8 Big Reasons Why You’re Getting an F in Personal Finance 101

FI was looking at my son’s mid-term progress report a few weeks ago when I noticed that he was getting an F in one of his classes — Physical Education, to be exact. I know.

“How in the world does anybody fail phys ed?” I asked the Honeybee, shaking Matthew’s report card in my hand for added emphasis.

“Beats me, Len. Why don’t you ask him?”

Genius. Where would I be without the Honeybee? So I marched upstairs and confronted my son.

“Matthew, why are you getting an F in PE?” I said in my calmest possible voice.

“Beats me, Dad. I don’t think Coach likes me.”

Of course. The old my-teacher-hates-me-and-that’s-why-I’m-getting-an-F excuse.

Needless to say Matthew and I had a nice little talk about his grade. Let’s just say I sincerely doubt he’ll be finishing the year with an F in PE.

8 Big Reasons Why You’re Getting an ‘F’ in Personal Finance 101

That little incident with my son got me thinking about what people would have to do to earn an F in Personal Finance 101. For me, Personal Finance 101 is all about mastering my first commandment of personal finance: spend less than you earn.

If you’re always swimming in debt and living paycheck-to-paycheck, then you’re at risk of getting an F in Personal Finance 101. Here are eight reasons why that’s probably so — along with a little extra credit to help you get a better grade:

1. You don’t have an emergency fund.

In life you should expect the unexpected, such as the sudden loss of a job, and the last thing you want to do is be caught off-guard and forced to rely on credit cards or a loan which could get you into deeper financial trouble.

Extra Credit: Establish an emergency fund of at least three to six months of expenses. And don’t delay; you should start building your emergency fund as soon as you get your first pay check.

2. You don’t know how much money you have in your bank accounts.

Overdrawing a checking account by just a few cents could result in lots of expensive bank fees. To ensure you’ll never write a check for more than what you have, you should always know how much money you’ve got in all your accounts.

Extra Credit: Set your overdraft limit to $0, and your debit card will not be allowed to overdraft your account. True, you could bounce a check; but if you are being a responsible household CFO and balancing your checkbook regularly, that shouldn’t ever be a problem. You can also consider using money management software to help manage your finances more closely.

3. You don’t understand the difference between a want and a need.

Being able to distinguish between wants and needs is directly tied to your ability to accept personal responsibility.

Extra Credit: Understand that when taken down to the most basic level, all of us have only four or five primary needs. Those needs are food/water, clothing, shelter, transportation (for most of us), and health care. Everything else is a want.

4. You don’t know how much money you spend.

It’s pretty simple: What you save is the difference between how much you make and how much you spend — but it’s tough to save anything if you don’t know how much you can afford to save. So look at your expenses and determine exactly how much money you’re spending and where it’s going.

Extra Credit: Audit your expenses by writing down everything you spend your money on for a couple months. The trick is to be as detailed as possible; use a spreadsheet to capture even the smallest purchases. Assign categories for your expenditures such as: housing, automobile, groceries, utilities, and entertainment.

5. Your tastes exceed your spending capability.

Understand that this is not a problem, so much as an excuse. When your expensive tastes starts impacting your ability to save, you’re in trouble.

Extra Credit: Ratchet your tastes down a notch or three — and stop making lame excuses.

6. You can’t say no.

Being able to say no is a crucial skill in the world of personal finance. Those that can’t will always have the most trouble keeping their personal finances on an even keel.

Extra Credit: Master the art of saying no.

7. You’re an impulse shopper.

Impulse buying is a nasty habit that can best be cured by careful planning.

Extra Credit: When buying groceries, make a list of everything you need. Establish and adhere to a household budget. And always know exactly how much you plan on spending before walking out the door. In short: Think before you buy.

8. You worry about what others think about you.

People who are highly competitive, or worry about what others think of them, often have a predilection for conspicuous consumption, otherwise known as the desire to keep up with the Joneses.

Extra Credit: Forget the Joneses; nobody cares. Besides, the odds are they’re probably broke anyway.

Photo Credit: pdugmore2001

(This is an updated version of an article originally published on May 17, 2010.)


  1. 1


    I think you could relate all of these back to the same problem your son had. Complete indifference or lack of effort. If you don’t try and you don’t care you are going to fail.

  2. 2


    Great post! In the past when I was getting an F in personal finance, I think it was mainly due to the face that I was indifferent to where my money went, and I just wasn’t paying close attention. My wants and needs were blurred together, and I just had no plan. thankfully things have changed!

