As a college professor teaching finance, it often occurs to me that, on the subject of personal finance, my job is to simply do a great job of stating the obvious. As the tagline on my blog always reminds us – it’s really about common sense.
Are there key financial concepts that help us achieve our personal financial goals? Of course! The concept of the time value of money is the key to preparing for our financial future.
But how complicated is it, exactly? Let’s see… if we put some money in an investment account and leave it alone, or better yet add to it every chance we can, it will grow. Hmmm. Can I get a huge collective “duh”? We all know that having our money work for us is a factor of time, and that the longer we wait to get started, the more difficult it will be to achieve our personal financial goals. Again – duh!
So why doesn’t every student simply heed this simple advice? It’s very much a combination of the “latte factor” (give up a daily latte and muffin, invest the money, and you’ll be a millionaire at retirement), laziness (I know I should do it, but I just haven’t gotten around to opening an account), the influence of cynicism (hey man, you can lose all your money!) and other factors.
As a college teacher and financial social worker, when it comes to teaching personal finance, I suppose that my main job is not to teach complex financial principles. Rather it simply to provide a constant reminder of what we all already know.
Yes, I am a master of stating the obvious.