11 ms·

A little off topic but I noticed whenever these financial literacy threads come up - the only people whose point of view I care about are those who had been poo

A little off topic but I noticed whenever these financial literacy threads come up - the only people whose point of view I care about are those who had been poor and found ways out of it. Those are the people who "figured it out" and I want people to know what they know. Everyone else is theorizing. If you had always been rich, you may think poor people are lazy, or you may believe they are deeply stuck. If you're poor, you may also think you're stuck because you're not seeing ways. Both of these categories of people's views are irrelevant to the topic. I don't want to hear that something is "easy" or "impossible" from those who haven't done it. I want to hear from those who've done it and learn from them. As a conceptual shortcut, I'd want to understand what immigrant and first-generation Asians do, and do that.

vsskanth 5y ago
> As a conceptual shortcut, I'd want to understand what immigrant and first-generation Asians do, and do that. It's pretty simply actually. They try to hold a steady job, save a high percentage of their income, don't have expensive hobbies, buy some property in the best school district they can and spend a lot of time on their kids education to get them into good colleges and elite professions like doctor, engineer etc. Kids learn good financial habits from their parents, and repeat the cycle with some additional knowledge (index funds, rental properties etc.) until they "make" it.
- nostrademons 5y ago
  Also a first-generation Asian (on one side of the family), and my wife is one too. This is absolutely right. It basically comes down to "Make (a lot) more than you spend. Invest the difference in scarce, desirable cash-flowing assets. Borrow money iff the expected returns from the asset exceed the interest rate." These are really simple rules, but really hard to execute. The advantage that immigrants (and some of their kids) have is that they haven't internalized all the subconscious messages American society imparts. So for example my sister lives in Texas, where everything is bigger, and her home is like 50% bigger than my Bay Area one (which I thought was a huge extravagance). But she's always like "Yeah, the neighbors all have bigger houses, and their kids have like twice as many toys, and our kids' friends all have bouncy castles inside the home, and we need to buy them a play structure so we don't waste time going to the playground." So money goes out the door on a bouncy castle, and a play structure, and full-service landscaping, and home improvements, and even more toys. Meanwhile, a typical Asian immigrant is like "Who need more than 4 walls and a bed? Why you care if other people think you poor, when your bank account go up?" My wife is like "We're gonna all end up in one big family bed anyways. Let's look into converting the house into a duplex and renting out the downstairs."
- jfrunyon 5y ago
  You're right, saving a high percentage of your income is pretty simple. For those with disposable income to save.
jopsen 5y ago
> the only people whose point of view I care about are those who had been poor and found ways out of it. Those are the people who "figured it out" and I want people to know what they know. Apologies for not being one such person. But doesn't this assume the libertarian (or conservative) view that financial wellness is a result of individual action? As the article says at the end: > Such curricula also tend to reinforce a libertarian view of financial wellness, based on individual rather than collective action — one where poverty and debt are less a societal problem and more a consequence of bad individual financial decisions. Of course there is an individual component to it. But the most effective way to get people to save for retirement, is to make such savings the default configuration. There's many subtle ways to configure society such that people make good financial choices. Educating people to take action, seems a lot harder than just making sure your life has a sane default setup, if you do nothing :)
- xyzelement 5y ago
  I actually am not a big believer that people can be educated on something they don't want to be educated about so I am with you on that. So ln the surface your idea of a good default setup makes sense. But I am cynical about that working because I wouldn't trust anyone with the power to set the default, especially when the people they are setting the default for aren't able or interested to understand if it's done poorly or well.
  - jopsen 5y ago
    > I wouldn't trust anyone with the power to set the default This is why Americans don't have health insurance by default :) In other countries these defaults are setup by union, politicians, NGOs, interest organizations, etc. I think you have a fair point though: you can't easily create trust -- nor can you easily build up a system of such defaults. It takes time. For example: In Denmark there is no legal requirement that your employer pays into a pension scheme. Yet, almost all employers do, negotiated through unions etc. And when you get a job the usually setup a default contribution from you too, which you can tweak/reduce if you want to -- most people never touch it.
hiddencost 5y ago
My single mom raised two kids on $20k a year. I make $400k / yr after 8 years in industry. My big tricks: - being a really talented programmer - quitting jobs and trading up until I found a good level - spending money to make myself more comfortable, less stressed, more effective - saving a ton of money Learning to spend money was remarkably hard.
nmhancoc 5y ago
> A little off topic but I noticed whenever these financial literacy threads come up - the only people whose point of view I care about are those who had been poor and found ways out of it. Those are the people who "figured it out" and I want people to know what they know. So I can't precisely say I'm part of this group, but I'm definitely associated with it. My parents divorced early, and living with one, for several years, involved food insecurity while living with the other involved being at the 90th percentile of HH income (though not wealth). I'm now on my own, and while I wouldn't say I've 'figured it out', I'm in a position where if I never saved another dollar I'd at least be able to retire by 40. I've seen three broad categories of children who end up successful with money. In order of pain of childhood: 1. Children of parents who are successful, who then replicate the model their parents used. This is a buddy of mine who is a doctor because his dad is a doctor and he liked what he saw growing up. 2. Children of parents who are successful to a limited point, and instill in their child the need to adopt a better model to live a better life. This is the child-of-immigrants experience that you allude to. I had a friend in college, for example, who's dad paid for her tuition but hadn't seen a dentist in 20 years. His basic message to her was: "You can work 60 hours a week like I do, and this is the best you can get. If you want to do better then do well in school." 3. Children whose parent or parents are destructively unsuccessful: addicts, criminals, etc. In this case the operative thinking is "I'll do anything to avoid this outcome". I'd predominately put myself in this category. I'd guess that if you polled most successful people, they'd predominately come from 2 or 3 rather than 1. And I think this effect occurs because a life spent following the path of least resistance (at least in an American context) seems to end poorly for most people. Divorce is common, and financially most people don't end up with enough money to support themselves in old age (and Social Security is of dubious ability to continue to do so). As a result, when you're looking for successful people you're looking for people who have been catalyzed out of the "normal path" or path of least resistance. Sometimes it's the presence of an obviously better alternative as in (1), but most of the time it's a really painful association with the normal path as in (2) or (3), which then motivates them to seek out something different.
WalterBright 5y ago
That's what the book "The Millionaire Next Door" by Stanley covers. In one sentence: live below your means, and invest the difference.

