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Money lessons without money: The financial literacy fallacy

228 points by herbertl 2y ago

Quinzel 2y ago
Great article. I think it’s very true. I felt I was failed by education/parents with regard to financial literacy, because the first time I ever had real money in my life was when I went to university the first time and I had no idea how to manage it, and I ended up homeless for some time. Now I’m a parent myself, I decided I’d teach my kids about money by actually giving them money. $100 each per fortnight. I made both kids set up savings accounts that earned interest, and they had to save $50 a fortnight. The other $50 I said they could spend on whatever they liked, but that I would no longer pay for anything related to their gaming (ie, Xbox subscriptions etc), I don’t buy them toys, or nice snacks, or fancy branded clothes - that’s all stuff they now need to save for and buy themselves with the money they are given. One kid has ADHD and the other kid is close to neurotypical. The neurotypical kid certainly learned how to manage money quicker. His savings account remained perfect, he accumulated interest as well, and can always afford his subscriptions etc. he barely ever even spends the $50 that he’s allowed to do anything with, but when he wants to use money when going out with friends etc, he just always has money, and he even keeps some cash on hand as well. The other kid on the other hand has taken a longer time to understand but, there’s absolutely no way an ADHD kid would learn without real money to manage in my opinion and I think they benefit from having the freedom to make mistakes with money. He would spent his $50 within about 10seconds of receiving it, generally on stupid shit from Amazon. Then he never had money for his gaming subscriptions which would result in massive meltdowns when he couldn’t play his games, and then he never had money to do stuff with friends when he wanted to. He was always the “poor kid”. Then, even though he wasn’t supposed to, he withdrew cash from his savings to pay for subscriptions, losing interest etc, and then also having no savings. It took about a year, but he’s finally learned to stop buying stupid shit on Amazon. He still can’t seem to save the way his brother can, but he saves for a couple of months at a time, and then buys the next computer part he wants, and he always sets aside the money for his game subscriptions now as well. He also does sometimes put extra little bits of money in his savings when he’s particularly motivated for a more expensive piece of computer, but he still often withdraws for stupid small shit. He also compares his spending behaviour to his brothers and he realises that his brother is “rich” because he doesn’t spend money. It’s an expensive lesson for me to teach them, but, I genuinely think that it has helped them both learn real life lessons with regard to money. I think the unfortunate thing is that the people who really need to learn money, are the ones that don’t have it. I’m very lucky that I’m in a position to be able to afford to let me kids experiment with $100 each a fortnight. There’s people out there who could probably afford more than that, but I think that in the real world, a large majority of people cannot afford to give their kids that learning opportunity. However, for me, having once been homeless, and then many years later having done an MBA which included finance, I realised the best way to help my own kids learn to manage money was to give them some money to manage.
- avdlinde 2y ago
  Would you mind sharing the age of your kids when you started this approach?
  - Quinzel 2y ago
    Sure. When we started, the younger son was 8 years old and the older son was 10 years old. At first I did it with cash and they didn’t have bank accounts, but I found the problem was the younger one would “misplace” his savings money all the time. And I also found that the ADHD was sly and would “find” the younger brothers misplaced money and spend it, but in such a way that I couldn’t prove it. So I just went and opened bank accounts for them. Who has cash these days anyway! It’s been much better since.
- hiAndrewQuinn 2y ago
  ~$5000 per year, which you would have likely spent anyway just giving them things, in order to hammer in solid financial literacy skills seems like a really good return on investment. Especially for the ADHD one - even if he can't or won't save like his brother I think you are immunizing him against the worst kind of financial ruin in the future.
  - Quinzel 2y ago
    Yes - I don’t buy them extra things through out the year. I also only top up their bus cards for public transport once every 3 or 4 months (sometimes they use their bus cards to pay for their friends) and if they run out of bus money, then they have to either walk, or top it up with their own money. The ADHD kid walks.
- ugurs 2y ago
  It is beneficial for your kids to have the opportunity to make mistakes with the small amount of money they receive. These lessons learned will save them from future troubles. 50 bucks may not be much, but it’s enough to keep it real.
- OldOneEye 2y ago
pradn 2y ago
> Teaching financial concepts in a classroom is like teaching swimming with PowerPoint slides. You can explain the theory of the butterfly stroke all day, but at some point you need to get in the water. And with money, the water is always cold, deep, and full of currents that weren’t in the textbook. It is totally true that these extra-mathematical factors have a big part to play how we spend and how we save. If you’re in a certain culture that expects a certain level of spending, it’s hard to take yourself out of that. I still don’t see even adults with a good idea of basic financial things. How much does it cost to buy a house? How does a monthly payment change with interest rates? How do you become eligible for Social Security? You really need to keep these several-dimensional functions in your head. At the least, a good grasp of algebra is required.
- BugsJustFindMe 2y ago
  > I still don’t see even adults with a good idea of basic financial things. How much does it cost to buy a house? Big part of that is because the answer is "twice as much as 10 years ago", which is simultaneously mindboggling, appalling, and hard to keep track of.
  - pradn 2y ago
    The list price of a house going up is a big part of it. But I don't think people actually have an idea of how much more a house of the same price costs when interest rates go from 2.5% to 7%. For a million dollar house, that's an extra thousand or two a month.
hollywood_court 2y ago
Many people I know need some lessons in basic financial literacy. I’ve been living in an apartment for the past 18 months while saving to build a house and I’ll be here until the home is completed in October. It has been very alarming watching how my neighbors behave and spend money. I myself come from an impoverished background. Single mom, multiple violent stepfathers, no money, left home at 16 to escape the abuse, etc. I slept hard for many months and I’ve been without a home on three different occasions. However, I firmly believe that poverty is a choice for a lot of people and it’s never been more evident until I lived in an apartment complex. My across-the-hall neighbors order food delivery 10+ times per week. Last weekend, from Friday afternoon until Sunday morning, they had food delivered 5 times. I’ve only paid for food delivery once and that was when my son and I were stuck at home with Covid. Many of my neighbors drive new $50k+ automobiles. Then I hear the same across the hall neighbors arguing about money. She’s a teacher (I see her ID card hanging from the rearview of her CR-V. The husband works in a kitchen. I’m guessing their combined gross income is maybe $100k and that’s being generous. Yet they spend money on food delivery like they were making twice that amount. My base salary is only $130k which is decent for Alabama, but I wouldn’t dare waste money on something like that. I drive a 25 year old Land Cruiser that I maintain myself. Growing up poor, we didn’t pay anyone to do anything. I had to learn to repair things myself. I kept that habit through adulthood. Sorry for the rant. It’s just wild seeing how some people live while also having to hear them complain about having no money.
- pyrophane 2y ago
  A lot of people were conditioned to rely on food delivery when it was cheap. Pre-pandemic, restaurant food was much less expensive, delivery apps had low or no fees, and the options for tipping were much lower. Now, of course, restaurant prices have skyrocketed, apps all charge significant fees and the tip expectation is around 20% (and don’t even get me started on how ridiculous it is to base tipping on food cost when none of the tip goes to anyone involved preparing the food and a 10lb bag of mashed potatoes is cheaper than a 1/2 oz container of caviar). But people now expect their meals to be brought to their door and have a lot of resistance to going out to get it or, god forbid, preparing it for themselves.
throwaway173738 2y ago
“New math” was actually a college prep thing because it sought to teach kids how mathematics as a field worked. It’s telling that the author’s only criticism is just that it bewildered some parents. I would expect that because they were never exposed to those concepts in the first place. Kids are bewildered by anything new. They were bewildered by “old math” too. You have to work with them to get them past that. So saying it bewildered kids is like saying water is wet.
bloomingeek 2y ago
I took a one semester class my soph year in high school called Business English. It was basic stuff about money, jobs and banking skills. (by this I mean how to access a bank account, how to try to determine what field to enter for work and how to get training and setting up a budget.) It was a very helpful class for me because my parents were not helpful in any of these subjects. One of the lessons the teacher gave one day has never left me: depending on your income, if you decide to have a new house, you may have to drive a used car. This very simplistic statement kept me out of a lot of financial trouble down through the years. When the company I worked for filed for bankruptcy our wages and benefits were drastically cut. Sadly, a third of my co-workers were forced into bankruptcy and some of them found themselves in divorce court. (remember, money is one of the biggest causes of divorce still today.)
naming_the_user 2y ago
As someone who grew up in a poor area (not in US, but not really relevant, I think), the main lesson that something like home economics/financial literacy classes need to teach is basically the role model / "this is actually possible" thing. Basically, some of the following: For poor kids; Don't train or focus on a career that doesn't pay well; don't even consider it, you can't afford it. That's someone else's problem. Maybe you can do it later when you 'make it'. (for example - low end - nursing, teaching, etc, high end - fashion, art, photography. do these after you make money) Yes, you can make it, just because your neighbours are poor doesn't mean that you have to be You will lose friends if you are ambitious, this is normal etc. Some people seem to intuitively have this understanding (personality traits that are a bit more individual, I guess), others don't. The problem of course is that the state school system basically can't do this, because there's a conflict of interest, someone needs to do the jobs that don't make sense for an individual to pursue.
jlintz 2y ago
One of the best lessons I had was in my senior year of high school with my economics teacher. We did a project where we had to pick a career and research the average salary. Then he showed us how much taxes would be taken out of that pay check and you had your monthly spend. Then you researched a home, car, budget for food and if you could afford it, saving for retirement. Suddenly you saw how quickly the money disappeared and reality hit me. There were so many other factors you could have added in that would suddenly find yourself in negative each month like student loan payments and various "wants"
- lhamil64 2y ago
  I had a health class in high school that taught things like sex ed, first aid, we even learned CPR (the teacher was also an EMT). I remember one class where we had to bring in newspapers and we drew scenarios like "you are divorced and have sole custody of your child, you make $X/hr" and we had to basically find an apartment in the paper and see if we could make it work, adding in things like food, utilities, etc. IIRC I wasn't able to get my monthly expenses below what I was hypothetically making...
petalmind 2y ago
“What [schools are] bad at is teaching people to win in adversarial environments. And they're also bad at the meta-game of reminding someone that knowing the basic mechanics of some process does not make them an expert, but does make them a mark. Said differently: if you know which hands win in poker, thinking that this means you know how to play the game makes you a mark, not an expert.” https://capitalgains.thediff.co/p/teachingfinance https://capitalgains.thediff.co/p/teachingfinance “And it's hard for a teacher to end a class by telling students that they got an A+ in financial literacy and are now equipped to get ripped off in entirely new ways by an entirely different set of adversaries. But it's also impossible to create a repeatable standardized test that accurately simulates such an adversarial environment, because any time everyone gets the same correct answer, that answer would need to become wrong.”
