Wow, was I horrified when I heard those words come out of my darling cousin’s mouth yesterday.  I was helping her create her first budget, and we were talking about the money that should be left over when all the bills are paid.  I mentioned “discretionary income,” and she had no clue what I meant.

She’s a college graduate in her thirties.  She’s held a responsible job for her entire adult life, plus she runs a small business of her own on weekends and evenings.  She looks sophisticated and worldly.  She loves to read.  She writes well.

You would think she’d be literate in money matters as well, but she’s not.  She’s a frightening example of a dyed-in-the-wool financial illiterate.

As we worked on the budget, I realized that she didn’t have a grasp of varying expenses such as groceries or utilities.  I could almost understand that lapse because her husband pays the bills.  When she misstated her housing costs by forgetting a $600 per month second mortgage, I began to worry.

Then she told me that she and her husband had stopped contributing to their 401ks to cut back on expenses — even though their employers match part of their contributions — and I thought we’d plumbed the depths of her ignorance.  We hadn’t though.

I realized we’d finally hit the bottom when she told me that all the money left over when the bills are paid — paying just the minimum on credit cards, of course — can be spent on whatever she wants.  No savings, no paying down of debt.  Just spending money!

It’s never too early — or too late — to help the ones you love gain some financial literacy.  I recommend the following site to my cousin and to you:  www.360financialliteracy.org.  A very large site, it’s put together by the American Institute of Certified Professional Accountants, and it has information for every stage of your life.  Besides good advice for parents, it has pages specifically devoted to losing a job, starting a business, women’s particular financial needs, and even folks suffering financial crises.  Volunteer CPAs staff the “Ask the Money Doctor” section, answering your specific questions for free.

Don’t assume that your kids, friends, or close relatives know the difference between discretionary income and a hole in their pocket.  Casually mention the AICPA site or another one that you may have discovered on your own, and tell them it was helpful to you.  Someone you care about might take their first step onto the path to financial literacy.