Money & Shower

Like many others, I do some of my thinking in the shower. Because I spend most of my life thinking and talking about money, it was not surprising when a recent shower led me to ponder the importance of money.

What is the single most important aspect of a typical human’s life? Basic survival? Pleasure? Enlightenment? Care? I suggest that it is money.

While we live in one of wealthiest nations, we are woefully deficient in money knowledge. We are, in other words, financially illiterate. This was borne out by the 2012 National Financial Capability Study1 conducted by the Financial Industry Regulatory Authority (FINRA). They found that only 14% of us could answer five simple financial questions, one of which was “Suppose you have $100 in a savings account earning 2 percent interest a year. After five years, how much would you have?” The answers ranged from “less than $102,” to “exactly $102,” to “exactly $102.” This simple mental calculation might have required third grade math, yet almost 86 out of 100 could not answer all five of these basic financial literacy questions. To take the test yourself, go to http://www.usfinancialcapability.org/quiz.php. If you miss even one question, you are a danger to your fiscal future and that of your family.

The problem with our meager money knowledge is not a result of our favorite scapegoat - our educational system. Instead, the fault lies more with the failings of another popular “fall guy,” the media.

Open the pages of your favorite newspaper and the section about money is typically titled “Business.” Only a few call it what the section really should be about, Money. Certainly, a “Business” subsection can exist within the broader concept of money, but money is the driving force behind most human activity. Business is only a part of our daily dealings with money.

A recent piece written about my radio show in a media journal stated; “In case you were wondering, Don says the most important [talk radio] topic is ‘money’.” The implication being there was likely a more important topic to discuss. What else could be more important than money? ‘Family’ often seems to be a popular response?

Family is incredibly important to me and, I would imagine, most others. Yet, the human family functions best in a financially stable environment. I have often stated that I believe that money issues are the leading cause of familial destruction. That belief was recently borne out by a 2013 study published Kansas State University assistant professor; Sonya Britt.2 She stated that, “Arguments about money is by far the top predictor of divorce...” Many other studies have arrived at the same conclusion, so it seems reasonable to conclude that money issues can make or break a family.

Listen to my particular branch of media; talk radio and you would believe that our most critical life issue is politics, particularly hyper-conservative, right-wing political beliefs. Is “Obamacare” more important than money? How about the Second Amendment? Are issues of inequality or poverty our leading concerns?

What do all of these topics actually have in common? Money! The health care debate is all about affordability. Everyone wants to know who should be picking up the tab. If a law-abiding citizen wants a gun, they generally need some money to buy one. What is at the root of most of societies concerns about fairness and equality? Money! You have more. I have less. Give me some of yours. What is the solution to poverty? Money. Be it earned, taken, or given, money is the tool that pounds poverty into submission.

For some reason talking and learning about money seems taboo. Many a parent has proclaimed, “It is impolite to talk about money!” We associate financial news and information with CNBC or those weekend con artists whose paid programs tout high yielding, no risk “investments.” (In case you are now wondering what those might be - they do not exist. There is no such thing as wealth without risk).

What passes for financial information is usually nothing more than a veiled pitch for gambling - Jim Cramer stating that owning five stocks creates a “diversified portfolio” on Martha Stewart’s show or it is of little real value; Suze Orman’s pusillanimous platitudes about turning pennies in to pounds (along with her poor judgment with prepaid credit cards and slimy newsletters). Most of the so-called “investment experts” are really hawking speculation. This includes everyone who claims to know when to get in and out of the market, the entire universe of precious metals peddlers, stock picking “gurus,” and anyone who claims to have discovered a secret for easy wealth.

Truly valuable knowledge and advice is available, but only sporadically. A few of the best money writers are New York Times contributors, Ron Lieber and Carl Richards. A few others are AOL’s Dan Solin, Larry Swedroe at CBSNews.com, and Jason Zweig at the Wall Street Journal. None of them preaches the gospel of greed. They see most of what passes as investments for what it really is, gambling.

We need to rethink the way we think about money, learn about money, and talk about money. The focus needs to be on how we can better earn it, spend more effectively, protect it from the myriad miscreants, and understand how investing it for our future really works. Dealing with money is really too easy to be this complicated and too significant to be so misunderstood. 

Heck, if it were not for money, I would not have the great shower that led to these profound thoughts. About a year ago, my shower pan developed leaks and had to be retiled. When it came time to purchase new shower plumbing, I decided to “invest” an extra $300 in one of those fancy multi-jet showers from Costco. While it does not pay cash dividends, it has turned out to be one of the best investments I have ever made.

1 http://www.usfinancialcapability.org

2http://onlinelibrary.wiley.com/doi/10.1111/j.1741-3729.2012.00715.x/abstract

Dew, J., Britt, S. and Huston, S. (2012), Examining the Relationship Between Financial Issues and Divorce. Family Relations, 61: 615–628. doi: 10.1111/j.1741-3729.2012.00715.x

    1.    School of Family Studies and Human Services, Kansas State University, Manhattan, KS 66506.

    2.    Personal Financial Planning, Texas Tech University, Lubbock, TX 79409.