Can you answer these three financial questions?

[JManInPhoenix]

If you make $30,000 a year:
Don't buy a $60,000 SUV
Don't buy a $400,000 house
Don't take vacations that cost $10,000

 

[werepossum]

Yeap, they all used to do this. (or at least most of them) Reasonable people would expect your transactions to hit your account in the order you made them. Banks need to make checking profitable for themselves somehow and if they have to raise other fees to make that happen so be it. At least in these circumstances people know what fees to expect.

Agreed. Something else that hit me twice was that the transactions in the bank meant nothing - the actual transactions were done that night. Once they debited my account for too much money for a car payment, even though the receipt I received was correct. I bounced two checks and made them write letters to both parties as well as pay the fees. The second time I deposited a check using a personalized deposit slip but it was actually applied to someone else's account who had the same last name but a completely different account number. That was the start of a semester and I bounced a LOT of checks, so I made the bank write letters to all parties as well as pay the fees. Then I found another bank.

 

[Zorba]

Yet no one really talks about getting the parents involved. Its all about how the schools have to handle this despite the universally poor results from taking a couple of classes. Heaven forbid we focus on parents having to do work when that has been shown to have the best results

The problem is a lot of even successful/well educated parents are very secretive with their kids about finances. I always knew how much my parents made, what our bills were, if they had gotten a raise. My Grandpa used to also pay me interest on my piggie bank at his house.

But my wife's family never spoke of money at all and most of my friends growing up had no idea how much their parents made or how they did their finances.

As for the OP, the three questions were quite simple, but it doesn't surprise me that only 30% could get it right. I know engineers that can't figure out a 1040EZ because it has dollar signs on it, or even do a basic return on invest calculation. People seem to go out of their way to be ignorant of money, which is a huge reason I am against privatizing SS.

 

[Genx87]

Agreed. Something else that hit me twice was that the transactions in the bank meant nothing - the actual transactions were done that night. Once they debited my account for too much money for a car payment, even though the receipt I received was correct. I bounced two checks and made them write letters to both parties as well as pay the fees. The second time I deposited a check using a personalized deposit slip but it was actually applied to someone else's account who had the same last name but a completely different account number. That was the start of a semester and I bounced a LOT of checks, so I made the bank write letters to all parties as well as pay the fees. Then I found another bank.

US Bank?

 

[WHAMPOM]

The rest of the article is worth reading, widespread financial illiteracy can pose a pretty serious threat to global economic stability.

For question #1 C: less than $104, many banks charge fees for amounts under $500.00

EDIT: #1&#2 with inflation always higher then the interest rate, your money is always less.

 

[realibrad]

For question #1 C: less than $104, many banks charge fees for amounts under $500.00

This confuses me. The question did not say that the bank would charge a fee, yet people keep adding things in.

What you just did was take 1+1=? and say, oh, you must have meant 1+1*5(1.24561/5)=?

The question was simple. You don't need to add things in to answer it.

 

[Gonad the Barbarian]

Yeah, these are intended as general simplified basic examples. Reading complications into them that aren't there and getting the wrong answer is still getting the wrong answer.

 

[Tweak155]

This confuses me. The question did not say that the bank would charge a fee, yet people keep adding things in.

What you just did was take 1+1=? and say, oh, you must have meant 1+1*5(1.24561/5)=?

The question was simple. You don't need to add things in to answer it.

Bingo. These guys adding to the problems probably over complicate everything in life. This is the reason the results were so shocking - the questions really are that simple!

 

[Mr. Pedantic]

The questions are too vague to realistically answer. My savings account has a $4 a month charge if you average daily balance is less than $300. So, after a year, I'd have zero dollars before 5 years.

The other two, I am okay with.

The conventional thing to do in these questions is to assume nothing except what's explicitly stated. Therefore, if the question doesn't mention charges, you should assume no charges.

 

[smackababy]

The conventional thing to do in these questions is to assume nothing except what's explicitly stated. Therefore, if the question doesn't mention charges, you should assume no charges.

Except, the article is trying to imply that not knowing the answers to these questions is one of the reason American are so bad with money. When, as pointed out, that even if I knew the answers, my savings account could still be depleted due to common, not always known about sources.

 

[dmcowen674]

If you make $30,000 a year:
Don't buy a $60,000 SUV
Don't buy a $400,000 house
Don't take vacations that cost $10,000

Don't buy a $60,000 SUV - check
Don't buy a $400,000 house - check
Don't take vacations that cost $10,000 - check

any other brilliant solutions?

 

[Drako]

any other brilliant solutions?

Stop whining. Probably impossible for you, but give it a shot.

