22/02/2021
WHY ARE SO MANY PEOPLE AROUND THE WORLD POOR WITH THEIR MONEY MANAGEMENT?
THIS IS SUCH AN IMPORTANT QUESTION BECAUSE IT HAS SUCH AN EFFECT UPON PEOPLE, CHILDREN,
COUNTRIES, BUSINESSES - POOR MONEY MANAGEMENT, ALMOST LIKE COMPOUND INTEREST, FEEDS
ON INTSELF AND BECOMES A NEVER-ENDING SWAMP - WE NEED TO HELP DRAIN THIS SWAMP
(1) Countries measure the income of their individual citizens via Gross Domestic Product (GDP per person) - the highest
25 country's citizens at November 2020 measured in $USD were:
Luxembourg $109,602 1
Switzerland $81,867 2
Ireland $79,669 3
Norway $67,989 4
United States $63,051 5
Singapore $58,484 6
Denmark $58,439 7
Iceland $57,189 8
Qatar $52,751 9
Australia $51,885 10
Netherlands $51,290 11
Sweden $50,339 12
Austria $48,634 13
Finland $48,461 14
Germany $45,466 15
Hong Kong $45,176 16
Belgium $43,814 17
Canada $42,080 18
San Marino $41,683 19
Israel $41,560 20
France $39,257 21
United Kingdom $39,229 22
Japan $39,048 23
Macao $38,769 24
NZ $38,675 25
Surprises for the writer regarding point (1) is Ireland, Iceland and Israel - something that tends to stand out is that most
in this top 25 are countries with a smaller population and strong economics - only the USA at a population of around
330 million is the exception.
(2) A complete absence of any countries from the continents of Africa, South America, Russia, India and much of Asia.
(3) Countries with low GDP per capita need, somehow, to improve their productivity/output or reduce their populations.
(4) Over the writer's lifetime, the reason people tend to stay poor are:
(a) Stuck in a debt trap;
(b) Ignoring the big debts;
(c) Feeling helpless;
(d) Not thinking about what is the right thing to do;
(e) Happiness now before future needs;
(f) Lack an emergency fund;
(g) They have a sense of entitlement, which they should not have;
(h) Saving not a priority;
(i) Don’t change course when finances dictate a change is required;
(j) No record of where money has gone;
(k) Don't separate wants from needs;
(l) No debt training;
(m) Investing in stuff instead of self;
(n) Trying to get rich quick;
(o) Can't stick to budget;
(p) Buying depreciating assets;
(q) Unwilling to sacrifice;
(r) Trying to have it all;
(s) Paying too much for cellphone and spending too much time on it;
(t) Spending more than you make;
(u) Very limited listening ability;
(v) Don't understand that they are only entitled to what they earn.
(w) No clear plan and no goals;
(x) More than one credit card and not clearing them each month;
(y) Paying interest rather than earning interest;
(z) Learnt nothing across the family kitchen table in those first 16 years;
(aa) Will fix it next time;
(bb) Good at digging financial holes;
(cc) Don’t understand the difference between good debt, bad debt and ugly debt;
(dd) Have forgotten how to play but still live within their means.
(5) Before the year 1800, just about everyone was poor - wealth was tied to the land. Before 1820, people more or less
were born and died in the same world.
(6) How can we help people who seem to remain stuck in the 'poor with money' group?
(a) Learning across the kitchen table for the first 16 years;
(b) A good mentor;
(c) One page suggestions/comments only - longer than that won't be read;
(d) Explaining how being on the wrong side of compound interest is heart-breaking long term;
(e) Rules around understanding the value of money;
(f) Understanding what are real assets compared with stuff;
(g) Helping them prepare a realistic budget and monitoring it;
(h) In many cases, need an education program for parents;
(i) Differences between wants and needs;
(j) Differences between spending now and later;
(k) Never spending more than 90% of disposable income;
(l) If you can't afford it - you can't afford it;
(m) Keeping up with the Joneses is dumb;
(n) Simple concepts on paper - at 20 years of age, if he or she saves $1,000 per year at 5% per year invested in
KiwiSaver with no withdrawals and with no allowances for inflation gains and allowing for Income Tax at 15% is
worth $273,000 at 65 years of age - $4,000 saved per year in the same way is worth $1,092,000. To get to
being a millionaire at 65 years of age really is not that complicated.
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(o) The NZ education system to make available a program that will equip NZ Children with a much better grip on
financial issues for when they enter the real world - with the right teacher, what a marvellous plus this would be
- this would benefit this potential poor with money group, I feel, much more than society would appreciate.
