Tuesday, August 14, 2018

Money for most people

I just read through a thread on Tumblr where users were explaining to people in their late twenties that you need to build credit or else you have no credit, which is treated almost exactly like bad credit by financial institutions.

And there were arguments in the comments where people were swearing it was not true, that credit cards are evil and you shouldn't owe any money to anyone at any time if you can help it, that "get and use a credit card and use it to build credit" must be advice designed as part of a capitalist trap. Several people who know how credit works had to come in and tell these people who'd nearly reached thirty without knowing this, explaining that having an established record of borrowing and paying back small amounts of money increases financial institutions' faith that you're trustworthy to pay back larger sums of money--a.k.a. CREDIT. 

And so many people were baffled that this is how it works.

I was taught this stuff well before I was a legal adult. Know why?

I'm a banker's daughter. My mom got a joint credit card with me when I turned 18 and I've been building credit since.

I've never taken out a major loan--have never bought a house or a car. The most I've ever done is charge to a credit card that I got many years after my joint one with my mom. I have very good credit. Good enough that I'm instantly approved as a renter. Good enough that when my friend who wasn't bottle-fed with this information couldn't get a loan for a car because he had no credit, I was able to co-sign and get the car loan with him. (Legally, I think it's my car, but I've never paid anything on it; he pays it. Obviously this is something you only do with someone you really trust.)

I wouldn't say I know a lot about financial management or budgets or whatever. But sometimes I'm shocked by how much I know in comparison to others. I've known for a long time that it's smart to have a 401(k) through your workplace and that it's basically throwing money away if you don't allocate at least the percentage that your workplace matches (if they do that). When I left my previous job, I rolled the 401(k) I had there into an IRA, and I understand what that is. Someone else manages it for me in exchange for a percentage. I own some stock. I have a smallish savings account that I try to forget about.  

Part of the reason I know about these things is that I came from a family who used these options and opportunities. And what really cheeses me off is how many people in my situation treat these things like they're common knowledge.

They're actually not common knowledge. We think they are because we mostly associate with people like ourselves who have the resources we have and know the things we know and value the things we value. But the people who don't know about these things aren't lazy, or willfully ignorant. A lot of times they don't know these things because a) the ideas aren't actively "marketed" to them because of their socioeconomic status; and b) the information is irrelevant if you don't HAVE any money.

Just put some away in savings, they say. Just skim a little out of your paycheck to go to this retirement account that you won't see for decades. Just buy stock, just invest, just do money stuff with your money.

They literally do not understand what it's like to go through life without anything like that luxury. Where you're waiting for your next paycheck so you can eat. Where you save money for a while before you can get shoes. Where small emergencies like home repairs or minor medical bills can send your budget into a tailspin of missed payments and skipped necessities. 

Money for most people isn't a game or a puzzle you can move around to get the best deal. It's life and death, and that's how they treat it--as something you never have enough of, and can only use toward immediate goals within your current means. 

That's why they don't know you have to "build" credit. That's why they don't know what you're talking about if you tell them they're sleeping on good opportunities if they don't allocate a good percentage to their 401(k) to take advantage of price matching. 

I know so little but compared to most people I appear to know so much. 

People who know these things make the rules and then everyone else gets screwed by them.

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