23 Comments »

Jason said:
I like to think that if you are at this site, you’re the type of person who won’t have trouble managing your money.
Still, I think it’s a HUGE issue. More of our middle-school and high-school education needs to revolve around practical skills like managing money. The big problem I see hear is all the hoopla the parents will put up when their kids come home and tell them they’re a financial mess.
# 6 October 2006 at 7:50 am

J Dawg said:
You seriously consider this a complete artcle? Come on! At least “Jason” left a comment that starts to address the issue. Of course the general problem is that Financial education is consideralby below par in the general populace, thats a given. So what do you purpose? What can be changed ? Should the government institue a national program with employers to make enrollment into 401K plans automatic upon hiring? Should there be a new class added to High School schedule that covers personal finance? Are parents the problem? Say something Erin!! Use your soapbox to say something !!!
# 6 October 2006 at 12:03 pm

Steve said:
The big problem is, how do you educate people about money and investing when everyone has a different opinion about how to do it? You really can’t. You can get into generalities, IE: Buy stocks, they’re good! Mutual Funds are tons of stocks together as one (and suck), real estate is good if you don’t make a mistake!
The information is out there, obviously, because a ton of people are good with money. The big issue is that there are 3 types of people, the “I can’t do it, I don’t know how” people who simply think they will always be poor, no matter what you tell them, the “I can’t do it, you do it for me” people who send their money to a broker or just buy mutual funds because they are too lazy to put in the effort themselves, so they pay someone else to lose their money for them, and the “I’ll do it my way” people like us who have read 50,000 books, asked friends and family, researched the net, pulled out calculators and figured everything out and created our own niche strategies.
It’s my opinion that you can take the first two groups and give them a step buy step guide on exactly how to use their money to make money and they STILL will never do it. It’s not in them to do it. They’ve already decided they can’t do it and no matter what you say to them, they never will. Until they realize that they are CHOOSING to be poor, they will never get out of that mentality, no matter what you teach them.
The way to stop having poor people is to stop giving poor people money for nothing. That keeps them where they are. You should fire all city/county/government workers and give those jobs to the people on welfare so they earn their money. Once they aren’t ‘poor’ they’re fired and forced to find a real job. Hotels should be forced to take one room in their hotel and hire a homeless person and give them room and board in that one room for a year and pay them 1/2 wages (since their room and board is covered), then you’d have no homelessness.
The problem isn’t education, it’s people. People are defeatist and those that get over that and become passionate and determined succeed. You can’t teach that.
# 6 October 2006 at 12:18 pm

Lisa said:
Ok, you pointed out the problem with the world. What are you offering to help? Thats a good bleeding heart story with no direction besides don’t live paycheck to paycheck. What are your realistic helpful ideas? How did you become a stay at home mother living off investments? Where did you get the money for the investments? What type of investments? How did you learn, if like you say, theres no education out there? People need solutions.
Lisa
# 6 October 2006 at 2:22 pm

Ken said:
Lisa,
While people need solutions, the answer is not as easy as a how-to article. People who are in financial trouble do not make sacrifices. I can think of 3 quick ways to reduce expenses. Shut off cable TV, internet and cell phones. 15 years ago, nobody had these additional monthly expenses. They are not 100% needed. How many people would be willing to do that to get in a better financial situation?
# 6 October 2006 at 3:42 pm

Mac9 said:
The problems, really, are capitalism and neoliberal economics. The “poor” will always be with as long as a tiny fraction of the world’s population controls a hugely disporportionate amount of wealth and resources. When enough people stand up and reject a politics and economics of lies promoted by a class of people that benefit from that obfuscation, perhaps we’ll be able to have a genuine discussion of poverty and its eradication.
So sure, people have to learn to deal with money, but the context in which they learn it is key.
# 6 October 2006 at 5:17 pm

Jason said:
I knew this would generate some discussion. Mission accomplished.
Steve, good points about folks having different opinions on how to save and invest. I think we probably could find some common values and goals that just aren’t being taught. Maybe school isn’t the place for it though. If not school, where? Tough problems.
Saving is one of the most important parts of investing. If you don’t do it, you better have a really good plan for how you’ll find the money to invest. And saving is really all about delayed gratification. I can almost always find something I could spend my money on now that would make me happier or make my life easier or more enjoyable. How can we teach that to our young? I think the idea of saving could be a bigger part of early education. But It’s a cultural thing that would need to be attacked from many angles.
Another thing we should keep in mind is that some people are more comfortable being “poor”. Having money makes them nervous. (Weirdos) I think things like having 401k contributions default to a maximum or some kind of forced saving could have a place in our society.
Ok… might jump back in later.
# 6 October 2006 at 6:21 pm