juujian 2y ago
The underlying philosophy is also partially problematic. That is, the idea that the next generation can just budget their way out of a problematic macroeconomic situation. Houses are utterly unaffordable now compared to 30 years ago, and no amount of budgeting will change that. But "financial literacy" shifts the blame and makes it out as an individual inability to budget. It's still useful to learn about how to use a credit card, and how not to, but that is not the root cause. Besides, the big three, medical debt, and student loan debt, credit card debt, and maybe car loans could be tackled at the macro-level, too, but that would be government overbearance again, wouldn't it...
jordanpg 2y ago
Was with you right up to the “entrepreneur” part. No, fawning obeisance to entrepreneurship isn’t the answer, sorry.
thelastgallon 2y ago
I fully agree that only experience creates a forcing function to learn, most kids who were 'dull' kids in school ends up learning how to make good decisions for themselves after a decade of work experience. The 'smart' kids who fall for crypto/nft scams probably aren't that smart. It might be slightly illegal for kids to enter into contracts, which is a prerequisite for running a business. There is also the small matter of child labor laws (also intersects with minors not allowed to sign contracts?). I'm not arguing from a moral standpoint, but just the bottlenecks to make this happen. But we live in interesting times, looks like most of the regulatory authorities are gone, perhaps this bottleneck to enterprising child entrepreneurs and big businesses looking for cheap labor will be removed? I also wonder, child labor was commom for pretty much most of human history, but we have a decent history of child labor during industrial times. How many of them became enterpreneurs? Or were successful financially (better than their peers who weren't child laborers) because they got early experiential learning? 2 examples from that time, Andrew Carnegie (experiential learning) and Rockefeller (School). Andrew Carnegie (I guess he was 12?): Soon after this Mr. John Hay, a fellow Scotch manufacturer of bobbins in Allegheny City, needed a boy, and asked whether I would not go into his service. I went, and received two dollars per week; but at first the work was even more irksome than the factory. I had to run a small steam-engine and to fire the boiler in the cellar of the bobbin factory. It was too much for me. I found myself night after night, sitting up in bed trying the steam gauges, fearing at one time that the steam was too low and that the workers above would complain that they had not power enough, and at another time that the steam was too high and that the boiler might burst. John D. Rockefeller: He attended Cleveland's Central High School, the first high school in Cleveland and the first free public high school west of the Alleghenies. Then he took a ten-week business course at Folsom's Commercial College, where he studied bookkeeping. In September 1855, when Rockefeller was sixteen, he got his first job as an assistant bookkeeper working for a small produce commission firm in Cleveland called Hewitt & Tuttle.[
- myheartisinohio 2y ago
  Do you have any books you'd recommend on Rockefeller and Carnegie?
  - 2y ago
rincebrain 2y ago
IMO a bunch of the problem is distress and short-term thinking. You're not planning for 1, 2, 4 weeks out if you're constantly so stressed you're only thinking about today. And if you're so overwhelmed you're only thinking about today, you're not noticing that you're spending impulsively 5, 6, 7 times a week, and that it adds up. That's really been the key thing, the times that I've sat down and tried to talk someone through who was struggling with their financial planning. They never really internalized doing this sort of planning regularly, for various reasons, and are so stressed by the day to day that they do not spend time thinking about much beyond the immediate, not just in terms of finances, so they're not trying to save for a goal, or a vacation, they're just trying to get through the day and pass out, so that kind of planning and feedback of "oh I need to not do that" just doesn't happen, much less learning to stop and think before buying things. I don't have great advice on how to use this for better outcomes, though - sometimes, just making the suggestion when asked that they start to do this sort of planning regularly has been massively helpful for people, but I have, a couple times, had people ask for advice, only for it to become clear that they were looking for a rationalization to externalize their problems - that is, any proposal which required they change their behavior was off the table. (The above, by the way, is also, I think, why there's so much backlash about RTO and similar - a lot of people who had been mindlessly struggling through the day, had time to themselves now, and did some thinking they never had the energy to do before...)
epolanski 2y ago
> They do it because everyone they know is going to college, because their parents expect it, because they’ve been told their whole lives that education is always worth it Jm2c but I would not really recommend, not blindly at least, a degree to many kids today. You really like it/care? Good. Go for it. In my countries, Italy/Poland, the average plumber or electrician makes more than the average law or economics degree. You want to make very good money? You're more likely to do so running a bakery in northern Italy where there's very few of them. My SO lives in Reggio Emilia, a city of 150k+ it's impossible to get a decent croissant for breakfast, it's crazy. The new generations will have relatively low competition for blue collar jobs, but plenty in higher education. It's especially easy on those that want to be self employed to find opportunities. Yet, every time I say those things there will be the usual person bashing me that a very good lawyer or engineer will make more than those jobs...sure, true. But the largest majority won't.
dasil003 2y ago
This is a ridiculously shallow article all based on arguing against a strawman that teaching financial literacy will, on its own, lead students to make wise money decisions. Yeah, no shit. It's well understood that classroom education can not and does not substitute for real world experience in any way. There is literally nothing the education system can do that will lead to young people making wise financial decisions on its own. On the other hand, teaching them financial literacy is not "bikeshedding" as the article suggests. Financial literacy is not just some esoteric application of basic math that is somehow distracting from the fundamentals. The modern world is set up to prey on the naive by extracting usurious interest rates. Kids absolutely should be taught about this, even if they still have to go through a few hard knocks for it to actually sink in.
sinuhe69 2y ago
While teaching the "theoretical stuff" may not help much, playing financial games can help ingrain the knowledge much better. Perhaps because the feeling is more real and the emotions more tangible. I've played games like Build Your Stax [1], Stock Market Game [2], SPENT [3] and other budget games with my son and he really likes them. He quickly broke the record and beat me in the games and was very proud of himself :) [1] https://buildyourstax.com/ https://buildyourstax.com/ [2] https://www.stockmarketgame.org/ https://www.stockmarketgame.org/ [3] https://playspent.org https://playspent.org
readthenotes1 2y ago
I have several impoverished family members and for none of them is it because of the math or initial lack of mobey. It is because of their inability to believe that negative consequences could happen to them so they make one stupid decision after another. There is no training I know of that can fix that. Certainly the School of hard knocks has not.
farceSpherule 2y ago
How about you teach kids basic concepts like how to balance a checkbook and how to balance expenses based on monthly income. It's basic addition and subtraction.
gatienboquet 2y ago
> We’re making the same mistake with money that we once made with abstinence-only sex education: pretending that pure knowledge will triumph over emotion, peer pressure, and real-world temptations. Spoiler alert: it won’t. Funny things, couple weeks ago, the most upvoted links was 'its a knowledge proble or is it' https://josvisser.substack.com/p/its-a-knowledge-problem-or-is-it https://josvisser.substack.com/p/its-a-knowledge-problem-or-...
diegolo 2y ago
to me the author just rediscovered montessori method https://en.wikipedia.org/wiki/Montessori_education https://en.wikipedia.org/wiki/Montessori_education
black_13 2y ago
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DrNosferatu 2y ago
Careful, as that can be a slippery slope: that exact expression, “financial literacy”, has been used in Europe as a way to push ideology - all economy is political. Will they teach the fallacy that economic agents make rational choices? Will they teach the fallacy that running a country is the same as running a household or a grocery store (in terms of supposed thrift)? Will they teach that market growth guaranteedly means improved living standards for all? Will they overwhelm students with technical jargon to make contestable theories seem irrefutable? Will they present market dynamics as "natural laws" rather than human constructions? Will they teach that widespread economic practices must be correct simply because they're common? Will they equate market freedom with political freedom as if they're the same thing? Finally, will they teach Keynesian Economics or Neoliberal Economics? Furthermore, will they teach austerity is mathematically self-defeating and in 95% of cases, will fail?
- trod1234 2y ago
  > Finally, will they teach Keynesian Economics, or Neoliberal Economics? What about Classical or Austrian?
- NlightNFotis 2y ago
  Jesus Christ mate, they're talking about personal finance, not political economy.
  - DrNosferatu 2y ago
    Basic personal finance, like interest rates, simple statistics (namely about casinos), sure. BUT, during the European austerity footgun days, they put an animated talking bear on tv teaching this “financial literacy” and illustrating the “run your country as a thrifty household” tale as meritorious and not a fallacy, among other stuff like that.
    - alabastervlog 2y ago
      Talk to some political scientists. You're never getting a polity that understands the issues and votes largely based on policy. Won't happen, not even remotely close. They'll always be voting on forehead-slappingly dumb shit like "running government like a business is a good idea", or more likely on a dozen extremely stupid misconceptions at once, plus just "do I perceive that bad things are happening, generally, regardless of whether they have anything to do with the office I'm voting for".
wjholden 2y ago
You can also frame this as a strong-link problem. For high-aptitude students, one might argue that it's a waste to have them drill basic financial literacy when instead they need to be learning more abstract mathematics to follow pioneers like Newton, Turing, and Pearson in creating entire new disciplines. Now, I want to constrain my thought to just the high-aptitude students with possible futures in science and engineering. I can understand educators trying to make math useful for those who won't need algebra to do calculus, calculus to do physics, and physics to do engineering.
- snailmailstare 2y ago
  I don't really get that point. We have decided against removing the prodigies from the normal environment so its not at all uncommon to see someone who was expected to be the most promising for society held back by a basic social or economic trap they should have avoided if they valued putting the slightest thought into our mundane things.
freddie_mercury 2y ago
Financial literacy has tons of fallacies but this article really only covers one of them. The research I've read on the subject, experts nowadays are tending towards preferring "just in time" teaching. If you learned about mortgages and 401ks in 12th grade, that's not much help if you don't get a 401k until you're 22 or a mortgage until you are 25. And that shows another issue: what does anyone even mean by "financial literacy". Does it include lessons about individual stock picking? About claiming Social Security early? About optimising taxes? About checking for better insurance every few years? About college savings plans for children? How much ground do we need to cover?
- wodenokoto 2y ago
  If you are an American I think learning about what a 401k is, why it is good, how to calculate why it is good is really important to learn ahead of time. Then when it comes time to get a 401k, you can check and understand why it is still valuable and you can understand whatever new thing might be available. But you know what’s going on. That’s the “financial thinking”.
