The dismal state of financial education in our country

[diesbudt]

I agree. i think financial education should be taught in high school. I was amazed when in college how many didn't know how to keep a checkbook (back then there were not as many debit cards etc.). kids would write checks and not put it in the ledger. then get bounced check fees and be shocked.

a budget? wtf is that?

we are trying to teach our kids how to do it. we give them allowance and subtract things they want (teakwondo for my son and gymnastics for daughter) out of it. so they get the idea of a budget. it seems to be working.

I have been out in the workforce from college for the last 6 months.

I already have $3,000 saved in accounts along with paying my debt off at a rate quicker than normal, and bills and "fun" stuff and friends/girls.

So... why are other people having issues?

 

[waggy]

I have been out in the workforce from college for the last 6 months.

I already have $3,000 saved in accounts along with paying my debt off at a rate quicker than normal, and bills and "fun" stuff and friends/girls.

So... why are other people having issues?

because many kids out of college have never done it before. Mom and dad took care of the finances. So when they are free they have no clue that bills come first then fun.

while it seems like common sense (well it is) some kids just lack that.

I think the parents failed more then the kids though. They should have been trying to teach the kids what a budget is. why you should stick to it. Why to have a savings account etc.

My daughter is on a Gymnastics team. she travels all over the state and country. We have a small budget set up for that. EVERYTHING comes out of her "allowance" (we do it as a form of teaching her to budget. she is only 11).

whatever is left is her real allowance. She wanted a practice "kip bar" that was $300. she saved her allowance ($10 a week roughly) and worked around town for nearly a year to buy it. Next item she wants to save for is a Ipad (i think $600 is a litle much heh).

Parents NEED to teach kids it.

 

[diesbudt]

because many kids out of college have never done it before. Mom and dad took care of the finances. So when they are free they have no clue that bills come first then fun.

while it seems like common sense (well it is) some kids just lack that.

I think the parents failed more then the kids though. They should have been trying to teach the kids what a budget is. why you should stick to it. Why to have a savings account etc.

My daughter is on a Gymnastics team. she travels all over the state and country. We have a small budget set up for that. EVERYTHING comes out of her "allowance" (we do it as a form of teaching her to budget. she is only 11).

whatever is left is her real allowance. She wanted a practice "kip bar" that was $300. she saved her allowance ($10 a week roughly) and worked around town for nearly a year to buy it. Next item she wants to save for is a Ipad (i think $600 is a litle much heh).

Parents NEED to teach kids it.

Very wise. My parents did something similar. They also allowed me to take a "loan from them" with interest. So if I wanted something NOW. (using your $10/wk example) that costed $50. As long as I didn't already owe, they would front me the $50, but then I would owe $55 back. Meaning 5 weeks of $0 and 6th week would be only $5.

First year outta High school, I made a huge mistake (mostly my fault, some of it the bank sucked at updating money withdrawn so I thought I had more than I did) in finances and overdrew an account to -$250, and didn't have money on me to pay it. My parents basically said fix it yourself, you found your way into this mess.

Went and talked to the bank, they understood, dropped it to $100, I sold off an item or 2 and paid it off to the bank. Since then I have not made the same mistake, and keep weekly track of where I am/should be.

 

[Exterous]

This is not new. I did make a few threads about how little Americans know about basic finance/economy.

It is truly sad.

I know its not new but it seems to be getting worse

I have been out in the workforce from college for the last 6 months.

I already have $3,000 saved in accounts along with paying my debt off at a rate quicker than normal, and bills and "fun" stuff and friends/girls.

So... why are other people having issues?

Well - it somewhat depends on how much you are making but people just out of college often rush into marriage/kids/homes/cars which puts a serious dent in their excess income. Hey - we have some extra money! Let's immediately take on more expenses to take care of that problem!

Also - if you haven't already I would highly recommend starting your saving for retirement. Use compound interest options to your advantage. Not sure how old you are but I am nearing 30 and while I did contribute more than most during my mid/late 20s I do wish I had done more

Saving more now will either vastly decrease the amount you need to save later, allow you to retire earlier or allow you to retire 'better' (Or some combination of those)

 

[GTaudiophile]

Best part is that our education system sucks, yet it is the first thing politicians want to cut.

 

[diesbudt]

I know its not new but it seems to be getting worse



Well - it somewhat depends on how much you are making but people just out of college often rush into marriage/kids/homes/cars which puts a serious dent in their excess income. Hey - we have some extra money! Let's immediately take on more expenses to take care of that problem!

