6 ms·

At the end of the day, it's the same reason most people go broke: they know nothing about money. Unfortunately, Money is the most important thing in the world

At the end of the day, it's the same reason most people go broke: they know nothing about money. Unfortunately, Money is the most important thing in the world because you can't get anything without it. And yet, it's not even a primary subject taught in k-12. Where are people supposed to go for a decent financial education? Instead k-12 teaches kids about useless butterflies and countless other things that are of lesser importance. You would think, they'd at least teach it in college. But, I know MBA graduates with 3.8 GPA who don't even know what a tax deduction is! I recommend basic financial classes for everyone k-12, everyone should have the right to basic understanding of personal finances and basic economics.

harscoat 9y ago
you just explained that the most important thing is knowledge not money
- beambot 9y ago
  No... Knowledge of money
djellybeans 9y ago
IMO the financial industry tries to make it seem so much more technical and complex than it is. Even for how an average person can invest money. A lot of people are perceiving it as such.
- paulddraper 9y ago
  Well you're not going to be inclined to pay them for something simple.
Baeocystin 9y ago
Do you have any book recommendations? I have some younger relatives graduating from college soon, and although they are bright, I worry about their financial sense. I talk to them regularly, but something more concrete would likely also help.
- fapi1974 9y ago
  Rich Dad, Poor Dad is lifechanging for a lot of people. Note that it focuses on real estate, but the lessons are spot on.
- madengr 9y ago
  A Random Walk Down Wall Street Dave Ramsey videos on YouTube.
- fantispug 9y ago
  "If You Can" by William J Bernstein. It gives a simple conservative investing strategy, and refers to other great books for the details. Available here: https://www.etf.com/docs/IfYouCan.pdf https://www.etf.com/docs/IfYouCan.pdf
- mattm 9y ago
  "Fail Safe Investing: Lifelong Financial Security in 30 Minutes" by Harry Browne "The richest man in Babylon" was also a good read for me early on. It's told in a story format. "Your money or your life" is also good for the principles although it's a little outdated.
- jordancrane 9y ago
  I found JL Collins' "Stock Series"[1] of posts on his blog really helpful. He lays out a very simple investment strategy using low-cost index funds and talks about a lot of different investment vehicles in an easy to understand way. He also wrote a book on the same subject matter called "The Simple Path to Wealth". [1]http://jlcollinsnh.com/stock-series/ http://jlcollinsnh.com/stock-series/
hi41 9y ago
Yes, my thought too. I want to learn about managing money properly. Do you know any good book which is friendly to lay persons like me. I don't want the book to be too dry but also don't want a book like the idiot guide which tries very hard to be funny.
- Consultant32452 9y ago
  I recommend the books by Dave Ramsey. Here's got everything from personal finance to wealth management.
QittyQat 9y ago
I have a very vivid recollection of 8th Grade Civics units on personal finance, budgeting, and tax management. In this unit we were awarded a salary through a lottery system and had to learn to live within the means of our salary. Students would pair up and find homes to live in by reviewing ads in the newspaper. We would have to learn to set aside money for savings, groceries, and for fun. We also learned how to invest in the stock market and also filled out the paperwork to file 1040EZ tax returns. This was all in 8th grade public school in Virginia around 2001. I thought this was normal, and it saddens me to realize the inequality in education across the nation.
- grahamburger 9y ago
  I'm pretty sure your experience is pretty normal for the US. Lots of people forget that they had several classes that taught basics of personal finance, few people actually didn't have those classes.
  - cm2012 9y ago
    I didnt
    - rfeather 9y ago
      Ditto.
  - wutbrodo 9y ago
    I went to private schools in CA and never had classes like these either.
  - pzxc 9y ago
    I believe you are completely incorrect, but fortunately the tide is turning. This article points out that 17 states now require personal finance education in high school, but 20 years ago only one state did (Illinois). http://www.businessinsider.com/high-schools-teaching-personal-finance-2015-4 http://www.businessinsider.com/high-schools-teaching-persona... I certainly did not have it myself, and my K-12 years were from 1985-1998 in Indiana (public school). We had an accounting class. We had a government class that taught how a bill becomes a law and all that. We even had a home economics class where we learned how to make pillows and pigs-in-blankets. But no personal finance whatsoever, and certainly no economics until college. I distinctly remember approximately 15 minutes of relevant personal finance education in all my primary school years, when one math teacher went off-curriculum at the end of a class to show us the magic of compound interest. (It blew my