If there’s one common feeling that people have when it comes to money, it’s pessimism. It’s not necessarily something they realize. But when talking about their long-term goals, they may say things like ‘I’ll never retire.’ Or ‘I’ll never be able to afford a house.’ Or ‘I can’t change jobs.’ These negative thoughts only work to damage a financial picture. As the planning process proceeds, though, you can actually realize your financial goals can be achieved, changing your mindset in the process.

The pessimism seen from people regarding finances is actually quite understandable. We only know what we know, and most people do not advise people about finances for a living. They don’t work on finances everyday. Therefore, they don’t have the ability or time to understand nuances of the financial system. Their assumptions come from an understandably limited knowledge about their savings, investments and debt. With a limited picture, they assume that’s all there is. I have the same response to fixing my house – I can barely wield a hammer.

While this is where having a fee-only financial planner on your side helps, this pessimistic view can cause serious damage to your finances. Say you don’t believe you will ever retire, for instance? Well, when a serious debt issue arises, why wouldn’t you tap the retirement account to pay back the debt? It makes sense, if you believe you will never retire in the first place. After all, why have a retirement account if you will never use it? 

Such a sentiment leaves the retirement account tapped, creating a self-fulfilling prophecy. No retirement account, then no retirement. It’s the same when I try a project around the house. Since I don’t know the full complexity of doing it correctly, it inevitably comes out lopsided or unworkable and I assume it cannot be done. Of course, as soon as I hire a contractor, they figure it out immediately.

To get out of this pessimistic cycle, it’s important to understand a few facts about finances and how it relates to your financial life. 

You Weren’t Taught Personal Finance

The fact you don’t have a full understanding of the financial system isn’t only because you don’t work in finance. It’s because you very likely were not taught this stuff in school. When I was young, I had one personal finance class, which was wrapped up in a life learning class. In this, I learned how to write a check and they vaguely taught us the concept of investing in a stock (only determining if it went up or down). 

That’s it. I bet you’re in a very similar situation. Currently, only about 25% of high schools offer financial literacy programs, which is up considerably from even 2018, when only 16% of schools did the same. When you were growing up, the chance becomes even smaller that you would have taken financial literacy.

I learned finances from studying and covering financial topics as a writer. If I hadn’t happened to become an investing writer about 15 years ago, I may never have learned this stuff. I may never have gone back to school to learn more intricate tactics. And I may never have gone through the process of obtaining CFP® certification. It’s from a random chance that I learned. From there, I realized I loved teaching and helping others, which is why I’m here now. But the learning came from a proverbial flip of a coin.

Realize Your Financial Goals Through Learning

But that experience also really hit home another core belief I have when it comes to your personal finances: This stuff can be taught.

Many players within the financial system want to make the ideas of investing, saving, spending and debt much more complicated than it is. Why? If they make it complicated, they can charge more. Or they can charge you in a way that allows you to think you’re getting a good deal, when in fact they’re not only charging you more, but putting you in poor products in the process that pay them more. 

While many of the concepts may not come naturally to you, they’re things that can be learned over time. And the most important lesson in the personal finance space is that it takes time. Instead of constantly tinkering, it’s developing a plan and sticking to it year after year. When doing so, you’re cutting down on fees and costs for yearly or monthly tweaks. Larger financial players don’t like that, so they preach ideas that encourage more trading (for example). But this only hurts you. 

With the right knowledge, you will have tactics at your fingertips to find success. And with those successes, you can find optimism for the future, putting your finances in a better position to succeed.

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