Financial Literacy Must Be Taught!

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nvboglehead
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Financial Literacy Must Be Taught!

Post by nvboglehead » Tue May 28, 2013 10:59 am

Hello, everyone:

I am shocked at the level of financial innumeracy in our country. Most folks that I know simply retire when they become age eligible to receive Social Security, having made few if any efforts to save and invest for their elder years. I have come to realize how atypical it is to be receptive to the Boglehead philosophy. Few of us have the educational background or experience to respond to the siren call of Jack Bogle's message.

Muriel Siebert shares my concern for the financial ignorance of the masses. Being a stockbroker, I doubt that the program that she created for the public schools is the best way to teach personal finance. I am sure that a curriculum designed by Bogleheads would be better.

Muriel Siebert writes:
Over the next five years I got an even broader look at how many people lack the most basic financial information.....In the late 1990s I met with then-chancellor of New York City’s Board of Education, Rudy Crew, and worked out a program to teach high school students the fundamentals of personal finance. It took a while, but the course — Siebert’s Personal Finance Program: Taking Control of Your Financial Future — went into New York City public high schools for seniors in 2004 and was expanded to middle schools in 2010.

http://www.marketwatch.com/story/what-t ... lcountdown

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Index Fan
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Re: Financial Literacy Must Be Taught!

Post by Index Fan » Tue May 28, 2013 11:26 am

I agree 100%, but there doesn't seem to be much of a constituency for an informed and responsible citizenry these days. Quite the opposite, in fact.
"Optimum est pati quod emendare non possis." | -Seneca

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SpecialK22
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Re: Financial Literacy Must Be Taught!

Post by SpecialK22 » Tue May 28, 2013 12:12 pm

Realistically, with the accessibility of information via the web I don't think formal education is really beneficial. Those that would be receptive to the concepts of indexing will likely find it. I suspect nearly any Google search about investing will yield some hits about indexing towards the top. I began researching information about indexing and other boglehead concepts even before I had heard of the diehards or bogleheads. Granted there were competing viewpoints on investing I was reading about, but by around 25 I was firmly in the indexing camp. Students without an interest in money matters will be just as likely to blow off a mandatory class in personal finance as they will other mandatory classes they don't have much of an interest in.

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Re: Financial Literacy Must Be Taught!

Post by FelixTheCat » Tue May 28, 2013 12:16 pm

I enjoy reading the Behavioral Finance articles. I see a lot of investing information given to the general public. The problem is I see a lot of people using their credit cards to buy XBox, dining out, etc. instead of making savings their priority.
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Re: Financial Literacy Must Be Taught!

Post by texasdiver » Tue May 28, 2013 12:36 pm

Frankly one could say the same thing about pretty much any topic.

Scientific literacy
Fitness literacy
Health literacy
Geographic literacy
Environmental literacy

I don't think financial literacy is different from any of these or any other area of study. The American public is just horrifyingly ignorant in pretty much every area of study despite the fact that we live in a time when more information is readily and freely available than in any other time in human history.

The question I think is what to do about it. One approach of course is to try to educate the public which may be a futile battle in many cases. Another approach is to minimize the harm caused by financial ignorance. Programs such as forced retirement savings, beefed up Social Security and so on would tend to accomplish that.

On this board many of us are obsessed with financial literacy and we spend long threads and lots of effort understanding arcane financial and investment issues. But those of us who teach other subjects know how difficult it is to educate the typical American in pretty much any academic subject. In other fields such as science we generally don't let uneducated rubes conduct scientific research. We let the pros do our science so general ignorance among the public isn't a show stopper for the most part. Yet when it comes to personal finance (and public health) we pretty much just leave things up to the individual....increasingly so when it comes to personal finance, which seems a recipe for disaster.

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Re: Financial Literacy Must Be Taught!

Post by Grt2bOutdoors » Tue May 28, 2013 12:38 pm

I read the article especially the line about New Jersey requiring those in high school to pass a class on financial literacy. I thought that was ironic, considering the well known financial mess that state is in. :o
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noyopacific
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Re: Financial Literacy Must Be Taught!