 

[Mr. Pedantic]

Except, the article is trying to imply that not knowing the answers to these questions is one of the reason American are so bad with money. When, as pointed out, that even if I knew the answers, my savings account could still be depleted due to common, not always known about sources.

So instead of testing people's knowledge of interest and inflation, a question ostensibly about interest and inflation should instead test arbitrary and user-dependent rules set in place by banks who don't actually operate in most of the world?

I don't know if this is news to you or not, but your banks don't actually operate here. Some people (such as me) have no fees on their everyday accounts.

 

[IndyColtsFan]

Don't buy a $60,000 SUV - check
Don't buy a $400,000 house - check
Don't take vacations that cost $10,000 - check

any other brilliant solutions?

Yeah, how about making more than $30,000?

 

[smackababy]

So instead of testing people's knowledge of interest and inflation, a question ostensibly about interest and inflation should instead test arbitrary and user-dependent rules set in place by banks who don't actually operate in most of the world?

I don't know if this is news to you or not, but your banks don't actually operate here. Some people (such as me) have no fees on their everyday accounts.

The problem is the article is attempting to conflate knowledge of simple interest with ability to effectively manage a budget, which in a lot of cases has a lot of user dependent rules.

That is like saying "if you can answer what is 2+2, you should be able to solve complicated algebra problems!"

 

[Gonad the Barbarian]

No, it's like saying "if you can't answer what is 2+2, how can you solve complicated algebra problems?"

 

[Atreus21]

Yeap, they all used to do this. (or at least most of them) Reasonable people would expect your transactions to hit your account in the order you made them. Banks need to make checking profitable for themselves somehow and if they have to raise other fees to make that happen so be it. At least in these circumstances people know what fees to expect.

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I'm still not convinced someone didn't hack eskimo's account.

 

[Jhhnn]

It appears that someone doesn't understand the difference between wealth and income.

And the bigger problem with your analysis is you seem to be assuming you have to spend every penny of your income for the next 30 years. But the person earning market returns doesn't have to spend a penny of it.

Gee, who would have thought that if you don't spend money for 30 years you will have a lot more than the person who spent all of their money? :hmm:

It appears that someone can't escape thinking in personal rather than societal terms, a common failing among fringe whacks.

http://www.salon.com/2014/04/27/wel..._is_a_game_changer_even_if_you_never_read_it/

http://gabriel-zucman.eu/files/SaezZucman2014Slides.pdf

 

[Mr. Pedantic]

The problem is the article is attempting to conflate knowledge of simple interest with ability to effectively manage a budget, which in a lot of cases has a lot of user dependent rules.

That is like saying "if you can answer what is 2+2, you should be able to solve complicated algebra problems!"

No, it's saying that "if you can't answer what is 2+2, you should never be able to solve complicated algebra problems!"

 

[JManInPhoenix]

Don't buy a $60,000 SUV - check
Don't buy a $400,000 house - check
Don't take vacations that cost $10,000 - check

any other brilliant solutions?

To dumb it down for you - "Don't live beyond your means."

 

[QuantumPion]

Savings accounts are a joke nowadays anyway, 2% wtf!

You think 2% is bad, but that would be incredibly good for a savings account. My bank's savings rate is 0.1%, which is considered pretty good since it is a credit union. You can get that rate up to 0.4% if you have more than $30,000 in the account, but who does that lol.

 

[fskimospy]

...
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I'm still not convinced someone didn't hack eskimo's account.

Really? Why is that?

 

[ZaneNBK]

Yep.


I know that my local bank used to sort all deposits and checks by person each day, then line up the checks by amount and post largest first and deposits last. That way if one bounced a check, one would bounce as many checks as possible.

Yeah, I had Bank of America do that to me back when I was first starting out in my career and living paycheck to paycheck. I did learn a few valuable lessons from that though:

1) Never cut your finances that close.
2) Banks will usually screw you as much as possible as long as it's not blatantly illegal, especially the big ones.
3) Never willingly do business with Bank of America.

Of course BoA bought my mortgage after I got it through a local credit union, but not much I can do about that unless I want to refi or sell the house, and even then they could buy the new loan as well.

 

[Cozarkian]

You think 2% is bad, but that would be incredibly good for a savings account. My bank's savings rate is 0.1%, which is considered pretty good since it is a credit union. You can get that rate up to 0.4% if you have more than $30,000 in the account, but who does that lol.

If you don't mind having money in banks that don't have physical branches, try bankrate.com. You can find savings accounts offering .90% with no maintenance fees or minimum balances. Check around for special deals at local credit unions, as well. One in my area offers 3% on the first $500 dollars in an account and 0.1% on the remaining balance. Again, with no minimum balances or maintenance fees.

 

[shira]

70% of Americans don't know the answers to these questions because they don't have any money to save or invest.