7 ms·

As someone who didn't learn the very basics of personal finance at the optimal point in life, I feel like it should be part of our standardized education. I'd

As someone who didn't learn the very basics of personal finance at the optimal point in life, I feel like it should be part of our standardized education. I'd like to think that would make things at least marginally better. Another thing I'd love to see, would be for banks to fundamentally reorient themselves to be their customer's advocates/financial guardians, instead of being yet another party encouraging people to borrow more than they ought to. Wishful thinking, I know. My bank knows how much I make, it knows how often I get paid, it knows how much I spend and on what - they have all the info they need to develop a plan to ensure my financial security and advise me where I can do better. Why don't they and why isn't it a standard part of opening account(s)? I'd love to see more innovation around encouraging proper saving habits and budgeting, like what simple.com is doing - but it needs to go even farther than what they currently have, IMHO.

49531 8y ago
You'll never have banks working in consumers self interest as long as they are profit driven organizations. Public banks tend to work better for actual sensible banking.
- zeroonetwothree 8y ago
  Banks don't want you to spend money. They want you to have as much in your account as possible. So it would be in their interest to encourage saving.
  - closeparen 8y ago
    Pretty sure they want you to pay as much interest and generate as many interchange fees as possible.
    - imtringued 8y ago
      This. One of my friends got a call from his bank trying to get him to sign up for a car loan because he had 30k € in his bank account and should "splurge" a little.
- alex_duf 8y ago
  Unless you pay upfront for the service rather than having a free bank account. If your economical model is to take advantage of people going overdraft you can be certain the bank won't try to help clients. If the bank can make more money by having clients with more money that would probably work better, now I'm not sure how that would scale.
  - ip26 8y ago
    Except didn't they charge the same ridiculous fees even when the accounts were not free?
  - NightlyDev 8y ago
    Banks does make a lot of money if the customer spends his money or stores his money using the services of the bank.
- closeparen 8y ago
  The government wants money to flow, to drive the economic growth and job creation that gets it reelected. It's the last thing that's going to encourage low-consumption/high-savings lifestyles.
vailprogrammer 8y ago
I like it. How would the bank make its money? The standard exploitative practices of other banks, just with smaller fees ($5 overdraft fee instead of $37?, or lower interest rate spreads?) or just charge $50 a year, and do away with those fees? Would that lead to too many people taking advantage of it?
- SmirkingRevenge 8y ago
  To be honest, I don't know what the business model would be, but it seems like it should be in the banks long-term best interest to create rich, prosperous people with invest-able funds. They are literally in a position to create their own wealthy customer base. What would it actually do for a big bank, if it were the exception rather than the rule, that their low/middle-class account holders had enough savings to cover several months of expenses and small/medium emergencies without relying on credit, had a reasonable portfolio of retirement investments, and on their way to being in a financial position to get involved with other kinds of investments, eventually? The banks could automate all the best practices of personal finance for most their account holders, to make all of the above happen for their average customer. Software is cool like that. - They could divert a percentage of all deposits to emergency funds by default. - They could set aside money for expenses, based on your cash-flow history by default. - They could set aside spending money, also based on your cash-flow history by default. - They could manage a persons credit debt (think pay minimums while savings/cushion is built, then use the extra cash flow from savings goals into debt payments). - If the customer dip into savings because your car broke down or something - starting filling up the emergency fund again. - If credit debt is paid up, savings goals are hit, they could start automatically put portions of savings into low risk long term investments (IRA's etc). (Simple.com does some of the above kind-of but its a manual process - but quite nice compared to what 21st century online banking has been, so far) And I'm sure there's much much more - and for the people who do really well, then they can funnel those people into more customized investment approaches. Are market forces so screwy, that all this would actually be bad for the banks bottom line, in the long run?
  - sokoloff 8y ago
    Banks make a lot of money (averaging a bit over 12¢ per dollar lent) on credit cards. It would likely be overall disadvantageous for them to pull people out of credit card debt, out of debt in general, and to eliminate overdraft situations.
matis140 8y ago
Another change, but one much harder to manage is that many of the products people buy today have no value left after 2-4 years and some both have no value after 2-4 years and do things degrading their performance forcing you to again purchase an expensive item that does nothing to build wealth. Vehicles, electronics, home appliances all sit at something like a max of 8-11 years of use and loose 30-50% of their value as soon as purchased. Now that we are making smart everything's I can see the life of home appliances dropping. Some of this is intentional. Some necessity. I have a refrigerator from the 70's that works great, but I know I could reduce my power bill by getting a more modern one, however I am worried that upgrading will land me with something more likely to fail. certainly not something that will run 50 years with no issues.
- zozbot123 8y ago
  > I have a refrigerator from the 70's that works great That refrigerator had a real cost (adjusted for inflation) that's just as high as "heavy-duty", "pro" units that you can buy today and that will last you just as long (adjusting for survival bias)
  - pixl97 8y ago
    That old refrigerator likely eats a ton of power and will kill the atmosphere if it breaks open too.
- rland 8y ago
  Things were repairable in the past because they were both mechanically simple and far more expensive up front. If you want, you can live as people did in the 50s and spend $2,000 for an automatic dishwasher, $3,000 for a washer/dryer combo, and $4,000 for a refrigerator. If you spend that much today, you will get something that will last you decades. But you probably won't. Instead, you'll go for something that is a third of the price, and it'll last you about 10 years. In particular: cars are far more reliable and efficient than they were even 10 or 20 years ago.
- kaybe 8y ago
