By Janice Desautels (photo by Nate Grigg)
What drives our economy? The answer is goods and services.
Where do these goods and services come from and where do they go? Are we as a populace outside this equation or are we the creators?
Many a conversation starts out with “The economy is doing this” or “it’s bad right now” or “it can’t go on like this,” etc., as if we have no control over it. Well actually we do – we are in the driver’s seat with what we purchase, what services we need or want, what is considered fair market value, and how much we are willing to spend.
It is this decision that determines the outcome, and if it comes without any responsibility on our part, then we only have ourselves to blame. Simply put, if we do not speak up or take action, someone else will.
The English language is constantly changing. Every year, thousands of words are added to the dictionary. What is the path? If one person or group comes up with a new word or a different meaning to an existing word, then they’ll tell someone and so on and so on… and poof! It sticks and becomes mainstream.
Why mention this in a financial education article? I was listening to a car commercial recently in which the language they chose to use was very troublesome to me. Bear with me because to explain I need to back up hundreds of years…
History shows that people have been indebted to one another for many reasons, none of which was ever a good position to be in, however, over time, and due to those who have forged a way before us, being indebted has become commonplace and accepted.
For example, the mortgage, which is from the Latin word meaning a “dead pledge.” The meaning of the mortgage contract refers to the term “dead.” If the borrower cannot pay the debt, then they lose the pledge or property, and if the debt is paid, then the lender loses the pledge and the property is fully owned.
Fast-forward and we find the word comfortably in our language, and we now have many other words around it like amortization, accelerated mortgage, and the PIT acronym: principle interest and taxes. All these words are used to describe purchasing property, that for the masses is a large debt.
This brings me back to the commercial and the language they chose – unassuming, but there, creeping up on us. They were talking about purchasing a car using the term “PIT.” Why would they choose to use this when this term is usually reserved for a high debt purchase?
Food for thought: which way will things go if more and more begin to talk about buying a car using PIT? We already seem to be accepting the bi-weekly payments for many, many years which were once reserved to the mortgage. Is this a sign of the future in terms of prices?
Would we be willing to accept this future if we knew the acceptance comes from us rather than being imposed on us by some unknown entity out there? This goes back to the question: who or what drives the economy? Is it us and the decisions we make?
As we begin another year, my challenge to you is to be aware of the language used. Question its source and validity. The baby boomers already do this by using their collective purchasing power which drives the types of goods and services offered, and ultimately affects pricing.
Now it’s your turn.
Janice Desautels has been working with families and individuals for the last seven years helping educate in the field of financial literacy. She is a Certified Financial Educator with over 15 years’ experience in teaching and training adults.