mind) Everything else, from balancing a checkbook (no that wasn't taught in accounting) to filling out tax forms to how credit cards work was either taught by my parents or self-learned through social context. You do realize how many poor college students have been taken in by credit card offers that used to be right on campus to sign up gullible freshmen, don't you? Fortunately I think that has fallen out of practice (it got enough publicity that colleges now realize it makes them look bad, I think). But for how many years have millions of 18-year-olds fallen into this kind of trap? You think any of those people had personal finance classes? I seriously, seriously doubt that. I think the vast majority of Americans (until recently) did not have any such formal education on how to navigate money in the real world. I don't have any idea the prevalence of this kind of education in other countries, though.
kazinator 9y ago
> they know nothing about money. Oh, I think they probably know the basics. They know how percentages work well enough to know that they could take all that money and put it strictly into safe investments, and get a considerable, steady cash flow from that, on which a more than comfortable life is possible. Any rank and file financial advisor at a local bank branch could set them straight on the basics, if they want. Come on, just half a percent earned on $100M is $500,000; total no-brainer. That's boring though; they want to substantially multiply their wealth. They want to take their dough and blow it sky high. E.g. guy who has a $100M million put away thinks he can turn it into a $1B empire. It's like another sport; scoring another goal. In some ways, taking the risk makes sense (just not to the point that you go broke). Say you have that example $100M, and you could earn 0.5% on it for the rest of your life. Well, whoopee; why would you? You could simply draw 500,000 a year from that for 200 years, even if it earns nothing. (Let's ignore inflation and all that for simplicity.) So you can see why the lower-yield safe things are not attractive if you have a lot of money. I think these guys just fall victim to a "go big or go home" thinking. Plus they probably think that they have so much money, they don't have to keep tabs on exactly how much. Also, while they have those high paying contracts, they think that their income can always save them.
notyourwork 9y ago
MBA who doesn’t know what a tax deduction is? I call bullshit. I did a business minor and took finance, any business student would fake finance.
closeparen 9y ago
>everyone should have the right to basic understanding of personal finances and basic economics. This is silly. Living within your means is like doing the dishes or the laundry. When someone "doesn't know how" or "needs to learn how" it's not that they're missing or failing to comprehend information. Even if they lack it, it's trivial to acquire. The relevant entities are discipline, habit, and values. This is not something you can learn in a lecture, only by doing. If you're just clueless about personal finance, the worst thing that happens is you pay for tax prep services (something many of us do anyway to save time). Going broke or getting up to your eyeballs in debt is either an arithmetic error (don't try and tell me schools don't teach subtraction), a failure of self-control (if your income should be enough for you situation), or a symptom of insufficient income for your situation. I'll venture a guess that most of the time, it's the latter.
- heyjammo 9y ago
  Easy access to credit and sudden unfortunate circumstances bite people more often than you might think. You have it under control, until you don't.
  - closeparen 9y ago
    Exactly. Debt is typically caused by having less income than your situation demands (illness, parenthood, college without parental support, etc) and should be viewed as a symptom, not a cause.
- dizzystar 9y ago
  Everyone below a certain income starts with insufficient income to go to college, buy a car, go to the dentist, and many other things. Living paycheck to paycheck is a very real thing, and it only takes a minor circumstance to cause massive debt. You don't even need a credit card to find yourself up to your eyeballs in debt.
  - closeparen 9y ago
    Yes, and financial literacy isn’t going to help.
pgt 9y ago
Wealth is what you have left when someone takes all your money away.
jdavis703 9y ago
They need more financial games. I remember playing Railroad Tycoon as a kid and realizing I could run a pump and dump scheme against the AI. At the time of course I didn't know there was a phrase for pump and dump, or that it was a well known financial play, but that game put me on good footing to both get a very rough understanding of the stock and debt markets. My own nefarious behavior probably also gave me a more cynical outlook on financial transactions.
brennoon 9y ago
I'm a senior in college and needed 3 more credits to fulfill my credit hours for graduation. I saw that we had a personal finance class open to any major. I find it ironic I've been waiting for this curriculum my whole life, and yet here I am able to take it during my last go-round as a student.

