Vast Majority of Adults Want Personal Finance Taught in HS

[RiverDog]

Here's a subject that I think most of us can agree on, although I wouldn't stop with just high schools. They need to teach the effect of compound interest, how to file a tax return, what an insurance premium is, what deductibles are, and so on.

Eighty-eight percent of adults surveyed by the National Endowment for Financial Education said their state should require either a semester or year long personal finance course for graduation. The survey of 1,030 adults was conducted in March.

https://www.msn.com/en-us/money/careers ... uxbndlbing

Although I don't think it should be mandated, I feel very strongly that employers bear some responsibility to at least make available voluntary classes on personal finance and retirement planning to their employees. As we move away from Social Security and pensions, more and more responsibility for retirement planning is going to fall onto the individual through IRA's and 401K's.

Hopefully mykc pokes his head in here as I'd really like to hear from him on this subject.

[NorthHawk]

Absolutely. I've been saying that for years.
The basics of balancing a checkbook and rudimentary exposure to balance sheets.
And I haven't even started on how interest works and how powerful compounding interest rates are both for investing and debt.

About 40 years ago I had a friend of mine get a credit card and he maxed it out. After a year or so where he paid the minimum but never paid it off they extended his credit by
$500 (which at the time was a lot). His response was this is great, free money! And of course he maxed it out as well. He was lucky because one of his bosses caught wind of
his attitude and took the time to sit down and explain how the world worked. After that he made an effort to lower his debt and was much more responsible. But the problem
was he didn't understand the basics of interest rates and how it affected his life style.

[MackStrongIsMyHero]

I’m curious for the old timers on the forum to weigh in on just how prevalent teaching money was at home. I never received much in the way of finance education from my parents. I was naturally a saver whereas my siblings spent money as soon as they got it. I do remember having an assignment in 6th grade where we had to set a household budget and balance a check book. And I know interest and saving was touched on but getting young people to understand the time value of money in a world of instant gratification is tough. I also have filed my own taxes since I was 16; there’s plenty of documentation out there to figure out a basic tax return filing.

I don’t think it’s a bad idea, but you can lead people to knowledge but you can’t make them think. Either these kids, hell, people, have the maturity, grounding, and intelligence to listen to and apply this stuff or they don’t.

[mykc14]

I agree with this wholeheartedly. I teach a senior class called CIVICS 12 (or CWP- Current World Problems) and when I started teaching I would always spend a unit talking about about basic things you should be able to do after High School (basic finance- balancing checkbooks, investing, mortgages, etc; basic home ownership- basic repairs, animal rodent proofing, routine maintenance, etc; and basic car ownership- basic maintenance, how to change your oil, etc.). This wasn't officially part of the curriculum the state wanted me to teach but it was also a class that had some leeway in what I could teach so I took that leeway. Every once in awhile a parent would complain that I wasn't teaching what I was supposed to and I would simply reply not understanding how to budget your life is a huge problem in our country that we need to learn about (i.e. it is a Current World Problem). That was enough to satisfy my principal. To get a job in my hometown I had to take a Middle School position (6th grade) so obviously I didn't spend too much time talking about that stuff, although we did have a classroom economy in which kids learned about budgeting, supply and demand, taxing, saving, credit, investing, etc. It was a capitalistic utopia!! When a position opened at the High School I took it and was able to teach CWP again, but was extremely happy to see that our district already had a Senior class called life after High School. It's only one trimester but it is taught by three different teachers: Financial Teacher (obviously he teaches them about financial life after HS, our Home and Family Life (Home Ec) Teacher (she teaches them like 10 easy, healthy meals you can make), and our Wood/Metal Shop Teacher (He teaches them basic car ownership and home repair- I think he even shows them how to build a small shed). Overall it is a great class and very beneficial to kids. The problem typically is how much do HS kids really listen to this stuff. You can show them all of the evidence in the world as to why they should start investing at a young age but 95% of them are going to start spending that money when they get it. Balancing a checkbook is a foreign concept to them, and actually their parents. I can't remember the last time I even wrote a check personally, but we still teach it. I think we have to change that aspect into balancing your debit card, maybe. Keeping track of your transactions. I always taught that the best thing you can do- If you are responsible enough- is to buy everything with your credit card and pay off the balance at the end of the month. It's easier to track your spending and you get the rewards, but that is a dangerous game for some kids. The reality is if they actually learn to avoid the major pitfalls (debt, especially vehicle and credit card) and don't settle for employment ($20/hour sounds awesome when you are 18, but isn't enough to raise a family and own a home) then they should be alright. Back to the OP- I completely agree these are things that should be taught to all seniors and are in some schools, I just don't know if it is a State Requirement right now or not.

[mykc14]

I’m curious for the old timers on the forum to weigh in on just how prevalent teaching money was at home. I never received much in the way of finance education from my parents. I was naturally a saver whereas my siblings spent money as soon as they got it. I do remember having an assignment in 6th grade where we had to set a household budget and balance a check book. And I know interest and saving was touched on but getting young people to understand the time value of money in a world of instant gratification is tough. I also have filed my own taxes since I was 16; there’s plenty of documentation out there to figure out a basic tax return filing.

I don’t think it’s a bad idea, but you can lead people to knowledge but you can’t make them think. Either these kids, hell, people, have the maturity, grounding, and intelligence to listen to and apply this stuff or they don’t.

