It’s no secret that most people don’t know how to handle money.

Personal finance is one of the primary categories of blogs on the internet today. That’s because it’s needed.  It’s highly needed.  And most people don’t even know where to start.

People don’t understand things like the stock market, mutual funds, index funds or compound interest in general.  The average person doesn’t keep a budget, and they overspend on a daily basis.

I know you don’t do that, but you may still be wondering why personal finance isn’t taught in schools, and why most people don’t have a clue when it comes to money.

Here’s some insight…

A Wrong View of Wealth

Let’s start with the paradigm that people see money through.

It’s often assumed that people with big houses and nice cars are wealthy, but that’s usually not the case.  If you’ve read books like The Millionaire Next Door, you know that the average millionaire doesn’t live a fancy life.  Though some do live in luxury, most understand that having expensive houses, cars and toys means paying a lot for upkeep…and most importantly, they understand that they shouldn’t spend a lot of money on things that lose value.

People assume that doctors, lawyers and other high-paid career fields lead to wealth and a knowledge of finances.  Also not the case.

We’ve all heard about how many professional athletes are filing for bankruptcy within a few years of retiring, but that’s to be expected, right?  They are in a profession that is known for living a luxurious lifestyle and spending a lot of money.  Doctors, however, are in a professional role, and they went through a lot of school, so they should know how to handle money…right?

Not really.  Sanj Katyal, MD, explains that, while doctors make a lot of money, many of them struggle financially.  Why?  It comes down to two words: financial literacy.  I’ve said it before, but it’s worth repeating: if you make a million dollars a year, and spend a million dollars a year, you’re still broke.