- nly 2y ago
  How about basics like : who will have better a retirement outcome at 60? 1) Bob who invests $1000/mo from age 20 to age 30, then nothing afterwards 2) Alice who starts investing $1000/mo from age 30 all the way to age 60. 3) Johnny whose mum invested $200/mo from his birth to age 18, then nothing afterwards.
- silvestrov 2y ago
  I think the biggest fallacies is 100% seperation of "there is school, then there is work". It's stupid to think that after school no more teaching is needed. I hate that after leaving university it is difficult to find out what is taught current students, what are the new theories and tools that have been introduced in the last 10 years. It would be much better to start working alongside being in school, so you can learn about taxes and compound interest while earning money. People also have much better ability to learn math when they can use it for solving problems outside of the classroom: https://www.reddit.com/r/TheWire/comments/1it269l https://www.reddit.com/r/TheWire/comments/1it269l
thenoblesunfish 2y ago
Since you're the one who brought up bikeshedding, why are you focusing on this instead of e.g. paying and respecting educators enough to encourage smart people like yourself to solve this and a thousand other problems of how to educate better?
pembrook 2y ago
Any argument against teaching financial literacy can also be applied to pretty much any topic taught in schools. You could also write the same clever-sounding contrarian think-piece about why teaching Home Economics doesn't make sense until you have your own home to run; teaching CPR doesn't make sense unless there's someone choking right in front of you; etc. Using the logic underpinning this article, the only things taught in school should be how to play video games, how to find the best parties and how to get laid; since those are the only things actually relevant to students at that stage of their life. Obviously studies will show that most students don't become financial wizards after taking financial literacy classes, because that's how it is with all education. How many kids who take English class become good writers? Doesn't mean we shouldn't offer the knowledge for those willing to take it.
- rsanek 2y ago
  i think your examples are actually fantastic. a home ec class where kids actually cook something is much better than just reading a bunch of recipes. a CPR class where you practice on a dummy is better than just watching a video on it. fwiw i had the same experience with money that the article talks about. my parents tried to impart alot of wisdom on me but it hits different when you have actual money in the market and see it go down.
- pyrophane 2y ago
  In home economics though, you are cooking real food, right?
  - y-curious 2y ago
    Yes! My wife grew up in the SF Bay area in one of the wealthiest suburbs. They had water polo, cross country trips etc. They did not, however, have home economics! It makes me so sad, as I see her peers (and for a while, her) be relatively clueless on cooking at home.
    - Yeul 2y ago
      The number of restaurants and coffee shops has exploded compared to when I was a teenager. It starts to add up if you go to Starbucks frequently.
tr888 2y ago
Teaching physics is pointless unless you have your own particle accelerator.
- olddustytrail 2y ago
  That attitude is totally bizarre to me. Why would you not want to know how things work? I guess that's why some people don't get climate change: to them it's just some weird belief for scientists rather than something you can understand yourself.
  - trod1234 2y ago
    > That attitude is totally bizarre to me. When they say physics they aren't talking about it as you know it. What they are actually talking about is a corruption of the meaning. To them, physics is just boring math that you solve problems that have no basis in reality. Its just formulas you have to memorize that don't let you do useful things, and formulas by themselves are useless knowledge, so they believe. This is what current textbooks teach, no intuition, no practical knowledge, contradictory information. Its not about how things work because that isn't what is being taught. It may have been at one time, but now its all just useless formulas to these people. Such is the corruption and degradation of education today.
lucasfcosta 2y ago
Most people’s money problems would be solved if we taught them not to chase status instead of focusing on the numbers. Financial literacy itself is quite simple: spend less than you make. Everything else is an optimization and it’s pretty easy to learn with a few days of research. I know this is the classical HackerNews type comment, but I honestly can’t understand why it’s so hard when there’s so much information available and so few pre-requisites (almost none) to learn about it.
- vjk800 2y ago
  > Financial literacy itself is quite simple: spend less than you make. Maybe for the quantitatively minded Hacker News audience this is simple. But there are quite many people who have no idea how much they are spending, or sometimes even how much they are spending. It's easy to forget if you live in tech - or even middle class - bubble, but even the most basic math is very difficult to some fraction of people.
  - graemep 2y ago
    > but even the most basic math is very difficult to some fraction of people. That is the real problem. People need to learn maths before they can learn financial literacy.
    - vjk800 2y ago
      Maybe. Or maybe there is just a certain fraction of people that are incapable of learning it. Like dyslexia, but for mathematical operations. I mean, it's not like we're not trying. Math is taught in every school at every age group and it's around us everywhere.
      - graemep 2y ago
        There is such a recognised condition with regard to arithmetic. Its called dyscalculia. Those with it need appropriate teaching, but can end up pretty good at maths. > Math is taught in every school at every age group and it's around us everywhere. it is taught everywhere, but I think it is usually badly taught - more commonly badly taught than any other subject.
trod1234 2y ago
I dislike articles like this because they tend to get the details wrong, while having things that sound plausible, but still poorly defining the problem. The article does little more than promote and repeat the same arguments that led to each one of the things mentioned as negatives, with somehow this time will be different. I hate to be the one to say this, but if the problem has repeated itself over decades, its not the subject matter but the type of people involved. The subject matter changes, and you get the same result. The only thing that does not change are the people involved, and when you look at who is involved specifically it comes down to the bureacratic administrators, and the NEA special interests that receive the most weight. They are the experts after all. After a certain amount of time, the only way these things are still a problem is because it was intended to be that way by someone involved. Education is hardly rocket science. Ask yourself why Critical Thinking and Reasoning doesn't really happen until college? Philosophy used to be included in all basic education starting around 3rd-4th grade. It has since largely been withheld, but anyone receiving this education scores significantly higher than those that don't. Food for thought, Trivium based curricula stood the test of time for hundreds of years, it was not until people started tinkering and removing things that we started having these problems.
- Yeul 2y ago
  If you teach kids critical thinking they won't believe in religious fairytales anymore.
  - trod1234 2y ago
    If you teach them critical thinking, they won't believe in false ideology anymore which would normally blind them to everything else. Some people are working real hard towards extinction.
kome 2y ago
The push for financial literacy as a panacea for systemic economic instability is a neoliberal sleight of hand. It’s a moral cop-out, allowing institutions to pathologize poverty while absolving themselves of designing systems that prey on human behavior. Consider retirement: we dismantled pensions, replaced them with 401(k)s, and now blame individuals for not magically becoming Warren Buffett. Or student loans: we tell 18-year-olds to “shop around” for degrees as if education is a commodity, not a societal investment. Healthcare? “Just be a savvy HSA optimizer!” Meanwhile, the system is a Skinner box of late-stage capitalism—overdraft fees, algorithmic rent hikes, predatory loans—all while whispering, “You should’ve read the fine print.” Behavioral economics has shown we’re not rational actors. Yet the system demands perfect foresight: save exactly enough, borrow exactly enough, die just before your 401(k) runs out. When people fail (and they do, because life is stochastic), we scold them for not being “literate” enough, rather than asking why basic survival requires a PhD in personal finance. This isn’t empowerment—it’s exploitation gaslit as morality. Countries with robust social safety nets don’t obsess over teaching kids to day-trade; they structure defaults that work for humans. Financial literacy has value, but weaponizing it to justify atomizing every risk onto individuals? That’s not education. That’s a rigged game wearing a meritocratic mask.
- jongjong 2y ago
  Great point. I saw a short YouTube video the other day in which a lady was describing how saving $100 a month and investing it in an index fund would turn into $1 million after 50 years or so... The numbers seem to add up but this strategy all rests on society's ability to maintain what has been the biggest legalized economic ponzi in the history of mankind... Plus, it doesn't factor in inflation. A 10% annual gain means nothing at all if real inflation is 10%. Note that the inflation compounds as well! There are all these risks and dysfunctions that are covered up and simplified down in the language. Whenever you're discussing long term events and you say the word "dollar", you're talking about an extremely vague depreciating unit... It's not a term that's fit for discussing long term events. Dollars might not even exist in 20 years. All fiat currencies in history have gone to 0... Literally hundreds of them across different civilizations. USD has only really been a fiat currency since 1971... It's not that long ago and it has lost most of its value since then. Now it seems to be held together by sheer insanity; psyops, shady international organizations, geopolitical machinations, massive-scale coercion and deprivation of opportunities through regulations, weaponizing taxpayer dollars against taxpayers... Always accompanied with gaslighting of course. We have fraud disguised as aid, sin disguised as morals.
snailmailstare 2y ago
The article goes on to make better arguments than the comments imply, but still treats the opposition as a strawman. Showing a student how compound interest works on one loan or account is microeconomics and it was never as ineffective as teaching kids smoking public health statistics which is more like teaching macroeconomics and expecting children to be afraid they will ruin the GDP.
vjk800 2y ago
> What makes financial decisions hard isn’t the math. To be fair, I've met quite a few people who also struggle with the math. To the Hacker News audience this seems unfathomable, but the very idea that you end up paying much more with the "pay only 9.99 €/month)!" deal is completely alien to many people. Or even if they understand it in principle, it never occurs to them to compare the actual numbers. Or even if they compare the actual numbers, it doesn't occur to them to add the numbers up to see how much extra they are spending on interests in total. Many people are quite stupid when it comes to even the most basic math. Or not even math, but just thinking of or comparing numbers.
- pianom4n 2y ago
  > What makes financial decisions hard isn’t the math. > Most personal finance math is basic arithmetic – the same arithmetic that most of our students currently struggle with. These sentences are literally next to each other! The entire article can be disregarded.
whatever1 2y ago
Like everything else, without practice you cannot not really learn.
gabesullice 2y ago
The article's argument is that experience is a better teacher than a person with a curriculum and a chalkboard, which I agree with, but the proposed solution: "so, let's just give them experience!" is a shallow proposition—I doubt anyone knows how to start 4 million small businesses per year, with meaningful revenue, using a workforce that hasn't (yet) graduated high school. Experience is hard (if not impossible) to scale. And it could easily backfire: imagine the scenario where the experience is miserable and results in failure. What if the students' lesson learned is "why bother trying?" The most effective way we have to scale experience is through simulation. And we know how to provide that pseudo-experience to young kids without a lot of investment: story telling. Maybe we should scour the globe for compelling stories that teach lessons about delayed gratification, the value of saving, and self-confidence vs. vanity in terms of spending money, so that we could start telling them to students at an early age.