This reminded me of another thing that I go into a decent amount of detail about when I am teaching CWP. I tell my students that when you can you need to start some sort of business. I tell them it doesn't need to be your main source of income, it really doesn't need to make a lot of money at all, but it does need to be legit. If you live in the country mow people's lawns, sell some of your meat, or sell the hay in the field. If you live in the city become a consultant for something. Whatever you do you can find some sort of business that will work for you. Your comment about filing your own taxes reminded me. My wife and I used to file our own taxes but when we decided to create an LCC things got a little more complicated and we have found that paying for the right accountant more than pays for itself in the long-run. We have even hired a bookkeeper part-time. It's pretty amazing she lives in Colorado and she only charges $200 a month. We send her all of our expenses and she gets the documents ready for our accountant and reviews our taxes and she's a tax write-off!

[RiverDog]

I’m curious for the old timers on the forum to weigh in on just how prevalent teaching money was at home. I never received much in the way of finance education from my parents. I was naturally a saver whereas my siblings spent money as soon as they got it. I do remember having an assignment in 6th grade where we had to set a household budget and balance a check book. And I know interest and saving was touched on but getting young people to understand the time value of money in a world of instant gratification is tough. I also have filed my own taxes since I was 16; there’s plenty of documentation out there to figure out a basic tax return filing.

I don’t think it’s a bad idea, but you can lead people to knowledge but you can’t make them think. Either these kids, hell, people, have the maturity, grounding, and intelligence to listen to and apply this stuff or they don’t.

My dad was a bookkeeper. He taught me how to balance a checkbook, a task that is as out of date as a buggy whip maker. The ironic thing about that is that mom was the one who paid the bills and ran the household, so I guess I was exposed to it by both parents. I also was a business administration major in college, so I had some extensive schooling on financial management and accounting. I knew what compound interest was as we were given problems to figure out the total finance charge given a certain interest rate and term, also understood early what the words 'principal' and 'equity' referred to. Accounting taught me how to depreciate assets and determine a net worth. Cars are bad investments because they depreciate. A house is a good investment because it appreciates.

I got my first credit card in the early 80's. I used to save all the receipts and kept a running total of what I had outstanding, being careful not to charge more than a certain amount. In my first job out of college, I only got paid once a month, so I had to carefully budget my money to insure I had enough to make it through each month, so I essentially treated it like a checking account where you had a register to record each check written, manually subtracting them from the beginning balance.

I think that's where a lot of people started losing control, when the frequent use of credit cards started becoming more prevalent in the 80's. It's like gambling at a casino where the chips causes you to lose perception of money. If those were $100 bills instead of blue chips being tossed around the table, people would be less likely to play. The movement from cash to credit has had a psychological effect. People get surprised at the end of the month when the credit card comes due, make a minimum payment, then forget about it until the following month.

But the problem goes beyond simply managing a household budget. Towards the end of my working career when I was assigned to mentor new supervisors, I had one guy, a college graduate, sharp kid, married and with no kids. When I asked him how much he was contributing to his 401K he told me "2%". Our 401K had a 2-1 match up to a maximum of 4% company contribution, so if you contributed 8%, an amount easily achieved when you have two incomes and no kids. No one had ever told him about that little detail. HR spends two days telling newly hired supervisors about everything from who the CEO is to keeping rain water from draining off the property, but they don't tell them a damn thing about our benefits.

In any event, it's always been a pet peeve of mine, and it's refreshing to see that for once, I'm in the majority of adults that feel it's essential.

[RiverDog]

I agree with this wholeheartedly. I teach a senior class called CIVICS 12 (or CWP- Current World Problems) and when I started teaching I would always spend a unit talking about about basic things you should be able to do after High School (basic finance- balancing checkbooks, investing, mortgages, etc; basic home ownership- basic repairs, animal rodent proofing, routine maintenance, etc; and basic car ownership- basic maintenance, how to change your oil, etc.). This wasn't officially part of the curriculum the state wanted me to teach but it was also a class that had some leeway in what I could teach so I took that leeway. Every once in awhile a parent would complain that I wasn't teaching what I was supposed to and I would simply reply not understanding how to budget your life is a huge problem in our country that we need to learn about (i.e. it is a Current World Problem). That was enough to satisfy my principal. To get a job in my hometown I had to take a Middle School position (6th grade) so obviously I didn't spend too much time talking about that stuff, although we did have a classroom economy in which kids learned about budgeting, supply and demand, taxing, saving, credit, investing, etc. It was a capitalistic utopia!! When a position opened at the High School I took it and was able to teach CWP again, but was extremely happy to see that our district already had a Senior class called life after High School. It's only one trimester but it is taught by three different teachers: Financial Teacher (obviously he teaches them about financial life after HS, our Home and Family Life (Home Ec) Teacher (she teaches them like 10 easy, healthy meals you can make), and our Wood/Metal Shop Teacher (He teaches them basic car ownership and home repair- I think he even shows them how to build a small shed). Overall it is a great class and very beneficial to kids. The problem typically is how much do HS kids really listen to this stuff. You can show them all of the evidence in the world as to why they should start investing at a young age but 95% of them are going to start spending that money when they get it. Balancing a checkbook is a foreign concept to them, and actually their parents. I can't remember the last time I even wrote a check personally, but we still teach it. I think we have to change that aspect into balancing your debit card, maybe. Keeping track of your transactions. I always taught that the best thing you can do- If you are responsible enough- is to buy everything with your credit card and pay off the balance at the end of the month. It's easier to track your spending and you get the rewards, but that is a dangerous game for some kids. The reality is if they actually learn to avoid the major pitfalls (debt, especially vehicle and credit card) and don't settle for employment ($20/hour sounds awesome when you are 18, but isn't enough to raise a family and own a home) then they should be alright. Back to the OP- I completely agree these are things that should be taught to all seniors and are in some schools, I just don't know if it is a State Requirement right now or not.