Post by noyopacific » Tue May 28, 2013 12:43 pm

While I definitely agree that some kind of Financial Literacy curriculum is sorely lacking in education, I suspect it would take years to beat back the hordes of snake-oil vendors that would likely be the first to offer themselves up as instructors. I recall an earlier thread started by a parent that was concerned about a lesson that their child (and mine) had received that included picking stocks for a mock portfolio and grading them on their short-term performance.
It might be necessary for Bogleheads to infiltrate the classes as agents of the principles of Asset Allocation, Efficient Markets & The Cost Matters Hypotheses in order to combat the dark forces that would surely try to promote the false-doctrines of Market Timing, Active Management and High-Frequency Trading schemes.
I suspect that in order for Financial Literacy to ever be taught, it would first be necessary to fight a pitched battle over what actually constitutes meaningful Financial Literacy.

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Re: Financial Literacy Must Be Taught!

Post by KyleAAA » Tue May 28, 2013 12:44 pm

From what I've seen, most attempts at teaching financial literacy have failed for the same reason people are overweight. You don't need to be told to save money just like you don't need to be told not to eat junk food every day. It's not really lack of knowledge that's the problem.

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Re: Financial Literacy Must Be Taught!

Post by Randomize » Tue May 28, 2013 12:53 pm

texasdiver wrote:Frankly one could say the same thing about pretty much any topic.

Scientific literacy
Fitness literacy
Health literacy
Geographic literacy
Environmental literacy

I don't think financial literacy is different from any of these or any other area of study. The American public is just horrifyingly ignorant in pretty much every area of study despite the fact that we live in a time when more information is readily and freely available than in any other time in human history.
It's worth pointing out that schools teach the other subjects. Yeah, there are plenty of people who didn't pay attention but the folks here certainly know a little bit about these subjects thanks to primary/secondary education. What we have and cannot thank the pre-college education system for is financial smarts. Honestly, if all they did was teach kids about compounding interest and make them build a mock budget and balance a checkbook, the world would be a much better place.

FafnerMorell
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Re: Financial Literacy Must Be Taught!

Post by FafnerMorell » Tue May 28, 2013 12:55 pm

Back when I was in high school in the early 80s, there was a mandatory semester-long class called "Consumer Education" which basically covered it. One part that was pretty effective was the famous Cosby Show bit where we had to figure out a basic monthly budget (we actually predated that episode by a number of years, but I suspect the scenario wasn't novel). We also had to fill out a simple 1040. We also read "The Jungle". Learned about the miracles of compound interest. /shrug - it was marginally useful, but I think a lot depended on the students willingness to learn. I remember my take-away being "Hmm, I need to earn some decent money otherwise I'm not going to have much to spend".

Of course, I'm sure education has declined horribly since there - kids these days, with their low-hanging jeans, talking on their cell phones and standing on my lawn - no hope for them.

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Re: Financial Literacy Must Be Taught!

Post by staythecourse » Tue May 28, 2013 1:06 pm

KyleAAA wrote:From what I've seen, most attempts at teaching financial literacy have failed for the same reason people are overweight. You don't need to be told to save money just like you don't need to be told not to eat junk food every day. It's not really lack of knowledge that's the problem.
Unfortunately, I think this is very correct.

I'm a physician and I never tell a patient to stop drinking or smoking or lose weight. There is no point they already know that. I help the one's who say "hey I have this problem and I just can't seem to figure out how to get over it". Those are the ones who are more likely to be succesful. Most know is this country they are not financially secure and they don't care. The reason is not "I didn't learn enough", but "who cares as I know if I need money I will be able to get it from some program by the government".

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Re: Financial Literacy Must Be Taught!

Post by spencer99 » Tue May 28, 2013 1:06 pm

Index Fan wrote:I agree 100%, but there doesn't seem to be much of a constituency for an informed and responsible citizenry these days. Quite the opposite, in fact.
Yes, and who develops the curriculum? It strikes me that lack of knowledge is a problem and the wrong (again, who decides?) knowledge is also a problem.

I had an interesting and frustrating conversation with my (wonderful) sister during the recent holiday weekend. She volunteered, based evidently on minimal reading on Motley Fool, that investing for retirement was not difficult, “you just did a little research, purchased stock in a solid company that paid good dividends, and stayed with them.” I commented on a few things I’ve heard around here: benefits of diversification, expectations of earnings already being built into stock value, the value of information that everyone already knew, low-cost investing, future uncertainty, etc. All this was summarily dismissed. What did I not understand about just picking a good company, in a good sector that paid good dividends? The conversation was blessedly brief.

There are different realities to those we mostly agree upon around here, and they can be very persuasive. These folks do not agree that they’re financially illiterate.

Randomize
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Re: Financial Literacy Must Be Taught!