- laserbeam 2y ago
  The article also references a low capital required list of business ideas for high school children. No one is arguing for million dollar projects. The argument is for hundred/thousand dollar projects.
- bsenftner 2y ago
  Financial video games, where the player never sees "finance!" in any of the media marketing of the serious educational product sold as a toy. Seriously, the "rules" of finance pale in complexity when compared to how much intricacy and never-actually-pointless complexity put into simulation games. I expect there are already finance/stock/economic simulation games of a serious nature; make and promote watered down versions and market them in cooperation with serious money paid to the people that actually successfully sell pop culture game software. Yes, a hard sell, I know, I came from those industries, but it can be done.
  - adrianN 2y ago
    Isn't Eve Online essentially that.
someothherguyy 2y ago
This article contradicts itself on corrective measures. As the article states, people still go into debt even when they have real world experiences with financial transactions. Vulnerabilities will always be exploited if there is something to gain from it. Rules can be implemented to protect the vulnerable.
bustling-noose 2y ago
The article almost got it right ‘emotions, peer pressure, temptations’ and how people spend money on things they don’t need and then got it wrong by not actually saying what’s important. Money management and financial literacy involves psychology along with math. So does sex education like the article compares it to. Having sex or spending money is not the problem. Nor is putting fear of the two in your head from a young age or the desire for it. As Charlie munger said - psychology should be taught from a young age. Maybe the most important topic missing from education. Spending money isn’t bad and having sex isn’t either. But saving for a future you’ve dreamt of and sex with a loved one is better. This involves less math and sex education and more psychology and mental well being. If you are a 30 something politician looking for a change and understand psychology, you might want to visit schools and give children hope and mental well being tips. They might vote for you in 15 years.
- jimkleiber 2y ago
  Hell, you might want to visit communities and give adults hope and emotional well being tips and they might vote for you now. It's not just kids who need this and frankly adults probably realize they need it more than kids.
fweimer 2y ago
Isn't core financial literacy a bit more basic than that? Like how to pay your bills? I wasn't taught any of these practicalities in school, and it I suppose it could have been useful.
NanoYohaneTSU 2y ago
The article uses AI art at the start.
jakubmazanec 2y ago
> Education is particularly susceptible to flavor-of-the-month initiatives that promise revolutionary changes but deliver minimal results. Then the article proposes another flavor-of-the-month solution that promise revolutionary changes - if only each student would start a business, then he would HAVE to learn math and everything will be solved. Ignoring the issues of costs and scalability, why not try something simpler first? IMO teaching how to handle money is something that should parents start even before their kids go to school. Give them a little pocket money so they have some agency, and they will soon learn what they can buy now and how to save for a future.
- ikr678 2y ago
  My country's stock exchange runs a play platform for highschoolers. It runs 15 week seasons in line with school terms, participants get 50k play money, and can make unlimited trades from the top 300 stocks using market data from that period. The jump from opening a bank account and basic financial literacy to share trading is a pretty big one but it's hands on and more engaging than most lessons. https://www.asx.com.au/investors/investment-tools-and-resources/sharemarket-game https://www.asx.com.au/investors/investment-tools-and-resour...
- boxed 2y ago
  Yea, seems a bit weird honestly. Starting a business is incredibly hard. And the financial part of it is just a tiny part of why it's hard. You also have to find an idea of a service/product and marketing to name just two that will kill your company before it ever got a single customer.
  - milesrout 2y ago
    The article isn't suggesting kids start the next google. They do have two big structural benefits you don't have, though: 1. Their customers love them or at least know them well and are sympathetic. Not many neighbours or parents will walk past the lemonade stand or ring the health inspectors. People will be their customers just to be nice and to support them. 2. They have no costs and unlimited time. They don't pay rent or board, they don't have jobs and they don't have dependants.
TheOtherHobbes 2y ago
The best way to teach financial literacy is to pay everyone more, and make economic culture participatory and cumulative - not the current bizarre and toxic zero-sum system which elevates mediocre and/or damaged people who compensate for low self-esteem with inherited status and predatory power games. Teens should start a business? With what? Most families in the US are dirt poor, and even setting up a basic YouTube or Etsy business is going to need a couple of hundred dollars of startup investment for materials, creative software, something... This will shock many, but tens of millions of families can't afford to take a risk like that. And one of the things that defines millennial culture is that many millennials already have a main job, a side gig, and some kind of online hustle, and still aren't earning enough to break even.
- Yeul 2y ago
  Society needs nurses and plumbers. Not more dropshippers and influencers.
- milesrout 2y ago
  The US has the highest average household income in the world. There are tens of millions of households that can help their kids start a "business" whether it requires high capital investment or low. Some people will be able to buy a 3D printer and make something cool. Many will create lemonade stands. That is fine. >And one of the things that defines millennial culture is that many millennials already have a main job, a side gig, and some kind of online hustle, and still aren't earning enough to break even. Online bubble, I think, unless my experience is highly atypical. The vast, vast majority of people just have one normal job.
OtherShrezzing 2y ago
>Teaching kids financial literacy without real money is like teaching swimming with PowerPoint slides. And we all know how that ends. The opening statement of this article is fundamentally flawed. I didn't learn to swim as a child, and unironically, watching presentations of "how to swim for absolute beginners" on YouTube got me over the initial challenge of getting into a pool. I can now comfortably swim in the ocean. This isn't just anecdotal. Go to YouTube, and search "learn to swim", and you'll see videos with millions of views, full of comments describing similar learning journeys. You can teach people swimming in these formats.
yodsanklai 2y ago
Financial education in the US is like teaching how to eat healthy to people surrounded by fast food and advertising since they're born. There are other forces at play.
ggm 2y ago
Compound interest is magic. But, people obsess with rate of return which is unsustainable when the long term market rate tends to 6-7%. I appreciate tech stocks do better, I'm just observing a contradiction inherent in things. Balancing interest earned against interest paid can be confronting for some people. Debt is not always bad. It depends. Margaret Thatcher is responsible for a fucktonne of misunderstanding about the national economy because of trite truisms about domestic economy. She hated Keynesians and talked a lot to LSE economists who we'd now critique quite harshly. She'd have hated MMT. Thatcher also laid the seeds of the ruin that is British housing by forcing councils to sell off public housing and refusing to allow them to reinvest the profits in more housing, and created the surge in demand for petty bourgeois share holding in the privatised former national utilities, and rentier behaviour. She utterly fucked over the state. We're living in the ashes of Thatcher destroying all the post war social uplift, and taking her asset stripping model worldwide. I ran away to Australia in the peak of this mania to arrive into a state launching the same madness. Housing is totally awful here for young people. I'm fine, in the great Australian tradition of people my age who own their home and have huge retirement savings, it's "fuck you, I've got mine" voting here.
bsenftner 2y ago
I think the problem with "financial literacy" is that it is taught too polite, it never mentions the true fact that our society is filled with professional organizations that use deception to get your money, and the investment world, the contracting world, and the employment world are filled to the gills with unethical players on both sides that are professional liars. They pose as one and deliver another, their entire careers, and get away with it because they understand how to hide their tracks with financial complexity. The majority of humanity falls prey to these predators, and they are in fact a significant proportion of every nation's economy. Every single company that is "hard to cancel" is one of these predators, entirely successfully, and that is thanks to our lack of financial literacy.
- deleted 2y ago
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- milesrout 2y ago
  I don't think that is really the source of the issues for most people that are bad with money. They spend more than they earn. They don't earn enough and they spend too much. It is like blaming Cocacola for people being fat. Yeah they probably have some diffuse structural blame for the situation at a societal level but nobody is forcing anyone to drink a litre of coke a day or to fritter away their money on takeaways instead of investing it sensibly. Could you blame advertisers for people spending money. Maybe? Do ads even work? They don't seem to work at all in politics so I doubt they do much anywhere else.
  - inetknght 2y ago
    > They spend more than they earn. They don't earn enough and they spend too much. Yeah, because Coca Cola (and other "businesses") convince them to spend. > Yeah they probably have some diffuse structural blame for the situation at a societal level but nobody is forcing anyone to drink a litre of coke a day Have you seen advertisements at all? Nobody's forcing people to see/hear them. But they're shoved in your face wherever you go. > Could you blame advertisers for people spending money. Maybe? Not even just maybe. You're shortselling yourself. > They don't seem to work at all in politics so I doubt they do much anywhere else. You might want to double check how politics use advertisements.
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mihaic 2y ago
My most terrible conclusion is that if everyone had perfect financial literacy, the world would be even worse for the younger generation, who's never get any change without some systemic reset to catch up. So, personally I give everyone I know the standard advice (basket of S&P 500, never pick your own stocks, get some T bills for diversity, etc), I think in the long run this is creating a terrible economy for the young, and the old will eventually pay for it.
- Etheryte 2y ago
  This is a widely known trope in the financial circles, often stated as what if everyone only invested in indexes. Firstly for context, we're not even remotely close to a situation like it, with all the rage index investing is today, we're still somewhere in the ballpark of half and half for passive and active investing. Secondly, it's not really a problem, and actually the more financially literate you are, the more you could benefit from that situation. If everyone invests in index funds then the companies in the index get pushed up while the companies that are not in get pushed down. This means that there will be many good companies that are undervalued outside of the index and anyone with the literacy to notice that can buy them and then benefit.
  - mihaic 2y ago
    It's not about the fact that you don't have an edge against your peers with financial literacy, you'll always have that. It's the fact that you won't have an edge against your median efficiency elders, who are simply leveraging a much larger capital. Closing a gap by 2% per year, even over 50 years still means less than tripling an amount (1.02 ^ 50 ~ 2.7). Your edge needs to be significant for exponentiation to work within your lifetime.
Havoc 2y ago
The fallacy here is that it’s not an either or proposition. You need practical experience but supported with theory along the way. Just like with basically anything else
Already__Taken 2y ago
The core tenant of this I'd rather push is project based learning. Otherwise it sounds a bit too much like the point of education is to do a job and earn money. Also touched on is failure, you can't learn a business with real money without failing to make any money, and failure is important and just as much of a passing grade in a project context IMO, depending on grasping the failure.