Thanks for chiming in, mykc. Knowing that you are an educator (is the term "teacher" politically incorrect nowadays? ), I was looking forward to reading your insight into this topic, and you did not disappoint. I'm glad that you seem to have a passion for this subject as I agree with you in that it is one of the biggest, fixable problems that dogs our society.

It's easy to blame the lack of personal finance awareness on our schools. They are an inanimate object, like blaming a mistake on a computer error. I never had a class in high school about personal finance so I don't see where suddenly it's the school's fault for not teaching these basic skills. We're asking schools to do too much already, with everything from yoga, sex education, and bullying to critical race theory and LBGT. Sometimes we expect too much out of our school system. Personal finance needs to be taught in the home like it was with me.

There's also blame to be shared by private industry and government. Loans are too easy to come by. Low income people end up paying a higher finance charge than rich people because they are a higher risk of defaulting. Car dealerships are aggressively selling cars to people that they know can't afford the payments. Real estate agents, paid on commission, are rewarded for getting people into homes they can't afford. And as I said before, companies and unions, in general, are doing a piss poor job of educating their employees/members, or at least the one I worked for was.

The problem had its genesis in the late 70's and early 80's when two factors collided: One was the emergence of the credit cards, ie Visa and Master Card. Prior to that, the only credit cards I'd ever seen used were for gas stations or a major retailer like Sears. The other factor was the economy, as at the time, we had double digit inflation and double digit interest rates. The mindset was to buy it today because the price goes up tomorrow, so people were led to believe that buying it on credit actually saved you money because you got it a few week's earlier before the inevitable price increase. You didn't 'see' the money like you did with a checkbook register.

[Aseahawkfan]

We really need to teach financial literacy in schools. This is not the economy us older folks grew up with. It is extremely complex with access to investment types you never dreamt of when you were young. I'm 51 and I know that these young folks nowadays have more access to investment assets only wealthy people had access to when you were growing up. They very much need an education on finance. We're not talking about learning to balance your checkbook or run a household.

They need to know how to read financial statements. How to evaluate stock investments. How to calculate a mortgage payment. The idea of opportunity cost of earning 5% on your bond investment versus an 8% return in the S&D index fund.

We also need to educate them on economics. How businesses work. How the minimum wage affects the cost of inputs which affects how businesses choose to use labor. We run in one of the most complex global economies in history and we're pushing kids out of High School who don't know the first thing about investing in a free market economy or whether a 15 dollar minimum wage even does anything to improve their lives or what type of economic policies they should support to improve their ability to prosper within the economy.

If this were still get a job at a company, get matching, save up, buy a house type of economy, then sure, do most of it in the home. But that isn't this economy any longer. The less you know about investing and how economics work, the more these younger folks are not going to be able to take advantage of the unprecedented opportunities available to them to grow their money. I don't see why schools should teach math and English, but somehow avoid economics when our entire economy from buying a house to managing your retirement to the structure of a companies finances are all economic information that the majority of the population is unable to comprehend due to a lack of education.

[NorthHawk]

With the relative demise of defined pensions, investing and different types of investment vehicles should be a must.
Just the basics in school but they should have a knowledge of risks and benefits of the different opportunities.
Some will avoid it but others will take advantage of it and at the very least have some idea of what’s out there.

[Aseahawkfan]

I’m curious for the old timers on the forum to weigh in on just how prevalent teaching money was at home. I never received much in the way of finance education from my parents. I was naturally a saver whereas my siblings spent money as soon as they got it. I do remember having an assignment in 6th grade where we had to set a household budget and balance a check book. And I know interest and saving was touched on but getting young people to understand the time value of money in a world of instant gratification is tough. I also have filed my own taxes since I was 16; there’s plenty of documentation out there to figure out a basic tax return filing.

I don’t think it’s a bad idea, but you can lead people to knowledge but you can’t make them think. Either these kids, hell, people, have the maturity, grounding, and intelligence to listen to and apply this stuff or they don’t.

I was taught the standard work a job, save money if you can, survive. No real financial education. My family was paycheck to paycheck or worse after my parents divorced and my mother was raising my brother and I.

I learned to save, manage money well, and invest on my own after reading Donald Trump's Art of the Deal and thinking, "This guy's idea of living on a budget is living on 100,000 a month. There has got to be a better way to go about making money because this guy isn't working a job." Then I picked up Rich Dad, Poor Dad. From there I took my first 1500 into Merrill Lynch and invested in two stocks I picked myself: Microsoft and some cancer biotech I can't remember splitting it almost evenly. Made money on those first two picks, and about 800 percent on the MSFT. Then I was hooked. Just kept investing and looking for ways to grow money I earned rather than spend on garbage that doesn't earn any type of return. I took a 90 percent loss when the tech bubble burst. That took a while to recover from, but I'm doing well enough now. I wasn't going to let a bust deter me from investing. Plenty of other successful people have taken some big hits, a big loss is just a learning experience that I try to avoid now.

I've tried to influence my niece and nephew this way, but most people seem to be of the mindset that money is for spending on things they need or want to feel good with maybe a little savings just in case. Most of the value of people's net worth is in their home if they buy a house and in their retirement fund if they bothered to get one going.

