To move from being a complete idiot about money to being smart as Jimmy Wales at Wikipedia can be a long process or a short one. A few people – who may appear naturally talented in this – probably got that way through natural inclinations and some absorption from their parents, usually through osmosis.
According to wikipedia… (which is always right – isn’t it?) … there are four stages of learning. Ahem, I put Jimmy Wales’ picture up there and not Maslow’s because I think Jimmy is totally hot and Maslow was not. But some people hated Jimmy’s pic showing up on Wikipedia every time they logged on. I miss him, so I’m preserving my favourite pic of him to drool over at will.
I walk my dog lately with a guy who looks kind of like Jimmy – the 6’6″ version. Last night we moved to “the next level” in our dog walking relationship where we don’t just know each other’s dog’s names, we exchanged first names. And shook hands. He has a bull mastiff, I have a golden retriever. I’m a believer in the theory that your dog type reflects your personality.
The ex had a foofoo dog like a Bichon. He liked to be taken care of. The ex that is, not the dog. So I’m thinking that this guy is kind of dominant, especially since he seems to enjoy it too much when his dog drapes himself over mine. I love it when my dog signals he’s had enough of this domination and snaps back. It reminds me of man-woman relationships. Or mine at least, which kind of says something. Maybe something not very good.
Ahem, I digress. Anyway, those stages (of learning, not dog park relationships) are:
1. Unconscious Incompetence – you’re stupid and you don’t know it
“Stupid and don’t know it” looks like this:
Or people who think that their retirement will be funded by winning the lottery. Ahhh… ignorance is bliss, isn’t it? At this stage, you tend to think that debt is normal or having no food in the house every couple of days before payday is also normal.
Last year my oldest son was stupid with money and didn’t know he was stupid. He went off to university in another town with no emergency fund, a paycheck to paycheck mentality, no budget… You know the drill. The shit hit the fan in the first month. But mom was there to help enable. And I was enabling because I was at the second stage of “learning how to parent kids to be smart with money” (because I didn’t think to listen to wise moms like Kris at Every Day Tips) – which is…
2. Conscious Incompetence – you know you’re stupid, but you refuse to face reality.
This is a tremendously frustrating level to be at. This is the stage where you’re kicking yourself for ever getting into debt but your addictions to shopping or lattes or World of Warcraft are too strong. I know that pain. I spent two YEARS of never entering a shopping mall and not spending for anything that wasn’t a necessity once I decided to break my addiction to impulse spending and shopping for stupid shit I didn’t need and never used.
Crikey! TWO FREAKING YEARS of no-spend months! Imagine that. Even ERE would be proud. Maybe. 
3. Conscious Competence – you’re smartening up, but it’s kind of labor intensive.
Many GRS readers who enjoy tracking budgets seem to be at this stage. I’ve been an accountant for forever and have never tracked a multi-million dollar company’s finances and budgets to the degree that some people track their few thousand dollar budgets. And the reason I don’t is because I’m at the fourth stage of the finance learning curve, which is…
4. Unconscious Competence – Second Nature. Woot!
I admit it, my spending is so boring and stable that I can’t be bothered to focus on it. Every month like clockwork, I go out and eat and drink somewhere for around $100 worth of food and martinis. Happily. Every month I buy about $350 of groceries. Sometimes hungrily (got to stop doing that). In the scary (to most people) month of December, my spending (apart from the mortgage) is typically less than all other months.
Moving through the stages
If you’re in stage one of just being stupid, you probably aren’t reading this, so I’ll ignore it.
If you’re moving from the second stage of learning to the third stage, it’s probably best to focus on information and changing your mindset over entertainment. Read blogs like The Simple Dollar or Early Retirement Extreme. Although there’s some entertainment at ERE since Jacob drops the F-bomb occasionally and has an original way of thinking which you probably can and should scale according to your circumstances. And there may be no entertainment in The Simple Dollar’s posts, but there is in the comments section. Like this post where you learn why you should buy super cheap swimwear…
This comment (#196) from that post almost made me pee myself (I want you to know it took me half an hour to find that comment again):
“…telling us AGAIN to just swim in a bra and t shirt would be like me telling you to fix the family dinner by chopping vegetables and chicken w/ a half a pair of your kid’s safety scissors and heating it all up w/ a hair dryer in an empty mayonnaise jar.”
