6 ms·

I think the idea of focusing on reductions in expenses is the right thinking. I am not sure disguising it as increasing social welfare is the answer. I have bee

by eggy 10y ago

I think the idea of focusing on reductions in expenses is the right thinking. I am not sure disguising it as increasing social welfare is the answer. I have been teaching all of my children, and ranting about it online occasionally, that a lot of younger people are financially illiterate, including so-called smart or tech people. I was taught live within your means. I grew up below the poverty line in a crime-ridden neighborhood in Brooklyn in the late 60s, early 70s, and now I am living in the impoverished rice fields of East Java, Indonesia by choice. My son bought his own first used car by shoveling driveways, tutoring, working for a tree company all the while maintaining an A+ average at school. Financial literacy is not just being able to balance a checkbook. It is about being able to keep a 3 month to a full year of cash flow right in front of you, whether on a piece of paper or a spreadsheet. And don't tell me it is unrealistic. I did this when I had nothing. I recieved a shoeshine stand and kit when I was eight, and did newspaper routes, sweeping floors for supermarkets part time and a bunch of other fun jobs. Yes, they were fun for me. I smiled and whistled while I did them. I didn't see them as holdovers until I could be a real scientist or write my novel or make my art. Rather I saw them as another day towards buying that telescope on a fire sale at the local hobby store, or a book I really wanted to own, not borrow from the library. Besides, I met some really interesting people while doing them, and some led to better opportunities. Teach your kids the value of a dollar, and have them know what it really means in their gut. That is how poverty will be eliminated eventually in spite of any obstacles societal or otherwise.

