MackStrongIsMyHero wrote: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.
MackStrongIsMyHero wrote: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 wrote: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.
MackStrongIsMyHero wrote: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.
NorthHawk wrote: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 wrote: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 wrote: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 wrote: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.
Aseahawkfan wrote: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.
Aseahawkfan wrote: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.
Aseahawkfan wrote: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 wrote: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.
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.
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 wrote: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.
Aseahawkfan wrote: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 wrote: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'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 wrote: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'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 wrote: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 wrote: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 wrote: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.
tarlhawk wrote: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.
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