Why Is Money So Confusing?
Why Is Money So Confusing?
Liz Weston, CFP®
Thu, September 1, 2022 NerdWallet
The investing information provided on this page is for educational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.
Managing money is an essential life skill, yet most U.S. adults would fail a financial literacy test. Consider the results of a survey meant to measure financial literacy, called the TIAA Institute-GFLEC Personal Finance Index. On average, U.S. adults correctly answered only 50% of its financial literacy questions in 2022.
In other words: If you find money confusing, you’re far from alone. But the reasons you’re baffled may have more to do with how our brains work than how money does. Understanding some of the common barriers, along with strategies to cope, could help you finally get a handle on your finances.
Money is a new language
You wouldn’t expect to carry on a fluent conversation in Madrid or Mexico City if you only knew a few words of Spanish. Similarly, personal finance is loaded with terms, jargon and concepts that take a while to learn.
“Entering the world of money is like entering a whole new culture and learning a new language,” says Ed Coambs, a certified financial planner and couples therapist in Charlotte, North Carolina.
You shouldn’t feel stupid for not understanding everything instantly, and no one should make you feel that way. However, learning can be more difficult if we encounter judgmental, condescending or dogmatic people — which unfortunately describes many people who are fluent in personal finance lingo.
“Many money experts, professional or non-professional, can become varying degrees of authoritarian: ‘Yes, I know what's best for you. This is what you should do,’” Coambs says.
People with a rigid approach to personal finance may not understand the culture and life experiences that shaped you. They may insist you funnel every possible dollar into paying off debt or saving for retirement, for instance, but you may feel it’s important to tithe to your church or support your elderly parents.
Rather than dictating how you should spend your money, helpful advisors meet people where they are, says Rachael DeLeon, interim director of the Association for Financial Counseling & Planning Education, a nonprofit foundation that administers financial counseling credentials.
“It's figuring out: What are your values? What's important to you? And how do you make that work within your own financial situation?” DeLeon says.
To continue reading, please go to the original article here: