[HN Gopher] Money lessons without money: The financial literacy ...
___________________________________________________________________
Money lessons without money: The financial literacy fallacy
Author : herbertl
Score : 197 points
Date : 2025-02-18 17:21 UTC (4 days ago)
(HTM) web link (anandsanwal.me)
(TXT) w3m dump (anandsanwal.me)
| Quinzel wrote:
| Great article. I think it's very true.
|
| I felt I was failed by education/parents with regard to financial
| literacy, because the first time I ever had real money in my life
| was when I went to university the first time and I had no idea
| how to manage it, and I ended up homeless for some time.
|
| Now I'm a parent myself, I decided I'd teach my kids about money
| by actually giving them money. $100 each per fortnight. I made
| both kids set up savings accounts that earned interest, and they
| had to save $50 a fortnight. The other $50 I said they could
| spend on whatever they liked, but that I would no longer pay for
| anything related to their gaming (ie, Xbox subscriptions etc), I
| don't buy them toys, or nice snacks, or fancy branded clothes -
| that's all stuff they now need to save for and buy themselves
| with the money they are given. One kid has ADHD and the other kid
| is close to neurotypical. The neurotypical kid certainly learned
| how to manage money quicker. His savings account remained
| perfect, he accumulated interest as well, and can always afford
| his subscriptions etc. he barely ever even spends the $50 that
| he's allowed to do anything with, but when he wants to use money
| when going out with friends etc, he just always has money, and he
| even keeps some cash on hand as well.
|
| The other kid on the other hand has taken a longer time to
| understand but, there's absolutely no way an ADHD kid would learn
| without real money to manage in my opinion and I think they
| benefit from having the freedom to make mistakes with money. He
| would spent his $50 within about 10seconds of receiving it,
| generally on stupid shit from Amazon. Then he never had money for
| his gaming subscriptions which would result in massive meltdowns
| when he couldn't play his games, and then he never had money to
| do stuff with friends when he wanted to. He was always the "poor
| kid". Then, even though he wasn't supposed to, he withdrew cash
| from his savings to pay for subscriptions, losing interest etc,
| and then also having no savings. It took about a year, but he's
| finally learned to stop buying stupid shit on Amazon. He still
| can't seem to save the way his brother can, but he saves for a
| couple of months at a time, and then buys the next computer part
| he wants, and he always sets aside the money for his game
| subscriptions now as well. He also does sometimes put extra
| little bits of money in his savings when he's particularly
| motivated for a more expensive piece of computer, but he still
| often withdraws for stupid small shit. He also compares his
| spending behaviour to his brothers and he realises that his
| brother is "rich" because he doesn't spend money.
|
| It's an expensive lesson for me to teach them, but, I genuinely
| think that it has helped them both learn real life lessons with
| regard to money. I think the unfortunate thing is that the people
| who really need to learn money, are the ones that don't have it.
| I'm very lucky that I'm in a position to be able to afford to let
| me kids experiment with $100 each a fortnight. There's people out
| there who could probably afford more than that, but I think that
| in the real world, a large majority of people cannot afford to
| give their kids that learning opportunity. However, for me,
| having once been homeless, and then many years later having done
| an MBA which included finance, I realised the best way to help my
| own kids learn to manage money was to give them some money to
| manage.
| avdlinde wrote:
| Would you mind sharing the age of your kids when you started
| this approach?
| Quinzel wrote:
| Sure. When we started, the younger son was 8 years old and
| the older son was 10 years old.
|
| At first I did it with cash and they didn't have bank
| accounts, but I found the problem was the younger one would
| "misplace" his savings money all the time. And I also found
| that the ADHD was sly and would "find" the younger brothers
| misplaced money and spend it, but in such a way that I
| couldn't prove it. So I just went and opened bank accounts
| for them. Who has cash these days anyway! It's been much
| better since.
| hiAndrewQuinn wrote:
| ~$5000 per year, which you would have likely spent anyway just
| giving them things, in order to hammer in solid financial
| literacy skills seems like a really good return on investment.
| Especially for the ADHD one - even if he can't or won't save
| like his brother I think you are immunizing him against the
| worst kind of financial ruin in the future.
| Quinzel wrote:
| Yes - I don't buy them extra things through out the year. I
| also only top up their bus cards for public transport once
| every 3 or 4 months (sometimes they use their bus cards to
| pay for their friends) and if they run out of bus money, then
| they have to either walk, or top it up with their own money.
|
| The ADHD kid walks.
| ugurs wrote:
| It is beneficial for your kids to have the opportunity to make
| mistakes with the small amount of money they receive. These
| lessons learned will save them from future troubles. 50 bucks
| may not be much, but it's enough to keep it real.
| OldOneEye wrote:
| This is fantastic and inspiring, thanks for sharing it! I'll
| definitely share this with my parent friends. There's no better
| way to learn some stuff aside from it happening to you, all
| driven by incentives.
| whatever1 wrote:
| Do you boost the interest of their savings account to make more
| attractive?
| Quinzel wrote:
| No, because their savings accounts actually have fairly
| decent interest rates for kids accounts. However, I do give
| them extra money on birthdays and Christmas. Also, when they
| do really good things, (ie, achieve something good at school)
| they always get a cash bonus.
|
| Interestingly, even though the the non-ADHD one does better
| at saving, he doesn't understand the concept of interest yet.
| However, the ADHD one clicked on very quickly to how interest
| works, and his bank has a policy that if you withdraw from
| your savings more than once in a month, you lose the interest
| for that month. So now the older one has started to plan
| withdrawals around that idea. It's not the exact lesson I
| would like him to learn, I'd prefer that he just didn't
| withdraw. But I like that he's coming up with his own
| strategy to manage his money (and impulse control issues).
| graemep wrote:
| I do much the same: slightly less but with no rule about
| saving. Both have learned to handle money reasonably well.
|
| Its fits in with my general approach to parenting and education
| too - generally encouraging autonomy and making their own
| choices, "home educated" up to 16 (GCSEs - UK high school
| exams), managing their time (just as valuable as money).
|
| "I think the unfortunate thing is that the people who really
| need to learn money, are the ones that don't have it"
|
| and their parents have the same problem so cannot teach it
| either.
|
| That said being rich can make you stupid about money too, as it
| can lead people to think they have an endless flow, especially
| if they have indulgent parents.
| Quinzel wrote:
| > That said being rich can make you stupid about money too,
| as it can lead people to think they have an endless flow,
| especially if they have indulgent parents.
|
| I agree. It's difficult to strike the balance right. I
| definitely don't think there is a need for me to give my kids
| more money than they already get. Particularly because
| they're sort of lazy when it comes to household chores,
| especially the neurotypical kid - he's diabolically lazy. The
| money I give is independent of "chores". It's literally a
| lesson in an of itself. If I want them to do a job for me,
| ie, gardening etc, I'll offer them a similar amount of money
| to what I'd pay someone else to do it. The $100 a fortnight
| is basically like my own version of a universal basic income
| for kids. It hasn't destroyed their motivation to earn money
| in other ways, in fact, I think it's motivated them to want
| to get good paying jobs etc, so they can have more money.
|
| They're still relatively young though, so I will be
| interesting to see how they do once they reach adulthood and
| have real adult responsibilities and bills to pay etc.
| relaxing wrote:
| This is a sobering account. Thank you for sharing.
|
| I'm curious, is the ADHD child receiving treatment? On
| medication?
|
| I wish more people understood how this goes, when their answer
| to every social ill is "people need to do better" and there's
| no allowance for those who don't possess the same capacity.
| Quinzel wrote:
| Unfortunately he does not receive the typical ADHD treatment.
| As he also has a tic disorder (Tourette's). Standard ADHD
| medications are contraindicated in people with tic disorders
| because they exacerbate tics.
|
| This is why some people who have ADHD actually get worse on
| medication, as they may also have mild cases of Tourette's
| that haven't been identified. Tourette's and ADHD commonly
| occur together along with OCD. I call it the ADHD trifecta.
| My son has behaviours consistent with all three (the most
| overlapping symptom being impulse control (or also known as
| compulsive behaviours). It's a difficult combination of
| behaviours to manage, and with Tourette's in particular, it's
| not just verbal tics or motor tics, it's also severe
| disinhibition (think having no filter), and uncontrollable
| rage (also because of the lack of filter). So the ADHD
| medication makes all those behaviours worse.
|
| He instead has off label medications. Clonidine, and a SNRI
| (I hate that he is on an SNRI, but he's been on it for 4
| years and before he was on it, life was really extremely
| distressing and hard most of the time so I often remind
| myself of those times when I feel guilty that he's been on an
| SNRI for as long as he has).
|
| So a lot of the management of his ADHD has to be through
| behavioural approaches since we can't use medication to help.
| Hence doing things like this money thing, and him suffering
| the consequences of his poor money choices.
| relaxing wrote:
| He's lucky to have you looking out for him.
| DrNosferatu wrote:
| Careful, as that can be a slippery slope: that exact expression,
| "financial literacy", has been used in Europe as a way to push
| ideology - all economy is political.
|
| Will they teach the fallacy that economic agents make rational
| choices?
|
| Will they teach the fallacy that running a country is the same as
| running a household or a grocery store (in terms of supposed
| thrift)?
|
| Will they teach that market growth guaranteedly means improved
| living standards for all?
|
| Will they overwhelm students with technical jargon to make
| contestable theories seem irrefutable?
|
| Will they present market dynamics as "natural laws" rather than
| human constructions?
|
| Will they teach that widespread economic practices must be
| correct simply because they're common?
|
| Will they equate market freedom with political freedom as if
| they're the same thing?
|
| Finally, will they teach Keynesian Economics or Neoliberal
| Economics?
|
| Furthermore, will they teach austerity is mathematically self-
| defeating and in 95% of cases, will fail?
| NlightNFotis wrote:
| Jesus Christ mate, they're talking about personal finance, not
| political economy.
| DrNosferatu wrote:
| Basic personal finance, like interest rates, simple
| statistics (namely about casinos), sure.
|
| BUT, during the European austerity footgun days, they put an
| animated talking bear on tv teaching this "financial
| literacy" and illustrating the "run your country as a thrifty
| household" tale as meritorious and not a fallacy, among other
| stuff like that.
| mcny wrote:
| I saw this YouTube video recently that said there are four
| main categories to spending money:
|
| A. Your own money A1. On yourself A2. On others (not
| necessarily the same others)
|
| B. Other people's money B1. On you B2. On others (not
| necessarily the same others)
|
| It is kind of a wordy way to describe the principal agent
| problem.
|
| Problem is that we can't really wrap our heads around large
| numbers. I get overwhelmed just thinking about how the
| relatively small town I live in manages its finances. I
| don't think I have the mental model to fit how the US
| economy functions much less how it should function.
| alabastervlog wrote:
| Talk to some political scientists. You're never getting a
| polity that understands the issues and votes largely based
| on policy. Won't happen, not even remotely close. They'll
| always be voting on forehead-slappingly dumb shit like
| "running government like a business is a good idea", or
| more likely on a dozen extremely stupid misconceptions at
| once, plus just "do I perceive that bad things are
| happening, generally, regardless of whether they have
| anything to do with the office I'm voting for".
| vasco wrote:
| I've seen that point made before. In Portugal for example the
| left wing parties are openly against financial literacy in
| schools exactly because they say it is political. I get the
| point, if you're a socialist or a communist, having everyone
| participating in the stock market puts your goal further
| away. They also have an argument that financial literacy is
| correlated with losing money on the stock market. In general
| I don't think it's that separate of an issue, even though I'm
| not as left.
| DrNosferatu wrote:
| It seems you have studied that exact tv talking bear's
| lesson very well :D
| vasco wrote:
| I didn't get the reference unfortunately.
| DrNosferatu wrote:
| Unfortunately.
|
| May I recommend a book by an Economics Nobel Prize
| winner?
|
| Here:
|
| "Arguing with Zombies: Economics, Politics, and the Fight
| for a Better Future" by Paul Krugman (2020)
|
| And maybe even better:
|
| "Austerity: The History of a Dangerous Idea" by Mark
| Blyth - 2013
| vasco wrote:
| I'm not sure I get your point still, I was merely
| describing the arguments of one side of the aisle of my
| country, did it give you the impression I'm somehow pro
| austerity? I'm not sure how you made that jump. And you
| still didn't explain the bear reference. Descriptive
| comments aren't endorsing something.
|
| Recommending two books to someone that asks you to
| explain a short expression is a bit rich though. Good
| luck with that.
| DrNosferatu wrote:
| Simple: pro-austerity people made the bear show and used
| similar blanket generalizations to yours.
|
| The books debunked them.
| vasco wrote:
| I'm not pro austerity! I didn't even make any
| generalizations, my whole comment is about the position
| of a few political parties in my country. Are you unable
| to distinguish relaying the position of a third party
| from relaying your own beliefs?
|
| Is the bear show the kitchen TV series? I'm still trying
| to understand what the heck you are referencing but I'm
| starting to realize you are very difficult to talk to so
| this is me giving up. I'm sorry I don't have more
| patience you seem like you know some stuff but are too
| preoccupied with sounding smart rather than speaking
| plainly.
| DrNosferatu wrote:
| Ad hominem all you want - but I don't really know what to
| say anymore.
|
| Did you read our complete chain of comments / debate?
| watwut wrote:
| > They also have an argument that financial literacy is
| correlated with losing money on the stock market.
|
| I think that the issue here is the definition of financial
| literacy that classifies people who effectively engage in
| gambling "financially literate".
| cocoto wrote:
| It is political of course, because the left would like to
| provide to the financially illiterates, such that they don't
| have to manage their own money. If everyone is
| saving/investing, the socialist system is mostly redundant
| (except for the extremely poor, non-working, ill or disabled
| people).
| DrNosferatu wrote:
| Sure: poor people are usually guilty of being poor.
|
| Nice thinking ;)
| hiAndrewQuinn wrote:
| >Will they teach the fallacy that economic agents make rational
| choices?