  Old home appliances are basically free. If you don't care too much for recency and efficiency, you can just pick one up from a neighbor here. For example, the city website where you can register to get large trash items taken away links to a platform where people post what they want to give away. It's full of old furniture and appliances, and only costs you some time and transport method. I'm surprised sometimes, really, at what a wealth of stuff is around us, and how quickly these things switch between being coveted sinks of money and 'just take it off my hands, free'.
mac01021 8y ago
So, when you log into the Bank of America website, you want to be greeted every time with things like the following? "Dude, maybe you should sell this car that you're paying $450 per month for and get a $7000 used car." "Did you know that between starbucks and happy hour you spend an average of $120 per week, and that amounts to 10% of your take-home pay?" "You currently spend $2500 per month on rent. If you downsize from 2 bedrooms to 1, you can save $X over the next 3 years."
- SmirkingRevenge 8y ago
  Haha. Well, that would be marginally better than being greeted by: Looks like you don't any savings. How about a new line of credit or a personal loan? The interest rates are microscopic! (Literally, the rates are printed in microscopic text. Speaking of which... How about taking out a personal loan, to cover the cost of a shiny new microscope? Click here to get started!)
- nunez 8y ago
  Banks actually do offer this service, though it's not front-and-center as you joked. Simple Bank was built around this premise. Chase Bank has an Insights feature that tells you how you're spending your money and offers recommendations.
- deleted 8y ago
  [deleted]
- anigbrowl 8y ago
  An automated fiduciary would be a huge boon, the robotic equivalent of a piggy bank. But it should be client side; it's role is to screen you from from being exploited by those who you do business with, including your bank.
  - pixl97 8y ago
    >But it should be client side This too will be co-opted by the greedy who look to profit in the short term, even if just to profit in the app. The boom bust cycle just shows up too many times in history not to be caused by a failure in the human psyche.
deleted 8y ago
[deleted]
zozbot123 8y ago
> As someone who didn't learn the very basics of personal finance at the optimal point in life, I feel like it should be part of our standardized education. It's not limited to personal finance, although that's part of it). Our education system does a terrible job of teaching folks about what makes our society tick (social sciences are essentially ignored) and how people should strive to act in order to best cope with it (basically, adopt middle-class values to the best of your ability. Don't eat that marshmallow!), while wasting untold amounts of time and effort on ridiculous bells-and-whistles that nobody will ever have any use or even appreciation for (like, what did author X really mean when they used that particular simile at page <n> of work Y?) Keep it simple, FFS!
nunez 8y ago
> As someone who didn't learn the very basics of personal finance at the optimal point in life, I feel like it should be part of our standardized education. I'd like to think that would make things at least marginally better. I agree, though I fear that this would only affect people that care enough. It's hard enough to incentivize students to get their work in on time, let alone learn how to balance a budget. Also, our society links spending money with personal self-image. (Buy this Lexus so that your kids love you. Buy this Armani cologne so that you can have weird sex with hot models in anonymous oceans. Etc.) Separating the two would require much more than personal finance classes. > Another thing I'd love to see, would be for banks to fundamentally reorient themselves to be their customer's advocates/financial guardians, instead of being yet another party encouraging people to borrow more than they ought to. Banks offer this service if your balances are high enough. Chase Private Client (and/or Sapphire Banking; not sure if they are the same now) assign you a personal banker that can help you maintain and improve your financial health, for example. JP Morgan Private Bank assigns you an entire (shared) team for this purpose; they can even act as middlemen to authorize purchases for you if the amounts are high enough. The former (CPC) requires a minimum balance of $75,000; the latter requires $1-10M (they don't publish their minimum requirements for this). It sucks that you have to be financially stable for banks to help you, but it would be unprofitable for banks to offer this service to everyone with an account (have you ever waited for a teller during peak hours?). Banks are starting to use "machine-learning" based platforms to provide generalized advice platforms, though, so that people can have some resources to help them achieve financial well-being. Nowhere near enough, but it's something.
NightlyDev 8y ago
Banks already do that. Don't they? At least that is the norm in Norway. Financial advisors are required to get an overview of my finances, financial competence, what goals I have and what my risk tolerance is. Customers also should have time to think about decisions. Banks financial advisors are basically salespeople for their own services, but that's well known and the service is free.
magicalhippo 8y ago
> Another thing I'd love to see, would be for banks to fundamentally reorient themselves to be their customer's advocates/financial guardians, instead of being yet another party encouraging people to borrow more than they ought to. The largest bank in Norway has introduced some tools to help people make sense of their financial situation, and to help them save up money. First and foremost is a budgeting tool, where they show you where money came from and where it went for each month. It has a lot of preset filters for labeling your transactions, and you can add your own. Top level view is "salary, rent, food" and similar, and then you can drill down a few levels. I found it gave a nice overview and allowed me to quickly pinpoint some small but frequent silly expenses I could cut down on. They've also introduced a "saving game" of sorts, where you can set your own saving goal, like $2000 for summer vacation or whatever, and whenever you use your debit card they'll transfer a configured percentage of whatever you're purchasing into your savings account. So for example if I buy a coffee for $3, they add $0.3 to my savings account, deducting $3.3 from my main account. They've made some easy way to keep track of your goal etc. They also added a special savings account where you get much higher rate than a regular savings account, with the twist that you can only deposit money into it using a monthly auto transfer (maybe also the above "game", can't recall). The budget tool I found nice, the saving tools I don't really need, but I see how it could be helpful to some to make it easier to save. Of course the above won't work miracles if the income simply won't cover required expenses...