RangerScience 10y ago
I live within my means but am not financially literate. It sounds like a good practice for me would be writing down my in/out cash flow - like you say, "It is about being able to keep a 3 month to a full year of cash flow right in front of you, whether on a piece of paper or a spreadsheet". Is starting out really that simple? Writing down what comes in, and what goes out, and what you know will come in and go out?
- toomuchtodo 10y ago
  https://i.imgur.com/1rPEkGQ.png https://i.imgur.com/1rPEkGQ.png
  - eggy 10y ago
    That's pretty neat. I'll have a better look at it later. Thanks!
    - toomuchtodo 10y ago
      You're welcome!
- Kluny 10y ago
  It's a good start. Read Mr Money Mustache to continue.
- eggy 10y ago
  It is simply keeping the expenses on the left rows, the time period on the columns (week, month), and keeping a running tally carried over to the next column at top. Sounds simple, but it is a powerful tool, since you see when you might actually dip to zero or below way before it happens, and you can plan. Simple keeping a balanced checkbook and writing your known expenses, is necessary, but does not provide the look ahead. You'd be surprised how many people who make more than 6 figures get caught short some months when for the year they're OK, but due to the ins and outs of cash flow, they are at a deficit one day or week out of the month. You can find plenty of templates online. I keep mine simple as compared to what my past business accounting was. I am hoping to get more deeply financially literate when it comes to things like investments for my future (kind of late now, and a fallout of how I was raised), but more so that I can at least teach all of my children. I don't subscribe to the work and retire model. I personally work to make ends meet, and work on my personal interests at night, or when I stop working and live cheap to devote more effort to the next round.
- et-al 10y ago
  I have a friend who used to write down everything he spent money on, then tallied it up weekly to see if he was on track. Over time he stopped doing that and transitioned into what happened that day, and now he keeps an interesting and concise journal. So if you need additional motivation, think of it as journaling. When I travel, I still write down my expenses and what I did that day. I figure it'd be useful when I'm old to tell the kids how much a 1GB prepaid SIM cost "back in my day." But seriously, keeping track of your expenses is a fundamental step in financial literacy. Hook everything up to Mint if you can't be bothered writing daily logs.
mc32 10y ago
Financial numeracy is definitely an issue which should be focused on. There was a story recently by the local NPR station where an organization which was teaching people new to the workforce about savings accounts, etc., found that many people used payday loans and were basically giving 30% - 40% or so of their paycheck to these high interest loan places because they just didn't know how to use a bank and set-up a savings account. These people just didn't have a better example to follow --their friends and mates had done the same so they just followed not knowing there are alternatives.
- will_brown 10y ago
  I was looking for a comment just like this! It seems when anyone talks about household expenses, just like this article, we get the same list: housing, food and transportation. I don't know why the cost of debt isn't right in the mix. Maybe it is assumed debt is paying for these other things, so when debt is paid off, the expense is just chalked up to the underlying housing, food or transportation costs. However, it ignores the fact debt carries its own costs which are significantly more expensive for the poor and the interest alone, especially on payday loans as you noted, could probably rival food and transportation costs of the poor.
  - Scarblac 10y ago
    And interest is a huge driver of wealth inequality. A large majority of people pay more interest than they receive in their lives, that money ends up at the top. We need more diverse currencies that are not the debt-based fiat money we have now.
    - theandrewbailey 10y ago
      Personal debt is not the same as using a debt-based fiat currency. They are completely different things.
- flaviusb 10y ago
  In many places, financial institutions like banks do not serve the poor. Like, in the US if you are a poor minority living in an area heavy in poor minorities, it is quite likely that banks will essentially refuse to serve you. Redlining was an example of this kind of thing. There are other, related things - low balance fees, minimum transaction sizes, the need for proof of income or a guarantor who can provide such. This is why cheque cashing places still exist in 2016 in the US - for many people, they literally will be refused service if they try to open an account so they can deposit their paycheque. Blaming this on 'poor financial literacy' is backwards - all the financial literacy in the world won't help you when banks systematically discriminate against you.
free2rhyme214 10y ago
Financial education isn't taught in school. I recommend showing your kids Rich Dad Poor Dad as well.
- HerpDerpLerp 10y ago
  I don't have a replacement book, but Rich Dad Poor Dad is less well thought of now. I believe it has a strong push on property as investments. It is maybe a better route to look at 'three fund portfolio' low cost ETF/mutual fund strategies. Investment blogs such as Mr Money Mustache may also be a good road into a good long term investment strategy.
SilasX 10y ago
I guess the real hurdle is getting people to understand the contradiction between a) "schools should require financial literacy for graduation" and b) "standardized testing is the spawn of satan".
- PKop 10y ago
  Or just offer it generally, forget about testing for it. How many people had any kind of accounting or personal finance in high school? More than 1 semester? Not me. And if that's generally true for many, than that is a tragedy. How practical, and helpful would that be for students? And yet it doesn't seem to be a focus of our public schools.
  - cmdrfred 10y ago
    There were monthly mandatory pep-rallies in my school growing up. No classes about financial literacy though. I guess they thought we would all join the NFL after graduating.
  - eggy 10y ago
    Not to mention the death of the trade school of learning how to operate machinery and tools for woodworking and metalworking. On a bright note, some of the engineering programs are incorporating more hands on experience, since it informs an engineer's take on what he inevitably asks to be produced.
vjdjcjnnf 10y ago
Yep, just pull yourself up by your bootstraps! Poor people are simply stupid and lazy. I would know, being an intelligent member of the upper middle class.
- PKop 10y ago
  I think his comment and attitude would be more helpful, motivating and inspiring to most people, poor or otherwise, than your self pitying snark. Honestly.
noonespecial 10y ago
I worked my way through college. If my kids try to do the same it will take them more than 14 years if they match my work. The snow you walked uphill both ways in wasn't as deep as you think.
- enraged_camel 10y ago
  Yeah. I think it's a huge issue when people romanticize the hard work they have done in the past and expect the same from their children. It's one thing to say "my kid should be financially literate" and another thing to say "I sweeped floors at a supermarket when I was a teenager and so should my kid." IMO our goal should be to make life better for our children, and that involves giving them opportunities and resources so that they don't have to work as hard as us, unless they absolutely have to. My dad worked through college, but paid for my college so that I could focus on my studies. I plan to do even more for my own kids in the future, maybe by paying for their grad schools as well.
  - rtpg 10y ago
    I think what GP was trying to mention is that the cost of things like college have gone up immensely since then. The same strategies won't work now. You can't live on a minimum wage job in most places in the US, let alone live + pay for school
  - eggy 10y ago
    You misread me. I don't expect my son or other children to work sweeping floors or otherwise. Each generation of my family has improved life for the next generation. From my Momo, grandma, coming over as a cleaning lady for New Yorkers, to my Dad driving a truck or other such job. I worked through college, but dropped out voluntarily. I think there are other opportunities to learn nowadays aside from university and graduate school unless you want to be a doctor, engineer, or lawyer. My son and daughter volunteer and work and go to school. They are both doing exceptional. My son was number one in the entire county in Chemistry this past year. I am split on whether they would be better off not working or volunteering at all. It is their choice; I didn't ask it of them. I did offer them the option of focusing solely on studies, but they like what they do. What can I say? I have friends whose kids are given whatever they please. These are not friends who grew up where or how I did. Their kids are having all sorts of serious adaptation issues. I think it is due to having too much time and no responsibility. I work hard at my art and job, no romanticizing here. The drunk writer, or coder who just wings it, are stereotypes. The real achievers work their ass off. I know from being a manager of hundreds, and including myself, that busy people seem to get more work done. I am not talking about the culture of no sleep, 75 hours per week. I am talking about having 30 hours of real work per week in a 40 hour week, and not 10 hours and making up for the deficit in a 75 hour week, which seems common in some companies.
arvinsim 10y ago
> I have been teaching all of my children, and ranting about it online occasionally, that a lot of younger people are financially illiterate, including so-called smart or tech people. You are right on the money. And that is true even in third world countries(I live in one). Financial literacy was assumed to be taught by parents. Unfortunately, not all parents are financial literate either.
deleted 10y ago
[deleted]
blowski 10y ago
if puritanical lectures solved the world's problems, we would already be living in paradise. Clearly there are a lot of reasons why some people struggle, and it's often not because they are lazy and profligate. There are structural societal reasons which can't be solved purely by hard work.
- gozur88 10y ago
  >if puritanical lectures solved the world's problems, we would already be living in paradise. Same is true of excuses.
- eggy 10y ago
  I can't speak to the puritanical, since I am an atheist and don't believe in paradise anyway ;) I had to overcome a lot to get where I am as posted at the top of the thread, and I don't believe people are just lazy or wasteful (had to look up profligate - thanks!). I'm curious to see examples of 'structural societal reasons' you write about for discussion, since I can only guess, and I don't want to assume. I do, however, think there are truly lazy and wasteful people; I have known quite a few in my decades and travels. I also think they can change. The world is a better place though in terms of worldwide people lifted out of poverty, and other indicators. "The U.S. ranks 6th worldwide in wages, but 25th in wealth..." quoting myself from another reply above. It is because we are a debt-based society. I saw this in my old impoverished neighborhood in Brooklyn in the 60s through the 80s, and I see it starkly in contrast here in East Java. People re-purpose stuff more readily here like my mom and dad did back home.
  - blowski 10y ago
    Well done to you for pulling yourself up by your bootstraps, and doing well in life. The stereotypical example of what I'm talking about is the child who grows up in a poor area with terrible parents, terrible schooling and little in the way of a good example to follow. So who's teaching the kids 'financial responsibility' and the 'virtues of hard work'? And when they grow up without those values, who's to blame? When they have kids of their own, and the cycle continues, who's to blame then? You're lucky that you had good parents, as are your own children by the sounds of it. But not everyone is as lucky as that, and simply lecturing and blaming those who grow up without that kind of luck doesn't solve anything.