If you’re moving from the third stage to the fourth stage, I’d focus on entertainment over information. You don’t need more and more information, you need to do what you know and just be persistent. See that persistence and focus on processes really does work. Find others who think the way you do. Sites that are great for that are Grumpy Rumblings – especially this post, Everyday Tips, First Gen American…
What I want to personally know more about is how to move to the fifth stage – how to recognize and develop unconscious competence in others. This is where J.D. at Get Rich Slowly is wonderful but I am not. That’s what I struggle with.
I’ve started sharing more about how I think about and deal with money with my kids (well, the youngest is actually teaching me) and the oldest has come such a long way in the last year, so I’m proud as punch and no longer worried about him. I’m even telling him to ease up and spend more going out with friends. He texted me last night while at the bookstore asking me if I owned Strunk’s Elements of Style already instead of just buying it like he would have in the past. (Yes, I do – although you wouldn’t know it from the writing…) We calculate “per supper” costs when we cook together. He just applied for a second job. My baby’s come a long way.
In the search for knowledge, I went to Cleverbot.
Me: How do I teach kids – or anyone really – about money?
CB: With or without my robot abilities?
Me: Without
CB: It didn’t have very many many tests in the first place!
Me: OK, how about with your robot abilities?
CB: I don’t know what you mean, the language is departed and the trigger is slammed so I can’t tell, what do you think?
Me: I think you don’t have very good robot abilities.
CB: I think you have bad eyes.
Me: haha I had laser eye surgery.
CB: To what surgery are you referring?
Me: Eyes
CB: You are not authorized for that information.
Me: So you’re saying just let them live their own lives and make their own mistakes?
CB: You are not me cleverbot, you are a program. Silly cleverbot, circular logic is for politicians.
Hmm. One thing I’ve learned is that I write blog posts remarkably like Cleverbot writes everything. (Sorry about that.)
When people link to me I always check it out, so here I am what do I find? Awesome writing and a great blog! Using the Headway theme, no less.
Your Yahoo! Answers pic is one of the best ones I’ve seen, but you haven’t lived until you’ve seen this one: http://www.omgsoysauce.com/5775/how-can-i-test-if-my-son-is-gay/
Warning: do not sip a beverage of any kind as you read this.
Rock on with your bad money self.
Michael Martine recently posted..I Quit
Thanks Michael, I really loved your “I Quit” post. And love the gay test! (I have 2 boys, please let me never have to actually make a volcano…)
I have a theme? And it’s called Headway? Cool!
J.D. Bentley at Idea Anarchy built my site for me, I can claim no credit for anything. I like the simplicity of it. Someday when I learn how to write more better I want to hire you as I am consciously incompetent about blogging…
What a great and fun post. (Thanks for 2 mentions, that makes the post even better of course!)
I laughed about your simple dollar comment. I stopped reading that blog ages ago because of the commenting issues (being sent to spam constantly). However, I was at GRS and JD did a review of Trent’s book and nobody cared about the book at all. I found out that I was not alone in being sent the TSD comment jail.
My spending is boring and stable, but I think I might track it a bit more this year. I just got my Amex annual statement in my email today and I was afraid to look at it. Will I be embarrassed to see the money I spent on going to lunch with friends? Ignorance is bliss!!
So glad your son has come around- it was only a matter of time. People have to learn the hard way. My oldest is 16 and I said to him yesterday “You would be so much happier if you didn’t have to learn every damn thing the hard way”. It just seems so exhausting.