harscoat 9y ago

you just explained that the most important thing is knowledge not money

beambot 9y ago
No... Knowledge of money

djellybeans 9y ago

IMO the financial industry tries to make it seem so much more technical and complex than it is. Even for how an average person can invest money. A lot of people are perceiving it as such.

paulddraper 9y ago
Well you're not going to be inclined to pay them for something simple.

Baeocystin 9y ago

Do you have any book recommendations? I have some younger relatives graduating from college soon, and although they are bright, I worry about their financial sense. I talk to them regularly, but something more concrete would likely also help.

fapi1974 9y ago
Rich Dad, Poor Dad is lifechanging for a lot of people. Note that it focuses on real estate, but the lessons are spot on.
madengr 9y ago
A Random Walk Down Wall Street Dave Ramsey videos on YouTube.
fantispug 9y ago
"If You Can" by William J Bernstein. It gives a simple conservative investing strategy, and refers to other great books for the details. Available here: https://www.etf.com/docs/IfYouCan.pdf https://www.etf.com/docs/IfYouCan.pdf
mattm 9y ago
"Fail Safe Investing: Lifelong Financial Security in 30 Minutes" by Harry Browne "The richest man in Babylon" was also a good read for me early on. It's told in a story format. "Your money or your life" is also good for the principles although it's a little outdated.
jordancrane 9y ago
I found JL Collins' "Stock Series"[1] of posts on his blog really helpful. He lays out a very simple investment strategy using low-cost index funds and talks about a lot of different investment vehicles in an easy to understand way. He also wrote a book on the same subject matter called "The Simple Path to Wealth". [1]http://jlcollinsnh.com/stock-series/ http://jlcollinsnh.com/stock-series/

hi41 9y ago

Yes, my thought too. I want to learn about managing money properly. Do you know any good book which is friendly to lay persons like me. I don't want the book to be too dry but also don't want a book like the idiot guide which tries very hard to be funny.

Consultant32452 9y ago
I recommend the books by Dave Ramsey. Here's got everything from personal finance to wealth management.

QittyQat 9y ago

I have a very vivid recollection of 8th Grade Civics units on personal finance, budgeting, and tax management. In this unit we were awarded a salary through a lottery system and had to learn to live within the means of our salary. Students would pair up and find homes to live in by reviewing ads in the newspaper. We would have to learn to set aside money for savings, groceries, and for fun. We also learned how to invest in the stock market and also filled out the paperwork to file 1040EZ tax returns. This was all in 8th grade public school in Virginia around 2001. I thought this was normal, and it saddens me to realize the inequality in education across the nation.

grahamburger 9y ago
I'm pretty sure your experience is pretty normal for the US. Lots of people forget that they had several classes that taught basics of personal finance, few people actually didn't have those classes.
- cm2012 9y ago
  I didnt
  - rfeather 9y ago
    Ditto.
- wutbrodo 9y ago
  I went to private schools in CA and never had classes like these either.
- pzxc 9y ago
  I believe you are completely incorrect, but fortunately the tide is turning. This article points out that 17 states now require personal finance education in high school, but 20 years ago only one state did (Illinois). http://www.businessinsider.com/high-schools-teaching-personal-finance-2015-4 http://www.businessinsider.com/high-schools-teaching-persona... I certainly did not have it myself, and my K-12 years were from 1985-1998 in Indiana (public school). We had an accounting class. We had a government class that taught how a bill becomes a law and all that. We even had a home economics class where we learned how to make pillows and pigs-in-blankets. But no personal finance whatsoever, and certainly no economics until college. I distinctly remember approximately 15 minutes of relevant personal finance education in all my primary school years, when one math teacher went off-curriculum at the end of a class to show us the magic of compound interest. (It blew my mind) Everything else, from balancing a checkbook (no that wasn't taught in accounting) to filling out tax forms to how credit cards work was either taught by my parents or self-learned through social context. You do realize how many poor college students have been taken in by credit card offers that used to be right on campus to sign up gullible freshmen, don't you? Fortunately I think that has fallen out of practice (it got enough publicity that colleges now realize it makes them look bad, I think). But for how many years have millions of 18-year-olds fallen into this kind of trap? You think any of those people had personal finance classes? I seriously, seriously doubt that. I think the vast majority of Americans (until recently) did not have any such formal education on how to navigate money in the real world. I don't have any idea the prevalence of this kind of education in other countries, though.