|
| The alternative ideology (ies?) you sound like you're proposing
| assumes that economic agents _do not_ make rational choices, or
| at least they don 't on average. But if that were true we would
| all be better off making as few choices as possible, because
| most possible exchanges are not beneficial to both parties. I
| just don't see evidence for that at all.
| DrNosferatu wrote:
| There are several books with the word "Zombie" on the title
| that can specifically teach you exactly about that!
|
| Some of them actually authored by Economics Nobel Prize
| winners ;)
|
| Here:
|
| "Arguing with Zombies: Economics, Politics, and the Fight for
| a Better Future" by Paul Krugman (2020)
|
| "Zombie Economics: How Dead Ideas Still Walk Among Us" by
| John Quiggin (2010)
|
| Bonus:
|
| "Predictably Irrational" by Dan Ariely - 2008
|
| "The Myth of the Rational Market" by Justin Fox - 2009
|
| "The Black Swan" by Nassim Nicholas Taleb - 2007
| hiAndrewQuinn wrote:
| This is a motte and bailey.
|
| Your original claim is "[individual] economic agents do not
| act rationally" (either at all, or on average, take your
| pick, both are pretty out there).
|
| When challenged, you retreat to "No no I don't mean like
| _you and me_ economic agents. Obviously when I buy eggs
| from the supermarket it 's probably because I wanted eggs
| more than the $x I paid for them, and not because I picked
| some random thing to buy for no reason. I'm _really_
| talking about " + insert some more complicated idea X from
| one of the books you mentioned.
|
| There are many such X you could choose from. That's why
| folks like you like to recommend entire books instead of
| giving a plain argument - so long as even one askance X
| seems to resonate with your audience, you can latch onto it
| and use it to emotionally persuade them. That is if anyone
| even bothers to read the book in the first place.
| DrNosferatu wrote:
| 1. What "no no, I don't mean anything like [that]"? - I
| never wrote any such thing.
|
| Economic irrationality isn't binary but exists on a
| spectrum. Humans *simultaneously* make mundane rational
| choices (like buying eggs) while being systematically
| influenced by cognitive biases, social pressures, and
| emotional factors that traditional economic models don't
| capture.
|
| I recommend books not to obfuscate but because complex
| economic behavior *can't be reduced to simplistic
| arguments*. The evidence for bounded rationality,
| hyperbolic discounting, and other psychological patterns
| affecting economic decisions is robust and empirically
| demonstrated across numerous studies - those books
| explain this.
|
| Your accusation uses a straw man fallacy and assumes
| rationality is simple and self-evident, when - guess what
| - real economic behavior is nuanced. This isn't
| retreating to a "safer" position--it's acknowledging that
| economic reality is more complex than idealized models
| suggest.
|
| ...idealized, provenly wrong models - whose severe (and
| many times outright dangerous) limitations omission
| allows those who peddle them to keep earning their
| salary.
| DrNosferatu wrote:
| 2. In other words, your answer misses the mark. When
| economists talk about economic agents not acting
| rationally, they're not claiming people make completely
| random decisions devoid of reason. They're pointing out
| that real human behavior consistently deviates from the
| idealized "rational actor" model in predictable ways.
|
| People exhibit cognitive biases, use mental shortcuts,
| are influenced by emotions, have inconsistent time
| preferences, and often lack complete information. These
| aren't rare exceptions - they're fundamental patterns
| documented in decades of behavioral economics research.
| Hence the books.
|
| This isn't a retreat to a more complicated position -
| it's simply acknowledging that the simplified models have
| practical limitations, AND, benefit some people far more
| than others. The evidence for these failures is robust
| enough that even mainstream economics has incorporated
| behavioral insights.
|
| Rather than hiding behind book recommendations, I'm happy
| to discuss specific examples of these systematic
| deviations from rationality if you're genuinely
| interested in the substance of the argument.
| hiAndrewQuinn wrote:
| You've qualified your original claim enough in these
| follow up comments that I'm happy leaving it here, thank
| you for your time.
| trod1234 wrote:
| > Finally, will they teach Keynesian Economics, or Neoliberal
| Economics?
|
| What about Classical or Austrian?
| wjholden wrote:
| You can also frame this as a strong-link problem. For high-
| aptitude students, one might argue that it's a waste to have them
| drill basic financial literacy when instead they need to be
| learning more abstract mathematics to follow pioneers like
| Newton, Turing, and Pearson in creating entire new disciplines.
|
| Now, I want to constrain my thought to just the high-aptitude
| students with possible futures in science and engineering. I can
| understand educators trying to make math useful for those who
| won't need algebra to do calculus, calculus to do physics, and
| physics to do engineering.
| snailmailstare wrote:
| I don't really get that point. We have decided against removing
| the prodigies from the normal environment so its not at all
| uncommon to see someone who was expected to be the most
| promising for society held back by a basic social or economic
| trap they should have avoided if they valued putting the
| slightest thought into our mundane things.
| freddie_mercury wrote:
| Financial literacy has tons of fallacies but this article really
| only covers one of them.
|
| The research I've read on the subject, experts nowadays are
| tending towards preferring "just in time" teaching. If you
| learned about mortgages and 401ks in 12th grade, that's not much
| help if you don't get a 401k until you're 22 or a mortgage until
| you are 25.
|
| And that shows another issue: what does anyone even mean by
| "financial literacy". Does it include lessons about individual
| stock picking? About claiming Social Security early? About
| optimising taxes? About checking for better insurance every few
| years? About college savings plans for children?
|
| How much ground do we need to cover?
| silvestrov wrote:
| I think the biggest fallacies is 100% seperation of "there is
| school, then there is work".
|
| It's stupid to think that after school no more teaching is
| needed. I hate that after leaving university it is difficult to
| find out what is taught current students, what are the new
| theories and tools that have been introduced in the last 10
| years.
|
| It would be much better to start working alongside being in
| school, so you can learn about taxes and compound interest
| while earning money.
|
| People also have much better ability to learn math when they
| can use it for solving problems outside of the classroom:
| https://www.reddit.com/r/TheWire/comments/1it269l
| graemep wrote:
| > I think the biggest fallacies is 100% seperation of "there
| is school, then there is work".
|
| A agree very strongly with this. Not so sure about your
| solution if pushed too young
|
| School level education should focus on mental development and
| learning how to learn. Given this, applying this to learning
| practical skills is a lot easier.
|
| I think that link is interesting because a lot of people are
| taught things, maths in particular, in ways that leave them
| unable to apply it. People say they never used the maths they
| were taught in school, but that is because they do not have
| the grasp of it required to apply it to real life problems.
| Of course, going back to my earlier point things taught in
| school do not have to be directly useful (funnily enough no-
| one suggests kids should not be taught art or literature
| because they are not useful) so there does seem to be a
| particular issue with maths.
|
| > hate that after leaving university it is difficult to find
| out what is taught current students, what are the new
| theories and tools that have been introduced in the last 10
| years.
|
| Or to learn new subjects and fields. IN the UK it has become
| a lot harder than it used to be - distance learning is a lot
| more expensive and adult education has been cut back.
| kcoddington wrote:
| I wonder if it's because art and literature are better at
| teaching one how to think in and derive abstractions from
| more complex ideas. Math should most definitely do this as
| well, but I don't think is taught that way. Most of the
| time is spent in math classes are on procedural practice
| and connecting that work to think about it in an abstract
| way happens infrequently.
| graemep wrote:
| I think you are right. One reason is that people are
| first taught maths in primary schools where most teachers
| are generalists who like art and literature, but dislike
| maths. People start by regarding maths as a chore forced
| on them, so never enjoy it, and the rest follows from
| that.
| anon7000 wrote:
| Sure, you don't need to know the exact details. But you should
| absolutely leave high school knowing that you need to think
| about retirement savings _sooner_ rather than later, or you
| won't have shit. I remember seeing a chart in high school
| related to compound interest and how much more someone who
| started saving earlier had by retirement. That chart was easy
| to grasp.
|
| And for mortgages, you should definitely learn that renting
| savings you money compared to owning in a lot of situations
| (even after accounting for selling the house), especially if
| you don't know you'll live there more than a few years.
|
| Like... where the fuck else is someone going to learn this if
| they don't have parent smart enough to teach them that. It's
| not like college covers this.
|
| Exposure early doesn't mean you're an expert at managing
| finances when you hit adulthood. That won't happen. But it can
| do enough to make you _broadly aware_ of what you should be
| thinking about -- which then means you can look it up more
| later.
|
| But if you go by comparing yourself to others, you might think
| it's normal and good to rack up credit card debt to have nicer
| clothes or something. You should be aware at how _costly_
| credit card debt is, and how easy it is to avoid that.
|
| Like we're not talking about small optimizations. There are a
| lot of things that can be extremely expensive and stressful for
| you if you don't even know to think about those things.
| matwood wrote:
| Also, for topics like compounding, it can be used immediately
| in life. Money is a nice example, but small increments
| everyday leading to big changes is a foundational life
| lesson.
| thanatos519 wrote:
| My 11 year old knows about mortgages. The longer you understand
| something, the better use you can make of it. Just in time
| delivery of mortgage math learning is borderline predatory.
| magicalhippo wrote:
| When I was about 4 there was a financial downturn here. Lots
| lots their jobs and mortgage rates were quite high.
|
| I still quite vividly recall watching the news with my
| parents, and there was a family crying in a hallway as some
| officials locked up the door to their apartment. Not
| understanding what was going on, I asked my parents why they
| were crying, and they said because they couldn't pay their
| mortgage and so they had lost their home.
|
| Lets just say I didn't need any more lessons regarding
| mortgage payments.
| NoLinkToMe wrote:
| Idk, I can't help but conclude lots of the things I learned in
| school were actually quite helpful. As a child for example I
| learned about insurance theory and that stuck with me. I didn't
| actually insure anything myself for at least another decade,
| but the theory stuck. Which is that an insurance company just
| smooths over the costs of a rare event that happens to one
| individual, by spreading it out over many individuals, none of
| whom know whether they will or won't be confronted with said
| event. And that the average cost of insurance (in a competitive
| market) is therefore tracking closely the average cost of the
| event, plus some profit and admin fees of the insurance
| company. Which means for most people it's not worth insuring
| events that you can easily cover yourself (e.g. losing your
| phone).
|
| I learned these things at age 15 or so. Sure I could've learned
| them later, but there's something about knowledge is that it
| builds on earlier building blocks and compounds. When certain
| things 'click' in your head, they open the door to new
| knowledge and areas of learning. There is power in learning
| early, because knowledge is cumulative and compounding to some
| extent. It's the reason why a 40yo is a more valuable employee
| than a 20yo, on average.
|
| That's not to say that every topic must come as early as
| possible, or that education is perfect. There's certainly
| better and worse ways and timing to teach personal finance for
| example. But I am quite happy I was introduced to some concepts
| sooner than later. Even just to prime myself such that, when I
| am reintroduced to the topic later, I feel somewhat familiar
| and confident to dive into it again.
|
| Certain topics don't really connect with everyone. Virtually
| everything I learned as a child in Chemistry was useless
| because it didn't resonate with me. While my gf went on to
| study biochemistry, and is clueless about finance. But neither
| of us know whether chemistry or finance would resonate with us,
| before being taught the subjects. Schooling for children also
| has a discovery function in that sense. It's not just about
| teaching what sticks, it's about discovering what sticks, and
| what is interesting. That's why a wide breadth of subjects can
| be a good idea, even if a significant portion doesn't end up
| being meaningful to someone at that age.
| wodenokoto wrote:
| If you are an American I think learning about what a 401k is,
| why it is good, how to calculate why it is good is really
| important to learn ahead of time. Then when it comes time to
| get a 401k, you can check and understand why it is still
| valuable and you can understand whatever new thing might be
| available. But you know what's going on. That's the "financial
| thinking".
| nly wrote:
| How about basics like : who will have better a retirement
| outcome at 60?
|
| 1) Bob who invests $1000/mo from age 20 to age 30, then nothing
| afterwards
|
| 2) Alice who starts investing $1000/mo from age 30 all the way
| to age 60.
|
| 3) Johnny whose mum invested $200/mo from his birth to age 18,
| then nothing afterwards.
| pembrook wrote:
| Any argument against teaching financial literacy can also be
| applied to pretty much any topic taught in schools.
|
| You could also write the same clever-sounding contrarian think-
| piece about why teaching Home Economics doesn't make sense until
| you have your own home to run; teaching CPR doesn't make sense
| unless there's someone choking right in front of you; etc.
|
| Using the logic underpinning this article, the only things taught
| in school should be how to play video games, how to find the best
| parties and how to get laid; since those are the only things
| actually relevant to students at that stage of their life.
|
| Obviously studies will show that most students don't become
| financial wizards after taking financial literacy classes,
| because that's how it is with _all_ education. How many kids who
| take English class become good writers?
|
| Doesn't mean we shouldn't offer the knowledge for those willing
| to take it.
| nosianu wrote:
| You _grossly_ misrepresent the points of the article!
|
| I usually hate such one-liner responses, but in this case,
| really, it is the article that needs to be read, not my reply.
| I could not say nothing and let this stand though, the contrast
| between the comment and what is actually in the article is too
| large.
| pembrook wrote:
| I do not.
|
| The article claims that teaching financial literacy is a
| "fallacy" ie. doesn't work because kids have no way to
| contextualize something they don't have a need for. So we
| should give them the need for the knowledge by instead
| helping all kids start a small business.
|
| Again, the equivalent would be kicking children out of their
| parents homes and helping them find apartments so they can
| get experience in Home Economics.
|
| Maybe we just start by teaching kids financial literacy the
| way our educational bureaucracy knows how to instead of
| fighting it because it's not perfect.
| jimkleiber wrote:
| I think what the author was saying is that we teach the
| intellectual theory of financial literacy but not the
| emotional practice of it. To use your home economics
| example, i assume the author would equate it to reading a
| book on how to cook an egg instead of firing up the hot
| stove and dancing with the time pressure, heat pressure,
| and attentional pressure that can come with cooking a meal.
