Had an interesting conversation with my daughter last night. We had just watched a movie together (Margin Call - meh!) and we're discussing whether people always acted in their own best interests.
She was advocating the Univ. of Chicago's economic theory which says that people do make decisions based on what's best for good ole me. For the most part I agree. I've been a fan of Milton Friedman (I believe that he's one of the originators of the theory) since the 1980s.
But, I think that sometimes people are wrong about what's in their own best interests. Especially when it comes to finances.
Sometimes they don't know enough to tell what's in their best interest. For instance many have never been taught about compound interest, the time value of money, opportunity costs and other financial concepts. They honestly don't know how to determine what's best for them so they just take a guess and hope that they're right.
Sometimes they're being misled. No one would willingly fall for a scam. Yet, people are scammed every day. Often it's because someone hid the truth or lied to them and they didn't catch it.
Sometimes they've been convinced that an action is in their own best interests when that might not be true. Not to pick on salespeople, but occasionally some (a distinct minority I'm sure!) have been known to confuse the buyer's and their own best interests.
OK, so why would I be blogging about this during the holiday season? Because this is the time of year when many people think about making New Year's resolutions. The time when people try to change their lives. Often in the area of finances.
So, I'd encourage you to learn as much as you can. Especially in the area that you're working on. If you're trying to pay off debt, search 'debt' on The Dollar Stretcher and other good financial sites.
Use the resources available to you so that you know enough to identify scams and salepeople's arguments that might not be the complete truth.
We'll do our part to help provide the resources you'll need. Not only in our newsletters and on our site, but pointing you to other good resources wherever we find it.
Your part is to put yourself in a position where you'll truly know what's in your best interest. That way your financial decisions will really benefit you. (oh, and you'll help to close the gap between my daughter's and my side of the discussion! We can't have her thinking she can best her old man anytime she wants!)
Keep on Stretching those 2012 Dollars!