I had a discussion with a mortgage loan officer recently and she shared with me a fascinating piece of trivia. I asked her who had the worst money skills of the loans she gives. Her unwaivered answer was lawyers and college professors. First, let me say that I have friends and family with PhD’s and I know several attorneys that are friends of mine. But why would she say this? What makes attorneys and college professors bad money managers?
The attorneys I can understand as profiled in the Millionaire Next Door. They can be under pressure in their field to consume, wear and exhibit high-status artifacts. Whether they have the means to do so or not is irrelevant.
Now, college professors on the other hand is a different story. My inclination is to believe they are so educated in their chosen field or area of research that they may not have learned basic money skills. If you think about it, a college tenured position is recession-proof, layoff-proof and has nearly guaranteed annual raises. A professor may be inclined to have no fiscal restraint in tough economic times because he or she knows a pay increase will be coming each year regardless of the economy. The longer you are in that “ivory tower” environment the less knowledgeable you become on the perils of high-interest loans and spending more than you make.
My experience in meeting people in life is that advanced formal education although generally helps your money skills, it’s no surefire way to accumulate wealth. As a matter of fact, for most college graduates the degree itself is initially a significant hindrance to the graduate early in life. Also, I have met plenty of business owners who exceled financially with no college degree and barely any other formal education.
Bottom line: formal education is no guarantee of financial success.