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When, like most people in existence (even in the USA or UK), you're barely making ends meet week to week financial literacy means something entirely different t

When, like most people in existence (even in the USA or UK), you're barely making ends meet week to week financial literacy means something entirely different than what this article is talking about. Knowing the ins and outs of the rigged game that is getting a loan from a fractional reserve bank doesn't matter when the bank will never give you a loan in the first place. And all the financial literacy problems they do face, like how to deal with predatory behavior from the "financially literate" banks regarding overdrafts and credit cards are artificial situations created by the banks. >New survey data, commissioned for the Financial Times from Ipsos Mori, reveals striking shortcomings in financial understanding that cement inequality. Becoming aware of how the banks and CC companies scam you doesn't really stop it. Ignorance doesn't cement the inequality, fractional reserve banking does.

JumpCrisscross 5y ago
> Becoming aware of how the banks and CC companies scam you doesn't really stop it I’ve seen educated friends do mind-bogglingly stupid things financially. Stuff like having savings wiped out for lack of renter’s insurance, paying off a low-rate card while a high-rate balance persists, paying hundreds of dollars in fees for banking services they never use, et cetera. To say nothing of not being aware of the myriad of government programs available to most people in a developed country.
- dheera 5y ago
  > savings wiped out for lack of renter’s insurance Wait what? How does renter's insurance have anything to do with savings? Or are these people who were keeping wads of cash under their bed? Or is it that they had to use all their savings to buy back all their stuff due to disaster or theft? (which seems weird to me because I imagine most renters tend to have more value in cash+securities than stuff; home owners probably are the opposite because of the sheer value of the home)
  - detaro 5y ago
    Presumably having to spend their savings to pay for something catastrophic renters insurance would have covered.
    - tialaramex 5y ago
      Note that the opposite calculation applies if you have (enough) money. One day, some years ago, I wrote a Facebook post something like. "That's interesting. The sound of water which woke me was in fact water pouring from the flat above into the bathroom. Those of you who've always said I should have insurance now get the last laugh". It turns out that the damage was relatively minor except to walls, ceilings and carpets which were - at the time - insured by the building owner, so, I think I spent less than a grand on some re-decorating and it would have been even less if the upstairs neighbour (who needed emergency plumbing etc.) had actually done her paperwork since that's one incident and one insurance claim excess. But the reason I was so calm about it was that I've done the arithmetic years earlier, if my stuff is destroyed I have to buy new stuff, using money, which I have, whereas if I carry insurance I have to pay the premiums every year, also using money, which includes a healthy profit for the insurer. Now, many people have no choice because in reality a bank owns their home, they pay a mortgage and the bank wants no chance of you walking away from that so it insists you also buy insurance. But I don't have a mortgage, I paid cash, and so I don't need to carry insurance. This a really edge case example of the widely true but counter-intuitive observation that being poor is expensive. It isn't at all surprising that the FT would rather blame the poor for their circumstances than help them. Very on brand.
      - allendoerfer 5y ago
        I have made the same calculation regarding a form life insurance, which only pays in case of death. Which in my jurisdiction is a weird product, which makes sense, if you have a little bit to lose, so you are above the minimum guaranteed by society, but you are not already above the point where the effects you described kick in. What makes the calculation even nicer if you are well-off enough to not have to buy it: If you actually put the money into your portfolio instead, each year you do not need it, the advantage increases further through compound interest, so at some point it literally pays for itself, while the insurance premiums would stay exactly the same.
  - JumpCrisscross 5y ago
    > How does renter's insurance have anything to do with what's in the bank? Long story short, damage was caused to the apartment by a house sitter. The landlord sued for the cost of the repairs. The litigation and costs would have been covered by a vanilla renter’s insurance policy.
    - superkuh 5y ago
      That's a nice ideal and all but buying food usually comes before renters insurance. $200 a year matters. Seriously. To a lot of the world population that's a lot of money they can't afford to throw away on a chance.
      - JumpCrisscross 5y ago
        > buying food usually comes before renters insurance. $200 a year matters. Seriously. I agree. Was echoing the observation that financial literacy and education can be disconnected. At lower levels of income, the key lessons tend to revolve around the cost of check cashing and payday lending, avoiding banks that charge fees, doing your taxes and getting your credits and refund and keeping an eye on recurring bills.
deleted 5y ago
[deleted]
dheera 5y ago
The other thing is, the concept of financial literacy is changing with the times. The likes of Warren Buffet would probably tell you to never touch cryptocurrency, for example, but today, as of 2021, pretending it doesn't exist and being afraid of it is being horribly oblivious to what is going on in the financial world right now. Four years ago you'd look like "one of those financially-illiterate hippies" for investing in Bitcoin, and become part of the laughing stock after the 2018 crypto crash, but if you had held onto a diversified portfolio of cryptocurrencies you'd probably be doing very well right now. The truly financially literate learn to adapt to a changing world, embrace and try to understand new investment vehicles, and try to make sense of how they might shape the future.
- lottin 5y ago
  Financial literacy means, among other things, understanding that an investment decision can never be justified after the fact based on the observed outcome of that particular investment.
- bluGill 5y ago
  Tulip mania can go on for years, as it has in all previous bubbels. Maybe they are good investments, but they still show all the signs of a bubble to me.
agumonkey 5y ago
It does help a bit, finance aware people (rich people) look at life differently, they chase fads less and wait a bit more with their capital.. they benefit a lot from uneducated mass going around buying stupid stuff and throwing it 6 month later to buy new stupid stuff. Now that said, being rich does allow a lot of stuff that no education can compensate for, I agree.

