Why Can't You Manage Your Own Finances?

Humans were created equal, but not in the world of personal finance. While some or most are born into poverty, few were born into great wealth, and the rest of us somewhere in between.

While we cannot choose the camp to be born into, we need to figure out to make do with what we've got.

Here are several reasons why you can't manage your own finances:

1. Financial illiteracy.

We don't know how to manage our personal finances because in most cases we were never taught how to do so. Almost none of our high schools and colleges do not offer a single course to teach this vital skill. A study showed 'more than half of its respondents did not know how to calculate the minimum payment for debts and its application to principal balance'. Even licensed accountants have a hard time explaining the time value of money to client and would-be investor.

2. Blame it on the parents.

In many families, money is a taboo subject. Kids only hear about money during disagreements or as financial crisis is beginning to bubble. On the other hand, some well-meaning parents do pass on their money-management habits, good AND bad. In other cases, parents had the right approach but the kids go to the other extreme out of rebellion.

3. We read the wrong stuff.

In this day and age of Wikipedia, one cause of financial illiteracy is incorrect, biased and poor advice people get from seemingly reliable sources. You'll be surprised at the number of personal finance magazines spewing out information that caused actual and sizeable damage to its readers.

Now that we have outlined some of the basic reasons why you can't manage your own finances, it's time to plunge in to the world of financial planning.