The Revolution of the Internet and Financial Knowledge

When it comes to finance and investing, there are a plethora of common misconceptions concerning how to build wealth and net worth. For example, many average investors believe that simply socking away a few bucks out of each paycheck in a 401k account is going to lead to a comfortable retirement. Statistics, however, tell another story.

Government statistics have proven over the last few years that the large majority of Americans do not feel financially prepared for a comfortable retirement. The average 50 year old in America has about $2,500 in savings. Furthermore, 65% of Americans who reach retirement age have less than $25,000 in retirement savings.

Why Don't People Save?

Let's face it. Saving money is not fun. Spending money is very fun. And, as humans, we tend to gravitate by nature to things that offer instant gratification.Therefore, the average person tends to spend much more money than they save, and when faced with the choice to save $50 in a savings account, or spend that $50 on a new outfit, most Americans tend to spend that $50. The question is why?

Many personal finance experts argue that the public education system in America does a terrible job of financially educating American youth. This means that the only way young people are educated concerning financial matters is through the home or an adult figure in their personal lives. Unfortunately, most people do not get this type of education in the home; thus, a perpetual cycle exists of one financially uneducated generation begetting another.

How Could This Change?

The internet has changed the world that we live in. Nothing less than a complete revolution is occurring in the way that humans communicate and the way that information is disseminated. Today, people can access thousands of websites discussing issues of personal finance, financial planning, a forex account, retirement investing etc-all for free!

Just 20 years ago, if a person wanted to understand personal finance and investing, what did they do? Most likely, they got in contact with a certified financial planner or similar financial advisor and the financial advisor would direct the person into specific investments such as a 401k, Roth IRA, mutual funds, etc. However, in this model, the financial advisor and certified financial planner held the power. The individual did not. The individual was still at the mercy of the "expert".

The internet has changed this, however. Now, there is so much free information on the internet, that if a person commits to spend her time, energy, and available resources, she could become a very well-informed investor within a reasonable period of time. We tend to take the power of the internet for granted because we are living in the midst of the revolution, but the transformation of information dissemination that is happening right before our eyes is on the same plane as the transformation that the Guttenberg Press caused during the Reformation.

Add the 2008 Global Recession To The Mix

The 2008 recession has also made people re-think their spending habits. After the exceptional stock market run of the 90's and 2000's, the people of the United States have suddenly realized that their property values and stock market portfolios are not always going to rise. The financial shock of '08 literally changed people's spending and saving habits in a very short period of time. Just prior to the recession, personal savings rates were at an all-time low in the U.S.; however, by the end of 2009, they were at all-time highs not seen since World War II.

Therefore, the writing is on the wall. Recession and the revolution of the information age could combine to bring about a continued shift in spending and saving habits of Americans. Of course, saving may not ever become fun for most people, but financially literate people understand that it is empowering, wise, and the first step toward building real wealth.

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