| true_religion wrote:
| Which reminds me of how some places teach science.
|
| We accept that students can't really learn chemistry
| without practice in the lab but practicals for physics
| aren't done so students graduate without being able to
| contextualize things.
| marcosdumay wrote:
| The article claims that teaching "money math" on a
| whiteboard that lacks any relation to real money won't make
| students learn financial literacy and the time wasted there
| should be replaced by something else.
|
| There is also a serious implication that "hey, students
| didn't have enough time to learn math, maybe we could add
| the time to it". But it's an almost irrelevant side point,
| and I got from it that the author would be perfectly fine
| with teaching real financial literacy instead too.
|
| So, yes, you seem to have misunderstood it.
| nosianu wrote:
| You present a tiny fraction of the article and argue
| against it.
|
| Most comments arguing against omit major points, they make
| zero mention of it: For example, the author points to the
| abysmal skills in very basic reading and math of a large
| part of pupils, and argues - rightly so I would say - that
| adding more and more on top when the very basics are
| missing!
|
| I stand by my comment. A lot of people here argue on reflex
| or by picking some tiny piece of the whole. This is one of
| the more a terrible discussions on this site, for some
| reason I don't see.
|
| IMO the author makes some really good points - especially
| when you take his _whole_ argument, and not individual
| pieces. He also does not just criticize, he also has
| suggestions for what to do that are worth looking at.
|
| The discussion reminds of the many voices saying "they need
| more training" after some police officer killed an unarmed
| suspect that was not threatening them. As if that would
| help, when in that case it is an attitude and lack of
| accountability problem, and in the case of this discussion
| it is incentives and human psychology and lack of the
| basics that overwhelm anything you could teach on the
| subject itself!
|
| The author rightfully argues against this "needs more
| training" panacea for all human problems, ignoring much
| larger forces and how humans and their brains work.
|
| He also does not at all argue that there should be no
| financial training! He argues that it has to take into
| account those other problems, and he makes suggestions for
| how it could look like.
|
| On the other hand, I saw not a single one of those quick
| article-condemnation comments take any of the many points
| made in the article into account. All picking either just
| the general idea in one sentence alone, or picking one or a
| few sentences to argue against, disregarding all other
| points, even though they all belong together.
| eadmund wrote:
| The thing I think you're missing is that financial literacy is
| not like most subjects taught in schools. Schools teach math so
| that students can do sums; they teach reading so that students
| can read. But financial literacy, sex education and civics are
| not about _knowledge_ ; they are about *character: they are
| less about what students can do and much more about what they
| ought to do.
|
| The methods used to inculcate character are, I think, different
| from the ones used to build knowledge.
| milesrout wrote:
| Is that the best way of thinking about it? I think the goal
| of all primary and secondaey education is to impart
| knowledge, build skills, and build character. Take sex ed.
| Building "practical skills", namely applying a prophylactic
| device to a banana. But it is also about teaching you that
| there are risks to certain behaviours that need to be
| considered. And being forced to discuss it sensibly and
| without giggling every 30s builds character.
|
| Or take maths. Maybe it is reductive but I think the
| difficulty of it helps build character. Most kids need to do
| a lot of exercises and memorisation, and the feeling of
| accomplishment of getting it and doing well? That is
| character building. Obviously immensely useful too.
|
| Civics (we had "social studies" and I don't recall ever
| discussing our political system, but at least in theory)
| involves:
|
| - teaching facts about the system (how many representatives
| there are, how often elections are held, who is responsible
| for what, what do courts do, what do juries do, what do MPs
| do, what do the police do, how are they structurally
| different from civil servants or the media or universities
| etc)
|
| - teaching skills (how to vote, how to think about
| political/societal structures, etc)
|
| - teaching character (instilling civic pride, understanding
| the long and rich history that led us here today, etc)
| pnut wrote:
| I thought the purpose of primary and secondary education
| was to progressively build a fungible work unit.
| pembrook wrote:
| Financial literacy is not some magical thing that lies
| outside the realm of topics like math and history. It _is_
| math and history.
|
| Building character might be needed to make good financial
| decisions, but the knowledge of the mechanics of how markets,
| debt, investment, compounding, pricing, fractional-reserve
| banking, etc. works are just concepts like any other.
| Teaching them is good.
|
| Sure, we won't magically make people less prone to emotional
| decision making. Teaching about gravity doesn't make you less
| prone to it either, but understanding how it works is good.
|
| How this "financial literacy can't be taught" thing became a
| meme I'll never understand. Like most things on the internet,
| it seems to be a hipster contrarian reaction to the "why
| isn't this taught in schools" comments you'd see all over the
| web in the 2000s.
|
| How about we stop trying to get attention for having
| interesting contrarian "takes" and just try doing the common
| sense thing and work on improving it from there.
| kcoddington wrote:
| I think the point isn't that teaching financial literacy is
| pointless, just that its impact is severely reduced due to
| external factors. And wringing our hands over the details
| of the curriculum is bike shedding, as alluded to in the
| article. John Doe can ace his financial literacy course and
| still go on to max out multiple credit cards after high
| school because of pressures that couldn't be understood
| from declarative knowledge alone.
| DennisP wrote:
| I'd say character is necessary but not sufficient. You _also_
| need knowledge and motivation.
|
| Knowledge keeps you from investing in ways that mostly lose
| money. Plenty of young people try to do the right thing, and
| screw it up.
|
| Understanding compound interest can improve motivation.
| Exponential functions aren't really intuitive to most people.
| They tend to make linear projections, which causes people to
| underestimate the rewards from investments and the damage
| from debt.
|
| (The article of course isn't saying we shouldn't teach kids
| this knowledge; it's proposing better ways to teach it.)
| alabastervlog wrote:
| From talking to people who, leaving high school, didn't know
| "obvious" things about finance, had a bad time, and course-
| corrected as soon as they figured it out: I'd say it's a lot
| more about knowledge than you're supposing.
|
| You'd be amazed the things people with parents different from
| yours didn't pick up.
| wat10000 wrote:
| I don't think it needs to be about what they ought to do. You
| can tell someone, if you abuse credit cards to buy a bunch of
| stuff you can't afford, you'll end up broke. They can make
| the "I don't want to be broke so I won't do that" connection
| on their own. Lay out the facts and consequences and you're
| all set.
|
| Same with sex. You don't need to tell them not to get
| pregnant, or get someone pregnant, in high school. You teach
| them how to avoid it and what happens if they do it.
| rsanek wrote:
| i think your examples are actually fantastic. a home ec class
| where kids actually cook something is much better than just
| reading a bunch of recipes. a CPR class where you practice on a
| dummy is better than just watching a video on it.
|
| fwiw i had the same experience with money that the article
| talks about. my parents tried to impart alot of wisdom on me
| but it hits different when you have actual money in the market
| and see it go down.
| pyrophane wrote:
| In home economics though, you are cooking real food, right?
| y-curious wrote:
| Yes! My wife grew up in the SF Bay area in one of the
| wealthiest suburbs. They had water polo, cross country trips
| etc. They did not, however, have home economics! It makes me
| so sad, as I see her peers (and for a while, her) be
| relatively clueless on cooking at home.
| Yeul wrote:
| The number of restaurants and coffee shops has exploded
| compared to when I was a teenager.
|
| It starts to add up if you go to Starbucks frequently.
| skybrian wrote:
| I vaguely remember home economics. We cookes things I don't
| like. I didn't learn cooking that way.
| analog31 wrote:
| No. In our Home Ec course, we baked cookies, that was it. The
| rest of it was in the classroom. I imagine that the
| experience varies from one district to another.
| Telemakhos wrote:
| We had home economics for one quarter as part of a rotation
| through grade-school electives: art, home ec, drama, wood
| shop. We didn't learn much about cooking, but I did learn how
| to sew on a button and do some basic clothing repairs that
| have come in handy.
| DonsDiscountGas wrote:
| Yes. I also did some sewing. And in shop class we did actual
| woodworking. I think active project based learning is best
| whenever it's possible and practical.
| neogodless wrote:
| Why should I learn this?
|
| This is the question most kids ask when offered education. If
| you answer that first, everything else follows.
|
| Start with why. (Thank you Simon Sinek.) Are there meaningful,
| ongoing benefits to learning how to make specific decisions
| with your money? Should you care enough to learn the more
| mundane details like reviewing expenses or filing your own
| taxes?
|
| I know there are attempts, like showing those log graphs that
| try to impress upon young minds the long-term value of compound
| interest. I'm sure those help a few people, but I do wonder if
| there might be other more impactful concepts.
|
| Personally, I get a great deal of satisfaction out of things
| like efficiency, self-reliance, and so on, but I don't know if
| valuing those things can be taught, or just develops
| organically. Regardless, I think you always need to impress
| upon students the motivations for their decision-making and try
| to help them care. The rest can come later.
| SilasX wrote:
| Yes, this is a very general insight, not just for education,
| but for any presentation: work _backwards_ from what problem
| you 're solving with the material. Then everything makes so
| much more sense!
| PaulDavisThe1st wrote:
| > Start with why. (Thank you Simon Sinek.) Are there
| meaningful, ongoing benefits to learning how to make specific
| decisions with your money?
|
| It's a great approach when the "meaningful, ongoing benefits"
| start to occur either immediately, or in the near future when
| you're living a life very, very much like the one you're
| living today.
|
| The difficulty of doing that within the context of educating
| 5-18 (+/- 4) years olds is that benefits (and costs) of
| learning (or not) are far, far down the road, in a life that
| they can typically not even imagine with any degree of
| accuracy.
| toast0 wrote:
| Many high schoolers on the cusp of needing some finanical
| literacy. They may be starting their first jobs, and making
| a budget and saving for a rainy day would be good skills.
| Others are about to borrow for college and financial
| understanding could help them avoid getting into a lot of
| debt in order to struggle at a degree that they end up not
| attaining, or in order to attain a degree that doesn't add
| up economically. Some may be moving out (voluntarily or
| not) and _need_ to have an income, find a place an pay
| rent, pay for food and utilities, etc, with potentially
| little room for error.
| SilasX wrote:
| I mean ... once you put it that way, yes, I'm actually willing
| to bite that bullet! (Or at least a cleaned-up, steelmanned
| version of it.)
|
| It's vanishingly unlikely that any student who learns "personal
| finance", with no practical application, is going to retain it
| for the 5+ years until they'll actually need to use it.
| Learning doesn't work that way -- with, as you note, a few
| exceptions for unusually motivated students ... who would
| probably be able to learn it on their own when the time comes.
|
| Ditto for the famous meme about "why don't schools teach
| something _useful_ , like doing my taxes?" Because it would
| come across as an ungrounded, garbled mess that you'd forget by
| the time it was actually relevant.
|
| So yes, I'd say that generally, education should work by
| grounding lessons in some kind of practical application. And
| indeed, like the other comments note, that's how it works for
| some of your other examples, like _actually cooking_ something
| for home ec, or doing CPR on a dummy (which mimics most of the
| dynamics of the real thing, even if imperfectly).
|
| I think there's a real human need being expressed by the common
| complaint, "When are we ever gonna use this stuff?" I'd phrase
| it as, "You're not grounding this material in a way that allows
| me to reason about it, and what's important vs isn't."
|
| So, to the extent that we want to prepare students for "the
| real world" -- in particular, things like "doing your taxes"
| and "evaluating a car loan" -- I'd say the best way to address
| it would be by teaching the (meta-)skill of "learning an
| unknown domain". (Yes, "learning how to learn" ... but as an
| explicit skill, not one applied to material that is itself too
| artificial.) That's something you could apply to practical
| problems, even if they're not the same ones students will be
| solving later.
|
| Applying this insight to the teaching of literary analysis:
| frame it as refuting an internet comment that doesn't
| understand that a song is a metaphor.
|
| In fact, one thing that frustrates me about how the teach
| estimation in math is that they teach a useless version of it:
| you do something that takes about as long as calculating the
| exact value, except you add some rounding steps because you're
| told you can't give an exact answer. What you should instead do
| is give a timed test, which much more problems that usual, and
| only require approximate answers. Then you're forced to save
| time by rounding.
|
| Late edit:
|
| >Using the logic underpinning this article, the only things
| taught in school should be how to play video games, how to find
| the best parties and how to get laid; since those are the only
| things actually relevant to students at that stage of their
| life.
|
| Yes, it does annoy me when the education system neglects the
| teaching of _some_ skills that don 't come naturally to some
| students, but not other skills.
| Telemakhos wrote:
| I think this debate about utility misses some of the
| functions of education that the Romans (like Aulus Gellius
| and Macrobius) discuss: they talk about education having
| three parts, namely utility, pleasure, and "cultitavtion" or
| "culture" (for lack of a better English word). Yes, some
| education does have direct practical application (utility) in
| life, but that alone is not sufficient. And, education must
| include pleasure and teach one how to take pleasure in
| things, or else it becomes an oppressive training in
| servility. But the third element, "cultivation," is the one
| that people today most often overlook. It's the Roman word
| for tilling soil, which you do not because it makes plants
| grow (that's sowing seeds) but because it prepares the ground
| for plants to grow when you do sow them. There are some
| educational activities that do not have direct and immediate
| utility but do open up new capabilities that can lead to
| future utility. Learning geometric constructions, for
| example, may not have immediate practical utility, but it may
| prepare the mind for trigonometry. Grade school art class
| never made anyone a Michelangelo or Monet, but learning to
| hold a brush or sculpt clay does promote fine motor skills
| that will enable one hold a pen later in education or maybe,
| with more practice, a scalpel in medical school.
|
| Financial literacy for those who do not yet have wealth to
| manage, even if it doesn't seem practical in the moment,
| still opens up new capabilities to enable future growth.
| SilasX wrote:
| >I think this debate about utility misses some of the
| functions of education that the Romans (like Aulus Gellius
| and Macrobius) discuss: they talk about education having
| three parts, ...
