Why Everyone Cannot Be Financially Responsible
There is a high chance that you reading this post are terrible with money and you are overwhelmed with lots of debts including credit card and payday loans. Since the US dollars is a generally acceptable currency, then I will be using it all through this post.
A lot of people cannot afford a $1000 expense without going to debt and while I use the dollar, the value might differ depending on the country where you live, and 1 in 3 people who earn above $100,000 annually still live hand to mouth from paycheck to paycheck. People spend lots of dollars on non-essentials and the average savings for anyone isn't what it is suppose to be. This is one reason why a lot of people are still working even at the age of 70 years. This is because they do not have enough saved for their retirement, and their possible retirement investment cannot feed them for more than 2 years.
You must have heard in the news or from analysts that lots of people are about to experience financial disasters, and this can create a question in your mind, like "why can't everyone be financially responsible? That question for me might look like the right question to ask but if everyone was financially responsible, there will be nobody to spend money on stuffs like overpriced restaurant meals, disposable consumer junks, and so on which are also a way for some people to survive as well since it is their job.
Almost everyone in the world is experiencing the effect of economic impacts and it has affected people's finances. Not everyone experiencing this financial difficulty are financially irresponsible, some of them are just living based on what they get from their jobs but then some people can be financially irresponsible and this starts with not having things like an emergency fund, or a retirement saving, rather they just spend everything they see, pay for a car in full and so on but when you look at these things, you will be so surprised at how expensive it can be to be financially responsible and so you will be surprised when I tell you that it is very difficult for the average person to have an emergency fund more less meeting the other requirement to qualify for financial responsibility.
People in developed countries were able to save a lot of money during the pandemic as a result of government stipends, student loan being paused, and since there was no way to buy anything that they didn't need, so they were able to save for their financial lives but after the pandemic study shows that people do not have any savings again as they have exhausted their pandemic savings with only 20% of the top class having savings for them.
Let me state that while being financially responsible is stressful and looks impossible, being poor is very expensive. Everyone cannot be financially responsible because it will make investing for the current financially responsible difficult because if everyone would be investing their money to succeed but not everyone will be able to join the train.
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In the case where there is an increased cashflow into a stock because everyone became financially responsible and want to invest, it will cause the price of the stock to increase but then people who want to practice compound interest will not be able to invest as they will not be able to afford purchasing the market and as financially responsible investor, they prefer the prices in the market remain low when they are purchasing and higher after purchase when they want to sell.
Let us look at it like this, if people stop to be financially careless and they decide to use a phone for about 4 to 5 years, only to change their phone when the previous one gets bad, then it will affect companies like Apple and Samsung that create phones on a regular basis, also it will affect the investors in those companies. So you might want to say that when people are financially careless and dumb financially, then you might want to say you will get ahead.
This said, we cannot say that people shouldn't be financially literate because when everyone is financially literate and responsible, it will be better for everyone. Less consumption will help reduce the amount paid in collective environmental taxes, and will help people to make right decision, and will put some companies that thrive when people spend recklessly out of business.
Posted Using InLeo Alpha