As much impact that fintech has had on financial services in the past decade people still continue to make poor financial decisions. While it is great that consumers can now refinance their credit card debt or student loans to a lower rate this is not making much of a dent in the overall financial health of consumers.
Credit card debt continues to rise to record levels of over $1 trillion in balances outstanding according to the Federal Reserve. Outstanding student loans are now close to $1.5 trillion continuing a staggering rise over the past decade. The national savings rate is now back down almost to its record low set in 2005. We are borrowing more and saving less. And we seem to be blissfully unaware of the challenges this may bring to our lives.
We Don’t Need No Education
I have many friends who are not the least bit interested in finance. They go about their lives in ignorance of the some of the most basic tenets of finance. A few years ago I had a highly educated friend try to convince me that there was no need to ever pay off credit cards and that I should think of it more like a utility bill with a fairly constant payment, the minimum monthly balance.
We don’t teach serious personal financial management in schools so young people are left to fend for themselves or (hopefully) learn from their parents. I was lucky. In my case we talked about finance and investing regularly at the dinner table when I was growing up and it was something that always interested me a great deal.