A columnist in a major newspaper today suggested that limiting consumer choices in some cases might be good. That curbing access to credit may be good. And last but not least – suggested that some people need protection from bad financial practices – and their own bad decisions.

In her September 2015 article“When the Government Tells Poor People How to Live” author Alana Semuels writes,

Is this the role government ought to be playing in people’s lives? John Stuart Mill condemned such efforts, writing, ‘The only purpose for which power may be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not a sufficient warrant.’ People may make bad choices, Mill and others argue. But that’s one of the costs of a free society. And it’s not as though government intervention is risk-free: The government may make even worse decisions on people’s behalf. Or, when it treats them like children, why expect that they will ever act like adults?

It would appear that the movement to protect consumers from financial bad practices to expand to personal bad decisions has gained headway from many organizations including regulatory agencies in the financial services sector.

In looking at the equation of Personal Finance = Personal Responsibility, a great definition has been proposed by Clay Skurdal – a 30+ year veteran of the financial services industry. He proposes that there are 6 characteristics of those who take personal responsibility for their finances.

  1. “Have a spending plan, or budget, is nothing more than a written plan detailing income and expenses before they occur. Having a plan in place shows diligence;
  2. Saving money is a priority - Saving, by definition, is spending less than you make.
  3. They recognize the difference between “needs” and “wants - You’ll be amazed how much you can save by cutting out “want”.
  4. They refuse to borrow money - if you already struggle to pay your mortgage each month and keep the lights on, the last thing you need is another monthly payment obligation. If you can’t afford to save toward this, then you can’t afford the monthly payment that would result from taking out a loan either.
  5. They don’t wait for friends, family, the government, or others to rescue them - don’t make the mistake of expecting these sources of income to make up for a lack of financial planning.
  6. They are givers - Givers are the happiest, most fulfilled people in the world. Giving of your time, money, effort, and energy takes the focus off of your own problems. You need to get your focus off your problems from time to time, for your own sanity’s sake. Those who are constantly worried about their money, or their lack of it, have difficulty focusing on anything else. It makes them not as productive at work, for example, which can cost them a raise or even their job.”

It would be beneficial if we paused and took a step back from proposals to enact regulations and laws protecting people from their own bad decisions. We cannot assume that these people want saving or merely want to escape their rightful personal responsibility for their decisions.

In a country of 318 million people, more than 75% of Americans responsibly deal with their finances. (Regulators estimate roughly 70 million Americans are contacted by debt collectors each year. 2016 Consumer Financial Protection Bureau -CFPB estimate) As any teacher might tell you, setting rules for the small minority of the class can often have unintended consequences for thee majority of the students in the class who are not the challenge.

"In the long run, we shape our lives, and we shape ourselves. The process never ends until we die. And the choices we make are ultimately our own responsibility.”

Eleanor Roosevelt

Mark Dobosz