Why you're getting an 'F' in personal finance

This post comes from Len Penzo at partner blog Len Penzo dot Com.

When my son was 12, he brought home his midterm progress report and I noticed he was getting an "F" in one of his classes.

What was most infuriating was that the "F" was in physical education.

"How in the world do you fail phys ed?" I asked the Honeybee, shaking Matthew's mid-term 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 phys ed?" I said in my calmest possible voice.

Of course, almost as an afterthought, I did manage to shake the report card that was still in my hand to convey the gravity of the situation. The fact that I shook it two seconds late didn't seem to phase my son.

"Beats me, Dad. I don't think coach likes me."

Of course. The old my-teacher-hates-me-​and-that's-why-I'm-g​etting-an-F excuse. Needless to say Matthew and I had a nice little talk about his grade and, unless he decides the domestic equivalent of your typical penitentiary chain gang is a great way to spend his summer vacation, I sincerely doubt he'll be finishing the year with an "F" in P.E.

8 big reasons 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. To me, Personal Finance 101 is all about mastering my first commandment of personal finance: Spend less than you earn.

If you find yourself swimming in debt and living paycheck to paycheck the odds are you would be getting an "F" in Personal Finance 101. Here are eight of the most likely reasons why that is so:

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 that 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 paycheck.

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 of 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. That's why it's important to take a critical look at your expenses so you know exactly how much money you are spending.

Extra Credit: Audit your expenses by writing down everything you spend your money on for a couple of months. The trick is to be as detailed as possible; try to capture even the smallest purchases. Assign each purchase or expenditure a category such as: Housing, Automobile, Food, Phone Bill, Cable Bill, Utilities, Entertainment, etc. Post continues below.

5. Your tastes exceed your spending capability.

Understand that this is not a problem, so much as an excuse. Kind of like my son arguing that he's getting an "F" in his P.E. class because the teacher doesn't like him. When your expensive tastes starts impacting your ability to save, you're in for trouble.

Extra Credit: If your tastes exceed your budget, ratchet them down a notch or three -- and stop making lame excuses.

6. You can't say no.

Many people do understand the difference between a want and a need, but they have trouble saying no anyway. 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: Establish a household budget. When going out shopping, know exactly how much you will be spending at each establishment. When buying groceries, make a list of everything you need before you go shopping. In short, think before you buy.

8. You worry about what others think about you.

People who worry about what others think of them suffer from a predilection to conspicuous consumption, otherwise known as the desire to keep up with the Joneses. There are many reasons people do this: the urge to advertise their success in life (be it real or imagined), the desire to have what others have, and instant gratification, just to name a few. Unfortunately, people with a poor grip on their personal finances fail to understand this little piece of reality: The Joneses are broke.

More from Len Penzo dot Com and MSN Money:

• 10  key characteristics of debt-free people
• Simpler saving: the 60% solution
• 12 reasons why you should and shouldn't pay your mortgage early
• 7 nasty credit myths that won't die
• The smartest way to eliminate your credit card debt
• Calculator:Is your budget in balance?