Monday, May 9, 2016
I Already Knew That!
When a young child feels he is being nagged about cleaning his room or getting ready for school on time, his reaction may be to stomp his foot, stick out his lip and yell, “I already knew that!” I’m surprised I don’t hear this same reaction from the American people when they are reminded over and over about the same things.
This sense of incessant repetition came up again when I saw a story on the PBS NewsHour about personal finance. The thrust of the piece was that everything you need to know about the subject could fit on a single notecard. After reviewing financial advice from a number of different sources, the individual featured in the story spoke to a financial advisor, who challenged him to do just that. He assembled his notes and boiled all the advice down to ten items that did fit on a notecard. Then he and the financial advisor got back together and wrote a book about it.
Anyone who has paid the least bit of attention over the years would have looked at the card, possibly slapped himself on the forehead, and said, “Duh, there’s nothing new here.” Of course anyone who has been paying attention over the years would have been doing this stuff already and wouldn’t need the notecard or the book. The advice included: don’t spend more than you make – actually worded as saving 10-20% of your income, but really the same idea; invest up to the maximum company match in a 401(k) plan; pay off debt beginning with the highest interest rate; etc. This was not rocket science or any other complicated program. And it's not presented as such, just a condensed summary of what we already should know.
The next day we were presented some health news about controlling your weight while grocery shopping. Again we’ve heard most, if not all of it before. Shop with a list and stick to it. Don’t go shopping when you are hungry. How do they get away with calling it news?
Why do people keep presenting this information on television, writing books about it and treating it like some revelation – nagging us about stuff we already know? Just like there is no magic money tree in economics, there are no secrets in the areas of finance or diet. In fact we can never get away with ignoring poor behavior in the discipline dimension. Eventually the consequences catch up.