228 points by herbertl 2y ago

Great article. I think it’s very true. I felt I was failed by education/parents with regard to financial literacy, because the first time I ever had real money in my life was when I went to university the first time and I had no idea how to manage it, and I ended up homeless for some time. Now I’m a parent myself, I decided I’d teach my kids about money by actually giving them money. $100 each per fortnight. I made both kids set up savings accounts that earned interest, and they had to save $50 a fortnight. The other $50 I said they could spend on whatever they liked, but that I would no longer pay for anything related to their gaming (ie, Xbox subscriptions etc), I don’t buy them toys, or nice snacks, or fancy branded clothes - that’s all stuff they now need to save for and buy themselves with the money they are given. One kid has ADHD and the other kid is close to neurotypical. The neurotypical kid certainly learned how to manage money quicker. His savings account remained perfect, he accumulated interest as well, and can always afford his subscriptions etc. he barely ever even spends the $50 that he’s allowed to do anything with, but when he wants to use money when going out with friends etc, he just always has money, and he even keeps some cash on hand as well. The other kid on the other hand has taken a longer time to understand but, there’s absolutely no way an ADHD kid would learn without real money to manage in my opinion and I think they benefit from having the freedom to make mistakes with money. He would spent his $50 within about 10seconds of receiving it, generally on stupid shit from Amazon. Then he never had money for his gaming subscriptions which would result in massive meltdowns when he couldn’t play his games, and then he never had money to do stuff with friends when he wanted to. He was always the “poor kid”. Then, even though he wasn’t supposed to, he withdrew cash from his savings to pay for subscriptions, losing interest etc, and then also having no savings. It took about a year, but he’s finally learned to stop buying stupid shit on Amazon. He still can’t seem to save the way his brother can, but he saves for a couple of months at a time, and then buys the next computer part he wants, and he always sets aside the money for his game subscriptions now as well. He also does sometimes put extra little bits of money in his savings when he’s particularly motivated for a more expensive piece of computer, but he still often withdraws for stupid small shit. He also compares his spending behaviour to his brothers and he realises that his brother is “rich” because he doesn’t spend money. It’s an expensive lesson for me to teach them, but, I genuinely think that it has helped them both learn real life lessons with regard to money. I think the unfortunate thing is that the people who really need to learn money, are the ones that don’t have it. I’m very lucky that I’m in a position to be able to afford to let me kids experiment with $100 each a fortnight. There’s people out there who could probably afford more than that, but I think that in the real world, a large majority of people cannot afford to give their kids that learning opportunity. However, for me, having once been homeless, and then many years later having done an MBA which included finance, I realised the best way to help my own kids learn to manage money was to give them some money to manage.

avdlinde 2y ago
Would you mind sharing the age of your kids when you started this approach?
- Quinzel 2y ago
  Sure. When we started, the younger son was 8 years old and the older son was 10 years old. At first I did it with cash and they didn’t have bank accounts, but I found the problem was the younger one would “misplace” his savings money all the time. And I also found that the ADHD was sly and would “find” the younger brothers misplaced money and spend it, but in such a way that I couldn’t prove it. So I just went and opened bank accounts for them. Who has cash these days anyway! It’s been much better since.
hiAndrewQuinn 2y ago
~$5000 per year, which you would have likely spent anyway just giving them things, in order to hammer in solid financial literacy skills seems like a really good return on investment. Especially for the ADHD one - even if he can't or won't save like his brother I think you are immunizing him against the worst kind of financial ruin in the future.
- Quinzel 2y ago
  Yes - I don’t buy them extra things through out the year. I also only top up their bus cards for public transport once every 3 or 4 months (sometimes they use their bus cards to pay for their friends) and if they run out of bus money, then they have to either walk, or top it up with their own money. The ADHD kid walks.
ugurs 2y ago
It is beneficial for your kids to have the opportunity to make mistakes with the small amount of money they receive. These lessons learned will save them from future troubles. 50 bucks may not be much, but it’s enough to keep it real.
OldOneEye 2y ago

pradn 2y ago

> Teaching financial concepts in a classroom is like teaching swimming with PowerPoint slides. You can explain the theory of the butterfly stroke all day, but at some point you need to get in the water. And with money, the water is always cold, deep, and full of currents that weren’t in the textbook. It is totally true that these extra-mathematical factors have a big part to play how we spend and how we save. If you’re in a certain culture that expects a certain level of spending, it’s hard to take yourself out of that. I still don’t see even adults with a good idea of basic financial things. How much does it cost to buy a house? How does a monthly payment change with interest rates? How do you become eligible for Social Security? You really need to keep these several-dimensional functions in your head. At the least, a good grasp of algebra is required.

BugsJustFindMe 2y ago
> I still don’t see even adults with a good idea of basic financial things. How much does it cost to buy a house? Big part of that is because the answer is "twice as much as 10 years ago", which is simultaneously mindboggling, appalling, and hard to keep track of.
- pradn 2y ago
  The list price of a house going up is a big part of it. But I don't think people actually have an idea of how much more a house of the same price costs when interest rates go from 2.5% to 7%. For a million dollar house, that's an extra thousand or two a month.

hollywood_court 2y ago

Many people I know need some lessons in basic financial literacy. I’ve been living in an apartment for the past 18 months while saving to build a house and I’ll be here until the home is completed in October. It has been very alarming watching how my neighbors behave and spend money. I myself come from an impoverished background. Single mom, multiple violent stepfathers, no money, left home at 16 to escape the abuse, etc. I slept hard for many months and I’ve been without a home on three different occasions. However, I firmly believe that poverty is a choice for a lot of people and it’s never been more evident until I lived in an apartment complex. My across-the-hall neighbors order food delivery 10+ times per week. Last weekend, from Friday afternoon until Sunday morning, they had food delivered 5 times. I’ve only paid for food delivery once and that was when my son and I were stuck at home with Covid. Many of my neighbors drive new $50k+ automobiles. Then I hear the same across the hall neighbors arguing about money. She’s a teacher (I see her ID card hanging from the rearview of her CR-V. The husband works in a kitchen. I’m guessing their combined gross income is maybe $100k and that’s being generous. Yet they spend money on food delivery like they were making twice that amount. My base salary is only $130k which is decent for Alabama, but I wouldn’t dare waste money on something like that. I drive a 25 year old Land Cruiser that I maintain myself. Growing up poor, we didn’t pay anyone to do anything. I had to learn to repair things myself. I kept that habit through adulthood. Sorry for the rant. It’s just wild seeing how some people live while also having to hear them complain about having no money.

pyrophane 2y ago
A lot of people were conditioned to rely on food delivery when it was cheap. Pre-pandemic, restaurant food was much less expensive, delivery apps had low or no fees, and the options for tipping were much lower. Now, of course, restaurant prices have skyrocketed, apps all charge significant fees and the tip expectation is around 20% (and don’t even get me started on how ridiculous it is to base tipping on food cost when none of the tip goes to anyone involved preparing the food and a 10lb bag of mashed potatoes is cheaper than a 1/2 oz container of caviar). But people now expect their meals to be brought to their door and have a lot of resistance to going out to get it or, god forbid, preparing it for themselves.

throwaway173738 2y ago

“New math” was actually a college prep thing because it sought to teach kids how mathematics as a field worked. It’s telling that the author’s only criticism is just that it bewildered some parents. I would expect that because they were never exposed to those concepts in the first place. Kids are bewildered by anything new. They were bewildered by “old math” too. You have to work with them to get them past that. So saying it bewildered kids is like saying water is wet.

bloomingeek 2y ago

I took a one semester class my soph year in high school called Business English. It was basic stuff about money, jobs and banking skills. (by this I mean how to access a bank account, how to try to determine what field to enter for work and how to get training and setting up a budget.) It was a very helpful class for me because my parents were not helpful in any of these subjects. One of the lessons the teacher gave one day has never left me: depending on your income, if you decide to have a new house, you may have to drive a used car. This very simplistic statement kept me out of a lot of financial trouble down through the years. When the company I worked for filed for bankruptcy our wages and benefits were drastically cut. Sadly, a third of my co-workers were forced into bankruptcy and some of them found themselves in divorce court. (remember, money is one of the biggest causes of divorce still today.)

naming_the_user 2y ago

As someone who grew up in a poor area (not in US, but not really relevant, I think), the main lesson that something like home economics/financial literacy classes need to teach is basically the role model / "this is actually possible" thing. Basically, some of the following: For poor kids; Don't train or focus on a career that doesn't pay well; don't even consider it, you can't afford it. That's someone else's problem. Maybe you can do it later when you 'make it'. (for example - low end - nursing, teaching, etc, high end - fashion, art, photography. do these after you make money) Yes, you can make it, just because your neighbours are poor doesn't mean that you have to be You will lose friends if you are ambitious, this is normal etc. Some people seem to intuitively have this understanding (personality traits that are a bit more individual, I guess), others don't. The problem of course is that the state school system basically can't do this, because there's a conflict of interest, someone needs to do the jobs that don't make sense for an individual to pursue.

jlintz 2y ago

One of the best lessons I had was in my senior year of high school with my economics teacher. We did a project where we had to pick a career and research the average salary. Then he showed us how much taxes would be taken out of that pay check and you had your monthly spend. Then you researched a home, car, budget for food and if you could afford it, saving for retirement. Suddenly you saw how quickly the money disappeared and reality hit me. There were so many other factors you could have added in that would suddenly find yourself in negative each month like student loan payments and various "wants"

lhamil64 2y ago
I had a health class in high school that taught things like sex ed, first aid, we even learned CPR (the teacher was also an EMT). I remember one class where we had to bring in newspapers and we drew scenarios like "you are divorced and have sole custody of your child, you make $X/hr" and we had to basically find an apartment in the paper and see if we could make it work, adding in things like food, utilities, etc. IIRC I wasn't able to get my monthly expenses below what I was hypothetically making...