49531 8y ago

You'll never have banks working in consumers self interest as long as they are profit driven organizations. Public banks tend to work better for actual sensible banking.

zeroonetwothree 8y ago
Banks don't want you to spend money. They want you to have as much in your account as possible. So it would be in their interest to encourage saving.
- closeparen 8y ago
  Pretty sure they want you to pay as much interest and generate as many interchange fees as possible.
  - imtringued 8y ago
    This. One of my friends got a call from his bank trying to get him to sign up for a car loan because he had 30k € in his bank account and should "splurge" a little.
alex_duf 8y ago
Unless you pay upfront for the service rather than having a free bank account. If your economical model is to take advantage of people going overdraft you can be certain the bank won't try to help clients. If the bank can make more money by having clients with more money that would probably work better, now I'm not sure how that would scale.
- ip26 8y ago
  Except didn't they charge the same ridiculous fees even when the accounts were not free?
- NightlyDev 8y ago
  Banks does make a lot of money if the customer spends his money or stores his money using the services of the bank.
closeparen 8y ago
The government wants money to flow, to drive the economic growth and job creation that gets it reelected. It's the last thing that's going to encourage low-consumption/high-savings lifestyles.

vailprogrammer 8y ago

I like it. How would the bank make its money? The standard exploitative practices of other banks, just with smaller fees ($5 overdraft fee instead of $37?, or lower interest rate spreads?) or just charge $50 a year, and do away with those fees? Would that lead to too many people taking advantage of it?

