[HN Gopher] The financial literacy industrial complex
___________________________________________________________________
The financial literacy industrial complex
Author : JumpCrisscross
Score : 80 points
Date : 2021-09-19 15:16 UTC (7 hours ago)
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(TXT) w3m dump (www.axios.com)
| ojbyrne wrote:
| So much of finance is based on the concept of "time value of
| money," that I wonder when people notice that it has been
| essentially zero (or negative) for a while now.
| [deleted]
| rg111 wrote:
| Have you found any resources that are helpful, high quality,
| free, and sane?
| [deleted]
| mmmrk wrote:
| I've had trouble locating English language resources, but if
| you speak German:
|
| - finanztip.de plus their social media presence are a great way
| to start
|
| - Stiftung Warentest/Finanztest for general financial product
| tests
|
| - Finanzfluss' social media presence is great, too.
|
| - Smaller scale sources like Finanzwesir, Gerd Kommer's books
| plus his company's blog for well researched treatises of all
| things finance, backed by data.
|
| - Education by workshop companies like Madame Moneypenny that
| teach hands on.
|
| Those are my favorite sources.
| paulpauper wrote:
| Fire subs can be useful. r/fatfire, /r/financialindependence/
|
| "Put it in index funds and do not touch it unless you need the
| money for an emergency", is as good of advice I have seen and
| will put you ahead of most people. Of course, there is more to
| it than that, such as the type of fund, the type of account,
| age, expenses, and other stuff.
| Ozzie_osman wrote:
| Yes.
|
| The r/personalfinance wiki on subreddit has some great starter
| content in a wiki[1] that's not a content marketing funnel into
| any product/service.
|
| For investing-specific content, bogleheads also has a pretty
| awesome wiki [2] (though somewhat ideological, given that it's
| mainly around the "Bogle" philosophy).
|
| These wikis are great because they're neutral (nothing to sell
| you) and also aggregated from thousands upon thousands of
| questions/answers/advice in each respective community.
|
| (I work on a startup in this space and while we build a
| product, not content, we've basically read everything else out
| there).
|
| [1] https://www.reddit.com/r/personalfinance/wiki/index/
|
| [2] https://www.bogleheads.org/wiki/Main_Page
| pjscott wrote:
| I second the recommendation of the /r/personalfinance wiki.
| In particular, their FAQ answer to "I have $X, what do I do
| with it?" is a concise, simple-to-follow basic blueprint for
| handling money that should work well for most people:
|
| https://www.reddit.com/r/personalfinance/wiki/commontopics
| hirvi74 wrote:
| The only major point of the flowchart that I disagree with
| is the part about paying off mid to low interest debt.
|
| I suppose that is where the "personal" part of personal
| finance comes into to play.
|
| For example, a person will post something like, "Should I
| pay off my $50k student loans at 4%-6% as fast as possible,
| or should invest more?"
|
| Common responses include:
|
| 1. "Would you take out a $50k loan at 4%-6% to invest?"
|
| 2. "Paying off your loans is a guaranteed 4%-6% return."
|
| The problem I have with this advice is that in the case of
| response #1, that is somewhat of a false equivalence. Also,
| I am not sure outside of a HELOC where one could even get a
| $50k loan for 4%-6%. Even in this environment currently, I
| see banks advertising their low interest loans which clock
| in around 8%-12%. (I'm not counting margin loan rates in
| this example).
|
| As for #2, I feel like this advice is okay at face value,
| but tends to fall apart once one takes more factors into
| account. One such factor people often miss is that one must
| use post-tax income to pay off student loans. Thus, in the
| US, assuming the person asking for advice has any income at
| all, then he or she must pay 10% <= x <= 37% in taxes to
| pay a 4%-6% loan, thus it's a guaranteed loss of 10% to 37%
| to get a guaranteed return of 4%-6%.
|
| I'm not trying to downplay the powerful psychological
| aspect of paying off debt, but I do think more people
| should consider the mathematically optimal option as well
| (making the minimum payments on debt while maxing out tax
| advantaged savings before making additional payments on
| debt).