Post by Randomize » Tue May 28, 2013 3:20 pm

FafnerMorell wrote: I remember my take-away being "Hmm, I need to earn some decent money otherwise I'm not going to have much to spend".
Instilling that same idea in people when they're 18 instead of making them wait 'til they're 30 with kids and no diploma would be an immeasurable improvement :D

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Re: Financial Literacy Must Be Taught!

Post by mlipps » Tue May 28, 2013 4:50 pm

KyleAAA wrote:From what I've seen, most attempts at teaching financial literacy have failed for the same reason people are overweight. You don't need to be told to save money just like you don't need to be told not to eat junk food every day. It's not really lack of knowledge that's the problem.
Exactly what I was thinking. Despite many years of health class & PE, I seem to still be overweight (although not obese) at 23, but still doing better than many of my peers who I know heard the exact same things I did growing up. Knowledge alone does not solve the problem.

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Re: Financial Literacy Must Be Taught!

Post by Kevin M » Tue May 28, 2013 5:28 pm

I just read a book that had a chapter on this topic. Can't remember the name of the book, but it also had chapters on Suze Orman, Dave Ramsey, David Bach, etc., pointing out the flaws and hypocrisy in much of what they "teach". The basic theme of the book was that the overall financial system needs fixing because fixing individuals is too hard, and there's only so much individuals can do given circumstances they have no control over.

Anyway, in the chapter on teaching financial literacy, studies were cited indicating that teaching financial literacy is a losing proposition. It just doesn't take, and people generally aren't interested. Bummer.

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MnD
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Re: Financial Literacy Must Be Taught!

Post by MnD » Tue May 28, 2013 5:38 pm

Short-term gratification usually wins out over long-term strategic thinking when it comes to money, food, drinking, power, sex etc.
Most people when offered a lump sum now or twice that amount a year from now will take the 50% discount to get the cash in hand.
That's not a complicated problem where people choose wrongly due to lack of financial knowledge but rather a symptom of chronic short-term thinking disease.

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Re: Financial Literacy Must Be Taught!

Post by vencat » Tue May 28, 2013 5:52 pm

I was just searching for a website to introduce my 15 and 13 year old sons to some financial basics. I stumbled on this excellent FDIC program called Moneysmart. Anyone else heard of it?
http://www.fdic.gov/consumers/consumer/ ... mscbi.html

rocket
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Re: Financial Literacy Must Be Taught!

Post by rocket » Tue May 28, 2013 6:40 pm

Before financial literacy, the major goal is to teach the basics , such as, math, science, English, etc. After the basics, the artsy people want to teach art in schools. Finance is way down the list. Who get to teach their version on finance ???

tibbitts
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Re: Financial Literacy Must Be Taught!

Post by tibbitts » Tue May 28, 2013 6:51 pm

While not entirely an explanation, I'm not sure that people starting out today have the same opportunities to learn some of the elements of personal finance that I did, even though I never had any formal education in personal finance. Here are some reasons:

1. At the same time I was starting my career, the economy and the financial markets were in much better condition than today. The only significant market collapse I'd personally experienced before starting my career ('73-'74) didn't affect as many people as the more recent collapses, because fewer people had their own investment accounts vs., for example, fixed pensions. Today, people starting out may have memories of two major collapses that may have affected their families. And they face a terrible job market.

2. After I'd accumulated a little savings early in my career, I could open a savings account earning about 6%, which was way more more than double my personal rate of inflation. That was an encouragement for me to save. Today you can open a savings account that is only guaranteed to lose money.

3. During my first decade of employment, my pay rose by substantially more than the inflation rate every year. Today I see people starting out who haven't received even a cost of living raise in their first several years of employment.

It's a lot easier to be enthusiastic about delaying gratification, investing, etc. when you can see it actually work in the short or medium term. Having some old person tell someone in her teens or twenties, for example, that, well, just hang on fifty years and you'll (probably?) be better off, doesn't have nearly the same effect.

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Re: Financial Literacy Must Be Taught!

Post by EyeYield » Tue May 28, 2013 7:26 pm

I've brought this subject up a few times and have tried to get my local school district involved in an introductory course for graduating seniors, but the obstacles are overwhelming. Teaching kids how to balance a check book and not live beyond their means, is in and of itself a major undertaking.

I'm backing off of the "teaching" and focusing more on "exposing" the different approaches to investing. Even the Efficient Market Hypothesis, which I personally believe in, will get a well rounded argument from many educated investors.