|
| Sure, but I was making that point in the context of a
| discussion that accepted the premise that we do want kids
| to be good at a practical skill (personal finance) and we
| want to know how to best adapt schools to achieve that.
|
| > But the third element, "cultivation," is the one that
| people today most often overlook. It's the Roman word for
| tilling soil, which you do not because it makes plants grow
| (that's sowing seeds) but because it prepares the ground
| for plants to grow when you do sow them. There are some
| educational activities that do not have direct and
| immediate utility but do open up new capabilities that can
| lead to future utility. Learning geometric constructions,
| for example, may not have immediate practical utility, but
| it may prepare the mind for trigonometry.
|
| It seems like you're agreeing with my point there, about
| the need to ground the knowledge in _what it will be used
| for_ , and thus some meaningful criteria for whether you're
| doing it right, that you can reason able. See my paragraph
| about "When are we ever going to use this stuff?": yes, it
| would tremendously help to teach tilling soil with an eye
| for "which tillings will actually make the soil receptive
| for seeds?" because then it would make a ton more sense why
| they're telling you to do it one way vs another!
|
| >Grade school art class never made anyone a Michelangelo or
| Monet, but learning to hold a brush or sculpt clay does
| promote fine motor skills that will enable one hold a pen
| later in education or maybe, with more practice, a scalpel
| in medical school.
|
| And again, you're agreeing about the need for practical
| application of a skill (actually using the brush).
|
| >Financial literacy for those who do not yet have wealth to
| manage, even if it doesn't seem practical in the moment,
| still opens up new capabilities to enable future growth.
|
| No, the issue is that it won't -- unless it hooks into some
| meaningful understanding that prevents it from folding into
| "useless esoterica where you have to guess the correct
| answer and then forget about over time", that most
| education falls into the trap of.
| wat10000 wrote:
| There's an interesting difference between learning how to do
| taxes and learning how to evaluate an auto loan, in that the
| latter is often adversarial. Thousands of highly-paid experts
| spend their days figuring out how to get you to take on more
| debt and pay more fees and interest. With taxes, you might
| have Intuit or whoever trying to get you to buy prep services
| you don't need, but it's small potatoes by comparison. You
| can at least get unbiased tax info directly from the source.
| Nobody from the IRS will try to upsell you on a seat massager
| option that's only $10/month more (and it extends the loan
| term by two years but let's just gloss over that).
|
| I'm not sure exactly what it means here, but I think there's
| a big difference when it comes to teaching people how to
| learn things that powerful vested interests want them not to
| know.
| SilasX wrote:
| Agreed. And the article talks about that some:
|
| >Most personal finance math is basic arithmetic - the same
| arithmetic that most of our students currently struggle
| with. The hard part is everything else: impulse control,
| peer pressure, status anxiety, and the fundamental
| uncertainty of the future.
|
| >Teaching teenagers about compound interest won't help them
| resist the urge to keep up with their friends' spending any
| more than teaching them about calories will stop them from
| eating junk food.
|
| Still, you can at least separate out those skills as being
| independently worth teaching: how to figure out the impact
| on your budget, and the social dynamics driving your
| options.
| wat10000 wrote:
| I don't think this is right. Teaching compound interest
| will help them resist that urge. What it won't do is
| guarantee success, but there's enormous benefit in just
| helping. This sentence mixes "help" with "stop,"
| suggesting that either something is useless or it's
| bulletproof.
|
| People can and do modify their choices based on their
| knowledge of the consequences. Yes, even teenagers,
| sometimes.
|
| But for these examples, I think you also need to teach
| them that they're doing battle with people who want them
| to make bad choices. People who spend their lives
| studying how to get them to make bad choices. Don't just
| teach them about compound interest. Tell them how credit
| card companies try to trick you into suffering from it.
| Tell them how car salespeople will focus on the monthly
| payment and do their best to obfuscate the total cost.
| Tell them how junk food makers abuse psychology to make
| you want their product.
|
| Teenagers love being contrary. We should take advantage
| of this tendency. The other guys certainly are.
| PaulDavisThe1st wrote:
| > Most personal finance math is basic arithmetic
|
| Most personal finance is understanding that anyone
| offering you financial services wants to make money with
| your money, no matter what they say or how nice they
| seem.
|
| In some cases, they won't actually reduce the amount you
| have claim to (like banks holding your money), but will
| make their money with your money. In other cases, they
| will take some (hopefully) small percentage of the gain
| in value of your money, supposedly (and sometimes
| rightfully) as compensation for the work they claim to
| have done. In the worst cases, they will gamble with your
| money in a way that ensures that they never lose, but you
| may.
|
| Understanding these human factors in real world personal
| finance comes, in my book, before anything else.
| nico wrote:
| > teaching CPR doesn't make sense unless there's someone
| choking right in front of you; etc
|
| This would actually be amazing if possible.
|
| "Operator, I need CPR lessons, now"
|
| Like Neo in the Matrix - "I know Kung-Fu"
| masfuerte wrote:
| The other point the article makes is that most of the children
| literally can't understand it because they are completely
| innumerate.
|
| Proposing the teaching of financial literacy when the children
| are baffled by arithmetic is absurd.
| teddyh wrote:
| _Your "use case" should be, there's a 22 year old college
| student living in the dorms. How will this software get him
| laid?_
|
| -- Jamie Zawinski <https://www.jwz.org/doc/groupware.html>
| PaulDavisThe1st wrote:
| Interesting thing to quote, given that JWZ hisself now says:
|
| > If all the people who claimed to have been "inspired" by
| this piece hadn't been, and had just kept writing middleware
| for banks or whatever, the world might have been a slightly
| better place.
|
| > I wish I had never published this.
| teddyh wrote:
| It seems that what he actually objects to are the now-
| ubiquitous surveillance, centralization, and black-box
| algorithm curation aspects of social networks - not the
| actually social parts.
| smadge wrote:
| When I was in middle school we actually cooked and baked in
| home economics, we didn't memorize recipes showed on an
| overhead projector. In Physical Education we ran the mile,
| didn't want videos on optimal technique. I think this is the
| main point.
| tr888 wrote:
| Teaching physics is pointless unless you have your own particle
| accelerator.
| olddustytrail wrote:
| That attitude is totally bizarre to me. Why would you not want
| to know how things work?
|
| I guess that's why some people don't get climate change: to
| them it's just some weird belief for scientists rather than
| something you can understand yourself.
| trod1234 wrote:
| > That attitude is totally bizarre to me.
|
| When they say physics they aren't talking about it as you
| know it. What they are actually talking about is a corruption
| of the meaning.
|
| To them, physics is just boring math that you solve problems
| that have no basis in reality. Its just formulas you have to
| memorize that don't let you do useful things, and formulas by
| themselves are useless knowledge, so they believe. This is
| what current textbooks teach, no intuition, no practical
| knowledge, contradictory information.
|
| Its not about how things work because that isn't what is
| being taught. It may have been at one time, but now its all
| just useless formulas to these people. Such is the corruption
| and degradation of education today.
| lucasfcosta wrote:
| Most people's money problems would be solved if we taught them
| not to chase status instead of focusing on the numbers.
|
| Financial literacy itself is quite simple: spend less than you
| make.
|
| Everything else is an optimization and it's pretty easy to learn
| with a few days of research.
|
| I know this is the classical HackerNews type comment, but I
| honestly can't understand why it's so hard when there's so much
| information available and so few pre-requisites (almost none) to
| learn about it.
| vjk800 wrote:
| > Financial literacy itself is quite simple: spend less than
| you make.
|
| Maybe for the quantitatively minded Hacker News audience this
| is simple. But there are quite many people who have no idea how
| much they are spending, or sometimes even how much they are
| spending.
|
| It's easy to forget if you live in tech - or even middle class
| - bubble, but even the most basic math is very difficult to
| some fraction of people.
| graemep wrote:
| > but even the most basic math is very difficult to some
| fraction of people.
|
| That is the real problem. People need to learn maths before
| they can learn financial literacy.
| vjk800 wrote:
| Maybe. Or maybe there is just a certain fraction of people
| that are incapable of learning it. Like dyslexia, but for
| mathematical operations. I mean, it's not like we're not
| trying. Math is taught in every school at every age group
| and it's around us everywhere.
| graemep wrote:
| There is such a recognised condition with regard to
| arithmetic. Its called dyscalculia.
|
| Those with it need appropriate teaching, but can end up
| pretty good at maths.
|
| > Math is taught in every school at every age group and
| it's around us everywhere.
|
| it is taught everywhere, but I think it is usually badly
| taught - more commonly badly taught than any other
| subject.
| koolba wrote:
| > But there are quite many people who have no idea how much
| they are spending, or sometimes even how much they are
| spending.
|
| Step one would be teaching people to write down the balance
| of all their accounts on 12/31 of each year. Checking,
| savings, brokerage, and all credit card debt (including
| current month spending). The difference in that number over
| two years is your net for the year.
|
| Your gross is going to be approximately what you report on
| your taxes. In reality it'll be a bit more but this gives you
| an upper bound.
| XorNot wrote:
| Except your second line is contradicted at the outset, because
| the largest purchase most people will make - their home - is
| bought on debt (a mortgage).
|
| Now there's sound, very good reasons to do this...but the
| headline issue itself already forces us to deal with more
| complex issues.
|
| Right there we're into issues like why is it okay to buy some
| things on debt but not others, how do you evaluate the time
| value of money etc.
|
| All still relatively simple...but not that simple, and
| frequently with no obviously correct answers either.
| Klaster_1 wrote:
| Being frugal no longer cuts it. As basic needs cost, such as
| housing, continues to outpace income, financial literacy won't
| be enough. Unless it crosses a point where people purposefully
| elect government willing to address the issue.
| orangecat wrote:
| _As basic needs cost, such as housing, continues to outpace
| income, financial literacy won 't be enough. Unless it
| crosses a point where people purposefully elect government
| willing to address the issue._
|
| Agreed, although I would note that a large part of addressing
| the issue of unaffordable housing is for governments to stop
| actively it worse by forbidding construction.
| NoLinkToMe wrote:
| I don't agree with this. Spend less than you earn is a big
| part, for sure. Without it, you'll never really get very far.
|
| But the rest is not mere 'optimization'. There is a massive
| difference between someone who puts their savings into a 0%
| interest account and sees it eaten away by inflation and in
| some countries (mine) a wealth tax, and someone who puts the
| savings as a pre-tax investment in their retirement account,
| which means you don't pay taxes on your salary, and in some
| countries (mine) don't pay taxes on the stock returns or on the
| equity as a wealth tax, and can get a 10% nominal annual return
| and see your money double >5 times over a 40 year career.
|
| In my country the saver (A) versus the investor (B) who puts
| $1k in savings or a retirement fund at age 25 and liquidates at
| age 65 looks like this:
|
| A) Saver: $1k salary is $500 take home pay (50% marginal tax of
| last bit of income). 0% interest rate at the bank. You pay a 2%
| effective wealth tax per year. That means $222 is left at age
| 65. Prices in this time went up by 3% a year, meaning what is
| left is the equivalent of $68 in today's dollars.
|
| B) investor: $1k salary goes pre-tax into retirement account.
| You get a 10% return each year, so at 65 you have 45k. You pay
| no wealth tax or return taxes in the retirement account. You
| then pay it out as a personal income at a reduced retirement
| rate of 35%, meaning you have about 30k left. In today's
| dollars that's about 10k.
|
| So $10000 vs $68. That's not optimization, it's the difference
| between gaining 10x versus losing 93% of it, or the difference
| between everything and nothing.
|
| Country of example is NL. Discrepancies are bigger or smaller
| elsewhere depending on tax policies, but generally the
| difference will remain orders of magnitude.
|
| I do agree that it's pretty easy to learn.
| vitus wrote:
| > Saver: $1k salary is $500 take home pay (50% marginal tax
| of last bit of income). 0% interest rate at the bank. You pay
| a 2% effective wealth tax per year.
|
| Wait, what? Under that tax regime, you might as well squirrel
| away that money under your mattress; you'd at least have the
| equivalent of $300 left after 40 years.
|
| Apparently there was a ruling by the Dutch supreme court
| equivalent (the Hoge Raad) last year that if your actual
| return is lower than the notional return (assumed ~6%), then
| you're supposed to be taxed on your actual return.
|
| https://www.belastingdienst.nl/wps/wcm/connect/en/income-
| in-...
| dhruvrrp wrote:
| > Financial literacy itself is quite simple: spend less than
| you make.
|
| I'd disagree with this. Financial literacy includes
| understanding how /how much to save as well. Too many people
| spend less than what they earn, but would be screwed if an
| emergency hit, because they have basically 0 savings/emergency
| fund.
|
| And the consequences of this are dire, I've seen people in
| their 70s working because they basically cannot afford to not
| work due to a lack of savings.
| roenxi wrote:
| > ...I honestly can't understand why it's so hard...
|
| You're pretty close, you touched on all the major points in
| your comment. You suggested people not to chase status. But a
| lot of people spend their whole lives and all the resources at
| their disposal chasing status. All they understand, want or
| need is status. They are status chasing people.
|
| You try teaching them not to chase status and it won't work.
| This is also what makes financial literacy so hard - people
| have these instincts that don't care about longer term material
| comfort even a little bit. They're calibrated for a world where
| "capital" is a stick with a rock tied to it and maybe a nice
| cave. There are these hang-overs from the old times where
| people's mind and body are strongly conditioned to only be
| sensitive to their current social status and they're willing to
| burn their entire bank account to get it _now_.
|
| Watching such people up close when they are also intelligent is
| a fascinating experience. They know that they're not doing
| financially optimal things. They don't care. They'd eat nails
| and go without sleep if they thought that would make them look
| better than their peers. Being poor in 12 months time doesn't
| register as a threat intellectually or emotionally.
|
| Note that even the people who are good at investing usually
| cheat by using their emotions in weird ways.
