Back when I was in college somebody I knew got a rather large inheritance from a family member.  When I heard about this I started to imagine what I would do if it was me that was getting the money.  I was formulating great plans in my mind about how I could invest this in a way that would allow me to essentially retire straight out of college.  I would have no need for the traditional job most of my peers were desperately trying to conform to.  A couple weeks later this person showed up to school in a brand new BMW.

I suppose this shouldn’t have been all that surprising.  After all early 20 year olds aren’t known for their long term planning. It was just was a little disappointing to see somebody waste what I viewed as a great opportunity.

Now this person wasn’t dumb a dumb person.  In fact they did quite well in school and where earning a degree in business and finance.  You would assume that they should have picked up some basic principles about money and investing.  It seems that if they did, they either did not apply this knowledge to their life or figured they had the rest of their life to worry about it.

I guess what I learned from this is that just because somebody is educated and understands financial principles it is of no use unless they apply that knowledge. I use this to remind myself that just because I might know more about finances than the average person it doesn’t mean I am exempt from making bad decisions.  While it is important to constantly work on increasing your knowledge regarding investing and business it is equally as important to constantly attempt to apply that knowledge.

-T!

The second opinion

I’d also like to add that some people do know how money works, but do not believe that if they take care of their money now they would be financially safe in the future. Such disbelieving keeps these people from applying their knowledge. I think it is part of human nature to disbelieve things that we don’t have experience with. It is difficult for a person to apply financial knowledge if her/she have never done so. Probably T!’s 20 year old friend had very little experience in controlling his money, consequently he couldn’t take advantage of this opportunity. I wish everyone would take their first step to apply his/her financial knowledge and start believing that controlling your personal finances now will have positive long term results.

-O.