One thing I've noticed when this subject is brought up. No major Bogleheads ever chime in, which makes me think that they know something I don't and possibly have thought about this before and have decided to stay away from any organized implementation.
"The stock market is a giant distraction from the business of investing." - Jack Bogle

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Re: Financial Literacy Must Be Taught!

Post by ThePrune » Tue May 28, 2013 8:44 pm

Most posters are focusing on the very young, which is a very important target audience. I'd like to challenge you to think about the masses of financially illiterate Baby Boomers that surround us.

Starting in 2009 I began teaching a 6 session / 9 hours total class on retirement planning in my local community. The typical demographic over the 6 times I have taught it is folks 15-5 years away from retirement. I get a few younger adults as well as a few recent retirees. The class is focused at adults with college education but with no financial background. I keep it cheap ($20 for cost of reproducing the class materials / I earn no mony from this class) and emphasize that I have no connection to any investment advisory, insurance or brokerage firm.

After repeated requests from the retirement class students I then developed a 6 session / 9 hours total class on investing that teaches the low-cost index mutual fund approach. I also throw in some behavioral finance, history of asset classs returns, the risk and return tradeoff, and a review of other investing approaches and the published research that demostrates why low-cost index fund investing is superior. Really nothing significantly different than what you get from reading Jack Bogle's books or these discussions.

Here's what I've discovered. Adults are hungry to get financial guidance from someone they view as being knowledgeable, organized, articulate and committed to putting their best interests first. It took some time for me as a non-financial industry retiree to build up credibility, but by offering highly organized classes along with summaries of the most recent academic literature I'm now over that hurdle. I'm not yet satisfied that my class materials are in optimum shape, but I'd be happy to share them with any Boglehead that wanted to offer a similar public education class.

Just remember - you'll earn maximum credibility if it's clear that you aren't financially benefiting from the class, either directly or indirectly.
Investment skill is often just luck in sheep's clothing.

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Re: Financial Literacy Must Be Taught!

Post by Kevin M » Tue May 28, 2013 9:42 pm

ThePrune wrote:I'm not yet satisfied that my class materials are in optimum shape, but I'd be happy to share them with any Boglehead that wanted to offer a similar public education class.
I would love to see your materials. Not sure about teaching a formal class, but maybe they would be useful as an aid in providing some informal finance education, which I do a bit of now and then.

Do you do this as part of a community program that offers classes?

Kevin
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Re: Financial Literacy Must Be Taught!

Post by lethean46 » Tue May 28, 2013 10:09 pm

ThePrune wrote:Most posters are focusing on the very young, which is a very important target audience. I'd like to challenge you to think about the masses of financially illiterate Baby Boomers that surround us.

Starting in 2009 I began teaching a 6 session / 9 hours total class on retirement planning in my local community. The typical demographic over the 6 times I have taught it is folks 15-5 years away from retirement. I get a few younger adults as well as a few recent retirees. The class is focused at adults with college education but with no financial background. I keep it cheap ($20 for cost of reproducing the class materials / I earn no mony from this class) and emphasize that I have no connection to any investment advisory, insurance or brokerage firm.

After repeated requests from the retirement class students I then developed a 6 session / 9 hours total class on investing that teaches the low-cost index mutual fund approach. I also throw in some behavioral finance, history of asset classs returns, the risk and return tradeoff, and a review of other investing approaches and the published research that demostrates why low-cost index fund investing is superior. Really nothing significantly different than what you get from reading Jack Bogle's books or these discussions.

Here's what I've discovered. Adults are hungry to get financial guidance from someone they view as being knowledgeable, organized, articulate and committed to putting their best interests first. It took some time for me as a non-financial industry retiree to build up credibility, but by offering highly organized classes along with summaries of the most recent academic literature I'm now over that hurdle. I'm not yet satisfied that my class materials are in optimum shape, but I'd be happy to share them with any Boglehead that wanted to offer a similar public education class.

Just remember - you'll earn maximum credibility if it's clear that you aren't financially benefiting from the class, either directly or indirectly.
Prune,

That is awesome. Where do you hold your meeting? Do you assign books to read, i.e., the basic Bogle and Bogleheads books, etc.? What is your background work experience? Business? teaching? other? Who comprised your first class? Friends? Thereafter, how did you get the word out on subsequent classes? Word of mouth? Were you hesitant to offer the classes? Why? What finally prompted you to step up and offer the first class? Do you find that you then do follow up with individuals/couples on a one on one basis?