| matthewmacleod wrote:
| Nah, that's reductive to the point of being useless. It's like
| saying "losing weight is simple: eat fewer calories than you
| burn". It's both completely correct and completely unhelpful.
|
| Broadly, everybody realises that you will accumulate money if
| you spend less than you earn. That's not financial literacy
| though - how do you do that? How do you _know_ how much you are
| earning, and how much you are spending? How can you figure out
| _how_ to spend less?
|
| Almost 30% of US adults are level 1 or below on the PIAAC
| numeracy scale - a level at which you can perform only the most
| basic arithmetic. It is, for many people, far from "pretty
| easy" or "quite simple".
| rytill wrote:
| How is "losing weight is simple: eat fewer calories than you
| burn" unhelpful? I'm genuinely asking, and want to understand
| how to empathize better.
|
| It seems like a lot of people don't make weight loss progress
| because they never internalize that fact and seem to "fight
| it" psychologically.
| trod1234 wrote:
| I dislike articles like this because they tend to get the details
| wrong, while having things that sound plausible, but still poorly
| defining the problem.
|
| The article does little more than promote and repeat the same
| arguments that led to each one of the things mentioned as
| negatives, with somehow this time will be different.
|
| I hate to be the one to say this, but if the problem has repeated
| itself over decades, its not the subject matter but the type of
| people involved.
|
| The subject matter changes, and you get the same result. The only
| thing that does not change are the people involved, and when you
| look at who is involved specifically it comes down to the
| bureacratic administrators, and the NEA special interests that
| receive the most weight. They are the experts after all.
|
| After a certain amount of time, the only way these things are
| still a problem is because it was intended to be that way by
| someone involved. Education is hardly rocket science.
|
| Ask yourself why Critical Thinking and Reasoning doesn't really
| happen until college? Philosophy used to be included in all basic
| education starting around 3rd-4th grade. It has since largely
| been withheld, but anyone receiving this education scores
| significantly higher than those that don't.
|
| Food for thought, Trivium based curricula stood the test of time
| for hundreds of years, it was not until people started tinkering
| and removing things that we started having these problems.
| Yeul wrote:
| If you teach kids critical thinking they won't believe in
| religious fairytales anymore.
| trod1234 wrote:
| If you teach them critical thinking, they won't believe in
| false ideology anymore which would normally blind them to
| everything else.
|
| Some people are working real hard towards extinction.
| kome wrote:
| The push for financial literacy as a panacea for systemic
| economic instability is a neoliberal sleight of hand. It's a
| moral cop-out, allowing institutions to pathologize poverty while
| absolving themselves of designing systems that prey on human
| behavior.
|
| Consider retirement: we dismantled pensions, replaced them with
| 401(k)s, and now blame individuals for not magically becoming
| Warren Buffett. Or student loans: we tell 18-year-olds to "shop
| around" for degrees as if education is a commodity, not a
| societal investment. Healthcare? "Just be a savvy HSA optimizer!"
| Meanwhile, the system is a Skinner box of late-stage capitalism--
| overdraft fees, algorithmic rent hikes, predatory loans--all
| while whispering, "You should've read the fine print."
|
| Behavioral economics has shown we're not rational actors. Yet the
| system demands perfect foresight: save exactly enough, borrow
| exactly enough, die just before your 401(k) runs out. When people
| fail (and they do, because life is stochastic), we scold them for
| not being "literate" enough, rather than asking why basic
| survival requires a PhD in personal finance.
|
| This isn't empowerment--it's exploitation gaslit as morality.
| Countries with robust social safety nets don't obsess over
| teaching kids to day-trade; they structure defaults that work for
| humans. Financial literacy has value, but weaponizing it to
| justify atomizing every risk onto individuals? That's not
| education. That's a rigged game wearing a meritocratic mask.
| jongjong wrote:
| Great point. I saw a short YouTube video the other day in which
| a lady was describing how saving $100 a month and investing it
| in an index fund would turn into $1 million after 50 years or
| so...
|
| The numbers seem to add up but this strategy all rests on
| society's ability to maintain what has been the biggest
| legalized economic ponzi in the history of mankind... Plus, it
| doesn't factor in inflation. A 10% annual gain means nothing at
| all if real inflation is 10%. Note that the inflation compounds
| as well!
|
| There are all these risks and dysfunctions that are covered up
| and simplified down in the language. Whenever you're discussing
| long term events and you say the word "dollar", you're talking
| about an extremely vague depreciating unit... It's not a term
| that's fit for discussing long term events. Dollars might not
| even exist in 20 years. All fiat currencies in history have
| gone to 0... Literally hundreds of them across different
| civilizations. USD has only really been a fiat currency since
| 1971... It's not that long ago and it has lost most of its
| value since then.
|
| Now it seems to be held together by sheer insanity; psyops,
| shady international organizations, geopolitical machinations,
| massive-scale coercion and deprivation of opportunities through
| regulations, weaponizing taxpayer dollars against taxpayers...
| Always accompanied with gaslighting of course. We have fraud
| disguised as aid, sin disguised as morals.
| thenoblesunfish wrote:
| Since you're the one who brought up bikeshedding, why are you
| focusing on this instead of e.g. paying and respecting educators
| enough to encourage smart people like yourself to solve this and
| a thousand other problems of how to educate better?
| snailmailstare wrote:
| The article goes on to make better arguments than the comments
| imply, but still treats the opposition as a strawman. Showing a
| student how compound interest works on one loan or account is
| microeconomics and it was never as ineffective as teaching kids
| smoking public health statistics which is more like teaching
| macroeconomics and expecting children to be afraid they will ruin
| the GDP.
| vjk800 wrote:
| > What makes financial decisions hard isn't the math.
|
| To be fair, I've met quite a few people who also struggle with
| the math. To the Hacker News audience this seems unfathomable,
| but the very idea that you end up paying much more with the "pay
| only 9.99 EUR/month)!" deal is completely alien to many people.
| Or even if they understand it in principle, it never occurs to
| them to compare the actual numbers. Or even if they compare the
| actual numbers, it doesn't occur to them to add the numbers up to
| see how much extra they are spending on interests in total.
|
| Many people are quite stupid when it comes to even the most basic
| math. Or not even math, but just thinking of or comparing
| numbers.
| pianom4n wrote:
| > What makes financial decisions hard isn't the math. > Most
| personal finance math is basic arithmetic - the same arithmetic
| that most of our students currently struggle with.
|
| These sentences are literally next to each other! The entire
| article can be disregarded.
| whatever1 wrote:
| Like everything else, without practice you cannot not really
| learn.
| gabesullice wrote:
| The article's argument is that experience is a better teacher
| than a person with a curriculum and a chalkboard, which I agree
| with, but the proposed solution: "so, let's just give them
| experience!" is a shallow proposition--I doubt anyone knows how
| to start 4 million small businesses per year, with meaningful
| revenue, using a workforce that hasn't (yet) graduated high
| school.
|
| Experience is hard (if not impossible) to scale. And it could
| easily backfire: imagine the scenario where the experience is
| miserable and results in failure. What if the students' lesson
| learned is "why bother trying?"
|
| The most effective way we have to scale experience is through
| simulation. And we know how to provide that pseudo-experience to
| young kids without a lot of investment: story telling.
|
| Maybe we should scour the globe for compelling stories that teach
| lessons about delayed gratification, the value of saving, and
| self-confidence vs. vanity in terms of spending money, so that we
| could start telling them to students at an early age.
| laserbeam wrote:
| The article also references a low capital required list of
| business ideas for high school children. No one is arguing for
| million dollar projects. The argument is for hundred/thousand
| dollar projects.
| bsenftner wrote:
| Financial video games, where the player never sees "finance!"
| in any of the media marketing of the serious educational
| product sold as a toy. Seriously, the "rules" of finance pale
| in complexity when compared to how much intricacy and never-
| actually-pointless complexity put into simulation games. I
| expect there are already finance/stock/economic simulation
| games of a serious nature; make and promote watered down
| versions and market them in cooperation with serious money paid
| to the people that actually successfully sell pop culture game
| software. Yes, a hard sell, I know, I came from those
| industries, but it can be done.
| adrianN wrote:
| Isn't Eve Online essentially that.
| hnthrow90348765 wrote:
| Starting a newbro corp with a bunch of unemployed high
| schoolers and decent taxes would make a great lesson on why
| you want to run a corporation and not be an employee.
| bsenftner wrote:
| I don't play, but from discussions with an addicted buddy,
| sure sounds like they do serious finance and economic
| projections as a part of their play strategies. He was in
| the middle of that event a few years ago where some huge
| amount of Eve Online players had some giant battle, and the
| amount of game money destroyed made the mainstream news.
| michaelbuckbee wrote:
| I have kids, there's no need for simulation. We have Roblox.
|
| Which has been a surprisingly useful [1]real-world/low-stakes
| financial literacy course for them.
|
| - They have been scammed.
|
| - They have blown money on stupid useless stuff and cried with
| regret.
|
| - They've applied for jobs (seriously, there was an application
| process and interview).
|
| - They've made hundreds if not thousands of decisions balancing
| entertainment, commerce, utility, and budgeting.
|
| It's all of the true feel-it-in-your-bones financial literacy
| that the article advocates for being delivered to them in the
| guise of blocky figures and them playing with friends.
|
| 1 - You buy Robux (the in-game currency) with real money, and
| for years, it's been the number one thing they've asked for as
| a gift.
| ykonstant wrote:
| I still don't understand how the Robux stuff is legal.
| Tyr42 wrote:
| I mean I cut my teeth on RuneScape and it was the same kind
| of deal. I learned that cow hides rose in value as you bring
| them closer to the crafting centres and that middlemen who
| want to do it for you can take a generous cut for themselves.
| y-curious wrote:
| That sounds like RuneScape for me as a kid. I got scammed,
| made money, made friends, had pathetic swipes at romance etc.
|
| What are the downsides to Roblox in your experience? It feels
| like crack cocaine for kids
| dfedbeef wrote:
| Read the Hindenburg article about Roblox
| teddyh wrote:
| Or this video, by Quintin Smith (People Make Games):
| <https://www.youtube.com/watch?v=_gXlauRB1EQ> (with
| follow-up: <https://www.youtube.com/watch?v=vTMF6xEiAaY>)
| kibwen wrote:
| Unfortunately you run the risk of your children learning
| "financial literacy" of the form "scamming people is
| lucrative, and gambling is fun and zero-consequence because
| it's all funny money anyway".
| milesrout wrote:
| When I was at primary school - specifically, around year 5 when
| I was about 9 - our class did a "small businesses" unit. We had
| to create business plans including a marketing plan, and yes a
| financial plan. What were we doing, how much were the inputs,
| how much are the outputs, how much time, what do we make per
| hour?
|
| We did it in groups although some did it individually. One
| group did a carwash that also made you a coffee while you
| waited. My team was three of us and we put on a school disco
| (actually two, senior and junior). We had to organise lighting,
| music, equipment. We had to sell tickets. It was so profitable
| it paid for the entire school camp for our whole class, and the
| next year's too.
|
| I don't know how much we actually learnt and I am sure our
| parents helped but I doubt it was entirely ineffectual.
| Probably more useful than many of the other activities we did.
|
| Point being: there is no reason kids can't experiment with
| business as children, whether it is a lemonade stand, a carwash
| or a school disco.
|
| I also have to point out for the record that if ever there was
| a win for capitalism over top down social planning, it was that
| the disco organised mainly by three 9 year olds was not only by
| far the most popular and enjoyable social event of my entire
| time at school (including high school) but it was also as far
| as I know the most profitable.
| s1artibartfast wrote:
| When I was in elementary school, the class ran a business
| making and selling box kites. It was part fundraiser, part
| economics, part engineering.
|
| We took orders, budgeted materials, then built the kites out
| of straw, string, and paper over the course a quarter.
| Something like this [1].
|
| I thought it was a really valuable introduction to econ and
| business for a group of 10 year olds. I remember calculating
| how long it would take to fulfill remaining orders, and if I
| could could make my own kite business and undercut the class
| price as a private business.
|
| https://www.instructables.com/Tetrahedral-Kite-1/
| sesm wrote:
| > using a workforce that hasn't (yet) graduated high school.
|
| Later, in court:
|
| - Your Honor, honestly, I thought "small" businesses could only
| use child labor.
| someothherguyy wrote:
| This article contradicts itself on corrective measures.
|
| As the article states, people still go into debt even when they
| have real world experiences with financial transactions.
|
| Vulnerabilities will always be exploited if there is something to
| gain from it. Rules can be implemented to protect the vulnerable.
| bustling-noose wrote:
| The article almost got it right 'emotions, peer pressure,
| temptations' and how people spend money on things they don't need
| and then got it wrong by not actually saying what's important.
|
| Money management and financial literacy involves psychology along
| with math. So does sex education like the article compares it to.
| Having sex or spending money is not the problem. Nor is putting
| fear of the two in your head from a young age or the desire for
| it.
|
| As Charlie munger said - psychology should be taught from a young
| age. Maybe the most important topic missing from education.
|
| Spending money isn't bad and having sex isn't either. But saving
| for a future you've dreamt of and sex with a loved one is better.
| This involves less math and sex education and more psychology and
| mental well being.
|
| If you are a 30 something politician looking for a change and
| understand psychology, you might want to visit schools and give
| children hope and mental well being tips. They might vote for you
| in 15 years.
| jimkleiber wrote:
| Hell, you might want to visit communities and give adults hope
| and emotional well being tips and they might vote for you now.
| It's not just kids who need this and frankly adults probably
| realize they need it more than kids.
| fweimer wrote:
| Isn't core financial literacy a bit more basic than that? Like
| how to pay your bills? I wasn't taught any of these
| practicalities in school, and it I suppose it could have been
| useful.
| NanoYohaneTSU wrote:
| The article uses AI art at the start.
| jakubmazanec wrote:
| > Education is particularly susceptible to flavor-of-the-month
| initiatives that promise revolutionary changes but deliver
| minimal results.