  3. 3


    All great points. The best part about the whole post, you can earn an A just by making a stand and follow the rules/reasons. We don’t have to settle for an F. A little work and focus can turn everything around.

    And here I thought you were going to tell us how to do a jumping jack. That’s the exercise you do while lying on your back right, oops that’s a snow angel :-)

  4. 4

    T-Bone says

    I really like this one. Everybody is right. I discovered most of my money issues (like overdrafts and ending the month with not quite enough money to cover the rent because I spent too much bar hopping every weekend) went away as soon as I started setting aside about 15 minutes every week making sure my personal finances were being attended to.

    It’s amazing what a little attention to detail can do for your money situation!

  5. 6


    I have to agree with the previous point that giving attention to personal finance as an important subject often seems to help many of the issues mentioned in this post take care of themselves. It’s good that a lot of solid personal finance advice is “good common sense.” Unfortunately, common sense doesn’t appear too common presently.

  6. 7


    Good list Len,
    It is interesting that you start out with a savings goal and follow up with a bunch of ways to control spending. Goal setting with saving (emergency fund in this case) can be a great motivator to curtail spending.

    To Matthew: listen to your dad. He isn’t kidding about the chain gang stuff!

  7. 9


    The last one (number 8) is one I see lots of people struggling with. But keeping up with the Joneses can cause financial headaches.

    Maybe we should ask ourselves, “Do I want to look rich, or actually BE rich?”

  8. 10

    Jenna says

    I’ve been talking to a lot of friends about your number one point: 1. You don’t have an emergency fund. As a recent college graduate how long does it usually take to set up an emergency fund? Seems to be tricky to save up 6 months of salary your first couple years at a job.

    • 11

      Lynn says

      Think smaller. An entire month’s salary is overwhelming especially when starting off. Think about a goal of $500 or $1000 with saving X dollars per paycheck. Most people can find $25 a paycheck. It may take you a while but you will at least have some emergency fund. As you earn more add more.

      • 12

        jeb says

        Smaller is fine for a recent college grad. You probably don’t have a house that might need expensive replacements. Chances are you won’t have a large family to support with dental care, broken eye-glasses, etc.

  9. 13


    I’ll have to co-sign (I know, bad thing to do right!?) Kyle’s comment. The thing to note is once you do wake up, you’ll have nobody to blame but yourself.

  10. 14

    Jennifer Barry says

    Very good list, and I also got a chuckle out of the story with your son :) In addition to the lack of effort and attention is the sense of entitlement I see in many people. I know a woman who is a single mother and hit up her friends for money to replace the engine in her SUV. I declined to participate because even though I have a lot more money than her, I have a 9 year old car that’s worth maybe $2000, and hers is worth about $30K. Her engine cost more than my whole car. She really needed to scale down to a vehicle she can afford instead of repeatedly getting in financial trouble. This breaks your rules #1, 3, and 5.

    I will admit that peer pressure is real though. I’ve had many people mock my car, and if I cared, I would run out and get a fancier one.

  11. 17


    Reading your article, I’ll be honest and say I was a major F myself as I checked off way too many of your top 8 reasons… luckily I’ve also been lucky to crawl my way out of those weaknesses or laziness and been holding on tightly to the reins of my finances since then.. Great job on the article! ;p

    • 18

      Len Penzo says

      It’s not how you start the school year, it’s how you finish. Glad you were able to bring your personal finance grade up!

  12. 19

    Steve says

    Len, Politically, I don’t always see eye to eye with you. But I surely respect your views and this is such an important, yet basic outline of how to work with money that I have to say, “Well done!” Being a retired teacher, I really appreciated the beginning of this piece and that could possibly be the basis for reason #9. “You’re blaming someone else for what you haven’t done.”

  13. 22


    Oh man I was getting a big fat “F” on personal finance 101 for years!!! I only started studying for the class a little over a year ago and I finally was able to pass (with a C+). I’m now on Personal Finance 102 or whatever the next level is called and I am determined to get an A++. My GPA is terrible right now because of all those F grades but I’m determined to get my Personal Finance degree with a decent GPA and move on to my Masters and finally my Ph.D.

    This list is great and right on point; it is exactly where I was about a year ago.

    • 23

      Len Penzo says

      I love your attitude, Aldo! But please … don’t be too hard on yourself! If I had to guess, I’d bet you’re earning a good solid A in 101 (or 102) now. :-)


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