vsskanth 5y ago

> As a conceptual shortcut, I'd want to understand what immigrant and first-generation Asians do, and do that. It's pretty simply actually. They try to hold a steady job, save a high percentage of their income, don't have expensive hobbies, buy some property in the best school district they can and spend a lot of time on their kids education to get them into good colleges and elite professions like doctor, engineer etc. Kids learn good financial habits from their parents, and repeat the cycle with some additional knowledge (index funds, rental properties etc.) until they "make" it.

nostrademons 5y ago
Also a first-generation Asian (on one side of the family), and my wife is one too. This is absolutely right. It basically comes down to "Make (a lot) more than you spend. Invest the difference in scarce, desirable cash-flowing assets. Borrow money iff the expected returns from the asset exceed the interest rate." These are really simple rules, but really hard to execute. The advantage that immigrants (and some of their kids) have is that they haven't internalized all the subconscious messages American society imparts. So for example my sister lives in Texas, where everything is bigger, and her home is like 50% bigger than my Bay Area one (which I thought was a huge extravagance). But she's always like "Yeah, the neighbors all have bigger houses, and their kids have like twice as many toys, and our kids' friends all have bouncy castles inside the home, and we need to buy them a play structure so we don't waste time going to the playground." So money goes out the door on a bouncy castle, and a play structure, and full-service landscaping, and home improvements, and even more toys. Meanwhile, a typical Asian immigrant is like "Who need more than 4 walls and a bed? Why you care if other people think you poor, when your bank account go up?" My wife is like "We're gonna all end up in one big family bed anyways. Let's look into converting the house into a duplex and renting out the downstairs."
jfrunyon 5y ago
You're right, saving a high percentage of your income is pretty simple. For those with disposable income to save.