Also - if you haven't already I would highly recommend starting your saving for retirement. Use compound interest options to your advantage. Not sure how old you are but I am nearing 30 and while I did contribute more than most during my mid/late 20s I do wish I had done more

Saving more now will either vastly decrease the amount you need to save later, allow you to retire earlier or allow you to retire 'better' (Or some combination of those)

mhm.

Have a 401k set-up along with taking approx. 10% of each pay period sent into an savings account that after a year or 2 I will take and invest with.

Another thing is, people want new things asap

Last year of college I purchased a 2006 Mercury Sable used Car for just over 2 grand.

Sure I could go get a new car/ car payment, but since I have had 0 trouble with this car and it is still in good condition. What would be the point? And no marriage yet, living single, just dating sure helps. But overall ANytime I find I have extra money at the end of the week it gets added to my savings also or onto my loans to pay off faster.

 

[Fern]

There are only so many hours in a school day, and so many days in a school year.

People can argue whether or not PC-type classes are useful, or perhaps how useful, but the bottom line is for every one you add you must push something off the agenda.

I think we've lost the ability to properly prioritize.

Fern

 

[BlahBlahYouToo]

Financial education?
Arithmetic was taught in the first grade. Compounding interest not long after.
The rest is common sense. Don't spend more than you make. If people are too stupid to realize this, I don't know what to say.

 

[Infohawk]

The S&P has averaged 11% growth since it's inception. Even earning an 8% return you could retire with $500,000 in the bank. Match the S&P and it would close to a million and a half. It just takes time.... 45 years. Retire at 63 comfortably.

Again, that's historical data that you're treating as gospel for the future. Anything can happen.

 

[Incorruptible]

Best part is that our education system sucks, yet it is the first thing politicians want to cut.

We have been spending more money yet the results are the same, its time to cut

 

[Exterous]

Again, that's historical data that you're treating as gospel for the future. Anything can happen.

The bank you saved your money in could go under and the FDIC could go bankrupt before they pay out your claim. In life we take actions to reduce the risks of certain events happening. 65 years of history is not the works rough indicator in the world. I don't see anything in his post guaranteeing everyone that the S&P will return the exact same return only showing how much money you would have if it does.

I think we've lost the ability to properly prioritize.

Fern

:thumbsup:

 

[Exterous]

Financial education?
Arithmetic was taught in the first grade. Compounding interest not long after.
The rest is common sense. Don't spend more than you make. If people are too stupid to realize this, I don't know what to say.

Maybe at your school. My wife always tries to work in a couple of compounding interest lessons into her teaching. Even as high school seniors, for most of these kids it is the first exposure they have to the benefits and detriments of compounding interest

 

[werepossum]

I have a feeling you just proved the quoted statement before the edit? lol

He also proves that people need to take more care when writing equations. '*' is commonly used both as an exponential and as multiplication - which is intended here? Also, parentheses beat hell out of assuming we all know the correct order.

The OP makes an excellent and well-reasoned point, but I would have little confidence that I understood the equation writer's intent without some knowledge of her background.

 

[Fern]

He also proves that people need to take more care when writing equations. '*' is commonly used both as an exponential and as multiplication - which is intended here? Also, parentheses beat hell out of assuming we all know the correct order.

The OP makes an excellent and well-reasoned point, but I would have little confidence that I understood the equation writer's intent without some knowledge of her background.

I have minor in Finance in addition to my degree in Accounting. I don't remember ever hearing about this PEDMAS thingy. We always used parentheses. Parentheses are free, so IMO people should just use them.

Fern

 

[Ryan]

I have minor in Finance in addition to my degree in Accounting. I don't remember ever hearing about this PEDMAS thingy. We always used parentheses. Parentheses are free, so IMO people should just use them.

Fern

An account and finance major who doesn't know PEMDAS.... what kind of place employs you, Lehman Brothers?

http://www.mathsisfun.com/operation-order-pemdas.html

 

[Exterous]

The EBRI released their 2012 Retirement Confidence Survey today. Three things stood out in it for me.

1) 30% reported having <$1,000 in savings!

2) Only 42% of people saving for retirement have tried to figure out how much they need for retirement.

3) 34% of all workers think they need less than $250,000 in savings to retire. Taking into account the average SS benefit that means that somewhere around 34% (I am sure there are some outliers that still have a pension) of workers think they can survive on less than $25,000 a year during retirement.

http://www.ebri.org/surveys/rcs/2012/

 

[HendrixFan]

I don't see anything in his post guaranteeing everyone that the S&P will return the exact same return only showing how much money you would have if it does.