The main irritation I have with these folks is they think only rich people can do the things they do to make money and yet I've been doing it for going on 30 years now. This generation has unprecedented access to investment tools and assets that they can use to grow their money. But these old hippies like Elizabeth Warren and Bernie Sanders want to pretend we're still living in the 60s where you work the same job for years and government policy is going to fix everything, while being completely unaware or purposefully obtuse about the fact that this young group can invest their money in assets that grow their money on their smartphones 24/7/365. The politicians should be pushing to modernize the economy, not try to fuel this haves and have nots mentality because they don't want people to learn how to take advantage of these unprecedented investment tools and assets.

[RiverDog]

With the relative demise of defined pensions, investing and different types of investment vehicles should be a must.
Just the basics in school but they should have a knowledge of risks and benefits of the different opportunities.
Some will avoid it but others will take advantage of it and at the very least have some idea of what’s out there.

Not only are pensions going the way of the horse and buggy, Social Security is destined to make up less and less of retirement income as it's subject to the same demographical math that has been killing pensions. More and more employers are changing their retirement funds to 401K's, which rely on the individual to make decisions on their funds.

This is one area where the government needs to step in and tighten up the restrictions on its use. People should not be allowed to pull money out of a retirement fund until they're at least in their late 50's. I've seen a whole lot of people in their 20's-40's that otherwise couldn't afford it take money out of their 401K's to pay for cars and boats. You can't draw out of a pension or SS until a specific age, I see no reason why a 401K should be treated any differently. The problem is that all the politicians care about is votes, and placing restrictions on what people regard as 'their' money isn't going to win them any popularity contests.

[RiverDog]

The main irritation I have with these folks is they think only rich people can do the things they do to make money and yet I've been doing it for going on 30 years now. This generation has unprecedented access to investment tools and assets that they can use to grow their money. But these old hippies like Elizabeth Warren and Bernie Sanders want to pretend we're still living in the 60s where you work the same job for years and government policy is going to fix everything, while being completely unaware or purposefully obtuse about the fact that this young group can invest their money in assets that grow their money on their smartphones 24/7/365. The politicians should be pushing to modernize the economy, not try to fuel this haves and have nots mentality because they don't want people to learn how to take advantage of these unprecedented investment tools and assets.

Government can and must play an active role by managing the rules on employer-sponsored retirement and health care plans. I would like to see the government give incentives or tax advantages to employers, particularly small employers that don't have the leverage that the larger companies have, so they can offer their employees health care and retirement plans that can compete with the Amazons and Walmarts. And as I said earlier, they need to tighten access to retirement accounts to match that which has existed with pensions and SS.

The problem with liberal pols like Warren and Sanders is that they tend to treat large companies and Wall Street like it's some kind of evil empire that has to be taken down. Instead of trying to slay Goliath, they should be trying level the playing field so it's a fair fight for David.

[Aseahawkfan]

Government can and must play an active role by managing the rules on employer-sponsored retirement and health care plans. I would like to see the government give incentives or tax advantages to employers, particularly small employers that don't have the leverage that the larger companies have, so they can offer their employees health care and retirement plans that can compete with the Amazons and Walmarts. And as I said earlier, they need to tighten access to retirement accounts to match that which has existed with pensions and SS.

The problem with liberal pols like Warren and Sanders is that they tend to treat large companies and Wall Street like it's some kind of evil empire that has to be taken down. Instead of trying to slay Goliath, they should be trying level the playing field so it's a fair fight for David.

Government has already put in place many means for people to benefit from investing whether tax benefits from buying a personal home or the tax status of retirement and investment accounts.

What they need to do if they want this to work is start teaching financial literacy in middle school as part of the development of math and language. Kids with cell phones can access financial information in an instant. I was watching at my job 20 something year old young people investing in stocks and crypto these last few years. They were hopping into these investment assets and doing them like gambling. Why? Because they had zero education on how to actually invest. They had the tools and the simple idea of buying and selling securities and options and cryptocurrency, but none of the knowledge for how to read financial documents or determine a quality investment versus a pump and dump.

It's an extremely bad idea for the government to implement all these tax incentives for things like IRAs, Roths, and encourage investment while not at all teaching young people how to determine a quality investment. That would be like not teaching them math and English, then expecting them to get a job reading manuals and doing basic math for even inventory work. Why does the government think that it is a good thing to teach people math and English to prepare them for a job, but don't consider it essential to teach financial literacy while creating so many tax incentives for people who invest that regular folk could take part in but don't due to a lack of education.

It really has to change. People like Bernice and Warren are an impediment to this type of change because they do very little but stoke the rich vs. poor rubbish while never going, "Wait a minute. All you working folk, you have access too the means to improve your wealth in your hand. We just need to teach you how to use it and start young."

The American education system just seems stuck in the agricultural era or focused on that 60s hippie era where school was to learn a bunch of liberal ideas to make your education wide, rather than focused on providing base skills for prosperity and survival. These young people need to be taught school has a very important purpose and it is for them to learn to survive in the modern economy just like a hunter-gatherer society would teach their young to hunt and gather. We need to teach our young folk how to navigate a modern economy and that it is important to their well being in the long run.

I really wonder who structured school in the fashion it is built at the moment. It is very unfocused and not good at preparing young people for what they will have to do in the world. It just seems that it's stuck in a past time period that is no more with old politicians stuck in a past time unable to realize that the world has passed them by and they are no longer following relevant modern economic ideas.

These young folks are tech savvy. They have a powerful tool at their disposal us old timers never had with unprecedented access to global investing. Schools do not seem to preparing them well for this environment. I hope they get up to speed as younger politicians take power from these old hippies and supply siders who are just clueless about the changes we need to make to get this going in the right direction.

