Americans are not good with numbers, and this is hurting both family budgets and national politics.
My newest client, a twenty-something, admits she likes people better than numbers. But, on an individual basis, we live numbers: Salary $22.75/hour; rent $995/month; gasoline $2.90/gallon; checking account interest rate-zero percent.
On the national level (from a Wall Street Journal article January 7-8, 2012), we, the people, don’t grasp numbers on important national issues. Americans overestimate the percentage of foreign-born by more than a factor of two (truth 12.5% in 2009; 1850 – 9.7%). We overestimate the spending on foreign aid by a factor of 25 (truth $45B in 2009 or 1.28% of federal budget). We overestimate federal spending on the Corporation for Public Broadcasting by 100 times (truth $430M in 2010 or 0.01% of the budget). The bad news: “Telling people the right numbers often doesn’t change their views.”
The really bad news: “People recall facts that support their beliefs, and don’t recall facts that contradict beliefs.”
On the state level (from the Colorado Springs Gazette January 9, 2012), the citizens of Colorado don’t understand that lawmakers have little control over most of the money Colorado spends. “Education is nearly the only place the state can “cut” to balance its budget.”
This is an important election year. I think we need better people, smarter people to represent us in Congress. We need representatives who put party politics aside and do the work we sent them to Washington to accomplish. But to get smarter people in Washington we, the voters, need to be smarter also. Let’s find out the real facts before we vote.
Getting back to my client who does not like numbers. To be successful financially she must be the one in charge of her numbers. Learn enough to do it yourself because others will not have your best interest in mind.
The heart of the matter: Step one – pay attention to the numbers. Step two – think about the facts and take positive action based on the true numbers.