by eggy 10y ago

RangerScience 10y ago

I live within my means but am not financially literate. It sounds like a good practice for me would be writing down my in/out cash flow - like you say, "It is about being able to keep a 3 month to a full year of cash flow right in front of you, whether on a piece of paper or a spreadsheet". Is starting out really that simple? Writing down what comes in, and what goes out, and what you know will come in and go out?

toomuchtodo 10y ago
https://i.imgur.com/1rPEkGQ.png https://i.imgur.com/1rPEkGQ.png
- eggy 10y ago
  That's pretty neat. I'll have a better look at it later. Thanks!
  - toomuchtodo 10y ago
    You're welcome!
Kluny 10y ago
It's a good start. Read Mr Money Mustache to continue.
eggy 10y ago
It is simply keeping the expenses on the left rows, the time period on the columns (week, month), and keeping a running tally carried over to the next column at top. Sounds simple, but it is a powerful tool, since you see when you might actually dip to zero or below way before it happens, and you can plan. Simple keeping a balanced checkbook and writing your known expenses, is necessary, but does not provide the look ahead. You'd be surprised how many people who make more than 6 figures get caught short some months when for the year they're OK, but due to the ins and outs of cash flow, they are at a deficit one day or week out of the month. You can find plenty of templates online. I keep mine simple as compared to what my past business accounting was. I am hoping to get more deeply financially literate when it comes to things like investments for my future (kind of late now, and a fallout of how I was raised), but more so that I can at least teach all of my children. I don't subscribe to the work and retire model. I personally work to make ends meet, and work on my personal interests at night, or when I stop working and live cheap to devote more effort to the next round.
et-al 10y ago
I have a friend who used to write down everything he spent money on, then tallied it up weekly to see if he was on track. Over time he stopped doing that and transitioned into what happened that day, and now he keeps an interesting and concise journal. So if you need additional motivation, think of it as journaling. When I travel, I still write down my expenses and what I did that day. I figure it'd be useful when I'm old to tell the kids how much a 1GB prepaid SIM cost "back in my day." But seriously, keeping track of your expenses is a fundamental step in financial literacy. Hook everything up to Mint if you can't be bothered writing daily logs.