The idea of a company providing retirement is outdated. Very few people will work at the same company for their life any more. Job changing is almost required in the modern day to maximize income. Automation is coming as well, so singular skills and limited skill sets are not going to cut it liked they used to. This an extremely diverse economy now. People are going to have a very different experience in it than older people had who managed to last at a single company and retire from it.

[RiverDog]

Government has already put in place many means for people to benefit from investing whether tax benefits from buying a personal home or the tax status of retirement and investment accounts.

They need to put more restrictions on withdrawals. I'm sure I told you this, but when my former company got bought out, a huge number of employees chose to cash out their 401K's, take the 10% early withdrawal penalty, added it onto their income for that year, instead of rolling it over into our new employer's 401K or starting a self directed IRA (which is what I did). They used it to buy cars and boats. You could never make early withdrawals like that on pension plans or Social Security. The only exception I'd make would be on using their retirement fund as a loan to help buy a first time home, but that they pay any withdrawal back into their own plan.

What they need to do if they want this to work is start teaching financial literacy in middle school as part of the development of math and language. Kids with cell phones can access financial information in an instant. I was watching at my job 20 something year old young people investing in stocks and crypto these last few years. They were hopping into these investment assets and doing them like gambling. Why? Because they had zero education on how to actually invest. They had the tools and the simple idea of buying and selling securities and options and cryptocurrency, but none of the knowledge for how to read financial documents or determine a quality investment versus a pump and dump.

Agreed, except as mykc indicated, it's likely to be one of those leading a horse to water but you can't make him drink things. It used to be a standing joke about the number of high school graduates that couldn't balance a checkbook.

It's an extremely bad idea for the government to implement all these tax incentives for things like IRAs, Roths, and encourage investment while not at all teaching young people how to determine a quality investment. That would be like not teaching them math and English, then expecting them to get a job reading manuals and doing basic math for even inventory work. Why does the government think that it is a good thing to teach people math and English to prepare them for a job, but don't consider it essential to teach financial literacy while creating so many tax incentives for people who invest that regular folk could take part in but don't due to a lack of education.

You don't have to have a deep understanding of investment strategies in order to be smart about managing your funds. All you need to know is some of the basics, like the difference between an after tax Roth and a pretax traditional IRA/401K, that younger participants can afford more risk than those closer to retirement, and so forth. It shouldn't be a topic that takes years of schooling to learn.

The idea of a company providing retirement is outdated. Very few people will work at the same company for their life any more. Job changing is almost required in the modern day to maximize income. Automation is coming as well, so singular skills and limited skill sets are not going to cut it liked they used to. This an extremely diverse economy now. People are going to have a very different experience in it than older people had who managed to last at a single company and retire from it.

Companies do need to provide retirement plans, just not defined pension plans. Retirement plans need to be portable, so you're not obligated to stick with a company j/b of their retirement plan, which is what makes 401K's superior to pensions. So long as your next employer offers a qualified 401K, you can roll over your account into your new employer's plan. I would like to see governments, including the military, get out of their pensions and convert their funds to 401K's.

[Aseahawkfan]

They need to put more restrictions on withdrawals. I'm sure I told you this, but when my former company got bought out, a huge number of employees chose to cash out their 401K's, take the 10% early withdrawal penalty, added it onto their income for that year, instead of rolling it over into our new employer's 401K or starting a self directed IRA (which is what I did). They used it to buy cars and boats. You could never make early withdrawals like that on pension plans or Social Security. The only exception I'd make would be on using their retirement fund as a loan to help buy a first time home, but that they pay any withdrawal back into their own plan.

I would personally like more control, but I have a lot of self-discipline.

[quote[Agreed, except as mykc indicated, it's likely to be one of those leading a horse to water but you can't make him drink things. It used to be a standing joke about the number of high school graduates that couldn't balance a checkbook.[/quote]

Do we make them take many years of English, history, and math? Yep. Financial literacy should be as high a priority as those subjects and taught nearly every year so even lagging students retain at least some measure of proficiency with financial matters. English, math, and history should be incorporated into financial literacy where they are taught math with finance in mind, can read business documentation so they can understand it, and study economic history with events like The Great Depression, the 2008 Housing Crisis, and the Tech Bubble Burst. Economics has an major effect on their lives, why not learn the history of why.

You don't have to have a deep understanding of investment strategies in order to be smart about managing your funds. All you need to know is some of the basics, like the difference between an after tax Roth and a pretax traditional IRA/401K, that younger participants can afford more risk than those closer to retirement, and so forth. It shouldn't be a topic that takes years of schooling to learn.

I think you do in the modern day. You are coming from the perspective of a guy who stayed at the same company for most of your career out of college. I have not seen that happening with the modern workforce. They are job jumping and can apply for jobs globally as easily as you applied for a job locally. They have access to more investments than you ever did. They also have access to far more credit options. It's a very different economy than the one you came up in, more complex and requiring more skill to navigate.

People who try to do it like you did it are going to find themselves lagging if they try that in the modern economy.

I work at a Big Tech company. They are always moving, always changing, always pushing adoption of new technology and new methods. They hire globally. If your skills don't keep up, you won't last long.

Companies do need to provide retirement plans, just not defined pension plans. Retirement plans need to be portable, so you're not obligated to stick with a company j/b of their retirement plan, which is what makes 401K's superior to pensions. So long as your next employer offers a qualified 401K, you can roll over your account into your new employer's plan. I would like to see governments, including the military, get out of their pensions and convert their funds to 401K's.