petalmind 2y ago

“What [schools are] bad at is teaching people to win in adversarial environments. And they're also bad at the meta-game of reminding someone that knowing the basic mechanics of some process does not make them an expert, but does make them a mark. Said differently: if you know which hands win in poker, thinking that this means you know how to play the game makes you a mark, not an expert.” https://capitalgains.thediff.co/p/teachingfinance https://capitalgains.thediff.co/p/teachingfinance “And it's hard for a teacher to end a class by telling students that they got an A+ in financial literacy and are now equipped to get ripped off in entirely new ways by an entirely different set of adversaries. But it's also impossible to create a repeatable standardized test that accurately simulates such an adversarial environment, because any time everyone gets the same correct answer, that answer would need to become wrong.”

juujian 2y ago

The underlying philosophy is also partially problematic. That is, the idea that the next generation can just budget their way out of a problematic macroeconomic situation. Houses are utterly unaffordable now compared to 30 years ago, and no amount of budgeting will change that. But "financial literacy" shifts the blame and makes it out as an individual inability to budget. It's still useful to learn about how to use a credit card, and how not to, but that is not the root cause. Besides, the big three, medical debt, and student loan debt, credit card debt, and maybe car loans could be tackled at the macro-level, too, but that would be government overbearance again, wouldn't it...

jordanpg 2y ago

Was with you right up to the “entrepreneur” part. No, fawning obeisance to entrepreneurship isn’t the answer, sorry.

thelastgallon 2y ago

I fully agree that only experience creates a forcing function to learn, most kids who were 'dull' kids in school ends up learning how to make good decisions for themselves after a decade of work experience. The 'smart' kids who fall for crypto/nft scams probably aren't that smart. It might be slightly illegal for kids to enter into contracts, which is a prerequisite for running a business. There is also the small matter of child labor laws (also intersects with minors not allowed to sign contracts?). I'm not arguing from a moral standpoint, but just the bottlenecks to make this happen. But we live in interesting times, looks like most of the regulatory authorities are gone, perhaps this bottleneck to enterprising child entrepreneurs and big businesses looking for cheap labor will be removed? I also wonder, child labor was commom for pretty much most of human history, but we have a decent history of child labor during industrial times. How many of them became enterpreneurs? Or were successful financially (better than their peers who weren't child laborers) because they got early experiential learning? 2 examples from that time, Andrew Carnegie (experiential learning) and Rockefeller (School). Andrew Carnegie (I guess he was 12?): Soon after this Mr. John Hay, a fellow Scotch manufacturer of bobbins in Allegheny City, needed a boy, and asked whether I would not go into his service. I went, and received two dollars per week; but at first the work was even more irksome than the factory. I had to run a small steam-engine and to fire the boiler in the cellar of the bobbin factory. It was too much for me. I found myself night after night, sitting up in bed trying the steam gauges, fearing at one time that the steam was too low and that the workers above would complain that they had not power enough, and at another time that the steam was too high and that the boiler might burst. John D. Rockefeller: He attended Cleveland's Central High School, the first high school in Cleveland and the first free public high school west of the Alleghenies. Then he took a ten-week business course at Folsom's Commercial College, where he studied bookkeeping. In September 1855, when Rockefeller was sixteen, he got his first job as an assistant bookkeeper working for a small produce commission firm in Cleveland called Hewitt & Tuttle.[

myheartisinohio 2y ago
Do you have any books you'd recommend on Rockefeller and Carnegie?
- 2y ago

rincebrain 2y ago

IMO a bunch of the problem is distress and short-term thinking. You're not planning for 1, 2, 4 weeks out if you're constantly so stressed you're only thinking about today. And if you're so overwhelmed you're only thinking about today, you're not noticing that you're spending impulsively 5, 6, 7 times a week, and that it adds up. That's really been the key thing, the times that I've sat down and tried to talk someone through who was struggling with their financial planning. They never really internalized doing this sort of planning regularly, for various reasons, and are so stressed by the day to day that they do not spend time thinking about much beyond the immediate, not just in terms of finances, so they're not trying to save for a goal, or a vacation, they're just trying to get through the day and pass out, so that kind of planning and feedback of "oh I need to not do that" just doesn't happen, much less learning to stop and think before buying things. I don't have great advice on how to use this for better outcomes, though - sometimes, just making the suggestion when asked that they start to do this sort of planning regularly has been massively helpful for people, but I have, a couple times, had people ask for advice, only for it to become clear that they were looking for a rationalization to externalize their problems - that is, any proposal which required they change their behavior was off the table. (The above, by the way, is also, I think, why there's so much backlash about RTO and similar - a lot of people who had been mindlessly struggling through the day, had time to themselves now, and did some thinking they never had the energy to do before...)

epolanski 2y ago

> They do it because everyone they know is going to college, because their parents expect it, because they’ve been told their whole lives that education is always worth it Jm2c but I would not really recommend, not blindly at least, a degree to many kids today. You really like it/care? Good. Go for it. In my countries, Italy/Poland, the average plumber or electrician makes more than the average law or economics degree. You want to make very good money? You're more likely to do so running a bakery in northern Italy where there's very few of them. My SO lives in Reggio Emilia, a city of 150k+ it's impossible to get a decent croissant for breakfast, it's crazy. The new generations will have relatively low competition for blue collar jobs, but plenty in higher education. It's especially easy on those that want to be self employed to find opportunities. Yet, every time I say those things there will be the usual person bashing me that a very good lawyer or engineer will make more than those jobs...sure, true. But the largest majority won't.

dasil003 2y ago

This is a ridiculously shallow article all based on arguing against a strawman that teaching financial literacy will, on its own, lead students to make wise money decisions. Yeah, no shit. It's well understood that classroom education can not and does not substitute for real world experience in any way. There is literally nothing the education system can do that will lead to young people making wise financial decisions on its own. On the other hand, teaching them financial literacy is not "bikeshedding" as the article suggests. Financial literacy is not just some esoteric application of basic math that is somehow distracting from the fundamentals. The modern world is set up to prey on the naive by extracting usurious interest rates. Kids absolutely should be taught about this, even if they still have to go through a few hard knocks for it to actually sink in.

sinuhe69 2y ago

While teaching the "theoretical stuff" may not help much, playing financial games can help ingrain the knowledge much better. Perhaps because the feeling is more real and the emotions more tangible. I've played games like Build Your Stax [1], Stock Market Game [2], SPENT [3] and other budget games with my son and he really likes them. He quickly broke the record and beat me in the games and was very proud of himself :) [1] https://buildyourstax.com/ https://buildyourstax.com/ [2] https://www.stockmarketgame.org/ https://www.stockmarketgame.org/ [3] https://playspent.org https://playspent.org

readthenotes1 2y ago

I have several impoverished family members and for none of them is it because of the math or initial lack of mobey. It is because of their inability to believe that negative consequences could happen to them so they make one stupid decision after another. There is no training I know of that can fix that. Certainly the School of hard knocks has not.

farceSpherule 2y ago

How about you teach kids basic concepts like how to balance a checkbook and how to balance expenses based on monthly income. It's basic addition and subtraction.

gatienboquet 2y ago

> We’re making the same mistake with money that we once made with abstinence-only sex education: pretending that pure knowledge will triumph over emotion, peer pressure, and real-world temptations. Spoiler alert: it won’t. Funny things, couple weeks ago, the most upvoted links was 'its a knowledge proble or is it' https://josvisser.substack.com/p/its-a-knowledge-problem-or-is-it https://josvisser.substack.com/p/its-a-knowledge-problem-or-...

diegolo 2y ago

to me the author just rediscovered montessori method https://en.wikipedia.org/wiki/Montessori_education https://en.wikipedia.org/wiki/Montessori_education

black_13 2y ago

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DrNosferatu 2y ago

Careful, as that can be a slippery slope: that exact expression, “financial literacy”, has been used in Europe as a way to push ideology - all economy is political. Will they teach the fallacy that economic agents make rational choices? Will they teach the fallacy that running a country is the same as running a household or a grocery store (in terms of supposed thrift)? Will they teach that market growth guaranteedly means improved living standards for all? Will they overwhelm students with technical jargon to make contestable theories seem irrefutable? Will they present market dynamics as "natural laws" rather than human constructions? Will they teach that widespread economic practices must be correct simply because they're common? Will they equate market freedom with political freedom as if they're the same thing? Finally, will they teach Keynesian Economics or Neoliberal Economics? Furthermore, will they teach austerity is mathematically self-defeating and in 95% of cases, will fail?

trod1234 2y ago
> Finally, will they teach Keynesian Economics, or Neoliberal Economics? What about Classical or Austrian?
NlightNFotis 2y ago
Jesus Christ mate, they're talking about personal finance, not political economy.
- DrNosferatu 2y ago
  Basic personal finance, like interest rates, simple statistics (namely about casinos), sure. BUT, during the European austerity footgun days, they put an animated talking bear on tv teaching this “financial literacy” and illustrating the “run your country as a thrifty household” tale as meritorious and not a fallacy, among other stuff like that.
  - alabastervlog 2y ago
    Talk to some political scientists. You're never getting a polity that understands the issues and votes largely based on policy. Won't happen, not even remotely close. They'll always be voting on forehead-slappingly dumb shit like "running government like a business is a good idea", or more likely on a dozen extremely stupid misconceptions at once, plus just "do I perceive that bad things are happening, generally, regardless of whether they have anything to do with the office I'm voting for".

wjholden 2y ago

You can also frame this as a strong-link problem. For high-aptitude students, one might argue that it's a waste to have them drill basic financial literacy when instead they need to be learning more abstract mathematics to follow pioneers like Newton, Turing, and Pearson in creating entire new disciplines. Now, I want to constrain my thought to just the high-aptitude students with possible futures in science and engineering. I can understand educators trying to make math useful for those who won't need algebra to do calculus, calculus to do physics, and physics to do engineering.

snailmailstare 2y ago
I don't really get that point. We have decided against removing the prodigies from the normal environment so its not at all uncommon to see someone who was expected to be the most promising for society held back by a basic social or economic trap they should have avoided if they valued putting the slightest thought into our mundane things.

freddie_mercury 2y ago

Financial literacy has tons of fallacies but this article really only covers one of them. The research I've read on the subject, experts nowadays are tending towards preferring "just in time" teaching. If you learned about mortgages and 401ks in 12th grade, that's not much help if you don't get a 401k until you're 22 or a mortgage until you are 25. And that shows another issue: what does anyone even mean by "financial literacy". Does it include lessons about individual stock picking? About claiming Social Security early? About optimising taxes? About checking for better insurance every few years? About college savings plans for children? How much ground do we need to cover?

