Schools Teaching Finances?

[jeep45238]

My parents didn't talk money, and it took 39 years for me to hear an actual dollar amount from their lips regarding an account balance. I was taught to disappear when money was brought up at home.


I graduated high school in 2003, and took a financial class - it was taught my the gym teacher, and in retrospect, I really wish they had a teacher with any knowledge of the concepts teach the class. What they did teach - how to balance a check book, what a loan was (and you can't get rid of it) but not what the loan did to the cost of the thing you're buying, and that the stock market was a casino/game (pick individual stocks from the newspaper, see what they do in a week).

Nothing was taught about having short/mid/long term money buckets, retirement accounts, what a mutual fund was, the difference between long and short term capital markets (speculation vs. investing), credit cards, etc.

Was it better than nothing? Maybe.



Personally speaking, I think too many people approach finance as a math problem to solve - just straight numbers. This works if the subjects in question are perfectly rational - and humans tend to be emotional creatures capable of rationalization after the fact. A more holistic view of the individual, their goals, situation, capability to induce change, and THEN the math might be a healthier long term perspective that values more parts of their life than just the destination.


In 2013, E. Fama and K. French won the Nobel prize for their work in describing over 90% of how a stock market security was priced at a systematic basis (work dating back to 1970). This is akin to the math part of finance - what people tend to focus the most on.

Also in 2013, R. Shiller won the Nobel prize for his work in behavioral economics - the human inability to act rationally and the short vs. long term effects.



A parallel can be drawn on firearms, where initially people look solely at the gun/caliber, then maybe the holster if they continue down the path, and eventually pursue technical disciplines combined with cognitive learnings and physical exercise.

[RoyGBiv]

I graduated high school in 2003, and took a financial class - it was taught my the gym teacher, and in retrospect, I really wish they had a teacher with any knowledge of the concepts teach the class. What they did teach - how to balance a check book, what a loan was (and you can't get rid of it) but not what the loan did to the cost of the thing you're buying, and that the stock market was a casino/game (pick individual stocks from the newspaper, see what they do in a week).

Nothing was taught about having short/mid/long term money buckets, retirement accounts, what a mutual fund was, the difference between long and short term capital markets (speculation vs. investing), credit cards, etc.

Was it better than nothing? Maybe.

My kids were required to take what I would call a financial literacy class in HS. Basic skills like making a budget, balancing a checkbook, discussions about what things cost and what you could expect to earn from various jobs, so they could relate earning with budgeting.. Basic saving for retirement but nothing about "investing".. Both my kids hated that class (for being boring and useless) until they started handling their own money... then it all made sense. Made me laugh when our daughter admitted it after she started working.

What I think HS education seriously lacks is a foundational macro economics class requirement. I didn't take a formal Econ class until grad school. If I had taken one in HS, I likely would have chosen Econ as my major, I was completely blown away by how you could describe the world and predict behavior with 2 axis' and a curved line.

My daughter took Econ in HS, but the class was taught online to the half dozen kids that wanted to take it as an elective. Go to the classroom, put on headphones, log in and be taught. Not ideal but better than nothing.

[TGS]

This closely describes me. I'm 32, a mortgage and one very small car payment that I have the ability to pay off anytime. But, I'm pretty risk adverse about money thus far in life. I have never had a credit card, but my wife and I recognize the need for one at some point for additional security and credit. I strongly perfer paying outright instead of over time.

But, the real kicker is investments. They've been discussed on the forum by intelligent and reasonable folks a few times, and I'm still mostly lost. I was homeschooled, and the curriculum talked about household budgets, interest rates on loans, simple nterest... but investing for retirement was absent. I now years later get the gist of compound interest and Roth IRAs, though I have neither.

This is awesome, dude. Just based on the fact that you aren't burdened with credit card debt, you're already way ahead of the curve compared to the average American.

If you've played around with some investment calculators, you've probably seen that compounding interest really kicks in around 20 years and is off to the races at 30 years. Assuming you're 32 and want to retire somewhere at 62-65, you're at a good point in life to start funneling money into an IRA or 401k, if your employer offers one (especially so if your employer matches any percentage of your contributions). Maximizing your contributions now will be key. If you need help getting your feet wet and your employer doesn't offer a 401k, you can probably get an IRA set up with whatever bank you use. It's a financial product they want to sell, so if you just call them and say you want an IRA, they'll do the work for you as far as setting it up.