A lot of 401ks have limited investment options that aren't even close to the best returns. I think 401ks and retirement investment should be more self-managed with some kind of matching from the company like it is set up, but completely transferable as you move. Not sure how you manage that globally, but the global banking system will likely become more portable as it moves to a more and more digital format. Even recently at my job, some friend of a co-worker who was a coder applied for and worked in Sweden for a while at a Swedish company. My buddy when younger worked in Japan for a few years. A bunch of workers where I work moved to Europe and Asia for jobs at the global multinational tech company I'm employed for.

Employees have to be very portable and fluid in the tech field. I think both retirement accounts and medical insurance need to be portable and less associated with singular companies. This seems to be a relic of the manufacturing and agricultural economy where the assumption was to get a job at the same company and work there until retirement. We all know that companies no longer encourage that behavior as they can't afford to to stay competitive. The company that can't adapt quickly to the changing environment is gonna end up gone including all their workers. Even in the automotive industry entrepreneurs like Elon Musk are changing the game as far as manufacturing goes. Workers that can't keep up will be left wanting.

I think even unions need to adapt to this changing environment as well. It's reaching a point where even fast food is trying to automate and it is the dawn of the robotics era. The number of companies pushing robotics to automate way human labor is growing and pushing and wanting to change the reliance on human labor.

And what are we doing in school? Taking summers off and thinking of financial literacy as some barely important subject that you can take in college if you feel like it. Whereas investing is going to be one of the few ways to survive in your old age in a very fast changing economy unless you want pittance check from the government to barely survive in some government backed home where they're waiting for you to drop.

I think because of your background, you just don't have much of an idea of what's going on globally in economics and how much it is different for these young folks. I see it first hand. It's going to be a different world in the next 50 years and we're way behind teaching young people how to navigate it.

[RiverDog]

A lot of 401ks have limited investment options that aren't even close to the best returns. I think 401ks and retirement investment should be more self-managed with some kind of matching from the company like it is set up, but completely transferable as you move. Not sure how you manage that globally, but the global banking system will likely become more portable as it moves to a more and more digital format. Even recently at my job, some friend of a co-worker who was a coder applied for and worked in Sweden for a while at a Swedish company. My buddy when younger worked in Japan for a few years. A bunch of workers where I work moved to Europe and Asia for jobs at the global multinational tech company I'm employed for.

Employees have to be very portable and fluid in the tech field. I think both retirement accounts and medical insurance need to be portable and less associated with singular companies. This seems to be a relic of the manufacturing and agricultural economy where the assumption was to get a job at the same company and work there until retirement. We all know that companies no longer encourage that behavior as they can't afford to to stay competitive. The company that can't adapt quickly to the changing environment is gonna end up gone including all their workers. Even in the automotive industry entrepreneurs like Elon Musk are changing the game as far as manufacturing goes. Workers that can't keep up will be left wanting.

I think even unions need to adapt to this changing environment as well. It's reaching a point where even fast food is trying to automate and it is the dawn of the robotics era. The number of companies pushing robotics to automate way human labor is growing and pushing and wanting to change the reliance on human labor.

I agree completely, which is why I'm saying that 401K's are superior to pensions. So long as your next employer has a qualified plan, you can seamlessly roll over your entire account into theirs, or you can choose, as I did, to put it into a self directed IRA and satisfy those like you that have a good grasp on investment strategy. The other thing that 401K's have going for them vs. pensions is that they are not subject to the demographical problems that is hurting both pensions and SS where the worker-to-retiree ratio has gotten so out of whack.

I started working at my first job out of college before 401K's existed. The employer I worked for had a fantastic retirement program that they termed profit sharing. The would contribute 15% of your salary to a fund that had 401K-type limitations, plus if someone left the plan before they were fully vested, their account would be split up amongst the rest of the participants, so I was getting another 2-4% in forfeitures. The kicker was that you had to work there 5 years just to be 25% vested and 15 years for 100% vesting. When 401K's arrived, my employer had to retroactively change their vesting rules to a maximum of 5 years for the entire account.

I would like to see any penalties for early 401K withdrawals or transfers, like I'm doing in taking money out of my traditional accounts and putting them into a Roth, plowed back into a fund that would be shared with other participants rather than simply dumping it back into the US Treasury. It would be another incentive for people to keep their money in the retirement fund as if you drew it out, you could lose out on a certain percentage of forfeitures.

And what are we doing in school? Taking summers off and thinking of financial literacy as some barely important subject that you can take in college if you feel like it. Whereas investing is going to be one of the few ways to survive in your old age in a very fast changing economy unless you want pittance check from the government to barely survive in some government backed home where they're waiting for you to drop.

I think because of your background, you just don't have much of an idea of what's going on globally in economics and how much it is different for these young folks. I see it first hand. It's going to be a different world in the next 50 years and we're way behind teaching young people how to navigate it.

I'll be the first to admit that I don't stay abreast of all the economic factors that influence investments, at least not as much as you appear to have. I am smart enough to know that I'm not that smart and have hired a financial advisor of whom I really like and trust to manage my money for me. That's one of the advantages of having an IRA vs. SS or pensions, that you can do as you do and manage your money on your own, or do as I do and hire a person of my choosing to do it for me.

[Aseahawkfan]

I agree completely, which is why I'm saying that 401K's are superior to pensions. So long as your next employer has a qualified plan, you can seamlessly roll over your entire account into theirs, or you can choose, as I did, to put it into a self directed IRA and satisfy those like you that have a good grasp on investment strategy. The other thing that 401K's have going for them vs. pensions is that they are not subject to the demographical problems that is hurting both pensions and SS where the worker-to-retiree ratio has gotten so out of whack.

