Financial Literacy Article in NY Times

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Post Reply
Topic Author
lloydbraun
Posts: 101
Joined: Mon May 30, 2011 9:14 pm

Financial Literacy Article in NY Times

Post by lloydbraun »

Here's a link to Univ. of Chicago's Professor Richard Thaler's piece on financial literacy in today's NY Times. http://www.nytimes.com/2013/10/06/busin ... wanted=all
livesoft
Posts: 85971
Joined: Thu Mar 01, 2007 7:00 pm

Re: Financial Literacy Article in NY Times

Post by livesoft »

I think "just in time" education is the wave of the future. We already see it here on the forum every single day.

Folks with a new 401(k) plan will ask "What do I do?"

Folks with a new kid will ask "529 plan?" and "How to pay for college?"

Folks just about to retire will ask, "Do I have enough? What do I do?"

Folks about to draw on SS benefits will ask "What do I do?"

Folks with ACH problems will ask "What is your experience?"

Folks with computer virus problems will ask "What do I do?"

While there is some benefit to knowing what to do more than a month before you do it, it turns out that learning about it the day before is not so bad either. Perhaps the biggest financial literacy skill to have nowadays is the skill of using google effectively. They already teach this in schools.
Wiki This signature message sponsored by sscritic: Learn to fish.
Topic Author
lloydbraun
Posts: 101
Joined: Mon May 30, 2011 9:14 pm

Re: Financial Literacy Article in NY Times

Post by lloydbraun »

I think you're correct. Most people aren't obsessive about learning every possible thing about finance or investing so "just in time" teaching is extremely important. This site fulfills that function but the problem for most people is that the "just in time" teaching their getting is from people who have a financial incentive to direct them into certain products or certain loans that are more beneficial to the teacher than the student.
User avatar
nedsaid
Posts: 19249
Joined: Fri Nov 23, 2012 11:33 am

Re: Financial Literacy Article in NY Times

Post by nedsaid »

Yes this is a very discouraging problem. My take on this is that people won't learn this stuff until they are motivated to do so. Otherwise, attempts at financial education fall on deaf ears.

During my years of doing taxes on the side, I have tried to educate people with mixed results. So I bring up these topics only if people seem interested. Folks have to have the motivation.

How many young people have I seen that bounced checks, ran up debt, and trashed their financial life? Banks won't let them have checking accounts. Since their credit is ruined, if they can get loans, they pay high interest rates. Seeing their hard earning money siphoned off by fees to cash their paychecks and fees to buy money orders to pay bills. It is really sad to witness. Some people learn the hard lessons and get things turned around. Others are dysfunctional enough that they blame others or society at large and just never learn.

In short, a percentage of America needs to grow up in a financial sense. Sadly, some never do.
A fool and his money are good for business.
staythecourse
Posts: 6993
Joined: Mon Jan 03, 2011 8:40 am

Re: Financial Literacy Article in NY Times

Post by staythecourse »

livesoft wrote:While there is some benefit to knowing what to do more than a month before you do it, it turns out that learning about it the day before is not so bad either. Perhaps the biggest financial literacy skill to have nowadays is the skill of using google effectively. They already teach this in schools.
Excellent point.

As long as the horse figures out how to drink the water when the time comes is the most important part of life. It is not "not knowing", but actively figuring it out when the time comes by researching it. Must say the internet has made it much simpler. Not sure what folks did just 20+ yrs. ago? Did folks just ask their close family or friends (selection bias), hire "professionals", hit the library and read books, or just wing it??

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle
montanagirl
Posts: 1799
Joined: Thu Nov 19, 2009 3:55 pm
Location: Montana

Re: Financial Literacy Article in NY Times

Post by montanagirl »

I am so weary of the calls for personal finance classes in high school...AFAIK these kinds of classes have been offered for years. My stepson had to take it as a senior at our very ordinary flyover HS, and it didn't stop him from immediately going into debt when he went into the military the next year.

You can't fix stupid.
staythecourse
Posts: 6993
Joined: Mon Jan 03, 2011 8:40 am

Re: Financial Literacy Article in NY Times

Post by staythecourse »

caroljm36 wrote:I am so weary of the calls for personal finance classes in high school...AFAIK these kinds of classes have been offered for years. My stepson had to take it as a senior at our very ordinary flyover HS, and it didn't stop him from immediately going into debt when he went into the military the next year.

You can't fix stupid.
One of the arguments would be that financial literacy should be started MUCH earlier. My opinion it should be started when a child asks, "Can I have money for..." or "Can I buy...". When high school rolls around it is too late. Another possiblity is that it is too early to decide if it is helpful or not. I learned a lot of lessons that I employed not when I learned them, but as I got older and understood WHY they are important.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle
User avatar
Aptenodytes
Posts: 3786
Joined: Tue Feb 08, 2011 7:39 pm

Re: Financial Literacy Article in NY Times

Post by Aptenodytes »

caroljm36 wrote:I am so weary of the calls for personal finance classes in high school...AFAIK these kinds of classes have been offered for years. My stepson had to take it as a senior at our very ordinary flyover HS, and it didn't stop him from immediately going into debt when he went into the military the next year.

You can't fix stupid.
You might like this article: http://www.nytimes.com/2013/10/06/busin ... wanted=all
Fallible
Posts: 8795
Joined: Fri Nov 27, 2009 3:44 pm

Re: Financial Literacy Article in NY Times

Post by Fallible »

Agree with "just-in-time" ed, although Thaler notes it would need to be compulsory. He also likes a more user-friendly financial system for the best chance of immediate help, but does anybody feel hopeful about the financial services industry making it easier for people to make sound decisions anytime soon? Probably all three approaches he lists would be needed.