jopsen 5y ago

> the only people whose point of view I care about are those who had been poor and found ways out of it. Those are the people who "figured it out" and I want people to know what they know. Apologies for not being one such person. But doesn't this assume the libertarian (or conservative) view that financial wellness is a result of individual action? As the article says at the end: > Such curricula also tend to reinforce a libertarian view of financial wellness, based on individual rather than collective action — one where poverty and debt are less a societal problem and more a consequence of bad individual financial decisions. Of course there is an individual component to it. But the most effective way to get people to save for retirement, is to make such savings the default configuration. There's many subtle ways to configure society such that people make good financial choices. Educating people to take action, seems a lot harder than just making sure your life has a sane default setup, if you do nothing :)

xyzelement 5y ago
I actually am not a big believer that people can be educated on something they don't want to be educated about so I am with you on that. So ln the surface your idea of a good default setup makes sense. But I am cynical about that working because I wouldn't trust anyone with the power to set the default, especially when the people they are setting the default for aren't able or interested to understand if it's done poorly or well.
- jopsen 5y ago
  > I wouldn't trust anyone with the power to set the default This is why Americans don't have health insurance by default :) In other countries these defaults are setup by union, politicians, NGOs, interest organizations, etc. I think you have a fair point though: you can't easily create trust -- nor can you easily build up a system of such defaults. It takes time. For example: In Denmark there is no legal requirement that your employer pays into a pension scheme. Yet, almost all employers do, negotiated through unions etc. And when you get a job the usually setup a default contribution from you too, which you can tweak/reduce if you want to -- most people never touch it.

hiddencost 5y ago

My single mom raised two kids on $20k a year. I make $400k / yr after 8 years in industry. My big tricks: - being a really talented programmer - quitting jobs and trading up until I found a good level - spending money to make myself more comfortable, less stressed, more effective - saving a ton of money Learning to spend money was remarkably hard.

nmhancoc 5y ago

> A little off topic but I noticed whenever these financial literacy threads come up - the only people whose point of view I care about are those who had been poor and found ways out of it. Those are the people who "figured it out" and I want people to know what they know. So I can't precisely say I'm part of this group, but I'm definitely associated with it. My parents divorced early, and living with one, for several years, involved food insecurity while living with the other involved being at the 90th percentile of HH income (though not wealth). I'm now on my own, and while I wouldn't say I've 'figured it out', I'm in a position where if I never saved another dollar I'd at least be able to retire by 40. I've seen three broad categories of children who end up successful with money. In order of pain of childhood: 1. Children of parents who are successful, who then replicate the model their parents used. This is a buddy of mine who is a doctor because his dad is a doctor and he liked what he saw growing up. 2. Children of parents who are successful to a limited point, and instill in their child the need to adopt a better model to live a better life. This is the child-of-immigrants experience that you allude to. I had a friend in college, for example, who's dad paid for her tuition but hadn't seen a dentist in 20 years. His basic message to her was: "You can work 60 hours a week like I do, and this is the best you can get. If you want to do better then do well in school." 3. Children whose parent or parents are destructively unsuccessful: addicts, criminals, etc. In this case the operative thinking is "I'll do anything to avoid this outcome". I'd predominately put myself in this category. I'd guess that if you polled most successful people, they'd predominately come from 2 or 3 rather than 1. And I think this effect occurs because a life spent following the path of least resistance (at least in an American context) seems to end poorly for most people. Divorce is common, and financially most people don't end up with enough money to support themselves in old age (and Social Security is of dubious ability to continue to do so). As a result, when you're looking for successful people you're looking for people who have been catalyzed out of the "normal path" or path of least resistance. Sometimes it's the presence of an obviously better alternative as in (1), but most of the time it's a really painful association with the normal path as in (2) or (3), which then motivates them to seek out something different.

WalterBright 5y ago

That's what the book "The Millionaire Next Door" by Stanley covers. In one sentence: live below your means, and invest the difference.