Kim said:
Another thing we should keep in mind is that some people are more comfortable being “poor”. Having money makes them nervous. (Weirdos)
I agree. People like this are either seriously weird, or seriously stupid. I’ve been poor my whole bloody life(not by choice), and I am most definitely NOT comfortable.
# 7 October 2006 at 1:56 am

JVP said:
I asked a colleague the other day what he thought our economic(American) world would be like if we were only given credit for education and business and that general credit for livestyle purchases were restricted. In other words, if we could only pay cash for our homes, cars, clothes and food, where and what would our friends lives or your life really look like? The extension of credit and the continuing rise in consumer debt is a disgrace and a major problem in our country. It’s only one part of the problem that needs both education and regulation.
What’s our current source of economic education? The media? Are schools offering our children education on responsible spending and investing? If the parents aren’t aware of those basic principals is it the job of our government to teach them? I say yes. We are a free, capitalistic society and therefore it should be part of a standard curriculum to teach basic economic and investing theories to our children. How does paying somebody more money help them manage that money if they don’t clue on how to be fiscally responsible? It doesn’t. But if they had the basic tools and principles, it would make a difference.
Finally, we always hear about debt as a problem but we rarely hear anyone point out the obvious and that’s the banks that extend credit are like modern day loan sharks. They bombard you with solicitation on how easy it is to get money quickly and easily but hit you with interest rates that far exceeded what any standard investment (the S & P 500 benchmark) could realistically provide.
# 7 October 2006 at 10:57 pm

Phil John said:
Some people choose to be poor – true. But many do not. Many are a victim of circumstance, bad luck or poor decisions.
Life is not like a game of monopoly, where if you roll some bad dice, you can replay the next night.
Some of you strike me as a little too smug. Many are on the path to wealth, but that is through the choices we have made. Some choose otherwise and for those people I have no sympathy – but others are simply dealt a bad hand.
Kind regards,
Phil
# 8 October 2006 at 10:09 am

Jason said:
I was thinking more about the people I see who I suggest are “more comfortable” without money. These aren’t poor people. I’m thinking of people with household incomes of $40k-$80k which still cannot manage to save any money for retirement and always seem to be in debt.
I’m asking myself why? It seems easy to me. (I’m even a little smug about it apparently.) To me it’s obvious to delay gratification and save a little money which is going to do more for me later in life than it will now.
Then I started thinking about my diet for some reason. It seems to me that dieting, like saving money, is delaying gratification for increased happiness (and health) in the future. Now dieting isn’t coming so easy to me; I’m overweight.
How come I can save 10-25% of my pay for the benefit of my wealth, but I can’t pass up on a corn dog for the benefit of my health? I guess it’s values. Buying a brand new car vs. a used car doesn’t do it for me. Eating a cheese steak instead of a healthier meal seems like a good trade off to my mind.
So my task is to find a way to convince myself to eat and live healthier. Once I do that, I might also have discovered a way to convince people to make good decisions for their financial health.
# 8 October 2006 at 2:14 pm

J Dawg said:
a) I think the problem is that everyone keeps jumping to who the poor is, from homeless guy to single mother in the projects. We need to define which poor we are talking about. Becasue when it comes to the homeless there is a gambit of people who just need help to get on their feet, to people who want to roam the streets because of the freedom. There is also the working poor who finish high school, maybe even have a degree but still just live check to check.
b) After all this discussion I haven’t seen one response from the author of the article. Come on get people on here who write a complete article and then at least respondes to a couple comments!!
# 9 October 2006 at 9:29 am

prlinkbiz said:
I’ve been watching and reading the comments JDawg. I wrote a follow up article that addresses the issues raised and ‘continues the conversation’ this week. It doesn’t really matter how much people make, it matters what they do with it.
# 9 October 2006 at 10:03 am

jj said:
Interesting site, this is my first visit.
I have to agree with the poster who said some of the folks are little too smug. I can’t believe that anyone, other than those with serious mental health problems, chooses to be poor. Ending poverty is more than just getting an education and having a desire to work… its about providing every child, teen, and adult with the environment in which they CAN go to school and get skills they can use to get a job. In my hometown of Chicago, let’s take a typical poor teenager – getting to school without getting shot by the gangs, avoiding drugs, not getting sick or having insurance if you do get sick, and having enough food in your stomach to concentrate on school, that’s just the basic starting point. These are the concerns of the truely poor, and these are the concerns we must address as a society before we can eradicate poverty. Yes, I wish that instead of calculus I would have had an option to take a personal finance class back in high school – but I was lucky to be born to a family where my basic needs were covered, allowing me to seek out that information on my own as a young adult. We have to examine the hard questions – what do you do with people without health insurance, food, English language skills, homes, daycare so they can work? We as a society pay the cost of helping our fellow citizens, whether it is upfront (universal health care, better school funding) or down the road (our taxes that fund the welfare system, our fancy suburban tech toys stolen by criminals). Isn’t it better to be upfront?
# 9 October 2006 at 2:55 pm