|
| Then the article proposes another flavor-of-the-month solution
| that promise revolutionary changes - if only each student would
| start a business, then he would HAVE to learn math and everything
| will be solved.
|
| Ignoring the issues of costs and scalability, why not try
| something simpler first? IMO teaching how to handle money is
| something that should parents start even before their kids go to
| school. Give them a little pocket money so they have some agency,
| and they will soon learn what they can buy now and how to save
| for a future.
| boxed wrote:
| Yea, seems a bit weird honestly. Starting a business is
| incredibly hard. And the financial part of it is just a tiny
| part of why it's hard. You also have to find an idea of a
| service/product and marketing to name just two that will kill
| your company before it ever got a single customer.
| milesrout wrote:
| The article isn't suggesting kids start the next google. They
| do have two big structural benefits you don't have, though:
|
| 1. Their customers love them or at least know them well and
| are sympathetic. Not many neighbours or parents will walk
| past the lemonade stand or ring the health inspectors. People
| will be their customers just to be nice and to support them.
|
| 2. They have no costs and unlimited time. They don't pay rent
| or board, they don't have jobs and they don't have
| dependants.
| aDyslecticCrow wrote:
| I did that actually!
|
| I had a large project in high school where we went through the
| process of starting a company, maybe selling a single knitted
| sock to someone, balancing the books, and closing the business.
| Not as simulated tasks but through the proper process. Other
| schools did the same.
|
| It didn't actually teach me much, and it took up a vast amount
| of school time. I preferred the pure class that explained the
| economic theory and went through calculation exercises. I
| remember that much more clearly.
|
| It's odd. The article starts by really highlighting that the
| school system is a bit broken in teaching the basics but then
| suggests adding extra stuff on top of it rather than suggesting
| or diagnosing the actual issue.
|
| > It's like installing a fancy security system on a house with
| no foundation.
|
| The article said it pretty well... for itself.
|
| > Give them a little pocket money so they have some agency
|
| This is great. My parents did it; most of my friends had the
| same. I will do it when I have children. The amount does not
| even matter. I think I had a $2 a month, and I started to
| proudly save up for toys or hold off on the lure of sweets.
| (not that the amount every accumulated to buy anything)
| TheOtherHobbes wrote:
| The best way to teach financial literacy is to pay everyone more,
| and make economic culture participatory and cumulative - not the
| current bizarre and toxic zero-sum system which elevates mediocre
| and/or damaged people who compensate for low self-esteem with
| inherited status and predatory power games.
|
| Teens should start a business? With what? Most families in the US
| are dirt poor, and even setting up a basic YouTube or Etsy
| business is going to need a couple of hundred dollars of startup
| investment for materials, creative software, something...
|
| This will shock many, but tens of millions of families can't
| afford to take a risk like that.
|
| And one of the things that defines millennial culture is that
| many millennials _already_ have a main job, a side gig, and some
| kind of online hustle, and still aren 't earning enough to break
| even.
| Yeul wrote:
| Society needs nurses and plumbers. Not more dropshippers and
| influencers.
| milesrout wrote:
| The US has the highest average household income in the world.
| There are tens of millions of households that can help their
| kids start a "business" whether it requires high capital
| investment or low. Some people will be able to buy a 3D printer
| and make something cool. Many will create lemonade stands. That
| is fine.
|
| >And one of the things that defines millennial culture is that
| many millennials already have a main job, a side gig, and some
| kind of online hustle, and still aren't earning enough to break
| even.
|
| Online bubble, I think, unless my experience is highly
| atypical. The vast, vast majority of people just have one
| normal job.
| OtherShrezzing wrote:
| >Teaching kids financial literacy without real money is like
| teaching swimming with PowerPoint slides. And we all know how
| that ends.
|
| The opening statement of this article is fundamentally flawed. I
| didn't learn to swim as a child, and unironically, watching
| presentations of "how to swim for absolute beginners" on YouTube
| got me over the initial challenge of getting into a pool. I can
| now comfortably swim in the ocean.
|
| This isn't just anecdotal. Go to YouTube, and search "learn to
| swim", and you'll see videos with millions of views, full of
| comments describing similar learning journeys.
|
| You can teach people swimming in these formats.
| yodsanklai wrote:
| Financial education in the US is like teaching how to eat healthy
| to people surrounded by fast food and advertising since they're
| born. There are other forces at play.
| ggm wrote:
| Compound interest is magic. But, people obsess with rate of
| return which is unsustainable when the long term market rate
| tends to 6-7%. I appreciate tech stocks do better, I'm just
| observing a contradiction inherent in things.
|
| Balancing interest earned against interest paid can be
| confronting for some people. Debt is not always bad. It depends.
|
| Margaret Thatcher is responsible for a fucktonne of
| misunderstanding about the national economy because of trite
| truisms about domestic economy. She hated Keynesians and talked a
| lot to LSE economists who we'd now critique quite harshly. She'd
| have hated MMT.
|
| Thatcher also laid the seeds of the ruin that is British housing
| by forcing councils to sell off public housing and refusing to
| allow them to reinvest the profits in more housing, and created
| the surge in demand for petty bourgeois share holding in the
| privatised former national utilities, and rentier behaviour. She
| utterly fucked over the state. We're living in the ashes of
| Thatcher destroying all the post war social uplift, and taking
| her asset stripping model worldwide.
|
| I ran away to Australia in the peak of this mania to arrive into
| a state launching the same madness. Housing is totally awful here
| for young people. I'm fine, in the great Australian tradition of
| people my age who own their home and have huge retirement
| savings, it's "fuck you, I've got mine" voting here.
| bsenftner wrote:
| I think the problem with "financial literacy" is that it is
| taught too polite, it never mentions the true fact that our
| society is filled with professional organizations that use
| deception to get your money, and the investment world, the
| contracting world, and the employment world are filled to the
| gills with unethical players on both sides that are professional
| liars. They pose as one and deliver another, their entire
| careers, and get away with it because they understand how to hide
| their tracks with financial complexity. The majority of humanity
| falls prey to these predators, and they are in fact a significant
| proportion of every nation's economy. Every single company that
| is "hard to cancel" is one of these predators, entirely
| successfully, and that is thanks to our lack of financial
| literacy.
| milesrout wrote:
| I don't think that is really the source of the issues for most
| people that are bad with money.
|
| They spend more than they earn. They don't earn enough and they
| spend too much.
|
| It is like blaming Cocacola for people being fat. Yeah they
| probably have some diffuse structural blame for the situation
| at a societal level but nobody is forcing anyone to drink a
| litre of coke a day or to fritter away their money on takeaways
| instead of investing it sensibly.
|
| Could you blame advertisers for people spending money. Maybe?
| Do ads even work? They don't seem to work at all in politics so
| I doubt they do much anywhere else.
| inetknght wrote:
| > _They spend more than they earn. They don 't earn enough
| and they spend too much._
|
| Yeah, because Coca Cola (and other "businesses") convince
| them to spend.
|
| > _Yeah they probably have some diffuse structural blame for
| the situation at a societal level but nobody is forcing
| anyone to drink a litre of coke a day_
|
| Have you seen advertisements at all?
|
| Nobody's _forcing_ people to see /hear them. But they're
| shoved in your face wherever you go.
|
| > _Could you blame advertisers for people spending money.
| Maybe?_
|
| Not even just maybe. You're shortselling yourself.
|
| > _They don 't seem to work at all in politics so I doubt
| they do much anywhere else._
|
| You might want to double check how politics use
| advertisements.
| yodsanklai wrote:
| > Yeah, because Coca Cola (and other "businesses") convince
| them to spend.
|
| It's amusing to see that a lot of people don't believe in
| ad, because "they don't work on me".
|
| I think that the best lesson school should teach is to
| learn how to shield ourselves from ads and avoid
| consumerism. Not going to happen in the US for obvious
| reasons.
| milesrout wrote:
| I don't think that ads don't work on me. Of course they
| do. But they don't make anyone do anything. They
| encourage, they suggest, they shape your ideas. But no
| number of Cocacola ads will get me to buy Cocacola
| because I don't like Cocacola! It tastes bad. The same
| applies generally: you can suggest and cajole and
| encourage all you like, but ultimately the decision lies
| with me. You aren't responsible for my decisions. If I am
| only aware of the brands that advertise, that is my fault
| for not doing any independent research before purchasing.
| Maybe that is fine, because it is a low impact purchase.
| But that is still a decision.
|
| Ads do not _make_ anyone do anything. Only one person is
| responsible for what you do: you!
|
| BTW, accepting this is very liberating.
| milesrout wrote:
| You can only convince someone with an argument and ads
| don't have arguments. Cocacola suggests they spend. It
| plants ideas in their heads. It puts Coke at the top of
| their minds. But the decision is not Coke's. Coke doesn't
| _make_ them buy Coke. This is basic responsibility.
|
| >Nobody's forcing people to see/hear them. But they're
| shoved in your face wherever you go.
|
| So what? You are forced to hear or see all sorts of things
| in your life. That has nothing to do with whether you are
| ultimately responsible for your own decisions.
|
| I think that on a societal level we should be talking about
| what impact these products (ultraprocessed food) have. But
| that is no excuse at an individual level. It is so easy to
| be normal: just don't eat crap food, which BTW is far more
| expensive than cooking your own meals.
|
| >You might want to double check how politics use
| advertisements.
|
| Hilary and Kamala outspent Trump by huge amounts and it did
| basically nothing. Lots of research shows that political
| campaign spending has little or no correlation with
| electoral success across many different countries.
|
| It turns out that when decisions are important people make
| their own minds up, ads don't tell them what to think, and
| politics is important enough if you care enough to vote at
| all.
| yodsanklai wrote:
| > It is like blaming Cocacola for people being fat. > Do ads
| even work?
|
| Coca-Cola spends four billion dollars a year on advertising.
| Generally speaking, ad revenues are in the order of
| trillions. It's hard to claim they don't work.
| alexashka wrote:
| > Do ads even work? They don't seem to work at all in
| politics so I doubt they do much anywhere else.
|
| Is the planet even round? It don't seem to be round
| everywhere I look so I doubt it is round anywhere else. :)
|
| Please ask an LLM to explain the basics of epistemology to
| you.
| milesrout wrote:
| Don't be condescending when you don't even understand the
| difference between a hypothesis based on a translation of
| an observation in one field into another, and a firm
| conclusion based on the same.
|
| Absent all the other evidence we have, hypothesising that
| the world is flat because everywhere is locally flat would
| be entirely reasonable.
| mihaic wrote:
| My most terrible conclusion is that if everyone had perfect
| financial literacy, the world would be even worse for the younger
| generation, who's never get any change without some systemic
| reset to catch up.
|
| So, personally I give everyone I know the standard advice (basket
| of S&P 500, never pick your own stocks, get some T bills for
| diversity, etc), I think in the long run this is creating a
| terrible economy for the young, and the old will eventually pay
| for it.
| Etheryte wrote:
| This is a widely known trope in the financial circles, often
| stated as what if everyone only invested in indexes. Firstly
| for context, we're not even remotely close to a situation like
| it, with all the rage index investing is today, we're still
| somewhere in the ballpark of half and half for passive and
| active investing. Secondly, it's not really a problem, and
| actually the more financially literate you are, the more you
| could benefit from that situation. If everyone invests in index
| funds then the companies in the index get pushed up while the
| companies that are not in get pushed down. This means that
| there will be many good companies that are undervalued outside
| of the index and anyone with the literacy to notice that can
| buy them and then benefit.
| mihaic wrote:
| It's not about the fact that you don't have an edge against
| your peers with financial literacy, you'll always have that.
| It's the fact that you won't have an edge against your median
| efficiency elders, who are simply leveraging a much larger
| capital.
|
| Closing a gap by 2% per year, even over 50 years still means
| less than tripling an amount (1.02 ^ 50 ~ 2.7). Your edge
| needs to be significant for exponentiation to work within
| your lifetime.
| Havoc wrote:
| The fallacy here is that it's not an either or proposition.
|
| You need practical experience but supported with theory along the
| way. Just like with basically anything else
| pradn wrote:
| > Teaching financial concepts in a classroom is like teaching
| swimming with PowerPoint slides. You can explain the theory of
| the butterfly stroke all day, but at some point you need to get
| in the water. And with money, the water is always cold, deep, and
| full of currents that weren't in the textbook.
|
| It is totally true that these extra-mathematical factors have a
| big part to play how we spend and how we save. If you're in a
| certain culture that expects a certain level of spending, it's
| hard to take yourself out of that.
|
| I still don't see even adults with a good idea of basic financial
| things. How much does it cost to buy a house? How does a monthly
| payment change with interest rates? How do you become eligible
| for Social Security?
|
| You really need to keep these several-dimensional functions in
| your head. At the least, a good grasp of algebra is required.
| BugsJustFindMe wrote:
| > _I still don't see even adults with a good idea of basic
| financial things. How much does it cost to buy a house?_
|
| Big part of that is because the answer is "twice as much as 10
| years ago", which is simultaneously mindboggling, appalling,
| and hard to keep track of.
| hollywood_court wrote:
| Many people I know need some lessons in basic financial literacy.
|
| I've been living in an apartment for the past 18 months while
| saving to build a house and I'll be here until the home is
| completed in October.
|
| It has been very alarming watching how my neighbors behave and
| spend money.
|
| I myself come from an impoverished background. Single mom,
| multiple violent stepfathers, no money, left home at 16 to escape
| the abuse, etc.
|
| I slept hard for many months and I've been without a home on
| three different occasions.
|
| However, I firmly believe that poverty is a choice for a lot of
| people and it's never been more evident until I lived in an
| apartment complex.
|
| My across-the-hall neighbors order food delivery 10+ times per
| week. Last weekend, from Friday afternoon until Sunday morning,
| they had food delivered 5 times.
|
| I've only paid for food delivery once and that was when my son
| and I were stuck at home with Covid.