I am appalled at the lack of financial literacy of what I consider to be educated, successful people. And I agree with you that people are HUNGRY for information. They know deep down that something isn't right. I get questioned, off and on. It always surprises me. The questions take various forms. I have twice been asked to meet with a group informally, and I declined to do it. I know enough of the basics, or know where to get the answers. (Many times here.) I wouldn't know how to put a class together. What topics to cover and make the whole thing cohesive.

It's very generous of you to offer your materials. I have bookmarked this thread and may at some time in the future send you a PM.

I am impressed that you are actually giving classes on this stuff. Would you care to give anymore insight into that experience? Particularly, the response and effect on those who took your class. It must be very rewarding for you, too. KUDOS.

ML

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SpecialK22
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Re: Financial Literacy Must Be Taught!

Post by SpecialK22 » Wed May 29, 2013 1:29 am

I was thinking back on my youth (currently 31) and I actually had a decent amount of formal financial education:

I'm an Eagle Scout and one of the mandatory merit badges is personal management. The current requirements for the badge can be found here: http://meritbadge.org/wiki/index.php/Pe ... Management

During senior year of high school I had one semester of personal economics, or something like that. It included the use of a mock budget and some introduction to the stock market. I remember we had to select stocks and then track them over the course. Basically I think it was just trying to teach us how to look up and track the value of a stock on an exchange. Really didn't get in depth at all.

Joined the USAF at 18 and part of instruction at everyone's first duty station was on responsible use of money. I'm sure it was meant to be general in nature, but it mainly focused on why buying a car where the monthly payment was about equal to your base pay was a bad idea. From what I remember the course was pretty decent. It tried to show young Airmen how much they would pay in interest over the life of the loan. Unfortunately, the class was largely for naught.

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Re: Financial Literacy Must Be Taught!

Post by goalie » Wed May 29, 2013 4:47 am

I also have run a "class" of sorts, at the small trucking company where I work. I tell all that attend that I am not tied to any investment company, I will not give investment advice and that I will let them take home the dated materials, but they are just examples of returns and not reflective of today's market. I do this because most people invest based on returns.

Prune hit the nail on the head. People are starving for info from someone who has nothing to sell. I help with basic budgeting, creating different emergency funds, teaching about the markets and why costs and taxes matter. They almost always take the most notes at the section on portfolio creation, and are disappointed when I won't give them a "portfolio" to use. I tell them they must create a personal portfolio that reflects who they are. It's set up as two classes at 2-3 hours a piece.

Thanks, Chip

madinvest
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Re: Financial Literacy Must Be Taught!

Post by madinvest » Wed May 29, 2013 5:33 am

For those who have the time and want to learn a litle bit of finance online:

https://www.coursera.org/course/introfinance

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Re: Financial Literacy Must Be Taught!

Post by beachplum » Wed May 29, 2013 11:09 am

ThePrune wrote: It took some time for me as a non-financial industry retiree to build up credibility, but by offering highly organized classes along with summaries of the most recent academic literature I'm now over that hurdle. I'm not yet satisfied that my class materials are in optimum shape, but I'd be happy to share them with any Boglehead that wanted to offer a similar public education class.

Just remember - you'll earn maximum credibility if it's clear that you aren't financially benefiting from the class, either directly or indirectly.
I think it would be very useful to post your materials on the wiki where we can find these materials when needed.

suming
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Re: Financial Literacy Must Be Taught!

Post by suming » Wed May 29, 2013 2:51 pm

I'd love to see your material too, ThePrune. Having children aged 21, 17, and 15, I've always wanted to teach them financial management. Recently my daughter graduated from college. I have thought about putting up some basic info together for tennagers. My ideas are starting with asking them some interesting questions - to make them want to learn and also figure out how much they have already knew. (Kids don't like to be told whatever they've already knew.)

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Re: Financial Literacy Must Be Taught!

Post by fatlittlepig » Wed May 29, 2013 5:43 pm

it should be part of the medical school curriculum, it's amazing how unsophisticated and unknowledgeable the physicians I work with are with regards to investing.
fatlittlepig

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Re: Financial Literacy Must Be Taught!

Post by Rick Ferri » Wed May 29, 2013 5:53 pm

[Political comment removed by admin LadyGeek] Sad, but true.

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Re: Financial Literacy Must Be Taught!