I started working at my first job out of college before 401K's existed. The employer I worked for had a fantastic retirement program that they termed profit sharing. The would contribute 15% of your salary to a fund that had 401K-type limitations, plus if someone left the plan before they were fully vested, their account would be split up amongst the rest of the participants, so I was getting another 2-4% in forfeitures. The kicker was that you had to work there 5 years just to be 25% vested and 15 years for 100% vesting. When 401K's arrived, my employer had to retroactively change their vesting rules to a maximum of 5 years for the entire account.

I would like to see any penalties for early 401K withdrawals or transfers, like I'm doing in taking money out of my traditional accounts and putting them into a Roth, plowed back into a fund that would be shared with other participants rather than simply dumping it back into the US Treasury. It would be another incentive for people to keep their money in the retirement fund as if you drew it out, you could lose out on a certain percentage of forfeitures.

I don't know about discouraging withdrawal with penalties. It doesn't seem to stop the undisciplined and immediate gratification people from doing it. They end up with less and don't care that much or even think about it. They just know they need money to buy a house, they want the house, so they dig into their 401k. I'm not even sure they have the skill to determine how badly that will affect their 401k over the years. Business math is not taught very well in school. That's why I feel financial literacy should be layered into every other type of teaching from math to English to computer studies. With math you show students the value of calculating interest and compounding. With English you show them how to read business statements and documents. With computer studies you show them how to use financial software. This will all be useful to them after they leave unlike some generic teaching on the subjects like book analysis or learning some generic formula for determining radius.

I'll be the first to admit that I don't stay abreast of all the economic factors that influence investments, at least not as much as you appear to have. I am smart enough to know that I'm not that smart and have hired a financial advisor of whom I really like and trust to manage my money for me. That's one of the advantages of having an IRA vs. SS or pensions, that you can do as you do and manage your money on your own, or do as I do and hire a person of my choosing to do it for me.

Glad you took an interest. My job has a terrible 401k plan. No matching and access to investment funs I would never touch other than many be an S and P index fund.

I'm one of the folks that likes to pick stocks and understands and accepts the risk of that process. I'm not also not bound by yearly returns. So I can wait some years for my 300 percent plus return to pan out. Or move in and out of a stock if it reaches the gain I was expecting.

I always advise these younger folks to invest. They come to me asking which stocks to buy, but I don't feel comfortable telling them. It's their money. I don't know their risk tolerance or time horizon. Quite a few of them seem to want to make money like they're at a casino: quick and on to the next bet. I've told them the most money I make is buying a quality, growing company at a decent price and waiting for years sometimes. That's investing, not gambling or trading. If they wanted to do that, they'll have to learn that themselves.

I also tell them to take an accounting class to learn to read financial statements. Company information is delivered in financial statements. Financial literacy requires that you be able to read and understand a financial statement. Which is why I wish they would teach it in school. I mostly learned it in accounting class getting a 2 year degree. After I learned that, I didn't need much more information. I understood what a company was telling me with their financial statements and could now see if an investment was a good quality company or not. I'm sure you learned to understand financial statements in your business classes and what all those numbers mean.

[RiverDog]

I don't know about discouraging withdrawal with penalties. It doesn't seem to stop the undisciplined and immediate gratification people from doing it. They end up with less and don't care that much or even think about it. They just know they need money to buy a house, they want the house, so they dig into their 401k.

It's been awhile since I've been exposed to the rules regarding 401K withdrawals, but it used to be that you could borrow against your 401K then pay yourself back with interest. It's treated as any other loan, in other words, you have to qualify for it, it has to be insured, it's subject to late fees, and so on. A house or property is an appreciating asset, so even if they default or declare bankruptcy, the 'loan' gets paid off. Or at least that's my understanding of how it works.

Outside of that and perhaps a hardship withdrawal, I want to see all retirement funds locked until a certain age. I'm almost to the point where I'd accept a rule requiring a minimum mandatory participation. Then they'd have to learn.

I'll be the first to admit that I don't stay abreast of all the economic factors that influence investments, at least not as much as you appear to have. I am smart enough to know that I'm not that smart and have hired a financial advisor of whom I really like and trust to manage my money for me. That's one of the advantages of having an IRA vs. SS or pensions, that you can do as you do and manage your money on your own, or do as I do and hire a person of my choosing to do it for me.

Glad you took an interest. My job has a terrible 401k plan. No matching and access to investment funs I would never touch other than many be an S and P index fund.

I'm one of the folks that likes to pick stocks and understands and accepts the risk of that process. I'm not also not bound by yearly returns. So I can wait some years for my 300 percent plus return to pan out. Or move in and out of a stock if it reaches the gain I was expecting.

I always advise these younger folks to invest. They come to me asking which stocks to buy, but I don't feel comfortable telling them. It's their money. I don't know their risk tolerance or time horizon. Quite a few of them seem to want to make money like they're at a casino: quick and on to the next bet. I've told them the most money I make is buying a quality, growing company at a decent price and waiting for years sometimes. That's investing, not gambling or trading. If they wanted to do that, they'll have to learn that themselves.

I also tell them to take an accounting class to learn to read financial statements. Company information is delivered in financial statements. Financial literacy requires that you be able to read and understand a financial statement. Which is why I wish they would teach it in school. I mostly learned it in accounting class getting a 2 year degree. After I learned that, I didn't need much more information. I understood what a company was telling me with their financial statements and could now see if an investment was a good quality company or not. I'm sure you learned to understand financial statements in your business classes and what all those numbers mean.