Loved this post. I need to remember it for next week’s roundup. However, I will be getting ready for another 5 days of break for my kids because they rarely go to school given all the holidays. I will probably just be scrambled and confused.
everyday tips recently posted..Link Round Up- Tired Edition
Thanks so much Kris, it was a hoot to write. Time consuming… but fun. My goal is to be that PF blogger where you wonder what crazy sh*t is going to come out of her mind and hands next… A small goal, but easy to achieve…
I’ve learned everything the hard way too, but those hard-earned lessons seem to stick with you. Which is good.
I would never be embarrassed by the money I spend going out with friends. Now if I spent money going for lunch every day by myself – THAT I would be embarrassed by – if I did that, which I don’t.
I think the thing with tracking is that it’s do-able at any level. I may do it at a macro (net income) level, whereas someone else can do it just in areas where they know they could go over. I do that with travel. Since I tend to loosen up when I travel, I do track more closely then – or go the (gasp!) cash route. Me no like surprises.
Get me out of moderation or I will start calling you Trent.
(I hope the delay isn’t because you are out at the store buying vinegar and baking soda…)
everyday tips recently posted..Link Round Up- Tired Edition
ROTFLMAO! Hell, whatever I changed makes me moderate MYSELF!! I don’t know how to make it so that anyone who has commented before gets on right away but the old posts are blocked from any comments at all. Seriously, I was getting 200 spam a day. I have to figure some alternative out before I do any traveling at all. But I’m afraid of doing too much in case I delete every comment I’ve ever received or something equally idiotic.
You must must must install Akismet and conditional captcha. (Captcha phrase only required when it is thought the person might be a spambot.) I have about 4 spam a day now. (Thank God those get through because I have bought so many gucci handbags via the spam comment!)
Everyday Tips recently posted..OK- Here Is A Revelation – My Kids Are In Private School
Thanks Kris! Will have to play with it this weekend. I just bought a handbag yesterday. Wasn’t gucci. Wasn’t off the interwebz either.
Thanks for including us! Great post!
Nicole recently posted..More January Link Loves
I try… I do love that Meeeelionnaire post.
That is one funny question/answer. I’m in stage 4, with latent stage 3 tendencies….
Hey Andrew! I had latent 3 tendencies come out last year too. I figure it’s probably a good thing to have to re-learn / re-focus on things once in awhile. As long as we’re not starting from 1 again, it’s all good.
I have three kids and all three are so different with money…the eldest is frugal and yet watched me spend, spend, spend; the youngest is a spendthrift and has been exposed to my frugality; go figure?
I’m going wrong somewhere!
Me myself I’m between a 3 and 4 on a good day
Hey Laura! I go to a 1 when I’m traveling so I have to consciously track / put limits on myself. It’s a PITA.
I found the same thing in my family growing up – 8 kids – all different money styles, most spendthrifts. So I don’t know, I do know that my parents never really TAUGHT us about money, I just knew we were weirdly frugal comparatively.
Hi Laura, we children tend to do everything in our power NOT to be like our parents. Especially our same sex parents.
I hate spending because my mom spends frivolously. She’s crazy. My brother on the other hand is closer to her, and can’t stand my father’s asceticism.
Go figure:-)
Mystic Kelly recently posted..5 Alternatives to Resolutions
Kelly, this was so true for me. I rebelled against my parents tightwad ways (and my own strict university budget) and went too far the other way. I figure if I’m balanced my kids will have nothing TO rebel against.
Great post Jacq. I guess I’d have to self confess I’m in Stage 3. It’s exciting to think I could progress some day to Stage 4, which sounds carefree and confident.
In my head, I’m confident that all will be well, but my gut still suggests that I consistently track everything, so I am continually aware that all will be well and leave any opportunity for self-doubt at the doorstep outside.
You’re right though, I feel like I don’t need any more information (but learning more about investing would be useful at some point), and I need to just keep up the good fight. I appreciate those other blog recommendations, I’ll check ‘em out!