Post by tibbitts » Wed May 29, 2013 6:06 pm

fatlittlepig wrote:it should be part of the medical school curriculum, it's amazing how unsophisticated and unknowledgeable the physicians I work with are with regards to investing.
What part of medical school curriculum would you replace with financial training? Obviously simply adding it is not a reasonable alternative.

Paul

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smiley
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Re: Financial Literacy Must Be Taught!

Post by smiley » Wed May 29, 2013 6:28 pm

tibbitts wrote:
fatlittlepig wrote:it should be part of the medical school curriculum, it's amazing how unsophisticated and unknowledgeable the physicians I work with are with regards to investing.
What part of medical school curriculum would you replace with financial training? Obviously simply adding it is not a reasonable alternative.

Paul

4th year (the promised land of medical education), half of which is basically elective/vacation. just wish schools would reduce tuition accordingly.

:happy

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Re: Financial Literacy Must Be Taught!

Post by texasdiver » Wed May 29, 2013 6:43 pm

fatlittlepig wrote:it should be part of the medical school curriculum, it's amazing how unsophisticated and unknowledgeable the physicians I work with are with regards to investing.
My wife's residency program actually had seminar courses on financial management and practice management for the 3rd year residents about to graduate. The invited spouses to sit in and I did. Nothing especially sophisticated, but appropriate I think for newly minted doctors getting ready to leave residency and earn their first real paychecks. Some basic stuff about running your own practice and some basic stuff about financial planning and retirement with heavy emphasis on packing away the savings in tax deferred vehicles like Roths, 401k and so on. They were run by the CFO of the residency program who was a CPA type, not a doctor or financial advisor/salesman so reasonably informative and useful.

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Re: Financial Literacy Must Be Taught!

Post by fatlittlepig » Wed May 29, 2013 7:22 pm

tibbitts wrote:
fatlittlepig wrote:it should be part of the medical school curriculum, it's amazing how unsophisticated and unknowledgeable the physicians I work with are with regards to investing.
What part of medical school curriculum would you replace with financial training? Obviously simply adding it is not a reasonable alternative.

Paul
Why not
fatlittlepig

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Re: Financial Literacy Must Be Taught!

Post by Fallible » Wed May 29, 2013 7:44 pm

Here's a link to an excellent thread on Jason Zweig's recent WSJ article on teaching "fin lit," http://www.bogleheads.org/forum/viewtop ... 0#p1686518

The thread includes key breakdowns by the OP and links to conference papers, above all the one by Lauren Willis presented at the May 2011 Future of Life-Cycle Saving and Investing Conference: http://www.cfapubs.org/doi/abs/10.2470/rf.v2012.n3.10

This info will make you wonder if financial literacy can ever be taught.
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Re: Financial Literacy Must Be Taught!

Post by StormShadow » Wed May 29, 2013 7:48 pm

fatlittlepig wrote:it should be part of the medical school curriculum, it's amazing how unsophisticated and unknowledgeable the physicians I work with are with regards to investing.
Why just medical school... financial literacy should be included as standard high school/college teaching.

I can only recall one time where financial literacy was part of my regular classwork... that was in 6th grade. We were given $500 play money and instructed to pick a stock to invest in. The winner after a few months would be given a prize. I think I picked Microsoft and ended up even. 8-)

The winner bought a penny stock. :oops:

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Re: Financial Literacy Must Be Taught!

Post by EyeYield » Wed May 29, 2013 7:55 pm

Rick Ferri wrote:The government couldn't care less about financial literacy.
If you remove the word "financial", is the statement still true? If the general population was more literate - in general, including financial, do you think they would've signed homes loans they couldn't afford? Did the government care about that? Do they now? I think the government should care. Think of all the regulating agencies that are in place to protect the illiterate from themselves. Banks and brokers, on the other hand, surely find an illiterate consumer to be their favorite customer.
Those who work hard to learn about the benefits of saving and investing will simply pay more in taxes, and the revenue will ultimately go to people who don't bother to save and invest. Sad, but true.
I'm trying hard to see what I'm missing here, but from my perspective, the more I learned about saving and investing, the more I learned about how not to needlessly pay taxes. True investing can lead to more taxes, but proper, literate, investing can lead to less taxes than someone who hasn't taken the time to understand the code and consequences of taxable accounts and capital gains.
"The stock market is a giant distraction from the business of investing." - Jack Bogle

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Re: Financial Literacy Must Be Taught!