mc32 10y ago

Financial numeracy is definitely an issue which should be focused on. There was a story recently by the local NPR station where an organization which was teaching people new to the workforce about savings accounts, etc., found that many people used payday loans and were basically giving 30% - 40% or so of their paycheck to these high interest loan places because they just didn't know how to use a bank and set-up a savings account. These people just didn't have a better example to follow --their friends and mates had done the same so they just followed not knowing there are alternatives.

will_brown 10y ago
I was looking for a comment just like this! It seems when anyone talks about household expenses, just like this article, we get the same list: housing, food and transportation. I don't know why the cost of debt isn't right in the mix. Maybe it is assumed debt is paying for these other things, so when debt is paid off, the expense is just chalked up to the underlying housing, food or transportation costs. However, it ignores the fact debt carries its own costs which are significantly more expensive for the poor and the interest alone, especially on payday loans as you noted, could probably rival food and transportation costs of the poor.
- Scarblac 10y ago
  And interest is a huge driver of wealth inequality. A large majority of people pay more interest than they receive in their lives, that money ends up at the top. We need more diverse currencies that are not the debt-based fiat money we have now.
  - theandrewbailey 10y ago
    Personal debt is not the same as using a debt-based fiat currency. They are completely different things.
flaviusb 10y ago
In many places, financial institutions like banks do not serve the poor. Like, in the US if you are a poor minority living in an area heavy in poor minorities, it is quite likely that banks will essentially refuse to serve you. Redlining was an example of this kind of thing. There are other, related things - low balance fees, minimum transaction sizes, the need for proof of income or a guarantor who can provide such. This is why cheque cashing places still exist in 2016 in the US - for many people, they literally will be refused service if they try to open an account so they can deposit their paycheque. Blaming this on 'poor financial literacy' is backwards - all the financial literacy in the world won't help you when banks systematically discriminate against you.

free2rhyme214 10y ago

Financial education isn't taught in school. I recommend showing your kids Rich Dad Poor Dad as well.

HerpDerpLerp 10y ago
I don't have a replacement book, but Rich Dad Poor Dad is less well thought of now. I believe it has a strong push on property as investments. It is maybe a better route to look at 'three fund portfolio' low cost ETF/mutual fund strategies. Investment blogs such as Mr Money Mustache may also be a good road into a good long term investment strategy.

SilasX 10y ago

I guess the real hurdle is getting people to understand the contradiction between a) "schools should require financial literacy for graduation" and b) "standardized testing is the spawn of satan".

PKop 10y ago
Or just offer it generally, forget about testing for it. How many people had any kind of accounting or personal finance in high school? More than 1 semester? Not me. And if that's generally true for many, than that is a tragedy. How practical, and helpful would that be for students? And yet it doesn't seem to be a focus of our public schools.
- cmdrfred 10y ago
  There were monthly mandatory pep-rallies in my school growing up. No classes about financial literacy though. I guess they thought we would all join the NFL after graduating.
- eggy 10y ago
  Not to mention the death of the trade school of learning how to operate machinery and tools for woodworking and metalworking. On a bright note, some of the engineering programs are incorporating more hands on experience, since it informs an engineer's take on what he inevitably asks to be produced.

vjdjcjnnf 10y ago

Yep, just pull yourself up by your bootstraps! Poor people are simply stupid and lazy. I would know, being an intelligent member of the upper middle class.

