Americans aren't financially dumb, we just misbehave

If you believe the reports, this country has a financial literacy problem.

I don't believe the reports.

We have a financial behavior problem. I'm not throwing stones here, because I have behavior problems, too. Our behavior and decision-making abilities tend to ignore empirical data, even when the negative outcome is obvious and known.

Take, for instance, smoking. I'm about to tiptoe here, because I'm not trying to get sued by big tobacco. The United States surgeon general states "there is no safe cigarette" and "(the poisons in cigarettes) damage DNA, which can lead to cancer; damage blood vessels and cause clotting, which can cause heart attacks and strokes; and damage the lungs, which can cause asthma attacks, emphysema, and chronic bronchitis."

At the risk of being dramatic and speaking in absolutes, everyone knows the "truth about cigarettes." Do people still smoke? Of course they do. We're not dealing with a literacy issue, we're dealing with a behavior issue (and addiction, too).

Can't afford 15-year mortgage? Then don't buy

Our financial mistakes aren't a whole lot different. Do we know we should spend less than we earn? Of course we do.

I was on a four-hour drive home last week from a speaking engagement. I hadn't eaten all day. I pulled into a fast-food restaurant and ordered a meal that contained 1,680 calories and 92 grams of fat. My poignantly literate tears stained my face for the remainder of the commute. I felt like hot garbage for the next eight hours, and was forced to live with the consequences of my poor decision. Eight hours of food regret is one thing, but the financial mistakes we make have a much bigger impact.

We make financial mistakes because we don't want to live in the real world. I met a married couple who live in the Midwest. Their combined household wage was $28 per hour. They had a $650-per-month payment on a brand new truck. Not only were they incredibly stressed out and regretful, but they were driving to work, to work, in order to be able to afford to drive to work.

Those nice folks aren't stupid. They aren't bad. They just made a bad decision, which was likely steeped in willful ignorance. Hey, every financial conundrum I've ever personally experienced was due to my willful ignorance. For that matter, every poor food choice and every prolonged period of purposeful couch-sitting are behavior issues, too.

Take a moment and think through the worst moments of your financial life. You will undoubtedly identify circumstance-based trauma such as job losses and relationship transitions. But the rest of the strife was brought-on by your decisions — your knowing decisions.

We don't have a financial literacy problem. We have a financial wellness problem. Financial wellness is a field that encourages people to make healthy financial decisions. While healthy financial decisions can't wipe out circumstance-based financial trauma, they can prevent us from ignoring the financially obvious.

Financial goals are great, as long as you're headed in the right direction

Financial literacy gems such as "spend less than you make," "you need to budget" and "save for the future" are impotent attempts to help. Everyone on the planet who has access to money knows to spend less than they make, budget and save for the future, but they don't, they don't and they don't. Financial literacy is a strange movement often peppered with bad advice fueled by the ulterior motives of those who deliver it.

A tremendous number of financial literacy programs, often sponsored by lending institutions, focus on managing credit scores. People learn how to make their scores go up, so they can have more access to more borrowed money. Let that sink in for a moment. People aren't encouraged to "fix their credit" in this country with the intention of accumulating wealth. They're encouraged to fix their credit so they can borrow more money. Focusing on an arbitrary number like a credit score is time wasted on the wrong metric. Your credit score isn't a measure of your financial health.

You cannot spin your financial wheels focusing on the wrong metric. You just can't. You need to manage your behavior, not your credit score.

If behavior management isn't part of financial curriculum, then there's really no point to the curriculum.

Your chance at financial success is not based on numbers or math. Your chance at financial success resides in your ability to win an argument against your irrational self. Sometimes you'll win, and sometimes you'll order an extra value meal with a chocolate shake.

Peter Dunn is an author, speaker, and radio host. Have a question for Pete the Planner? Email him at Pete@petetheplanner.com.