Post by john94549 » Wed May 29, 2013 7:56 pm

My Mom is 97, pushing 98 (as of June 1). Suffice it to say she never had a finance course. That said, she has done fairly well, and can manage the large costs of living independently, in her own home, with nursing help. Financial literacy? Even at 97/98, she balances her own checkbook, pays her own bills, and does amazingly well. Deaf in one ear, diminished hearing in the other, and legally blind, able to read only with the help of a magnifying machine.

She just hit the two comma club.* Even with all her expenses.

Kinda proud of her. Mind you, just a frugal, middle-class suburban housewife in Kansas. Not considered "rich" by any means, and with a very diversified portfolio.

*She always asked me to tell her if she ever hit a million net worth.

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Re: Financial Literacy Must Be Taught!

Post by fatlittlepig » Wed May 29, 2013 8:02 pm

StormShadow wrote:
fatlittlepig wrote:it should be part of the medical school curriculum, it's amazing how unsophisticated and unknowledgeable the physicians I work with are with regards to investing.
Why just medical school... financial literacy should be included as standard high school/college teaching.

I can only recall one time where financial literacy was part of my regular classwork... that was in 6th grade. We were given $500 play money and instructed to pick a stock to invest in. The winner after a few months would be given a prize. I think I picked Microsoft and ended up even. 8-)

The winner bought a penny stock. :oops:
True but for physicians with their overinflated salaries there is a huge disconnect between salary and their financial savvy. I can list some examples from colleagues.
fatlittlepig

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Re: Financial Literacy Must Be Taught!

Post by EyeYield » Wed May 29, 2013 8:04 pm

One program that I've found, that seems to be worthwhile is the Junior Achievement Program. I know little more than what my xbroker told me and what's on the site, but it seems like a good fit for me, so I've volunteered. Will report back after I have some personal experience.
Has anyone participated in this program?
http://www.ja.org/programs/programs_hig ... _obj.shtml
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Re: Financial Literacy Must Be Taught!

Post by Kevin M » Wed May 29, 2013 8:06 pm

Fallible wrote:Here's a link to an excellent thread on Jason Zweig's recent WSJ article on teaching "fin lit," http://www.bogleheads.org/forum/viewtop ... 0#p1686518

The thread includes key breakdowns by the OP and links to conference papers, above all the one by Lauren Willis presented at the May 2011 Future of Life-Cycle Saving and Investing Conference: http://www.cfapubs.org/doi/abs/10.2470/rf.v2012.n3.10

This info will make you wonder if financial literacy can ever be taught.
Yes, the message in the abstract of the Willis paper is similar to one of the messages of the book I mentioned above. I found the title of the book: "Pound Foolish: Exposing the Dark Side of the Personal Finance Industry", by Helaine Olen. A worthwhile read, IMO, for folks interested in this topic.

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Re: Financial Literacy Must Be Taught!

Post by john94549 » Wed May 29, 2013 8:13 pm

Professionals of any sort or ilk (be they lawyers, doctors, whatever) are most prone to scams. First, they assume they are smart (which might, or might not, be correct) and; second, they assume they are smarter than scammers (which most assuredly is incorrect). I can assure you my Mom is smartest of all. She just screams "WHAT" when the scammers call. Again and again. They give up.

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Re: Financial Literacy Must Be Taught!

Post by StormShadow » Wed May 29, 2013 8:52 pm

fatlittlepig wrote:True but for physicians with their overinflated salaries there is a huge disconnect between salary and their financial savvy. I can list some examples from colleagues.
Again... this is applicable to any number of professionals.

Debt management and student loan repayment are the biggest financial obstacles most young physicians face these days. Not to mention, those "overinflated salaries"... they're decreasing.

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Re: Financial Literacy Must Be Taught!

Post by john94549 » Wed May 29, 2013 9:04 pm

There tends to be a six-to-eight year time lag between career choices and career remuneration. Example: lawyers. Next example: physicians. It's the old law of supply and demand.

Tell a freshman at Stanford he'll have to undergo Organic Chemistry and a rigorous pre-med, then the angst of getting into Med School, then Med School, then all that debt and whatever. And work for Kaiser? He or she might opt for, shall we say, a different career path.
Last edited by john94549 on Wed May 29, 2013 9:11 pm, edited 1 time in total.

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Re: Financial Literacy Must Be Taught!