I keep waiting for a regression to the mean to fix my 401k/IRA. The S&P returns over an 80 year span are very encouraging, but the last ten years or so (since I turned 21 and started personal retirement accounts) I have barely been able to keep ahead of inflation. I can't see much hope of a roaring economy in at least another 5-10 years as we still haven't bottomed out to begin the climb back up. That means I could realistically see less than 5% annualized returns between the ages of 20-40, much less than that when inflation is factored in.

 

[Incorruptible]

There are still many idiots in this country who blame Wall Street instead of the government for the crash, that shows just how ignorant people in this country are

 

[Steeplerot]

Either that or young people know bigger financial institutions/banks are crooks. Why give them your hard earned money when they use it to screw us all?

Starve the beast. Go with a local credit union and stop being part of the problem yourself.

Protesting in front of Wall st will get nothing done. Putting the bankster thieves on the unemployment line is the only real answer. Boycott all investment firms.

Real change starts with a individual effort. That is unless you like bitching endlessly while we all get robbed blind.

 

[boomerang]

Don't want to change the subject but it's not just financial skills. I can't hire a young person that can spell, put together coherent sentences, understands the meaning of common words and understands the importance of spelling people's names correctly. The guy I've brought on board now has these weaknesses and thought that it was unnecessary to file things in alphabetical order. This despite an existing system in place that is filed alphabetically.

But he does seem very proficient at texting and watching videos on YouTube.

 

[werepossum]

Don't want to change the subject but it's not just financial skills. I can't hire a young person that can spell, put together coherent sentences, understands the meaning of common words and understands the importance of spelling people's names correctly. The guy I've brought on board now has these weaknesses and thought that it was unnecessary to file things in alphabetical order. This despite an existing system in place that is filed alphabetically.

But he does seem very proficient at texting and watching videos on YouTube.

LOL

"I can't find the Johnson file."

"It's filed under 'D'".

"'D'"?

"Of course, for 'Divorce'."

And . . . .

Dictated: "Therefore we find ourselves faced with bringing legal action against your subsidiary."
Typed: "Therefore we find ourselves faced with bringing legal action against your sub-city area."

And . . .

"I need you to count off the thousandths of an inch on the Vernier caliper and read it to me."

"Wow, how many thousandths of an inch are there? There must be a million!"

They are among us. And they vote for Hope and Change.

 

[CptObvious]

I agree that investing and saving is a foreign concept to a lot of poorer Americans, but the situation right now is really stacked against changing that. The investor confidence of the average American is not really high given all the shenanigans pulled by financial institutions, the Ponzi schemes, trading largely dominated by big institutional investors with supercomputers, overblown IPOs, the subprime mortgage crisis and bailouts, and on and on. Even if you want to go conservative and just save your money in an FDIC-insured account, the interest rates are just pathetic. Add to that high unemployment rates of new grads and impossible-to-pay student loans, and the younger generation's prevailing attitude to money is more or less just nihilism.

 

[Muse]

No problem, just win the lottery. D:

 

[Muse]

Don't want to change the subject but it's not just financial skills. I can't hire a young person that can spell, put together coherent sentences, understands the meaning of common words and understands the importance of spelling people's names correctly. The guy I've brought on board now has these weaknesses and thought that it was unnecessary to file things in alphabetical order. This despite an existing system in place that is filed alphabetically.

But he does seem very proficient at texting and watching videos on YouTube.

And you hired this guy??? :\

 

[Muse]

There are still many idiots in this country who blame Wall Street instead of the government for the crash, that shows just how ignorant people in this country are

See Inside Job

I agree that investing and saving is a foreign concept to a lot of poorer Americans, but the situation right now is really stacked against changing that. The investor confidence of the average American is not really high given all the shenanigans pulled by financial institutions, the Ponzi schemes, trading largely dominated by big institutional investors with supercomputers, overblown IPOs, the subprime mortgage crisis and bailouts, and on and on. Even if you want to go conservative and just save your money in an FDIC-insured account, the interest rates are just pathetic. Add to that high unemployment rates of new grads and impossible-to-pay student loans, and the younger generation's prevailing attitude to money is more or less just nihilism.

The stock market has been flat for over 10 years, meaning that unless you are very skilled you are very likely not going to benefit from investing in stocks, mutual funds, etc. The best way to deal with that is have a good paying job, or else just plain have a lot of money. Bad stretches in the stock markets usually last about 17 years IIRC, so we're apt to pull out of it in a few.