|
| Many of my neighbors drive new $50k+ automobiles.
|
| Then I hear the same across the hall neighbors arguing about
| money. She's a teacher (I see her ID card hanging from the
| rearview of her CR-V. The husband works in a kitchen.
|
| I'm guessing their combined gross income is maybe $100k and
| that's being generous.
|
| Yet they spend money on food delivery like they were making twice
| that amount.
|
| My base salary is only $130k which is decent for Alabama, but I
| wouldn't dare waste money on something like that.
|
| I drive a 25 year old Land Cruiser that I maintain myself.
| Growing up poor, we didn't pay anyone to do anything. I had to
| learn to repair things myself. I kept that habit through
| adulthood.
|
| Sorry for the rant. It's just wild seeing how some people live
| while also having to hear them complain about having no money.
| pyrophane wrote:
| A lot of people were conditioned to rely on food delivery when
| it was cheap. Pre-pandemic, restaurant food was much less
| expensive, delivery apps had low or no fees, and the options
| for tipping were much lower.
|
| Now, of course, restaurant prices have skyrocketed, apps all
| charge significant fees and the tip expectation is around 20%
| (and don't even get me started on how ridiculous it is to base
| tipping on food cost when none of the tip goes to anyone
| involved preparing the food and a 10lb bag of mashed potatoes
| is cheaper than a 1/2 oz container of caviar).
|
| But people now expect their meals to be brought to their door
| and have a lot of resistance to going out to get it or, god
| forbid, preparing it for themselves.
| neogodless wrote:
| I suspect there's a cultural element that I can't speak for
| outside of my own bubble.
|
| For example, I grew up in a rural area, large family, single
| income. I don't know exact figures, but adjusting for
| inflation, I suspect my dad was making what would today be
| $50K USD / year, feeding 4 kids (and a bunch of farm animals
| and pets.) Going to a restaurant was inconvenient and
| expensive. The food from animal husbandry and farm crops was
| labor intensive, but vastly cheaper. Every meal was cooked or
| prepared at home. (e.g. we'd have cereal or pancakes,
| sandwiches for lunch, a meal of meat and potatoes and
| vegetables.)
|
| If there's a point in this, it's that _going out_ or having
| someone else do all the work of making a meal was a _special
| treat_. It was rare, it was exciting, it meant something.
|
| But I know as an adult with the means to live very
| differently, we order out at least once a week, which feels
| like a ridiculous luxury. It doesn't feel special. It just
| feels more like, well we didn't _need_ to be prepared and
| have the ingredients we need here at home, so we 'll settle
| for something convenient. (Though where we live, we do not do
| delivery, but have to drive 10-15 minutes for pickup. We're
| usually already out because we take our dog to the park
| regularly.)
|
| Obviously there's a much bigger discussion on general
| financial literacy, defining "need", "quality of life", what
| we feel we deserve, whether we think about how today's
| decisions impact our future and if we care enough to do
| something about it. But at least in respect to ordering food,
| I think at least some of that is going to come from culture
| and family influence. In my specific case, seeing how
| hesitant the provider of my family income was to spend money
| also gave me reason to stop and think a bit before spending
| as an adult, even as my income grew well beyond what my birth
| family was getting.
| hollywood_court wrote:
| The trick is finding enough self-respect for yourself to
| break that conditioning.
|
| I was conditioned to smoke tobacco, waste money on crappy
| food, vote against my own self interests every two years at
| the ballot box, buy a new car every five years, hate people
| who looked or behaved differently than me, say 'yes sir' and
| 'yes ma'am' and do as I'm told, etc.
|
| I still find myself trying to break away from the stuff I
| learned as a child and as a young man. It takes life long
| effort.
| teddyh wrote:
| I often link to these articles. Especially the second one
| is exactly what you are talking about:
|
| * 5 Things Nobody Tells You About Being Poor, May 27, 2011:
| <https://www.cracked.com/blog/5-things-nobody-tells-you-
| about...>
|
| * The 5 Stupidest Habits You Develop Growing Up Poor,
| January 19, 2012:
| <https://www.cracked.com/blog/the-5-stupidest-habits-you-
| deve...>
|
| * 4 Things Politicians Will Never Understand About Poor
| People, February 21, 2013:
| <https://www.cracked.com/blog/4-things-politicians-will-
| never...>
|
| (Repost: <https://news.ycombinator.com/item?id=31752737>)
| klabb3 wrote:
| Growing up poor or with money problems, seeing that struggle.
| One does come out different. One can potentially be more
| understanding when people are just continuing the lifestyle
| they grew up with. In this case, 2 working adults, one white
| collar, used to be enough to rent an apartment and eat out/
| have deliveries regularly, no? That's just a story of middle
| class erosion and financialization of the economy.
|
| What makes very little sense to me is seeing people go from
| having very little to making a lot, and the increases in
| lifestyle to match income. Aka lifestyle creep. Things that 2
| years ago were not even a wish are now taken for granted. And
| it's all the same as everyone else.
| rayiner wrote:
| > In this case, 2 working adults, one white collar, used to
| be enough to rent an apartment and eat out/ have deliveries
| regularly, no?
|
| That's not true. I grew up in the 1990s, and my dad had a
| white collar job working for a government contractor. I
| remember that he made right around the median family
| household income in the early 1990s, which was at the time
| double the income for all households. (My mom didn't work
| then.) Our neighbors were professionals, white collar federal
| government workers, etc. Our house was 1,100 square feet. We
| rarely got even pizza delivery. Maybe we went to Sizzler or
| Pizza Hut a few times a month. We had one car until 1998 (a
| Toyota Camry). My dad worked right outside of DC and took a
| bus to the train station, and then took the Metro to the
| office.
| plakspin wrote:
| I looked up the average cost of living in Alabama. It says it
| is 54k for a family. Do you think that is realistic? The reason
| why I ask is that US incomes always confuse me. Incomes seem
| quite high and I understand that taxes are much lower than here
| (Finland). As an uninformed outsider with these costs of living
| 100k for a couple seems quite nice and a gross income 130k
| appears absolutely rich. Am I missing something? IlJust very
| curious always as some of the income programmers with my
| experience get in the US seem absolutely unachievable here.
| neogodless wrote:
| The numbers made my eyes jump out a little, though I need to
| remember that "six figures" when I was a ten would be over
| $250,000 now, a few decades later.
|
| And I'm in the U.S., Pennsylvania instead of Alabama, though
| they should be similar. (COL site says PA is 20% more
| expensive on average.)
|
| https://www.usnews.com/news/best-
| states/rankings/opportunity...
|
| Of note, Alabama is one of the cheapest states to live in
| nationally. I would think that a $100K USD income would still
| allow for a healthy amount of extravagance _and_ savings,
| though that would require _financial literacy_.
| horsawlarway wrote:
| Childcare and healthcare costs are really the big two.
|
| 100k is an awesome salary for a young single adult in most of
| the country.
|
| 100k is much less awesome when you pay $3200/m for daycare
| for two kids, and $890/m for family health insurance.
| saguntum wrote:
| Yeah, childcare costs are absolutely brutal nowadays. We
| are lucky enough to be able to hire a nanny 3 days a week
| with grandparents caring for them 2 days a week with young
| children. Daycare costs so much that this situation ends up
| being cost competitive.
|
| Cost of living in my Texas city is about 10% lower than the
| national average, but I have friends shelling out
| $1400/month for 1 child. That's more than my mortgage
| payment from a house we got in 2020.
|
| I haven't done looked at the FRED graphs, but I wonder how
| much people leaving the labor force due to the math not
| working out for childcare costs is happening.
|
| I am sure these numbers seem kind of low to folks living in
| high cost of living areas, but the median household income
| here is just over $60K.
| y-curious wrote:
| An easy way to check is look up basket prices. Average rent
| in America is quite high, food costs are high, tipping
| culture and other fees make food delivery an expensive
| venture. 100k for 2 people is a lot of money on a global
| ecale, but it's not really "rich" in the US unless you spend
| extremely smart for many years.
| jonstewart wrote:
| The cost of living (and everything else) varies wildly in the
| United States. Finland is maybe analogous to Rhode Island--
| not Massachusetts (Sweden) or Connecticut (Norway), but
| close. Alabama is then more like Albania--quite a bit
| cheaper... but do you want to live there?
|
| (Sorry to all the Albanians, it's not really fair to compare
| you to Alabama.)
| hollywood_court wrote:
| Maybe for rural Alabama, but not for Auburn. I think Auburn
| has the state's second highest cost of living, second only to
| Madison.
|
| My two-bedroom apartment is now $1400 per month, and that's
| for a decent but not exactly nice apartment.
|
| I could never support myself and my son on $54k here in
| Auburn.
| lnsru wrote:
| I got that $50k automobile. And it's absolutely worth it. It
| has warranty and I don't need to spent few hours every month
| fixing things, that shouldn't break. Land Cruiser is bad
| example because of very good build quality and excellent
| durability. I don't know how it's in US, but pretty much
| everywhere else Land Cruiser is luxury. I personally pay gladly
| additional 200EUR in a month to not to do 4-6 hours chores.
|
| But yeah, the food delivery is expensive. Never do this. Try to
| teach the young guys in the office, that cooking is not rocket
| science. 3 smallish pieces of okayish meat cost 5EUR, add some
| rice. Grab paprika, tomato or cucumber and you have super
| healthy 3EUR meal. Instead of 7-10EUR microwave crap from
| supermarket.
|
| Financial literacy should be a topic in school. Repeated every
| couple years going from simple budget planning to mortgages,
| stock market and exotic derivatives. Plus a course about all
| the scams and basic computer security. Heck we even modeled
| back then strategies of fake company before graduation. But
| that was special school.
| anticorporate wrote:
| The "50k automobile" sounds like almost an aside in this
| conversation, but it's still bothering me.
|
| I know there are reasons that new car prices have gone up so
| much in recent years, but is $50k still "reasonable" in the
| context of a financial literacy conversation? I too ended up
| going down the path of buying new cars when I became an
| adult, partially due to having no car repair education
| (something I only gained on my own later in life), partially
| due to living in apartments with no place to work on them
| early in my career, but mainly due to the incredible pressure
| to be able to get to work reliably in a society without
| adequate public transit.
|
| But my new cars cost more like $18k (2009), $26k (2014), and
| $31k (2019). Each felt like a luxury at the time, having
| grown up with used cars generally 15-20 years older than the
| year we drove them in. Is $50k not still a good $20k more
| than a base model Camry? It sure still sounds like a luxury
| to me.
| lnsru wrote:
| My BMW 328xi had tired automatic gearbox. Only Tesla wanted
| to have it for trade in, because the gearbox was still
| working more or less normal. No person would buy it in such
| shape, trade-in elsewhere didn't work either. I was also
| driving a lot in that time. 110EUR weekly gas bill. And
| Tesla had a small discount plus zero interest offer at the
| time. I signed for it and got model y long range. My first
| new car in whole life.
|
| My alternatives were dire: repair the gearbox for 8k. Ditch
| bmw and get some used vehicle for 25k. Take some other new
| vehicle with 6-8% interest rate. Or buy some 15 year old
| crap car and spend tons of money repairing it.
|
| Fast forward to today: I forgot broken bmw, got used to
| comfy, fast family car. My current workplace offers free
| electricity as a benefit, so I use supercharger only few
| times a year on vacation. Financially it looks good: gas
| and repair costs are gone.
|
| I can tell only one thing: each buy or not to buy decision
| is very individual. If bmw wouldn't start falling apart
| after 80k miles I would keep it as long as I can. I also
| wouldn't buy Tesla in first place if somebody else would
| buy bmw. I wouldn't need a car at all if I had no relative
| to care for 30 miles away.
| hollywood_court wrote:
| I buy a half-cow from a rancher every 6-7 months. I prepare
| all of my meals and all of my son's meals. I cook fresh meals
| for us six nights per week and take my lunch to work daily.
|
| We eat out exactly once per week, and it's always the same
| place. It has counter service, so no tipping is expected.
|
| It's the only restaurant in the area that prepares a meal
| better than I can at home. I know the owner, and we text each
| other occasionally and lift together at the same gym.
|
| I've only had one issue at his restaurant, which was resolved
| by simply calling him.
|
| My Land Cruiser costs me <$3k per year to own. That includes
| gas, insurance, and maintenance parts. I spent fewer than
| five hours on yearly maintenance for the four years I've
| owned it. The only exception was last year when I had to do
| the timing service, and that repair alone took me ~11 hours.
| It was much cheaper than the $2600 the import shop wanted for
| the repair.
|
| I bought it because the 100 Series is probably the most
| reliable vehicle ever.
| skeeter2020 wrote:
| it's a pretty brutal version of "financial literacy" but it
| sounds like you had it. Not sure how you broke the cycle
| though; what made you aware of an alternative?
|
| We have an entire generation of NOT poor western young adults
| who grew up during essentially zero % interest rates. Their
| parents financed lifestyles well beyond their means; that was
| their financial literacy education. None of your neighbours
| actually "bought" a $50K+ automobile. They are all paying bi-
| weekly (or weekly!) finance payments. Combine with our focus on
| immediate gratification and society is pretty messed.
|
| And it wasn't just consumers! Nobody runnning a small business
| has had to figure out to make the math with double-digit
| business loans work for some time. Massive fiscal spending
| growth has also made many businesses viable on government
| borrowing.
| hollywood_court wrote:
| My number one tools are arrogance and self-respect.
|
| I spent a few months visiting a therapist once per week. He
| said my arrogance is probably the most significant driver
| behind my success.
|
| Statically speaking, I should be dead, in prison, or broke
| with multiple illegitimate children or addicted to drugs and
| alcohol.
|
| I kept telling myself that I was better than my family
| members and peers who made those choices. I had to
| distinguish myself from my entire family to succeed.
|
| I am a hyper-critical individual and most of that criticism
| is towards myself. Every time I do something or make a
| purchase, I ask myself if I'm treating myself with respect.