SmirkingRevenge 8y ago
To be honest, I don't know what the business model would be, but it seems like it should be in the banks long-term best interest to create rich, prosperous people with invest-able funds. They are literally in a position to create their own wealthy customer base. What would it actually do for a big bank, if it were the exception rather than the rule, that their low/middle-class account holders had enough savings to cover several months of expenses and small/medium emergencies without relying on credit, had a reasonable portfolio of retirement investments, and on their way to being in a financial position to get involved with other kinds of investments, eventually? The banks could automate all the best practices of personal finance for most their account holders, to make all of the above happen for their average customer. Software is cool like that. - They could divert a percentage of all deposits to emergency funds by default. - They could set aside money for expenses, based on your cash-flow history by default. - They could set aside spending money, also based on your cash-flow history by default. - They could manage a persons credit debt (think pay minimums while savings/cushion is built, then use the extra cash flow from savings goals into debt payments). - If the customer dip into savings because your car broke down or something - starting filling up the emergency fund again. - If credit debt is paid up, savings goals are hit, they could start automatically put portions of savings into low risk long term investments (IRA's etc). (Simple.com does some of the above kind-of but its a manual process - but quite nice compared to what 21st century online banking has been, so far) And I'm sure there's much much more - and for the people who do really well, then they can funnel those people into more customized investment approaches. Are market forces so screwy, that all this would actually be bad for the banks bottom line, in the long run?
- sokoloff 8y ago
  Banks make a lot of money (averaging a bit over 12¢ per dollar lent) on credit cards. It would likely be overall disadvantageous for them to pull people out of credit card debt, out of debt in general, and to eliminate overdraft situations.

matis140 8y ago

Another change, but one much harder to manage is that many of the products people buy today have no value left after 2-4 years and some both have no value after 2-4 years and do things degrading their performance forcing you to again purchase an expensive item that does nothing to build wealth. Vehicles, electronics, home appliances all sit at something like a max of 8-11 years of use and loose 30-50% of their value as soon as purchased. Now that we are making smart everything's I can see the life of home appliances dropping. Some of this is intentional. Some necessity. I have a refrigerator from the 70's that works great, but I know I could reduce my power bill by getting a more modern one, however I am worried that upgrading will land me with something more likely to fail. certainly not something that will run 50 years with no issues.

zozbot123 8y ago
> I have a refrigerator from the 70's that works great That refrigerator had a real cost (adjusted for inflation) that's just as high as "heavy-duty", "pro" units that you can buy today and that will last you just as long (adjusting for survival bias)
- pixl97 8y ago
  That old refrigerator likely eats a ton of power and will kill the atmosphere if it breaks open too.
rland 8y ago
Things were repairable in the past because they were both mechanically simple and far more expensive up front. If you want, you can live as people did in the 50s and spend $2,000 for an automatic dishwasher, $3,000 for a washer/dryer combo, and $4,000 for a refrigerator. If you spend that much today, you will get something that will last you decades. But you probably won't. Instead, you'll go for something that is a third of the price, and it'll last you about 10 years. In particular: cars are far more reliable and efficient than they were even 10 or 20 years ago.
kaybe 8y ago
Old home appliances are basically free. If you don't care too much for recency and efficiency, you can just pick one up from a neighbor here. For example, the city website where you can register to get large trash items taken away links to a platform where people post what they want to give away. It's full of old furniture and appliances, and only costs you some time and transport method. I'm surprised sometimes, really, at what a wealth of stuff is around us, and how quickly these things switch between being coveted sinks of money and 'just take it off my hands, free'.

mac01021 8y ago

So, when you log into the Bank of America website, you want to be greeted every time with things like the following? "Dude, maybe you should sell this car that you're paying $450 per month for and get a $7000 used car." "Did you know that between starbucks and happy hour you spend an average of $120 per week, and that amounts to 10% of your take-home pay?" "You currently spend $2500 per month on rent. If you downsize from 2 bedrooms to 1, you can save $X over the next 3 years."

