Nature vs Nurture
Have you ever wondered why certain people seem to succeed financially and certain people don’t? I’ve spent a lot of time thinking about this. My major in college was International Studies with an emphasis on Development. Which is a fancy way of saying I studied poverty alleviation. Beyond college, I worked in Human Resources, and I did many things, including recruiting and being a professional “axe woman”. Meaning, I terminated employees for other companies and my own corporate office. What I found interesting was, I would hire two people and give them the same salary. They would seem to have similar responsibilities, I.e. wife, and a couple kids, but one would end up struggling financially and the other would do fine. I would usually come into the picture when I would investigate and terminate an employee for internal theft. Said employee would explain how they were struggling financially and that lead to the temptation to steal from the company.
Of course, there are many reasons one family could struggle more than another financially if they earn the same wage. Some examples are Medical bills, loss of a spouse's income, needs of extended family members. However, I have always pondered why, given a situation that is fairly even financially, some people find themselves on a fiscal cliff and other thrive.
Last week a friend of mine came into town and wanted to get together to catch up and meet my new wife. Our discussion over dinner turned towards finances. We brought up the question of why some people struggle with money and other don’t. Is it nature or nurture? We all know siblings that were raised in the same family and yet one sibling can’t hold a dollar in their pocket and another squirrel's money away. They came from the same household. I hate the idea that humans have no control over their financial futures. Otherwise, it would make my financial blog pointless if we couldn’t steer our own financial ship. If we were born a certain way and simply couldn’t succeed no matter how hard we tried with money, life could get rather depressing.
This “Nature vs. Nurture" question was deflating, because it seemed like some people simply are born with the inability to manage money. That’s when my friend chimed in. I tend to hog a conversation, so I’m glad I finally closed my mouth long enough to listen to her wisdom.
She said it seemed to her that everyone she knew that struggled financially also struggled planning. What a revelation! The ability to plan is what she observed. I don’t think it fully sunk in during dinner, but I’ve been thinking and discussing this concept since then. Is managing money really just coming back to the ability of someone to plan ahead? If so, can we coach and teach that skill? Can we help others learn to plan ahead for the medical expenses, loss of a job or the family car breaking down?
I currently have an employee who lives paycheck to paycheck. This employee is a part time cleaner for my commercial cleaning company. I’ve overheard them talking about the best place to purchase cigarettes by the piece. They touted that they could buy a cigarette for $.50 a piece at this one location (from what I understand, this is illegal). The reason they buy them at $.50 a piece is because it is hard for them to save up the $8.05 (average price of a pack of cigarettes in our state) to buy a full pack. At $.50 a piece they are paying $10 for a pack, not $8.05. Two things come into play here. Immediate gratification and planning for the future. Obviously, the best choice would be to not smoke and save all the money anyways, but it’s just an example. This employee truly lacks the ability to plan.
It seems to me that helping those who struggle financially must also include training on how to plan. What are your thoughts? How do we teach planning skills?