| rayiner wrote:
| My wife's parents come from poverty (they attained middle class
| around when she was 8-10) and she always says there's "people
| who are good at being poor and people who aren't." We are
| fortunate to make a lot of money, but even then I order
| delivery maybe a few times a year. I had back to back meetings
| the other day and was feeling sorry for myself and ordered some
| kabobs on Grubhub and she flipped out, lol.
| washadjeffmad wrote:
| Middle class poverty traps look like what you describe. I don't
| understand the compulsion to spend all of what you make every
| month, and sometimes more, either.
| pwg wrote:
| > I don't understand the compulsion to spend all of what you
| make every month, and sometimes more, either.
|
| It's a faux 'status symbol' thing. The idiom is "Keeping up
| with the Joneses"
| (https://en.wikipedia.org/wiki/Keeping_up_with_the_Joneses)
| and it is a self inflicted syndrome.
| kevin_thibedeau wrote:
| A large portion of the population has poor impulse control.
| Many of them see nothing wrong with spending large portions
| of their income on discretionary expenses even when cheaper
| alternatives are available.
| saguntum wrote:
| I understand where you're coming from. Some examples from
| people I know:
|
| * Person making around $40K buying a $50K new vehicle
|
| * Software engineer making $100K+ in a low cost of living area
| asking if $5K is a good enough down payment for a home (at
| least they questioned it!)
|
| * Consultant complaining about money while taking Uber back and
| forth to work every day and getting all groceries delivered on
| Instacart
|
| However, these examples are from people who have the means to
| make these poor decisions and access to credit to do so. I
| think you understand this from having grown up poor, but it's
| worth illustrating for readers who may seen your comment and
| blame most poorer people for their situation.
|
| There's "poverty," and then there's poverty. The bottom 20% of
| households in the US make about $22K per year. People I've
| known working in construction get paid entirely in cash and
| have no credit, often having to choose between paying the water
| bill or the electric bill after an unforeseen emergency. At the
| level where you are paycheck to paycheck, assuming the
| paychecks are regular, you can't save for emergencies because
| every day is spent triaging the basics.
| PaulDavisThe1st wrote:
| I don't know of the veracity of his claim, nor the definition
| he was using, but Bernie Sanders claimed in Omaha, NE last
| night that "60% of Americans are living _paycheck to
| paycheck_ ". If true (and it likely is for some definition of
| this), seems worth knowing.
| throwaway173738 wrote:
| "New math" was actually a college prep thing because it sought to
| teach kids how mathematics as a field worked. It's telling that
| the author's only criticism is just that it bewildered some
| parents. I would expect that because they were never exposed to
| those concepts in the first place. Kids are bewildered by
| anything new. They were bewildered by "old math" too. You have to
| work with them to get them past that. So saying it bewildered
| kids is like saying water is wet.
| bloomingeek wrote:
| I took a one semester class my soph year in high school called
| Business English. It was basic stuff about money, jobs and
| banking skills. (by this I mean how to access a bank account, how
| to try to determine what field to enter for work and how to get
| training and setting up a budget.) It was a very helpful class
| for me because my parents were not helpful in any of these
| subjects.
|
| One of the lessons the teacher gave one day has never left me:
| depending on your income, if you decide to have a new house, you
| may have to drive a used car. This very simplistic statement kept
| me out of a lot of financial trouble down through the years.
|
| When the company I worked for filed for bankruptcy our wages and
| benefits were drastically cut. Sadly, a third of my co-workers
| were forced into bankruptcy and some of them found themselves in
| divorce court. (remember, money is one of the biggest causes of
| divorce still today.)
| naming_the_user wrote:
| As someone who grew up in a poor area (not in US, but not really
| relevant, I think), the main lesson that something like home
| economics/financial literacy classes need to teach is basically
| the role model / "this is actually possible" thing.
|
| Basically, some of the following:
|
| For poor kids;
|
| Don't train or focus on a career that doesn't pay well; don't
| even consider it, you can't afford it. That's someone else's
| problem. Maybe you can do it later when you 'make it'.
|
| (for example - low end - nursing, teaching, etc, high end -
| fashion, art, photography. do these after you make money)
|
| Yes, you can make it, just because your neighbours are poor
| doesn't mean that you have to be
|
| You will lose friends if you are ambitious, this is normal
|
| etc.
|
| Some people seem to intuitively have this understanding
| (personality traits that are a bit more individual, I guess),
| others don't.
|
| The problem of course is that the state school system basically
| can't do this, because there's a conflict of interest, someone
| needs to do the jobs that don't make sense for an individual to
| pursue.
| jlintz wrote:
| One of the best lessons I had was in my senior year of high
| school with my economics teacher. We did a project where we had
| to pick a career and research the average salary. Then he showed
| us how much taxes would be taken out of that pay check and you
| had your monthly spend. Then you researched a home, car, budget
| for food and if you could afford it, saving for retirement.
| Suddenly you saw how quickly the money disappeared and reality
| hit me. There were so many other factors you could have added in
| that would suddenly find yourself in negative each month like
| student loan payments and various "wants"
| lhamil64 wrote:
| I had a health class in high school that taught things like sex
| ed, first aid, we even learned CPR (the teacher was also an
| EMT). I remember one class where we had to bring in newspapers
| and we drew scenarios like "you are divorced and have sole
| custody of your child, you make $X/hr" and we had to basically
| find an apartment in the paper and see if we could make it
| work, adding in things like food, utilities, etc. IIRC I wasn't
| able to get my monthly expenses below what I was hypothetically
| making...
| petalmind wrote:
| "What [schools are] bad at is teaching people to win in
| adversarial environments. And they're also bad at the meta-game
| of reminding someone that knowing the basic mechanics of some
| process does not make them an expert, but does make them a mark.
| Said differently: if you know which hands win in poker, thinking
| that this means you know how to play the game makes you a mark,
| not an expert."
|
| https://capitalgains.thediff.co/p/teachingfinance
|
| "And it's hard for a teacher to end a class by telling students
| that they got an A+ in financial literacy and are now equipped to
| get ripped off in entirely new ways by an entirely different set
| of adversaries. But it's also impossible to create a repeatable
| standardized test that accurately simulates such an adversarial
| environment, because any time everyone gets the same correct
| answer, that answer would need to become wrong."
| jordanpg wrote:
| Was with you right up to the "entrepreneur" part. No, fawning
| obeisance to entrepreneurship isn't the answer, sorry.
| juujian wrote:
| The underlying philosophy is also partially problematic. That is,
| the idea that the next generation can just budget their way out
| of a problematic macroeconomic situation. Houses are utterly
| unaffordable now compared to 30 years ago, and no amount of
| budgeting will change that. But "financial literacy" shifts the
| blame and makes it out as an individual inability to budget. It's
| still useful to learn about how to use a credit card, and how not
| to, but that is not the root cause. Besides, the big three,
| medical debt, and student loan debt, credit card debt, and maybe
| car loans could be tackled at the macro-level, too, but that
| would be government overbearance again, wouldn't it...
| thelastgallon wrote:
| I fully agree that only experience creates a forcing function to
| learn, most kids who were 'dull' kids in school ends up learning
| how to make good decisions for themselves after a decade of work
| experience. The 'smart' kids who fall for crypto/nft scams
| probably aren't that smart.
|
| It might be slightly illegal for kids to enter into contracts,
| which is a prerequisite for running a business. There is also the
| small matter of child labor laws (also intersects with minors not
| allowed to sign contracts?). I'm not arguing from a moral
| standpoint, but just the bottlenecks to make this happen. But we
| live in interesting times, looks like most of the regulatory
| authorities are gone, perhaps this bottleneck to enterprising
| child entrepreneurs and big businesses looking for cheap labor
| will be removed?
|
| I also wonder, child labor was commom for pretty much most of
| human history, but we have a decent history of child labor during
| industrial times. How many of them became enterpreneurs? Or were
| successful financially (better than their peers who weren't child
| laborers) because they got early experiential learning?
|
| 2 examples from that time, Andrew Carnegie (experiential
| learning) and Rockefeller (School).
|
| Andrew Carnegie (I guess he was 12?): Soon after this Mr. John
| Hay, a fellow Scotch manufacturer of bobbins in Allegheny City,
| needed a boy, and asked whether I would not go into his service.
| I went, and received two dollars per week; but at first the work
| was even more irksome than the factory. I had to run a small
| steam-engine and to fire the boiler in the cellar of the bobbin
| factory. It was too much for me. I found myself night after
| night, sitting up in bed trying the steam gauges, fearing at one
| time that the steam was too low and that the workers above would
| complain that they had not power enough, and at another time that
| the steam was too high and that the boiler might burst.
|
| John D. Rockefeller: He attended Cleveland's Central High School,
| the first high school in Cleveland and the first free public high
| school west of the Alleghenies. Then he took a ten-week business
| course at Folsom's Commercial College, where he studied
| bookkeeping. In September 1855, when Rockefeller was sixteen, he
| got his first job as an assistant bookkeeper working for a small
| produce commission firm in Cleveland called Hewitt & Tuttle.[
| myheartisinohio wrote:
| Do you have any books you'd recommend on Rockefeller and
| Carnegie?
| thelastgallon wrote:
| I haven't read any books about them. The Men Who Built
| America is a good show to watch. On youtube:
| https://www.youtube.com/watch?v=DydmaedDIhE
| rincebrain wrote:
| IMO a bunch of the problem is distress and short-term thinking.
|
| You're not planning for 1, 2, 4 weeks out if you're constantly so
| stressed you're only thinking about today.
|
| And if you're so overwhelmed you're only thinking about today,
| you're not noticing that you're spending impulsively 5, 6, 7
| times a week, and that it adds up.
|
| That's really been the key thing, the times that I've sat down
| and tried to talk someone through who was struggling with their
| financial planning.
|
| They never really internalized doing this sort of planning
| regularly, for various reasons, and are so stressed by the day to
| day that they do not spend time thinking about much beyond the
| immediate, not just in terms of finances, so they're not trying
| to save for a goal, or a vacation, they're just trying to get
| through the day and pass out, so that kind of planning and
| feedback of "oh I need to not do that" just doesn't happen, much
| less learning to stop and think before buying things.
|
| I don't have great advice on how to use this for better outcomes,
| though - sometimes, just making the suggestion when asked that
| they start to do this sort of planning regularly has been
| massively helpful for people, but I have, a couple times, had
| people ask for advice, only for it to become clear that they were
| looking for a rationalization to externalize their problems -
| that is, any proposal which required they change their behavior
| was off the table.
|
| (The above, by the way, is also, I think, why there's so much
| backlash about RTO and similar - a lot of people who had been
| mindlessly struggling through the day, had time to themselves
| now, and did some thinking they never had the energy to do
| before...)
| epolanski wrote:
| > They do it because everyone they know is going to college,
| because their parents expect it, because they've been told their
| whole lives that education is always worth it
|
| Jm2c but I would not really recommend, not blindly at least, a
| degree to many kids today. You really like it/care? Good. Go for
| it.
|
| In my countries, Italy/Poland, the average plumber or electrician
| makes more than the average law or economics degree.
|
| You want to make very good money? You're more likely to do so
| running a bakery in northern Italy where there's very few of
| them.
|
| My SO lives in Reggio Emilia, a city of 150k+ it's impossible to
| get a decent croissant for breakfast, it's crazy.
|
| The new generations will have relatively low competition for blue
| collar jobs, but plenty in higher education.
|
| It's especially easy on those that want to be self employed to
| find opportunities.
|
| Yet, every time I say those things there will be the usual person
| bashing me that a very good lawyer or engineer will make more
| than those jobs...sure, true. But the largest majority won't.
| dasil003 wrote:
| This is a ridiculously shallow article all based on arguing
| against a strawman that teaching financial literacy will, on its
| own, lead students to make wise money decisions.
|
| Yeah, no shit. It's well understood that classroom education can
| not and does not substitute for real world experience in any way.
| There is literally nothing the education system can do that will
| lead to young people making wise financial decisions on its own.
| On the other hand, teaching them financial literacy is not
| "bikeshedding" as the article suggests. Financial literacy is not
| just some esoteric application of basic math that is somehow
| distracting from the fundamentals. The modern world is set up to
| prey on the naive by extracting usurious interest rates. Kids
| absolutely should be taught about this, even if they still have
| to go through a few hard knocks for it to actually sink in.
| sinuhe69 wrote:
| While teaching the "theoretical stuff" may not help much, playing
| financial games can help ingrain the knowledge much better.
| Perhaps because the feeling is more real and the emotions more
| tangible.
|
| I've played games like Build Your Stax [1], Stock Market Game
| [2], SPENT [3] and other budget games with my son and he really
| likes them. He quickly broke the record and beat me in the games
| and was very proud of himself :)
|
| [1] https://buildyourstax.com/ [2]
| https://www.stockmarketgame.org/ [3] https://playspent.org
| readthenotes1 wrote:
| I have several impoverished family members and for none of them
| is it because of the math or initial lack of mobey.
|
| It is because of their inability to believe that negative
| consequences could happen to them so they make one stupid
| decision after another.
|
| There is no training I know of that can fix that. Certainly the
| School of hard knocks has not.
| farceSpherule wrote:
| How about you teach kids basic concepts like how to balance a
| checkbook and how to balance expenses based on monthly income.
|
| It's basic addition and subtraction.
| gatienboquet wrote:
| > We're making the same mistake with money that we once made with
| abstinence-only sex education: pretending that pure knowledge
| will triumph over emotion, peer pressure, and real-world
| temptations. Spoiler alert: it won't.
|
| Funny things, couple weeks ago, the most upvoted links was 'its a
| knowledge proble or is it'
|
| https://josvisser.substack.com/p/its-a-knowledge-problem-or-...
| diegolo wrote:
| to me the author just rediscovered montessori method
| https://en.wikipedia.org/wiki/Montessori_education
___________________________________________________________________
(page generated 2025-02-22 23:01 UTC)