PKop 10y ago
I think his comment and attitude would be more helpful, motivating and inspiring to most people, poor or otherwise, than your self pitying snark. Honestly.

noonespecial 10y ago

I worked my way through college. If my kids try to do the same it will take them more than 14 years if they match my work. The snow you walked uphill both ways in wasn't as deep as you think.

enraged_camel 10y ago
Yeah. I think it's a huge issue when people romanticize the hard work they have done in the past and expect the same from their children. It's one thing to say "my kid should be financially literate" and another thing to say "I sweeped floors at a supermarket when I was a teenager and so should my kid." IMO our goal should be to make life better for our children, and that involves giving them opportunities and resources so that they don't have to work as hard as us, unless they absolutely have to. My dad worked through college, but paid for my college so that I could focus on my studies. I plan to do even more for my own kids in the future, maybe by paying for their grad schools as well.
- rtpg 10y ago
  I think what GP was trying to mention is that the cost of things like college have gone up immensely since then. The same strategies won't work now. You can't live on a minimum wage job in most places in the US, let alone live + pay for school
- eggy 10y ago
  You misread me. I don't expect my son or other children to work sweeping floors or otherwise. Each generation of my family has improved life for the next generation. From my Momo, grandma, coming over as a cleaning lady for New Yorkers, to my Dad driving a truck or other such job. I worked through college, but dropped out voluntarily. I think there are other opportunities to learn nowadays aside from university and graduate school unless you want to be a doctor, engineer, or lawyer. My son and daughter volunteer and work and go to school. They are both doing exceptional. My son was number one in the entire county in Chemistry this past year. I am split on whether they would be better off not working or volunteering at all. It is their choice; I didn't ask it of them. I did offer them the option of focusing solely on studies, but they like what they do. What can I say? I have friends whose kids are given whatever they please. These are not friends who grew up where or how I did. Their kids are having all sorts of serious adaptation issues. I think it is due to having too much time and no responsibility. I work hard at my art and job, no romanticizing here. The drunk writer, or coder who just wings it, are stereotypes. The real achievers work their ass off. I know from being a manager of hundreds, and including myself, that busy people seem to get more work done. I am not talking about the culture of no sleep, 75 hours per week. I am talking about having 30 hours of real work per week in a 40 hour week, and not 10 hours and making up for the deficit in a 75 hour week, which seems common in some companies.

arvinsim 10y ago

> I have been teaching all of my children, and ranting about it online occasionally, that a lot of younger people are financially illiterate, including so-called smart or tech people. You are right on the money. And that is true even in third world countries(I live in one). Financial literacy was assumed to be taught by parents. Unfortunately, not all parents are financial literate either.

deleted 10y ago

[deleted]

blowski 10y ago

if puritanical lectures solved the world's problems, we would already be living in paradise. Clearly there are a lot of reasons why some people struggle, and it's often not because they are lazy and profligate. There are structural societal reasons which can't be solved purely by hard work.

gozur88 10y ago
>if puritanical lectures solved the world's problems, we would already be living in paradise. Same is true of excuses.
eggy 10y ago
I can't speak to the puritanical, since I am an atheist and don't believe in paradise anyway ;) I had to overcome a lot to get where I am as posted at the top of the thread, and I don't believe people are just lazy or wasteful (had to look up profligate - thanks!). I'm curious to see examples of 'structural societal reasons' you write about for discussion, since I can only guess, and I don't want to assume. I do, however, think there are truly lazy and wasteful people; I have known quite a few in my decades and travels. I also think they can change. The world is a better place though in terms of worldwide people lifted out of poverty, and other indicators. "The U.S. ranks 6th worldwide in wages, but 25th in wealth..." quoting myself from another reply above. It is because we are a debt-based society. I saw this in my old impoverished neighborhood in Brooklyn in the 60s through the 80s, and I see it starkly in contrast here in East Java. People re-purpose stuff more readily here like my mom and dad did back home.
- blowski 10y ago
  Well done to you for pulling yourself up by your bootstraps, and doing well in life. The stereotypical example of what I'm talking about is the child who grows up in a poor area with terrible parents, terrible schooling and little in the way of a good example to follow. So who's teaching the kids 'financial responsibility' and the 'virtues of hard work'? And when they grow up without those values, who's to blame? When they have kids of their own, and the cycle continues, who's to blame then? You're lucky that you had good parents, as are your own children by the sounds of it. But not everyone is as lucky as that, and simply lecturing and blaming those who grow up without that kind of luck doesn't solve anything.