JumpCrisscross 5y ago

> Becoming aware of how the banks and CC companies scam you doesn't really stop it I’ve seen educated friends do mind-bogglingly stupid things financially. Stuff like having savings wiped out for lack of renter’s insurance, paying off a low-rate card while a high-rate balance persists, paying hundreds of dollars in fees for banking services they never use, et cetera. To say nothing of not being aware of the myriad of government programs available to most people in a developed country.

dheera 5y ago
> savings wiped out for lack of renter’s insurance Wait what? How does renter's insurance have anything to do with savings? Or are these people who were keeping wads of cash under their bed? Or is it that they had to use all their savings to buy back all their stuff due to disaster or theft? (which seems weird to me because I imagine most renters tend to have more value in cash+securities than stuff; home owners probably are the opposite because of the sheer value of the home)
- detaro 5y ago
  Presumably having to spend their savings to pay for something catastrophic renters insurance would have covered.
  - tialaramex 5y ago
    Note that the opposite calculation applies if you have (enough) money. One day, some years ago, I wrote a Facebook post something like. "That's interesting. The sound of water which woke me was in fact water pouring from the flat above into the bathroom. Those of you who've always said I should have insurance now get the last laugh". It turns out that the damage was relatively minor except to walls, ceilings and carpets which were - at the time - insured by the building owner, so, I think I spent less than a grand on some re-decorating and it would have been even less if the upstairs neighbour (who needed emergency plumbing etc.) had actually done her paperwork since that's one incident and one insurance claim excess. But the reason I was so calm about it was that I've done the arithmetic years earlier, if my stuff is destroyed I have to buy new stuff, using money, which I have, whereas if I carry insurance I have to pay the premiums every year, also using money, which includes a healthy profit for the insurer. Now, many people have no choice because in reality a bank owns their home, they pay a mortgage and the bank wants no chance of you walking away from that so it insists you also buy insurance. But I don't have a mortgage, I paid cash, and so I don't need to carry insurance. This a really edge case example of the widely true but counter-intuitive observation that being poor is expensive. It isn't at all surprising that the FT would rather blame the poor for their circumstances than help them. Very on brand.
    - allendoerfer 5y ago
      I have made the same calculation regarding a form life insurance, which only pays in case of death. Which in my jurisdiction is a weird product, which makes sense, if you have a little bit to lose, so you are above the minimum guaranteed by society, but you are not already above the point where the effects you described kick in. What makes the calculation even nicer if you are well-off enough to not have to buy it: If you actually put the money into your portfolio instead, each year you do not need it, the advantage increases further through compound interest, so at some point it literally pays for itself, while the insurance premiums would stay exactly the same.
- JumpCrisscross 5y ago
  > How does renter's insurance have anything to do with what's in the bank? Long story short, damage was caused to the apartment by a house sitter. The landlord sued for the cost of the repairs. The litigation and costs would have been covered by a vanilla renter’s insurance policy.
  - superkuh 5y ago
    That's a nice ideal and all but buying food usually comes before renters insurance. $200 a year matters. Seriously. To a lot of the world population that's a lot of money they can't afford to throw away on a chance.
    - JumpCrisscross 5y ago
      > buying food usually comes before renters insurance. $200 a year matters. Seriously. I agree. Was echoing the observation that financial literacy and education can be disconnected. At lower levels of income, the key lessons tend to revolve around the cost of check cashing and payday lending, avoiding banks that charge fees, doing your taxes and getting your credits and refund and keeping an eye on recurring bills.

deleted 5y ago

[deleted]

dheera 5y ago

The other thing is, the concept of financial literacy is changing with the times. The likes of Warren Buffet would probably tell you to never touch cryptocurrency, for example, but today, as of 2021, pretending it doesn't exist and being afraid of it is being horribly oblivious to what is going on in the financial world right now. Four years ago you'd look like "one of those financially-illiterate hippies" for investing in Bitcoin, and become part of the laughing stock after the 2018 crypto crash, but if you had held onto a diversified portfolio of cryptocurrencies you'd probably be doing very well right now. The truly financially literate learn to adapt to a changing world, embrace and try to understand new investment vehicles, and try to make sense of how they might shape the future.

lottin 5y ago
Financial literacy means, among other things, understanding that an investment decision can never be justified after the fact based on the observed outcome of that particular investment.
bluGill 5y ago
Tulip mania can go on for years, as it has in all previous bubbels. Maybe they are good investments, but they still show all the signs of a bubble to me.

agumonkey 5y ago

It does help a bit, finance aware people (rich people) look at life differently, they chase fads less and wait a bit more with their capital.. they benefit a lot from uneducated mass going around buying stupid stuff and throwing it 6 month later to buy new stupid stuff. Now that said, being rich does allow a lot of stuff that no education can compensate for, I agree.