“You’ve got to stand for something, or you will fall for anything.”

 

- John Mellencamp

 

Many of my columns are about people who make bad financial
decisions.  People who take out payday
loans and run up debts on high-interest credit cards.  People who play the lottery and gamble too
much at casinos.

 

 People who just don’t
know how to handle their money.

 

I’m convinced that most of the mistakes result from lack of
information and bad habits formed in childhood. 

 

Dr. Keen Babbage  of Lexington, Ky. has some answers in the second edition of
his book, Extreme Economics (Rowman
& Littlefield Education, Lanham, Md.).

 

I loved the first edition that came out in 2007.  My glowing comments appear on the back cover
of the newer version.  

 

Dr. Babbage says that personal finance should be a part of
the school curriculum.

 

I’ve known Dr. Babbage for 30 years, and he knows something
about finance. He is frugal and has a good eye for investments. 

 

Keen mentions that he learned from his grandfather, Keen
Johnson, a former Kentucky
governor.

 

Governor Johnson was a “saving, thrifty, frugal” governor
who, instead of buying new office stationary, used the stationary of the
previous governor, Happy Chandler. 

 

Johnson simply drew a line through Governor Chandler’s name
and wrote in his own.

 

I wish Governor Johnson had been in charge of our economy
instead of Hank Paulsen, Timothy Geithner and Ben Bernanke.  I can’t see Governor Johnson giving away billions
in bailout money to Wall Street.

 

Governor Johnson was governor at the end of the Great
Depression.  He knew the value of a
dollar.

 

If you look at the saving rate of Americans, its obvious
that the frugal ethic of Governor
Johnson’s era has not been handed down to the current generation.

 

We have a society where the haves are getting more and the
have-nots are getting less.

 

There are whole segments of the business world set up for
the more intelligent and cunning to prey on the less savvy.  If you go back to Darwin, there is an argument that the world
has always been that way.

 

Education is the way for have-nots to protect
themselves. 

 

Education is the equalizer in any society. It allows the
poor to be on equal footing with the rich. If people are able to make informed
decisions, they are less likely to make mistakes.

 

That is where the concept of “Extreme Economics” kicks in.

 

Babbage’s book is aimed at teachers and educators, but any
parent or student would benefit from reading it.  In 2007, Babbage wrote that America was
headed toward a “financial meltdown.”  

 

He called it correctly on that one.

 

Smart money management sounds simple: spend less than you
make, and save the rest.    I don’t think
Americans, especially young Americans, get it. 
Babbage has some ways to help
them understand.

 

Until recently, today’s young people haven’t had to learn
hard lessons from a depression, and neither have their parents.  Both have societal pressure to spend on
consumer goods.

 

It wasn’t life and death for our grandparents to have the
coolest cell phone or IPOD. My grandmother didn’t have either and seemed to do
fine.

 

When sound fundamentals are taught at a young age, they
become habits.  I’ve read many studies
that show that people’s financial profiles are decided by the time they are
27.  If they run through money at age 27,
they will do the same at age 50.

 

If you don’t know the basics, you will blow your money.  It doesn’t make any difference how much money
you have.  Just ask lottery winners like Jack
Whitaker.  Like roughly 90% of lottery
winners, he went through all of his money in less than five years.

 

The spend-for-today mentality has to stop.  Schools and society have to address the
problem, and Dr. Babbage has concrete ideas, exercises and plans that  will help.

 

All of America
needs to stand up and take notice.  Too
many Americans are falling for anything.

 

Don McNay,
CLU, ChFC, MSFS, CSSC is one of the world’s leading authorities in helping
people deal with “Big Money” issues.
 
McNay is an award-winning syndicated financial columnist and Huffington Post
Contributor.
 
You can read more about Don at www.donmcnay.com
 
McNay founded McNay Settlement Group, a structured settlement and financial
consulting firm, in 1983, and Kentucky
Guardianship Administrators LLC in 2000. You can read more about both at
www.mcnay.com
 
McNay has Master’s Degrees from Vanderbilt and the American College and is
in the Hall of Distinguished Alumni of Eastern Kentucky University.  

 
McNay has written two books.  Most recent is Son of a Son of a
Gambler: Winners, Losers and What to Do When You Win The Lottery
 
McNay is a lifetime member of the Million Dollar Round Table and has four
professional designations in the financial services field.