prlinkbiz said:
Again, the problem is lack of financial education. The education system is a whole other can of worms- preparing kids for a wordl that no longer exists. With increased financial understanding, people can help themselves.
# 9 October 2006 at 4:10 pm

Jason said:
Few points:
Everyone should be familiar with the “category of poor” that I’m talking about, people who “want to be poor”. I think “broke” is maybe a better word.
I’m talking about people who make enough money to live comfortably, but because of poor money decisions end up with too much debt and too little money for retirement, etc.
I’m thinking of my father, who in 2001 bought a brand new Jeep Grand Cherokee because he “needed something to make him happy”. It didn’t matter that a lot of what made him unhappy were financial problems, which the extra $20k he paid for that car vs. a comparable used car would have helped him out with.
I’m thinking of the guy you know who lives in assisted housing but has a more jewelry than you do and better stereo system than you do.
If either one of the people in the above scenarios had $30k in a “retirement account” they could gain access to, they would find a reason to spend it. The money feels idle and psychologically these people enjoy the scenarios and stories they get themselves into as “broke” people. They’ve been broke all their lives. They’re used to it. They’re comfortable with the idea in the same way a battered wife is comfortable. If they had money, they would feel bad for all of their broke friends. If they had money, they would have nothing to talk about anymore because a lot of their discussion revolve around their lack of money.
The truth is that some people have psychological problems which cause them to do self destructive things. Whether that’s eating too much or smoking or buying a bunch of stuff they don’t need.
I don’t want to avoid the issue of the “real poor” though. There are a lot of people who are struggling to get by. A lot of their problems are societal and not self inflicted. Let’s talk about ways to help here too. I’m focused on the other situation since it’s so personal to me.
Good discussion. Keep it up. I know Erin has a follow-up in the works.
# 9 October 2006 at 4:44 pm

Steve said:
A friend of mine said a very insightful thing yesterday, “When you get married at 20, you want all of the things you parents have, a car, a house, nice furniture, but you don’t realize it took them 20 years to get to where they are and you want to be there right now.” That’s so true. You look at the lifestyle your parents are in when you move out and that’s what you want and it’s frustrating when you can’t have it, so you give up, but you SHOULD be looking at their lifestyle they had when they were 20 to see where you should be.
- Steve
# 9 October 2006 at 5:01 pm

Ken said:
I don’t think that this article was aimed at the homeless or poor. I really think it was aimed at the people who live day to day. How many people who make $50k a year still need that paycheck on Friday? Can they go two weeks missing one paycheck? Why can’t they.. people making $25k are doing it.
When I was looking at foreclosures and crappy houses, there were so many times where I walked into a house where the house was a mess, no running water, garbage everywhere… but guess what… A 50″ big screen TV in the living room and an Xbox.
Next time you go looking a foreclosures, take a close look at the car in the garage, type or furniture or number of doodads in the home.
I contend that these people are poor because they choose to be poor.
# 9 October 2006 at 6:44 pm

Phil John said:
Hey Jason
I think I misunderstood – perhaps a difference in use of the word “poor”. Where I am from “poor” means “homeless” or living in the ghetto.
If we are talking about those who chose to spend now rather than save / invest – I would not call them poor – I think broke or living paycheck to paycheck is a better classification. Many have more material goods than I do.
I think it is less about financial education (as mentioned above) and more about goals. I will live cheaply now, in my late 20s, compared to others, so that my late 30s onwards are much better than others.
There is plenty of education out there – I managed to find it and I am from a low wealth background where my parents skimped and saved to afford our house, but they now live quite comfortably.
In Australia, we have the equivalent of a mandatory 401k – 9% of your wage is automatically deposited by your employer. This is in addition to your wage, so often you will see people earn “50k”, but their actual package is 54k. Because this starts as soon as you are employed, after 30 or 40 years time, most people will have sufficient superannuation to retire reasonably comfortably. You can not touch this money until you turn 60, so it is forced saving and investing.
Kind regards,
Phil
# 10 October 2006 at 6:15 am

Ycphm said:
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