In my studies of personal financial management, it has occurred to me that money and wealth are relatively new things. Human beings have roamed the planet for about 200,000 years, developed agricultural settlements perhaps 10,000 years ago, and have only been handling money and wealth for about 100 years.
In the modern day, 92% of people (in the US, a developed economy) have checking accounts, and 76% of them hold investments (stocks, bonds, etc.) though generally only in their retirement accounts. So money and investing seems entirely normal, but things were not always thus.
During the early twentieth century, only 8% of the (US) population lived in towns and cities. Even as late as the 1950s, 45% of the population was still rural, living in isolated agricultural communities that, in an economic sense, had not changed much since the advent of agriculture itself.
Granted, “money” has existed for longer than that but it was not part of daily existence for the vast majority of people. Most people lived on self-sustaining estates, producing and handling the goods they consumed without engaging in trade. Only the heads of estates and the merchant class routinely engaged in trade that would require the use of money.
And even when money found its way into the hands of the working classes, it was seldom held for very long. The worker’s wages were paid to landlord, grocer, clothier, and other vendors – sometimes the same day they were received, but seldom longer than a week. Few people amassed wealth, and living hand-to-mouth was considered entirely normal.
Therefore it has only been since the 1950s that people have worked in professions in which they are paid in money, and had sufficient income to have money “left over” at the end of the monthly consumption cycle. It was only since the 1980s, with the creation of personal retirement accounts (IRA and 401k) that most people became involved in investing, or even considered the necessity of saving money to pay for their own retirement.
So it is little wonder that people are so woefully unskilled at managing money and investments – it is something that is very new to most people, and not something that they can learn from their elders (even their grandparents lived in the hand-to-mouth age). Given that the academic world is disdainful of financial topics and discussion money is considered a social taboo, there are few venues through which a person can learn to manage their money and investments.
We are, for the most part, ignorant primitives doing our best to handle some new and unfamiliar technology without any instructions or guidance, and no established authorities that are willing or qualified to guide us.
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