Tracy recently posted..Extreme Couponing
Hey Tracy! I was kind of thinking about this more, and I don’t know if it’s so much a state of learning (4 vs. 3) as that your spending is aligned with what you like to do or your values. That point where you save enough, you spend enough – on what matters to you. For most people, that point is hard because they’re paying off debt or saving a lot for retirement, so you just don’t have the room to go spend how you’d like to and will have to restrict yourself at that stage. I mean, we all do to some extent don’t we? I’d just love to go see Arnold Schwarzenneger speak here, but at almost $300 a pop for tickets, the only way I’d go is if he was nekkid and looked the same as he did in Terminator 1.
I think once your LOC is gone and the education costs are gone, you’ll have it made in the shade.
What an entertaining, resource rich post!
A few years ago, I tracked every penny to find out where in the world they were going. Very enlightening! From that I got to conscious competent with my spending, but I still had some wacko idea that every penny I earned was mine to spend. I moved the expenses around, didn’t get anymore debt, but didn’t save.
Crazy huh!
Fortunately, my old job swept 6% pre-tax into savings.
When I took the new job, I got a raise with it. Kept up the practice of sweeping the 6% and started putting the raise towards debt reduction.
A year later, I’m saving 19% on gross, my credit cards are paid, and I’m on track to pay off my car. No deprivation, just the process.
I’m looking forward to living on one check and saving the other. (You’ve inspired me.)
Also loved the 5th stage. Love knowing that it’s about sharing what your know that’s second nature to you. I love having labels.
Mystic Kelly recently posted..5 Alternatives to Resolutions
Oh good job MK! Doesn’t it happen so fast when you’re doing things right? What you might try doing when the car is paid off is what I used to do when I was starting off living on 50%. I’d bank the 50% but THEN use it just to do big things like take an annual holiday and pay annual car insurance or similar. It makes it easier not to have multi-accounts identified for savings goals. The nice thing is also that if you do get a raise, you get to at least enjoy some of it right now.
I think the fifth stage is interesting because it makes you look at why you do or did some of the things you do and then why other people do those things. Maybe you can save other people some time, anxiety or provide some motivation. That’s what I like to think anyway. I think years ago when I was in so much debt with no job and a baby on the way to boot, if I’d had somebody to talk to and tell me what to do and tell me it would all be okay if I just did X, I could have avoided so much grief.
Thanks so much for stopping by and commenting!
I love this post – your stage assessment is so true. I started off with Free Money Finance, then moved on to GRS and The Simple Dollar (which often had me saying wtf???). Now I’m getting more comfortable in my financial skin without feeling the need to whine incessantly.
And yes, teaching others this skill is really hard.
Lindy Mint recently posted..Shake It to Shrink It
Oh yes, I know the WTF? feeling…
I think the financial skin gets comfortable when you get a new “normal” that is like goldilocks and her 3 chairs. Not too small, not too big, just right.
My money learning curve will probably take me right over the cliff. Stupid is as stupid does? Uh huh.
givejonadollar recently posted..How to Promote your Website on Facebook- Twitter- Myspace- and Yahoo Groups
Brakes are good. And sometimes you have to give it a little gas.
I’ve been on autopilot for a while. Then scary stories about massive cuts to higher ed come along and I revert to panic mode.
I think your blog is very inspirational.
frugalscholar recently posted..How to Save 10 of Your Income- Courtesy of Andrew Tobias
Oh thanks so much FS.
I got into panic mode last year too watching my stocks too closely and seeing a dip. But it’s the people who do those things (react quickly to threats and DO something different) that end up surviving. Used to be it was a saber tooth tiger, now it’s a recession…
This is hilarious in so many ways. Most people I know fall into the conscious incompetence phase. I do know a few people that are at the unconscious incompetence phase. What fascinates me is that they are very bright in other areas of their lives, but just not with money.
First Gen American recently posted..The Social Part of Retirement Planning
FG, I think it’s because money can be so VERY emotional and not logical for some people. Throw desire, fear, longing, self-esteem… into the mix and you’ll find people doing things that just make no sense at all.