DIEGO ó A marriage destroyed because a husband paid
for a pool in the backyard, nice cars and frequent
dinners at restaurants ó money he should have been
squirreling away for his sonís college tuition.
people who are broke but who will put thousands of
dollars in tattoo purchases on credit cards.
who dip into their retirement funds to pay for a
Chilton offeres those stories as examples of financial
illiteracy. Heís the CEO of The Society for Financial
Awareness, a nonprofit he founded in 1993 and based in
groupís members, who include estate-planning
attorneys, financial advisers and CPAs, give free
finance seminars at clubs, churches and companies, which
are affected when an employee under financial strain canít
focus on the job.
know about drug and alcohol addiction," Chilton
said. "But we donít we talk about spending as an
addiction. Spending money makes us feel good and is
habit forming. Our economy thrives on spending. Not
enough people understand the importance of saving until
itís too late."
is Financial Literacy Month. Through SOFA, which is
funded mostly by membership dues, Chilton is trying to
spread the word that knowing how to manage money is
critical to health and happiness. Without it, it can
lead to bankruptcy, divorce and even suicide, he says.
is not just giving advice. He talks from experience. He
didnít become financially savvy until he was 26. He is
now 63. When he was younger, he started a business using
a line of credit and racked up a lot of debt.
chats about financial illiteracy and how to solve the
How do you define financial illiteracy?
Unfamiliarity with the principles of cash management,
finances. Ignorant doesnít mean stupid. It just means
most people have not been put in an environment to
spend first, consider second, whether they need it or
not. For example, they say: "Honey, wouldnít that
be nice in our bedroom, kitchen or living room?"
The (partner) should say: "It would, but is it
necessary?" Instead if we donít have the money,
we fall back on credit cards. Itís behavior. The
entire deal of money is behavior and having knowledge to
gain financial wisdom to handle that.
should belong in school and it isnít, which is amazing
to me. I go nuts about that. Itís bewildering to me
that schools across the nation donít have financial
literacy as a core subject.
In what grade should schools start teaching financial
Fifth and sixth grade. If your mom gives you an
allowance, think about short- and long-term spending.
Want a bicycle? The goal is to save up to $100. Mom and
dad will put in $200. Thatís long-term planning. Every
time I get an allowance, am I going to follow the plan
or spend that money with my girlfriend at the mall?
in high school, they can learn about car loans. In high
school, it should be mandatory to take financial
literacy. In college, it can be an elective.
for math and science. I have five kids. But they use
their phoneís calculator to do their math. They think
about money 24/7.
Before fifth and sixth grade, should parents be teaching
their kids about financial literacy?
Yes. We taught our kids with questions. What do they
want their money for? We always implemented long-term
planning, for example, to save for spending money for
vacations or big purchases. Why should I give them all
the money? Why shouldnít they learn the process?
Youíve mentioned that only 3 of of every 100 Americans
have a written financial plan. Why is it important to
Like a GPS or North Star, a written financial plan helps
them stay on track. The No. 1 cause of divorce is over
money issues. There are mistakes constantly made by
couples. Also, student loans have exceeded car debt and
credit-card debt combined.
then thereís stress. Our well-being can also crumble
because of a staggering amount of debt that constricts
us and sucks out our joy. You might have to move to a
place with (a lower) cost of living, leaving family and
friends behind. Money can absolutely ruin someone. Youíve
got to build a financial plan. If you have to drive
somewhere youíve never been before, do you go without
a map or GPS but only with the intention of driving?
Why donít more folks budget or plan financially?
They are already in the ditch. Itís embarrassing. They
donít want to look at it. Behavior of the individual
must modify to get out of the ditch. We are a product of