Post by Fallible » Wed May 29, 2013 9:05 pm

Kevin M wrote:
Fallible wrote:Here's a link to an excellent thread on Jason Zweig's recent WSJ article on teaching "fin lit," http://www.bogleheads.org/forum/viewtop ... 0#p1686518

The thread includes key breakdowns by the OP and links to conference papers, above all the one by Lauren Willis presented at the May 2011 Future of Life-Cycle Saving and Investing Conference: http://www.cfapubs.org/doi/abs/10.2470/rf.v2012.n3.10

This info will make you wonder if financial literacy can ever be taught.
Yes, the message in the abstract of the Willis paper is similar to one of the messages of the book I mentioned above. I found the title of the book: "Pound Foolish: Exposing the Dark Side of the Personal Finance Industry", by Helaine Olen. A worthwhile read, IMO, for folks interested in this topic.

Kevin
I plan to read the Olen book and thanks for mentioning it. Unlike most abstracts I've read, the one in the Willis paper proved, for me, to barely touch on the problems she goes on to detail. It seems everything that has been tried is a dead end and even the possible right ways to teach fin lit seem impossible to achieve.
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Re: Financial Literacy Must Be Taught!

Post by fatlittlepig » Wed May 29, 2013 9:53 pm

john94549 wrote:There tends to be a six-to-eight year time lag between career choices and career remuneration. Example: lawyers. Next example: physicians. It's the old law of supply and demand.

Tell a freshman at Stanford he'll have to undergo Organic Chemistry and a rigorous pre-med, then the angst of getting into Med School, then Med School, then all that debt and whatever. And work for Kaiser? He or she might opt for, shall we say, a different career path.
KP has been an exemplary employer.

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Re: Financial Literacy Must Be Taught!

Post by Random Musings » Wed May 29, 2013 10:56 pm

IMHO, certain financial aspects such as balancing a checkbook or developing a budget can be taught and most people can follow those concepts. That is, if they care to.

However, when it comes to investing, human nature tilts the scales towards emotion and away from discipline. Our society looks up to winners and a clinical approach to investing via index funds which track an average of sorts to win is counterintuitive for most. And for an investor who finally grasps this concept and implements the process, they still have to stick with their plan without succumbing to emotion.

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Re: Financial Literacy Must Be Taught!

Post by gouldnm » Thu May 30, 2013 10:56 am

I learned about investing when I inherited some money and started to panic because I realized that I knew nothing about finance. By sheer luck, I already had an account with Vanguard, and by sheer luck, I stumbled upon Dr. Bernstein's "Asset Allocation" book. I've since then tried to explain concepts such as index funds and rebalancing to several friends, most of them engineers and scientists who are well educated and analytical people. Unfortunately, the lure of "get rich quick" scams is all too real. Nobody wants to listen to me, so I've pretty much given up trying to give investment advice. It's like talking about politics or religion. People get very emotional when I try to tell them why their "get rich quick" technique might not be an optimal strategy in the long run.

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Re: Financial Literacy Must Be Taught!

Post by letsgobobby » Thu May 30, 2013 1:25 pm

staythecourse wrote:
KyleAAA wrote:From what I've seen, most attempts at teaching financial literacy have failed for the same reason people are overweight. You don't need to be told to save money just like you don't need to be told not to eat junk food every day. It's not really lack of knowledge that's the problem.
Unfortunately, I think this is very correct.

I'm a physician and I never tell a patient to stop drinking or smoking or lose weight. There is no point they already know that.
more and more, the point is that if you don't check off the box in your EMR that says you counseled weight loss and smoking cessation, you won't be reimbursed. So even though it frustrates you, and even though it doesn't benefit the patient, you'll keep doing it. However, be careful not to do it too much, or too unkindly, or be perceived as judgmental in any way, or your patient will give you only an 8 out of 10 on the 'doctor treated me with respect' NRC Picker survey question number 38, and your reimbursement will also be cut. :P

I'm being more cynical than necessary. Repetition does work; the average meth addict needs 5-9 rehabs to get sober; average smoker needs 3-7 serious attempts to quit; things do sink in after a while.

Financial literacy efforts to date have not proven terribly successful at effecting different financial outcomes.

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Re: Financial Literacy Must Be Taught!

Post by technovelist » Thu May 30, 2013 1:34 pm

Long ago there was a country where the only type of financial literacy that was necessary was to spend 10% less than your income, and save that 10% for your old age. This worked because money kept its purchasing power, so speculation wasn't necessary for survival.

Its initials were USA.
In theory, theory and practice are identical. In practice, they often differ.

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