SmirkingRevenge 8y ago
Haha. Well, that would be marginally better than being greeted by: Looks like you don't any savings. How about a new line of credit or a personal loan? The interest rates are microscopic! (Literally, the rates are printed in microscopic text. Speaking of which... How about taking out a personal loan, to cover the cost of a shiny new microscope? Click here to get started!)
nunez 8y ago
Banks actually do offer this service, though it's not front-and-center as you joked. Simple Bank was built around this premise. Chase Bank has an Insights feature that tells you how you're spending your money and offers recommendations.
deleted 8y ago
[deleted]
anigbrowl 8y ago
An automated fiduciary would be a huge boon, the robotic equivalent of a piggy bank. But it should be client side; it's role is to screen you from from being exploited by those who you do business with, including your bank.
- pixl97 8y ago
  >But it should be client side This too will be co-opted by the greedy who look to profit in the short term, even if just to profit in the app. The boom bust cycle just shows up too many times in history not to be caused by a failure in the human psyche.

deleted 8y ago

[deleted]

zozbot123 8y ago

> As someone who didn't learn the very basics of personal finance at the optimal point in life, I feel like it should be part of our standardized education. It's not limited to personal finance, although that's part of it). Our education system does a terrible job of teaching folks about what makes our society tick (social sciences are essentially ignored) and how people should strive to act in order to best cope with it (basically, adopt middle-class values to the best of your ability. Don't eat that marshmallow!), while wasting untold amounts of time and effort on ridiculous bells-and-whistles that nobody will ever have any use or even appreciation for (like, what did author X really mean when they used that particular simile at page <n> of work Y?) Keep it simple, FFS!

nunez 8y ago

> As someone who didn't learn the very basics of personal finance at the optimal point in life, I feel like it should be part of our standardized education. I'd like to think that would make things at least marginally better. I agree, though I fear that this would only affect people that care enough. It's hard enough to incentivize students to get their work in on time, let alone learn how to balance a budget. Also, our society links spending money with personal self-image. (Buy this Lexus so that your kids love you. Buy this Armani cologne so that you can have weird sex with hot models in anonymous oceans. Etc.) Separating the two would require much more than personal finance classes. > Another thing I'd love to see, would be for banks to fundamentally reorient themselves to be their customer's advocates/financial guardians, instead of being yet another party encouraging people to borrow more than they ought to. Banks offer this service if your balances are high enough. Chase Private Client (and/or Sapphire Banking; not sure if they are the same now) assign you a personal banker that can help you maintain and improve your financial health, for example. JP Morgan Private Bank assigns you an entire (shared) team for this purpose; they can even act as middlemen to authorize purchases for you if the amounts are high enough. The former (CPC) requires a minimum balance of $75,000; the latter requires $1-10M (they don't publish their minimum requirements for this). It sucks that you have to be financially stable for banks to help you, but it would be unprofitable for banks to offer this service to everyone with an account (have you ever waited for a teller during peak hours?). Banks are starting to use "machine-learning" based platforms to provide generalized advice platforms, though, so that people can have some resources to help them achieve financial well-being. Nowhere near enough, but it's something.

NightlyDev 8y ago

Banks already do that. Don't they? At least that is the norm in Norway. Financial advisors are required to get an overview of my finances, financial competence, what goals I have and what my risk tolerance is. Customers also should have time to think about decisions. Banks financial advisors are basically salespeople for their own services, but that's well known and the service is free.

magicalhippo 8y ago

> Another thing I'd love to see, would be for banks to fundamentally reorient themselves to be their customer's advocates/financial guardians, instead of being yet another party encouraging people to borrow more than they ought to. The largest bank in Norway has introduced some tools to help people make sense of their financial situation, and to help them save up money. First and foremost is a budgeting tool, where they show you where money came from and where it went for each month. It has a lot of preset filters for labeling your transactions, and you can add your own. Top level view is "salary, rent, food" and similar, and then you can drill down a few levels. I found it gave a nice overview and allowed me to quickly pinpoint some small but frequent silly expenses I could cut down on. They've also introduced a "saving game" of sorts, where you can set your own saving goal, like $2000 for summer vacation or whatever, and whenever you use your debit card they'll transfer a configured percentage of whatever you're purchasing into your savings account. So for example if I buy a coffee for $3, they add $0.3 to my savings account, deducting $3.3 from my main account. They've made some easy way to keep track of your goal etc. They also added a special savings account where you get much higher rate than a regular savings account, with the twist that you can only deposit money into it using a monthly auto transfer (maybe also the above "game", can't recall). The budget tool I found nice, the saving tools I don't really need, but I see how it could be helpful to some to make it easier to save. Of course the above won't work miracles if the income simply won't cover required expenses...