For more background, here's a comprehensive Jason Zweig column in WSJ on the challenges (futility?) of much current financial education. It ran last May and also was a forum topic: http://blogs.wsj.com/totalreturn/2013/0 ... s-so-over/

Also, another forum topic on literacy that ran last June.
http://www.bogleheads.org/forum/viewtop ... &p=1715901
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
User avatar
nisiprius
Advisory Board
Posts: 52105
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Financial Literacy Article in NY Times

Post by nisiprius »

Most "financial literacy" material reminds me of a stupid TV public service ad I once saw from some medical or quasi-medical organization. It was purporting to tell you how to take care of your heart. Obviously, though, they were so terrified of giving anything resembling actual advice that the ad boiled down to "advice" like someone singing "I'd never do things that would make me too fat" and a chorus replies "That's good!"

I suspect that seat belts and energy-absorbing steering columns have saved more lives than driver education.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Fallible
Posts: 8795
Joined: Fri Nov 27, 2009 3:44 pm

Re: Financial Literacy Article in NY Times

Post by Fallible »

nisiprius wrote:Most "financial literacy" material reminds me of a stupid TV public service ad I once saw from some medical or quasi-medical organization. It was purporting to tell you how to take care of your heart. Obviously, though, they were so terrified of giving anything resembling actual advice that the ad boiled down to "advice" like someone singing "I'd never do things that would make me too fat" and a chorus replies "That's good!"

I suspect that seat belts and energy-absorbing steering columns have saved more lives than driver education.
Having taken driver ed many times now, I know what you mean. So now we need to find the financial services equivalent of seat belts and energy-absorbing steering columns.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
SpecialK22
Posts: 844
Joined: Tue Sep 01, 2009 3:16 pm

Re: Financial Literacy Article in NY Times

Post by SpecialK22 »

I just perused the article, but I think the one thing many of these calls for financial literacy education ignore is the behavioral aspect. Namely, you need to be able to save money in the first place in order to invest it. To be fair the high school class I took did deal with budgeting; however, it still focused on the financial aspects (i.e. expenses needed to be less than earnings). I don't recall it ever addressing psychological factors like delaying gratification or dealing with marketing bombardment. To me these are far more significant factors in acquiring wealth than debates on something like "Roth vs Traditional."
SAB
Posts: 24
Joined: Sun Jan 22, 2012 3:42 pm

Re: Financial Literacy Article in NY Times

Post by SAB »

staythecourse wrote: One of the arguments would be that financial literacy should be started MUCH earlier. My opinion it should be started when a child asks, "Can I have money for..." or "Can I buy...". When high school rolls around it is too late. Another possiblity is that it is too early to decide if it is helpful or not. I learned a lot of lessons that I employed not when I learned them, but as I got older and understood WHY they are important.
Good luck.
I wouldn't necessarily agree that when high school rolls around it is too late to educate students on the financial world. However, I do agree that the best way for them to learn money management is from their parents, starting at an early age. Having to manage your allowance such that you don't run out until next month, or saving up to buy that expensive toy really helps kids understand the basics.

SAB
The Wizard
Posts: 13356
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: Financial Literacy Article in NY Times

Post by The Wizard »

For many of us, high school "finances" and independent adult finances are two totally different things.
I really don't think what I learn at age 16 or 17 is going to be of major help ten years later when I'm captain of my own financial ship.
The key point is that education is a continuing job and a bright person needs to find the resources to upgrade knowledge.
Good news is: with the internet and your public library, it's pretty easy...
Attempted new signature...
supton
Posts: 76
Joined: Wed Oct 02, 2013 7:37 am
Location: NH

Re: Financial Literacy Article in NY Times

Post by supton »

The Wizard wrote:For many of us, high school "finances" and independent adult finances are two totally different things.
I really don't think what I learn at age 16 or 17 is going to be of major help ten years later when I'm captain of my own financial ship.
The key point is that education is a continuing job and a bright person needs to find the resources to upgrade knowledge.
Good news is: with the internet and your public library, it's pretty easy...
I think that is the thing: when you're 16 (or 18 or even 20) retirement is a lifetime away. Just about literally. I remember being 18, and not wanting to go into the military to pay for college; 4 years seemed interminably long. In many ways it was a lifetime: 4 years prior I was a completely different person. Of course, 4 years later (college grad) I was again a different person... I know I had to relearn how to type while in college; I didn't pay attention in HS as I seriously did not see the point--wasn't going to use that skill.

I think, monkey see monkey do. Parents generally buy on credit, and don't talk much about saving money. IMHO it's only in the last couple of decades (and no, I have no real studies on this) that people have been getting into a position to pay for retirement. Sure, there were pensions prior, but I'm not entirely sure large amounts of people thought they were going to live long enough to retire. Without seeing ones parents and friends save, what incentive is there to do other than to live for the moment? Plenty of incentive to do just that, in our consumer society.

People saving 10% of their yearly income into a 401k (or whatever) for retirement don't make the news. Toss in a few Wall Street meltdowns and most don't want to think about money any more than they have to. It does not help that money is like religion, sex and politics: it's not nice to talk in depth about these sorts of things, at least not in polite company. Try to convince the average person that they should be saving money, and they'll think you are judging their spending habits (and likewise they themselves).
Post Reply