We had a very generous 401K plan, with a maximum company contribution of 8%, and we had a Roth option, which many employers don't. I was pushing people so hard to participate in the 401K that people assumed that I knew what I was doing, so they'd come ask me which fund to invest their money in. I felt extremely uncomfortable. I was afraid that if I told them to invest a certain way and the stock market suddenly went south, as it often times does, that I'd be the cause of their losing money. That's why I was literally begging my employer to bring in some professionals and hold meetings to educate our folks.

Bottom line is that I'm with you and the others about teaching it in the schools, but why stop there? Employers and unions ought to be taking some responsibility for educating their workers as well. It's in their best interest to have employees working for them that are financially literate.

[Aseahawkfan]

We had a very generous 401K plan, with a maximum company contribution of 8%, and we had a Roth option, which many employers don't. I was pushing people so hard to participate in the 401K that people assumed that I knew what I was doing, so they'd come ask me which fund to invest their money in. I felt extremely uncomfortable. I was afraid that if I told them to invest a certain way and the stock market suddenly went south, as it often times does, that I'd be the cause of their losing money. That's why I was literally begging my employer to bring in some professionals and hold meetings to educate our folks.

Bottom line is that I'm with you and the others about teaching it in the schools, but why stop there? Employers and unions ought to be taking some responsibility for educating their workers as well. It's in their best interest to have employees working for them that are financially literate.

8 percent matching? That is generous. I would have been all over that. You must be sitting pretty in retirement right now that good a retirement. Sheesh. Every once in while you find some obscure company many people haven't heard or think is glamorous to work for with amazing benefits.

[RiverDog]

8 percent matching? That is generous. I would have been all over that. You must be sitting pretty in retirement right now that good a retirement. Sheesh. Every once in while you find some obscure company many people haven't heard or think is glamorous to work for with amazing benefits.

Yes, it was great, better than any company I've heard of in recent years. But we're not exactly obscure as we're one of the larger employers in the region with over 10K employees worldwide.

The company contributions didn't start out that high and not all employees get that much. When I first started working for them in 1994, the maximum company contribution was 6%. Then the parent company got more assertive and wanted us to conform to the same percentage as the other companies they owned, so they cut it to 4%, an unpopular decision amongst our upper management. A few years before I retired, the parent company spun us off, allowing us to form our own independent, publicly traded company, so our management restored it back to 6%. A few months later, they decided not to buy out the parent company's pension plan, so in order to compensate us for the lack of a pension, they gave those of us that had been participants an additional 2% company contribution, raising it to the current 8%. The kicker was that in order to get the full 8%, employees had to contribute 6% as a portion of the company contribution was a 2-1 matching contribution. It's not that high for all employees as some of our facilities are union shops where benefits are negotiated, and I was in the salaried plan that had the pension that the company opted not to buy out, but there's not an employee that doesn't get at least a 4% company contribution if they contribute the minimum 6%.

And yes, we're in a good financial position. If there's one thing we did right, it was planning our retirements. We paid off our house about 5 years before we retired and have no intentions of selling it or buying additional properties. Prior to retiring and since we didn't have a house payment, we were able to make a lot of improvements, replaced the roof, upgraded the HVAC system, replaced a wood burning stove with a pellet stove, replaced our main electrical panel, bought two new cars and paid them off, replaced the carpet, bought some new furniture.

I've gone to 8-10 free seminars over the past 10 years, topics that include Social Security benefits, Medicare, taxes in retirement, and so on, some with complimentary meals. The one on Medicare is run by our hospital, will even set up free one-on-one consultations. Some seminars are run by investment companies, so you have to listen to their sales pitch, but it's all good information. I'm going to one later this month on estate planning that includes a free steak dinner. Information is power.

[tarlhawk]

My dad taught me a valuable lesson concerning credit. I was saving to buy a stereo system of my own and was ready to go to the mall and buy the "system of my dreams"...he advised me to "purchase" it on credit. I was confused at the time because I thought I was already practicing saving for getting something that wasn't food/shelter/clothing...why credit?

He told me that he felt credit would become (late 70's) important to "grow" responsibly...getting credit on something I already had the money to purchase. He said to "drag" my payments over two years while periodically making double payments...and explained the hazards of only paying "minimum payments". I didn't readily understand the logic straight out but trusted his advise...and credit has been my friend instead of me being a "friend" to any creditor...as the years go by.

[RiverDog]

My dad taught me a valuable lesson concerning credit. I was saving to buy a stereo system of my own and was ready to go to the mall and buy the "system of my dreams"...he advised me to "purchase" it on credit. I was confused at the time because I thought I was already practicing saving for getting something that wasn't food/shelter/clothing...why credit?

He told me that he felt credit would become (late 70's) important to "grow" responsibly...getting credit on something I already had the money to purchase. He said to "drag" my payments over two years while periodically making double payments...and explained the hazards of only paying "minimum payments". I didn't readily understand the logic straight out but trusted his advise...and credit has been my friend instead of me being a "friend" to any creditor...as the years go by.

Ironically, the first item I bought on credit also was a stereo system, and I bought it in 1978 after I got my first job out of college. I bought it at Payless Drug and paid it off over 6 months. I could have paid cash for it, but I was told that in order to establish a line of credit, it would be helpful to buy something on credit and pay it off. I still have the speakers for that original stereo system and they still work.

I'm at the point now where if I see a low interest rate, even though I can pay with cash, if the interest rate is lower than the rate of inflation, I'll go ahead and borrow and pay it back over time. It helps me from withdrawing from my retirement accounts, of which I can no longer contribute to and have tax advantages.