In my mother's case, she was born with a tendency to anxiety and insecurity. As she grew up, she mitigated these traits by avoiding many unfamiliar situations, and somewhat passive in terms of taking action on new things. She was fine when she was in an established routine where she felt confident about what to do. In terms of jobs: lack of job skills resulted in lack of confidence that she would be hired; and the fear of failure or being rejected. In practice, it usually was the job HUNT (not so much working the job once she got settled in) that caused her to avoid job hunting. If a friend with connections had just offered her a decently paying job, without making her jump through all the hoops, and then encouraged her through the first few months of inevitable screw ups until she gained confidence, then perhaps a lot of things in her life would have been different down the road. But she (and the vast majority of people) aren't that fortunate, of course. It was the same with managing her divorce settlement. She didn't know who she should speak to about it, who was trustworthy, and she didn't want to look stupid. Rather than risk making a bad immediate decision, she made none at all and kept the settlement in her checking, until she eventually burned through it a few years later. It wasn't like she made any single terrible decisions, just the accumulated weight of a lot of these tendencies just sort of snowballed over time.
When I was a young adult I'd never heard of "Anxiety" (well, I mean, other than in the context of a single event ... I have a big test next week, and I'm anxious about it). Today I have 3-4 students in every class who are diagnosed with Anxiety. I think today's reliance on technology /decreasing social skills among teens is a part of it. Regardless, thinking of these students, yes, your above description rings true to me -- these people with Anxiety don't know what to do, don't want to appear foolish, so they do nothing, they procrastinate, they hope somehow the situation will just work itself out. Sometimes things do work themselves out, more often they don't -- but long-term it's a recipe for disaster.
But I still wonder who these people are. My in-laws, for example, are completely financially illiterate. I imagine them as the typical American household. 2 jobs slightly above median household income, eating out, unnecessarily large vehicles, full cable package, zero understanding or interest in anything finance/retirement. Somehow, they still have a little over 200K in 401k savings + a paid off house.
I bet they're not financially illiterate;
they know they should save, and
they know that by skipping some of the above luxuries, they could save. What people like this lack -- and I think they're totally average Americans -- is the day-to-day willpower to make better choices. Saving is often compared to dieting:
Everyone knows how to lose weight, but ordering a pizza and watching Jeopardy every night is easier than cooking something healthy and then going for a walk.
But it's more, much more, than "education". It's mindset and commitment and belief in the future, which yes is very difficult for the vast majority of the population.
This I totally believe. Personal finance IS taught in high school. I see my homeroom kids doing homework dealing with compound interest. I was assigned to give the state test in Civics, and I saw two essay questions dealing with borrowing and credit cards. I know that another class does a semester-long stock project in which they choose/monitor stock choices and compete to see who "earns" the most over the semester. On a more practical level, Home Ec students complete projects dealing with the cost of preparing for a baby, then the cost of maintaining a baby's needs. They also plan meals with a budget. Personal finance is an elective class, though few take that. Why doesn't it stick? Because it seems un-real to teenagers; they don't connect it to personal long-term goals, so it's no more real to them than studying Abraham Lincoln and the Civil War.
But kids who have the "mindset and commitment" do internalize the idea, and they seek out the information they need. I've said on this website before, I realized in high school that I wanted to be financially secure (not a luxury I enjoyed in childhood), and in college I realized that I had at my disposal ALL the information I could ever need -- for free -- in the college library. So I started reading. Today it's even easier with the advent of the internet. But, yeah, without the "mindset and commitment", all the information in the world amounts to nothing.
My father used to say"Do you want children or do you want money because you can't have both."
I have both, and I'm not a 'specially high earner.