wodenokoto 2y ago
If you are an American I think learning about what a 401k is, why it is good, how to calculate why it is good is really important to learn ahead of time. Then when it comes time to get a 401k, you can check and understand why it is still valuable and you can understand whatever new thing might be available. But you know what’s going on. That’s the “financial thinking”.
nly 2y ago
How about basics like : who will have better a retirement outcome at 60? 1) Bob who invests $1000/mo from age 20 to age 30, then nothing afterwards 2) Alice who starts investing $1000/mo from age 30 all the way to age 60. 3) Johnny whose mum invested $200/mo from his birth to age 18, then nothing afterwards.
silvestrov 2y ago
I think the biggest fallacies is 100% seperation of "there is school, then there is work". It's stupid to think that after school no more teaching is needed. I hate that after leaving university it is difficult to find out what is taught current students, what are the new theories and tools that have been introduced in the last 10 years. It would be much better to start working alongside being in school, so you can learn about taxes and compound interest while earning money. People also have much better ability to learn math when they can use it for solving problems outside of the classroom: https://www.reddit.com/r/TheWire/comments/1it269l https://www.reddit.com/r/TheWire/comments/1it269l

thenoblesunfish 2y ago

Since you're the one who brought up bikeshedding, why are you focusing on this instead of e.g. paying and respecting educators enough to encourage smart people like yourself to solve this and a thousand other problems of how to educate better?

pembrook 2y ago

Any argument against teaching financial literacy can also be applied to pretty much any topic taught in schools. You could also write the same clever-sounding contrarian think-piece about why teaching Home Economics doesn't make sense until you have your own home to run; teaching CPR doesn't make sense unless there's someone choking right in front of you; etc. Using the logic underpinning this article, the only things taught in school should be how to play video games, how to find the best parties and how to get laid; since those are the only things actually relevant to students at that stage of their life. Obviously studies will show that most students don't become financial wizards after taking financial literacy classes, because that's how it is with all education. How many kids who take English class become good writers? Doesn't mean we shouldn't offer the knowledge for those willing to take it.

rsanek 2y ago
i think your examples are actually fantastic. a home ec class where kids actually cook something is much better than just reading a bunch of recipes. a CPR class where you practice on a dummy is better than just watching a video on it. fwiw i had the same experience with money that the article talks about. my parents tried to impart alot of wisdom on me but it hits different when you have actual money in the market and see it go down.
pyrophane 2y ago
In home economics though, you are cooking real food, right?
- y-curious 2y ago
  Yes! My wife grew up in the SF Bay area in one of the wealthiest suburbs. They had water polo, cross country trips etc. They did not, however, have home economics! It makes me so sad, as I see her peers (and for a while, her) be relatively clueless on cooking at home.
  - Yeul 2y ago
    The number of restaurants and coffee shops has exploded compared to when I was a teenager. It starts to add up if you go to Starbucks frequently.

tr888 2y ago

Teaching physics is pointless unless you have your own particle accelerator.

olddustytrail 2y ago
That attitude is totally bizarre to me. Why would you not want to know how things work? I guess that's why some people don't get climate change: to them it's just some weird belief for scientists rather than something you can understand yourself.
- trod1234 2y ago
  > That attitude is totally bizarre to me. When they say physics they aren't talking about it as you know it. What they are actually talking about is a corruption of the meaning. To them, physics is just boring math that you solve problems that have no basis in reality. Its just formulas you have to memorize that don't let you do useful things, and formulas by themselves are useless knowledge, so they believe. This is what current textbooks teach, no intuition, no practical knowledge, contradictory information. Its not about how things work because that isn't what is being taught. It may have been at one time, but now its all just useless formulas to these people. Such is the corruption and degradation of education today.

lucasfcosta 2y ago

Most people’s money problems would be solved if we taught them not to chase status instead of focusing on the numbers. Financial literacy itself is quite simple: spend less than you make. Everything else is an optimization and it’s pretty easy to learn with a few days of research. I know this is the classical HackerNews type comment, but I honestly can’t understand why it’s so hard when there’s so much information available and so few pre-requisites (almost none) to learn about it.

vjk800 2y ago
> Financial literacy itself is quite simple: spend less than you make. Maybe for the quantitatively minded Hacker News audience this is simple. But there are quite many people who have no idea how much they are spending, or sometimes even how much they are spending. It's easy to forget if you live in tech - or even middle class - bubble, but even the most basic math is very difficult to some fraction of people.
- graemep 2y ago
  > but even the most basic math is very difficult to some fraction of people. That is the real problem. People need to learn maths before they can learn financial literacy.
  - vjk800 2y ago
    Maybe. Or maybe there is just a certain fraction of people that are incapable of learning it. Like dyslexia, but for mathematical operations. I mean, it's not like we're not trying. Math is taught in every school at every age group and it's around us everywhere.
    - graemep 2y ago
      There is such a recognised condition with regard to arithmetic. Its called dyscalculia. Those with it need appropriate teaching, but can end up pretty good at maths. > Math is taught in every school at every age group and it's around us everywhere. it is taught everywhere, but I think it is usually badly taught - more commonly badly taught than any other subject.

trod1234 2y ago

I dislike articles like this because they tend to get the details wrong, while having things that sound plausible, but still poorly defining the problem. The article does little more than promote and repeat the same arguments that led to each one of the things mentioned as negatives, with somehow this time will be different. I hate to be the one to say this, but if the problem has repeated itself over decades, its not the subject matter but the type of people involved. The subject matter changes, and you get the same result. The only thing that does not change are the people involved, and when you look at who is involved specifically it comes down to the bureacratic administrators, and the NEA special interests that receive the most weight. They are the experts after all. After a certain amount of time, the only way these things are still a problem is because it was intended to be that way by someone involved. Education is hardly rocket science. Ask yourself why Critical Thinking and Reasoning doesn't really happen until college? Philosophy used to be included in all basic education starting around 3rd-4th grade. It has since largely been withheld, but anyone receiving this education scores significantly higher than those that don't. Food for thought, Trivium based curricula stood the test of time for hundreds of years, it was not until people started tinkering and removing things that we started having these problems.

Yeul 2y ago
If you teach kids critical thinking they won't believe in religious fairytales anymore.
- trod1234 2y ago
  If you teach them critical thinking, they won't believe in false ideology anymore which would normally blind them to everything else. Some people are working real hard towards extinction.

kome 2y ago

The push for financial literacy as a panacea for systemic economic instability is a neoliberal sleight of hand. It’s a moral cop-out, allowing institutions to pathologize poverty while absolving themselves of designing systems that prey on human behavior. Consider retirement: we dismantled pensions, replaced them with 401(k)s, and now blame individuals for not magically becoming Warren Buffett. Or student loans: we tell 18-year-olds to “shop around” for degrees as if education is a commodity, not a societal investment. Healthcare? “Just be a savvy HSA optimizer!” Meanwhile, the system is a Skinner box of late-stage capitalism—overdraft fees, algorithmic rent hikes, predatory loans—all while whispering, “You should’ve read the fine print.” Behavioral economics has shown we’re not rational actors. Yet the system demands perfect foresight: save exactly enough, borrow exactly enough, die just before your 401(k) runs out. When people fail (and they do, because life is stochastic), we scold them for not being “literate” enough, rather than asking why basic survival requires a PhD in personal finance. This isn’t empowerment—it’s exploitation gaslit as morality. Countries with robust social safety nets don’t obsess over teaching kids to day-trade; they structure defaults that work for humans. Financial literacy has value, but weaponizing it to justify atomizing every risk onto individuals? That’s not education. That’s a rigged game wearing a meritocratic mask.

jongjong 2y ago
Great point. I saw a short YouTube video the other day in which a lady was describing how saving $100 a month and investing it in an index fund would turn into $1 million after 50 years or so... The numbers seem to add up but this strategy all rests on society's ability to maintain what has been the biggest legalized economic ponzi in the history of mankind... Plus, it doesn't factor in inflation. A 10% annual gain means nothing at all if real inflation is 10%. Note that the inflation compounds as well! There are all these risks and dysfunctions that are covered up and simplified down in the language. Whenever you're discussing long term events and you say the word "dollar", you're talking about an extremely vague depreciating unit... It's not a term that's fit for discussing long term events. Dollars might not even exist in 20 years. All fiat currencies in history have gone to 0... Literally hundreds of them across different civilizations. USD has only really been a fiat currency since 1971... It's not that long ago and it has lost most of its value since then. Now it seems to be held together by sheer insanity; psyops, shady international organizations, geopolitical machinations, massive-scale coercion and deprivation of opportunities through regulations, weaponizing taxpayer dollars against taxpayers... Always accompanied with gaslighting of course. We have fraud disguised as aid, sin disguised as morals.

snailmailstare 2y ago

The article goes on to make better arguments than the comments imply, but still treats the opposition as a strawman. Showing a student how compound interest works on one loan or account is microeconomics and it was never as ineffective as teaching kids smoking public health statistics which is more like teaching macroeconomics and expecting children to be afraid they will ruin the GDP.

vjk800 2y ago

> What makes financial decisions hard isn’t the math. To be fair, I've met quite a few people who also struggle with the math. To the Hacker News audience this seems unfathomable, but the very idea that you end up paying much more with the "pay only 9.99 €/month)!" deal is completely alien to many people. Or even if they understand it in principle, it never occurs to them to compare the actual numbers. Or even if they compare the actual numbers, it doesn't occur to them to add the numbers up to see how much extra they are spending on interests in total. Many people are quite stupid when it comes to even the most basic math. Or not even math, but just thinking of or comparing numbers.

pianom4n 2y ago
> What makes financial decisions hard isn’t the math. > Most personal finance math is basic arithmetic – the same arithmetic that most of our students currently struggle with. These sentences are literally next to each other! The entire article can be disregarded.

whatever1 2y ago

Like everything else, without practice you cannot not really learn.

gabesullice 2y ago

The article's argument is that experience is a better teacher than a person with a curriculum and a chalkboard, which I agree with, but the proposed solution: "so, let's just give them experience!" is a shallow proposition—I doubt anyone knows how to start 4 million small businesses per year, with meaningful revenue, using a workforce that hasn't (yet) graduated high school. Experience is hard (if not impossible) to scale. And it could easily backfire: imagine the scenario where the experience is miserable and results in failure. What if the students' lesson learned is "why bother trying?" The most effective way we have to scale experience is through simulation. And we know how to provide that pseudo-experience to young kids without a lot of investment: story telling. Maybe we should scour the globe for compelling stories that teach lessons about delayed gratification, the value of saving, and self-confidence vs. vanity in terms of spending money, so that we could start telling them to students at an early age.