In addition to Bogleheads mentioned by @Cheapshot, you can also check out NerdWallet.com.

[mtnbkr]

My local school system has an Econ class in High School that also covers personal finance. I can't recall if it's an elective or not, but Thing 1 took it. Thing 2 is only a sophomore and I think it's a class offered to Juniors and Seniors, so she wouldn't have been exposed to it.

We're very open with our kids about finances, money management, etc. Both are net savers (Thing 1 has more money in savings as a college student than I did until my late 20s). Thing 2, who is "getting by" on an allowance still has a high double-digit number in her checking account. Both kids have bank accounts and are expected to track and manage their own money. Thing 1 has a credit card that she uses for everything but pays off as she spends (mainly due to the risk of using a debit card in public and online).

Chris

[mmc45414]

I was homeschooled, and the curriculum talked about household budgets, interest rates on loans, simple interest... but investing for retirement was absent. I now years later get the gist of compound interest and Roth IRAs, though I have neither.

Stuff that I was never taught, even in college micro and macro economics, was stocks and bonds. They were de jure part of the classes, but not de facto. What they are was talked about but how to properly use them wasn't really. And trying to find a reliable source on basic stock market stuff in the internet age is tough... lots of shills pushing an angle but hard to find information that will help you learn. Every asshole with a Robinhood account after the gamestop thing made a guide course they shill.

I was sorta fortunate in that at a pretty young age (probably still in my late twenties) I got a tiny ESOP like payout and was forced to roll it into qualified mutual funds. Then I spend the following forty years working in a variety of rather volatile situations where there were several times I got more rollover funds to contribute, so I guess to an extent the several forced transitions I made had (as I am less than two years from my target retirement) a happy ending. I think the distinct difference between trading individual stock and mutual funds gets glossed over. People get wrapped up over paying a "commission", when in fact you are paying a staff of fund managers who spread your money out across a variety of companies, and go to work every day working only on the task of looking after your investment, not because they are nice guys, but because they are coin operated and their jobs depend on it. And your time is now, get something started.

She also said that by day 3 every year, she'd have at least one parent come see her after school for help with their own finances. She ended up teaching how interest rates work and could be calculated to dozens of grown adults. Another factor about how debt and success and upward movement in society can be more challenging than most people think.

Way back (a few decades ago) my wife's cousin asked me to help her figure out her finances and make recommendations. I tactfully explained to her where she had been going wrong (QVC is not your friend, especially if you like to drink...) and that she was wildly over spending, and making plans to move to a dwelling where she would be over her head on the first month, and then progressively more fucked until she was completely fucked, as each of her dependent children got old enough to drop offa their dead father's SSI. And my tempered, diligent, thoughtful explanation had the same effect as talking to a wall, some people ya just can't reach.

Dave Ramsey’s Financial Peace was huge for the wife and I.

I like him a lot, but I think he is a little too myopic on total avoidance of interest. Interest is a tool like anything else, I think it gets blamed when people get buried, but they got buried by buying things they couldn't afford. OTOH you can responsibly use it to buy decent things you can afford, but IMO when people screw up the interest gets the blame, when it was often the financed purchase that was beyond their means that was the root problem. Once I heard him tell a guy, who had a free and clear rental and a newly financed primary dwelling, to sell the rental to pay off the dwelling. As far as I am concerned that is business interest, and he could pay it, and deduct it, while taking the positive cash flow from the rental and making extra principal payments. Probably could have owned them both in seven years or so and had rental income the rest of his life. But most of what he says is very good.

[Borderland]

My local school system has an Econ class in High School that also covers personal finance. I can't recall if it's an elective or not, but Thing 1 took it. Thing 2 is only a sophomore and I think it's a class offered to Juniors and Seniors, so she wouldn't have been exposed to it.

