Generational Financial Illiteracy!
Financial illiteracy is real; always has been to some degree. Some people are better understanding than others, but in today’s “instant gratification” world, we are facing an entire generation of people who have little to no understanding about the cost and consequences of bad financial choices and how wanting it “now”, means likely never really having it at all!
My son gets mad that it takes two hours for Amazon to deliver a package to his front door. My daughter consumes more than 50% of her meals either outside the home or delivered to her house. Fortunately, they both had a great education and have solid careers and above average incomes. However, even they don’t possess as much financial savvy as I would like. That said, they are under 40, own their own homes, take great care of their children, and have minor investments in the future. Likely above average for their peer group.
However, the generation behind them is a far different story. Those under thirty don’t balance a checkbook (may not even have one), can’t cook, rarely save any money, and very few plan out major financial obligations. The greatest threat to many of them is the instant gratification of their entire lives. That requirement to “have it all now” has led to increasing use of “buy now, pay later” and “payday loans”. Likely the WORST form of financial obligations short of a loan shark!
I bring this up because increasingly my clients have seen that these accounts and their dependency are destroying the ability for those who are looking to buy a home, not getting approved or sabotaging their own deals buy excessive use of these services. As mortgage professionals, it is imperative that we counsel everyone we come in contact with about the use of these service can prevent them from achieving mortgage financing on a property they would otherwise been able to finance. It is important to remind our own active clients that the use of credit during the financing process could prevent them from getting a mortgage! You MUST tell them because THEY DON’T KNOW!
We have initial jobless and continuing claims & GDP numbers today; Friday we have PCE numbers. These can be market movers! Questions or comments [email protected]