laserbeam 2y ago
The article also references a low capital required list of business ideas for high school children. No one is arguing for million dollar projects. The argument is for hundred/thousand dollar projects.
bsenftner 2y ago
Financial video games, where the player never sees "finance!" in any of the media marketing of the serious educational product sold as a toy. Seriously, the "rules" of finance pale in complexity when compared to how much intricacy and never-actually-pointless complexity put into simulation games. I expect there are already finance/stock/economic simulation games of a serious nature; make and promote watered down versions and market them in cooperation with serious money paid to the people that actually successfully sell pop culture game software. Yes, a hard sell, I know, I came from those industries, but it can be done.
- adrianN 2y ago
  Isn't Eve Online essentially that.

someothherguyy 2y ago

This article contradicts itself on corrective measures. As the article states, people still go into debt even when they have real world experiences with financial transactions. Vulnerabilities will always be exploited if there is something to gain from it. Rules can be implemented to protect the vulnerable.

bustling-noose 2y ago

The article almost got it right ‘emotions, peer pressure, temptations’ and how people spend money on things they don’t need and then got it wrong by not actually saying what’s important. Money management and financial literacy involves psychology along with math. So does sex education like the article compares it to. Having sex or spending money is not the problem. Nor is putting fear of the two in your head from a young age or the desire for it. As Charlie munger said - psychology should be taught from a young age. Maybe the most important topic missing from education. Spending money isn’t bad and having sex isn’t either. But saving for a future you’ve dreamt of and sex with a loved one is better. This involves less math and sex education and more psychology and mental well being. If you are a 30 something politician looking for a change and understand psychology, you might want to visit schools and give children hope and mental well being tips. They might vote for you in 15 years.

jimkleiber 2y ago
Hell, you might want to visit communities and give adults hope and emotional well being tips and they might vote for you now. It's not just kids who need this and frankly adults probably realize they need it more than kids.

fweimer 2y ago

Isn't core financial literacy a bit more basic than that? Like how to pay your bills? I wasn't taught any of these practicalities in school, and it I suppose it could have been useful.

NanoYohaneTSU 2y ago

The article uses AI art at the start.

jakubmazanec 2y ago

> Education is particularly susceptible to flavor-of-the-month initiatives that promise revolutionary changes but deliver minimal results. Then the article proposes another flavor-of-the-month solution that promise revolutionary changes - if only each student would start a business, then he would HAVE to learn math and everything will be solved. Ignoring the issues of costs and scalability, why not try something simpler first? IMO teaching how to handle money is something that should parents start even before their kids go to school. Give them a little pocket money so they have some agency, and they will soon learn what they can buy now and how to save for a future.

ikr678 2y ago
My country's stock exchange runs a play platform for highschoolers. It runs 15 week seasons in line with school terms, participants get 50k play money, and can make unlimited trades from the top 300 stocks using market data from that period. The jump from opening a bank account and basic financial literacy to share trading is a pretty big one but it's hands on and more engaging than most lessons. https://www.asx.com.au/investors/investment-tools-and-resources/sharemarket-game https://www.asx.com.au/investors/investment-tools-and-resour...
boxed 2y ago
Yea, seems a bit weird honestly. Starting a business is incredibly hard. And the financial part of it is just a tiny part of why it's hard. You also have to find an idea of a service/product and marketing to name just two that will kill your company before it ever got a single customer.
- milesrout 2y ago
  The article isn't suggesting kids start the next google. They do have two big structural benefits you don't have, though: 1. Their customers love them or at least know them well and are sympathetic. Not many neighbours or parents will walk past the lemonade stand or ring the health inspectors. People will be their customers just to be nice and to support them. 2. They have no costs and unlimited time. They don't pay rent or board, they don't have jobs and they don't have dependants.

TheOtherHobbes 2y ago

The best way to teach financial literacy is to pay everyone more, and make economic culture participatory and cumulative - not the current bizarre and toxic zero-sum system which elevates mediocre and/or damaged people who compensate for low self-esteem with inherited status and predatory power games. Teens should start a business? With what? Most families in the US are dirt poor, and even setting up a basic YouTube or Etsy business is going to need a couple of hundred dollars of startup investment for materials, creative software, something... This will shock many, but tens of millions of families can't afford to take a risk like that. And one of the things that defines millennial culture is that many millennials already have a main job, a side gig, and some kind of online hustle, and still aren't earning enough to break even.

Yeul 2y ago
Society needs nurses and plumbers. Not more dropshippers and influencers.
milesrout 2y ago
The US has the highest average household income in the world. There are tens of millions of households that can help their kids start a "business" whether it requires high capital investment or low. Some people will be able to buy a 3D printer and make something cool. Many will create lemonade stands. That is fine. >And one of the things that defines millennial culture is that many millennials already have a main job, a side gig, and some kind of online hustle, and still aren't earning enough to break even. Online bubble, I think, unless my experience is highly atypical. The vast, vast majority of people just have one normal job.

OtherShrezzing 2y ago

>Teaching kids financial literacy without real money is like teaching swimming with PowerPoint slides. And we all know how that ends. The opening statement of this article is fundamentally flawed. I didn't learn to swim as a child, and unironically, watching presentations of "how to swim for absolute beginners" on YouTube got me over the initial challenge of getting into a pool. I can now comfortably swim in the ocean. This isn't just anecdotal. Go to YouTube, and search "learn to swim", and you'll see videos with millions of views, full of comments describing similar learning journeys. You can teach people swimming in these formats.

yodsanklai 2y ago

Financial education in the US is like teaching how to eat healthy to people surrounded by fast food and advertising since they're born. There are other forces at play.

ggm 2y ago

Compound interest is magic. But, people obsess with rate of return which is unsustainable when the long term market rate tends to 6-7%. I appreciate tech stocks do better, I'm just observing a contradiction inherent in things. Balancing interest earned against interest paid can be confronting for some people. Debt is not always bad. It depends. Margaret Thatcher is responsible for a fucktonne of misunderstanding about the national economy because of trite truisms about domestic economy. She hated Keynesians and talked a lot to LSE economists who we'd now critique quite harshly. She'd have hated MMT. Thatcher also laid the seeds of the ruin that is British housing by forcing councils to sell off public housing and refusing to allow them to reinvest the profits in more housing, and created the surge in demand for petty bourgeois share holding in the privatised former national utilities, and rentier behaviour. She utterly fucked over the state. We're living in the ashes of Thatcher destroying all the post war social uplift, and taking her asset stripping model worldwide. I ran away to Australia in the peak of this mania to arrive into a state launching the same madness. Housing is totally awful here for young people. I'm fine, in the great Australian tradition of people my age who own their home and have huge retirement savings, it's "fuck you, I've got mine" voting here.

bsenftner 2y ago

I think the problem with "financial literacy" is that it is taught too polite, it never mentions the true fact that our society is filled with professional organizations that use deception to get your money, and the investment world, the contracting world, and the employment world are filled to the gills with unethical players on both sides that are professional liars. They pose as one and deliver another, their entire careers, and get away with it because they understand how to hide their tracks with financial complexity. The majority of humanity falls prey to these predators, and they are in fact a significant proportion of every nation's economy. Every single company that is "hard to cancel" is one of these predators, entirely successfully, and that is thanks to our lack of financial literacy.

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milesrout 2y ago
I don't think that is really the source of the issues for most people that are bad with money. They spend more than they earn. They don't earn enough and they spend too much. It is like blaming Cocacola for people being fat. Yeah they probably have some diffuse structural blame for the situation at a societal level but nobody is forcing anyone to drink a litre of coke a day or to fritter away their money on takeaways instead of investing it sensibly. Could you blame advertisers for people spending money. Maybe? Do ads even work? They don't seem to work at all in politics so I doubt they do much anywhere else.
- inetknght 2y ago
  > They spend more than they earn. They don't earn enough and they spend too much. Yeah, because Coca Cola (and other "businesses") convince them to spend. > Yeah they probably have some diffuse structural blame for the situation at a societal level but nobody is forcing anyone to drink a litre of coke a day Have you seen advertisements at all? Nobody's forcing people to see/hear them. But they're shoved in your face wherever you go. > Could you blame advertisers for people spending money. Maybe? Not even just maybe. You're shortselling yourself. > They don't seem to work at all in politics so I doubt they do much anywhere else. You might want to double check how politics use advertisements.

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mihaic 2y ago

My most terrible conclusion is that if everyone had perfect financial literacy, the world would be even worse for the younger generation, who's never get any change without some systemic reset to catch up. So, personally I give everyone I know the standard advice (basket of S&P 500, never pick your own stocks, get some T bills for diversity, etc), I think in the long run this is creating a terrible economy for the young, and the old will eventually pay for it.

Etheryte 2y ago
This is a widely known trope in the financial circles, often stated as what if everyone only invested in indexes. Firstly for context, we're not even remotely close to a situation like it, with all the rage index investing is today, we're still somewhere in the ballpark of half and half for passive and active investing. Secondly, it's not really a problem, and actually the more financially literate you are, the more you could benefit from that situation. If everyone invests in index funds then the companies in the index get pushed up while the companies that are not in get pushed down. This means that there will be many good companies that are undervalued outside of the index and anyone with the literacy to notice that can buy them and then benefit.
- mihaic 2y ago
  It's not about the fact that you don't have an edge against your peers with financial literacy, you'll always have that. It's the fact that you won't have an edge against your median efficiency elders, who are simply leveraging a much larger capital. Closing a gap by 2% per year, even over 50 years still means less than tripling an amount (1.02 ^ 50 ~ 2.7). Your edge needs to be significant for exponentiation to work within your lifetime.

Havoc 2y ago

The fallacy here is that it’s not an either or proposition. You need practical experience but supported with theory along the way. Just like with basically anything else

Already__Taken 2y ago

The core tenant of this I'd rather push is project based learning. Otherwise it sounds a bit too much like the point of education is to do a job and earn money. Also touched on is failure, you can't learn a business with real money without failing to make any money, and failure is important and just as much of a passing grade in a project context IMO, depending on grasping the failure.