We're very open with our kids about finances, money management, etc. Both are net savers (Thing 1 has more money in savings as a college student than I did until my late 20s). Thing 2, who is "getting by" on an allowance still has a high double-digit number in her checking account. Both kids have bank accounts and are expected to track and manage their own money. Thing 1 has a credit card that she uses for everything but pays off as she spends (mainly due to the risk of using a debit card in public and online).

Chris

(mainly due to the risk of using a debit card in public and online).

OT.

I have a card which is debt/credit. I recently went to a local store/gas station to fill up a gas can. I put my card in the reader and tell it debit card. I get a message that I have to go inside. Then I reinserted the card and said it was credit. GTG. First time I've seen that.

[TGS]

I like him a lot, but I think he is a little too myopic on total avoidance of interest. Interest is a tool like anything else, I think it gets blamed when people get buried, but they got buried by buying things they couldn't afford. OTOH you can responsibly use it to buy decent things you can afford, but IMO when people screw up the interest gets the blame, when it was often the financed purchase that was beyond their means that was the root problem. Once I heard him tell a guy, who had a free and clear rental and a newly financed primary dwelling, to sell the rental to pay off the dwelling. As far as I am concerned that is business interest, and he could pay it, and deduct it, while taking the positive cash flow from the rental and making extra principal payments. Probably could have owned them both in seven years or so and had rental income the rest of his life. But most of what he says is very good.

Agreed. I think I know that specific episode you're referencing, as well, which was completely fucking retarded advice...sure, pay off your debt as soon as possible, but keeping that fully paid off rental property allows the guy to pay off his residence quicker while keeping equity in two properties(!). Otherwise, if he follows Ramsey's advice and sells the rental and pays off his primary residence and then saves money to buy a house in cash...well, he'd be on his death bed by the time he'd be able to save up enough to buy another rental property in cash, instead of having enjoyed its benefits for the last 30 years. Debt on it's own is neither a good thing nor a bad thing. It's just a balancing act and not over-extending yourself is important, but it's really hard to objectively argue that a guy with 2 properties within his means (one being paid off) is over-extending himself.

Ramsey is a net positive if he can influence people to act financially responsible, but if the entirety of the U.S. followed his advice then our economy would basically collapse from stagnation and be overtaken by foreign economies.

ETA: Some of these financial talking heads start sniffing their own farts a little too much. Suze Orman is another one that has devolved into constantly saying stupid shit.

[Duces Tecum]

For those interested in portfolios rather than individual stocks, there is https://portfoliocharts.com/

Duces

[mmc45414]

Agreed. I think I know that specific episode you're referencing

I was driving and I think I even tried to call in to try and stop the poor schumk from selling off his rental, but I figured out I was listening to something prerecorded. To cut him some slack, DR even seemed to be caught off guard by someone who wasn't buried in debt calling in.

Ramsey is a net positive if he can influence people to act financially responsible, but if the entirety of the U.S. followed his advice then our economy would basically collapse from stagnation and be overtaken by foreign economies.

Cars are sure the temptation, because they are so easy to buy (you can take it home today, sign here, press hard there are copies) and depreciate so fast. We have had some nice vehicles we financed every dime of but kept them past the payoff. Probably the first really expensive vehicle we bought was the 2003 Suburban that was replaced by the 2014 F-150 we still have. My situation changed and I didn't actually need the truck, but wanted to keep it so we splurged and got the 2016 Focus ST, I paid it off with reimbursement and we still have it. In December we got our Transit Connect, paid for it with the HELOC but did end up paying it off, probably the first car we essentially paid cash for. And while we were paying all of the car loan interest we were paying off the home mortgage, while we were driving decent vehicles.

[whomever]

But, the real kicker is investments. They've been discussed on the forum by intelligent and reasonable folks a few times, and I'm still mostly lost. I was homeschooled, and the curriculum talked about household budgets, interest rates on loans, simple nterest... but investing for retirement was absent. I now years later get the gist of compound interest and Roth IRAs, though I have neither.

The p-f of investing is bogleheads.org. There is a forum and a quite good wiki.

The reading list is good:

https://www.bogleheads.org/wiki/Bogl...g_start-up_kit