kazinator 9y ago

> they know nothing about money. Oh, I think they probably know the basics. They know how percentages work well enough to know that they could take all that money and put it strictly into safe investments, and get a considerable, steady cash flow from that, on which a more than comfortable life is possible. Any rank and file financial advisor at a local bank branch could set them straight on the basics, if they want. Come on, just half a percent earned on $100M is $500,000; total no-brainer. That's boring though; they want to substantially multiply their wealth. They want to take their dough and blow it sky high. E.g. guy who has a $100M million put away thinks he can turn it into a $1B empire. It's like another sport; scoring another goal. In some ways, taking the risk makes sense (just not to the point that you go broke). Say you have that example $100M, and you could earn 0.5% on it for the rest of your life. Well, whoopee; why would you? You could simply draw 500,000 a year from that for 200 years, even if it earns nothing. (Let's ignore inflation and all that for simplicity.) So you can see why the lower-yield safe things are not attractive if you have a lot of money. I think these guys just fall victim to a "go big or go home" thinking. Plus they probably think that they have so much money, they don't have to keep tabs on exactly how much. Also, while they have those high paying contracts, they think that their income can always save them.

notyourwork 9y ago

MBA who doesn’t know what a tax deduction is? I call bullshit. I did a business minor and took finance, any business student would fake finance.

closeparen 9y ago

>everyone should have the right to basic understanding of personal finances and basic economics. This is silly. Living within your means is like doing the dishes or the laundry. When someone "doesn't know how" or "needs to learn how" it's not that they're missing or failing to comprehend information. Even if they lack it, it's trivial to acquire. The relevant entities are discipline, habit, and values. This is not something you can learn in a lecture, only by doing. If you're just clueless about personal finance, the worst thing that happens is you pay for tax prep services (something many of us do anyway to save time). Going broke or getting up to your eyeballs in debt is either an arithmetic error (don't try and tell me schools don't teach subtraction), a failure of self-control (if your income should be enough for you situation), or a symptom of insufficient income for your situation. I'll venture a guess that most of the time, it's the latter.

heyjammo 9y ago
Easy access to credit and sudden unfortunate circumstances bite people more often than you might think. You have it under control, until you don't.
- closeparen 9y ago
  Exactly. Debt is typically caused by having less income than your situation demands (illness, parenthood, college without parental support, etc) and should be viewed as a symptom, not a cause.
dizzystar 9y ago
Everyone below a certain income starts with insufficient income to go to college, buy a car, go to the dentist, and many other things. Living paycheck to paycheck is a very real thing, and it only takes a minor circumstance to cause massive debt. You don't even need a credit card to find yourself up to your eyeballs in debt.
- closeparen 9y ago
  Yes, and financial literacy isn’t going to help.

pgt 9y ago

Wealth is what you have left when someone takes all your money away.

jdavis703 9y ago

They need more financial games. I remember playing Railroad Tycoon as a kid and realizing I could run a pump and dump scheme against the AI. At the time of course I didn't know there was a phrase for pump and dump, or that it was a well known financial play, but that game put me on good footing to both get a very rough understanding of the stock and debt markets. My own nefarious behavior probably also gave me a more cynical outlook on financial transactions.

brennoon 9y ago

I'm a senior in college and needed 3 more credits to fulfill my credit hours for graduation. I saw that we had a personal finance class open to any major. I find it ironic I've been waiting for this curriculum my whole life, and yet here I am able to take it during my last go-round as a student.