You are right that many, many people don't understand these basic principles of personal finance management. It is not commonly taught in schools, and ignorance of this tends to run in families, along with irrational fears about investing (due to the same ignorance).
BUT
Economically speaking, we need it to be that way. If the vast majority of Americans lived frugally, saving some money for emergencies and investing most of the rest of their money in diversified stocks and bonds, spending only what they need to cover good medical care, healthy food and exercise opportunities, a sufficient but small house/apartment and transportation, and minimal luxuries....we would experience severe deflation and unemployment.
When people don't buy stuff, businesses fold, jobs are lost. The major retailers have to cut prices, hence deflation, but they also scale back production to meet the lower demand, hence fewer jobs. The money that should be, in theory, highly mobile by virtue of being invested in stocks and bonds winds up stagnating too. Corporations hoard it up because they don't see profitable opportunities for it, bond rates go down because business loans plummet in the dry market. It gets quite bad.
We see this happening in China right now, in fact. Exports are mostly what is keeping their economy afloat, and many countries are hitting them with tariffs in order to protect production within their own borders.
Its a real catch-22. In order for the economy to thrive, we need most people to spend frivolously. Rejecting this trend is good for the individuals who do it, but only so long as they remain in the minority.