|
| After all, time is the most important factor in the
| compounding returns/interest formula, and one can make more
| money but not more time. Plus, inflation slowly chips away
| at loans just as much as savings.
| quickthrowman wrote:
| IKBR will lend to you at 2.5ish% on margin
|
| https://www.interactivebrokers.com/en/index.php?f=46376
| Ozzie_osman wrote:
| The flowchart version of that "what do I do with it?" is
| pretty awesome https://m.imgur.com/lSoUQr2
| SuoDuanDao wrote:
| Checking out a copy of 'the intelligent investor' from your
| local library would fit all three criteria you mentioned.
| Buying at least one share of Berkshire Hathaway comes with a
| lifetime subscription to Warren Buffet's shareholder letters,
| not quite free but certainly good value for money.
|
| But in general, I think the issue is that basic financial
| competence doesn't require a very sophisticated model, it just
| requires the emotional intelligence and self-discipline to
| stick to a robust one. That probably can be taught, but not a
| lot of schools exist for it.
| gshubert17 wrote:
| Links to Berkshire Hathaway's letters to shareholders from
| 1977 through 2020 are available at,
| https://www.berkshirehathaway.com/letters/letters.html
| rwmj wrote:
| For the UK, http://monevator.com and
| https://www.reddit.com/r/UKPersonalFinance/
| MeinBlutIstBlau wrote:
| The basic form of financial literacy that is unbelievable to me
| that people still need to be told this:
|
| >Income should always exceed expenses; work to minimize
| expenses and maximize income.
|
| >You should always be saving money. A fool and their money are
| soon to part.
|
| >Time = money. The purpose is to maximize both.
|
| >Loans are assets and must be paid back plus interest.
|
| The last step, learn double entry accounting and manage your
| budget tracking everything. If you don't even do that, you
| aren't even aware of what you blow your money on to know where
| to start.
| Jtsummers wrote:
| Loans are not assets, they are liabilities.
| lastofus wrote:
| Rob Berger's youtube channel is pretty great, especially w.r.t
| investing for retirement. He's quite articulate and straight to
| the point on a lot of somewhat complex topics.
|
| https://www.youtube.com/channel/UC9C17-OMxa-7oRSaCtztObw/fea...
| hirvi74 wrote:
| Bogleheads.org is a great source of information too. Though,
| the site and forum users are strong believers in a particular
| investment strategy, many have great finical advice for the
| common man too.
|
| There appears to be quite a lot of overlap with
| /r/PersonalFinance, which would make sense considering much of
| the financial advice given by both sources is philosophically
| agnostic and somewhat ubiquitous in the world of personal
| finance.
| vmception wrote:
| A lot of the generic risk averse advise is good enough for a
| very broad population
|
| Even in the sources mentioned in this article, as well as the
| reddits mentioned in other comments.
|
| Its just overly risk averse to be plainly wrong in some cases.
| But not wrong enough that you wont be fine, they just dont
| really tolerate deviance enough.
|
| You need to know when to graduate and leave the playpen.
| OrvalWintermute wrote:
| For a long time, Google Finance [1] & SeekingAlpha [2] were
| great sources of content on financial information. The former
| had great charting/data, but it is completely changed now. The
| latter, although it was not targeted towards beginners,
| provided a great amount of value in both articles, has depth of
| coverage across asset clasess, and the comments sections, but
| the site is now paywalled..
|
| Mr Money Moustache [3] & Financial Samurai [4] are both good
| sources of Financial Independence type of content.
|
| I used this in conjunction with:
|
| r/personalfinance (great for thinking about spend to
| saving/investment ratios)
|
| r/wallstreetbets (best for binary bets and high opportunity
| situations - only use with a speculative small percent )
|
| r/realestateinvesting (all RE of course)
|
| r/investing (general stuff)
|
| There are a number of high quality videos on Youtube that I
| have found to be particularly good, depending on your own
| financial situation. Dave Ramsey, although maligned, is great
| for those with debt problems. I have no debt, and so his
| content has limited application for me.
|
| I also read Investopedia [5] for general terms, Tastytrade [6]
| for options coverage, and many brokers provide a large amount
| of free content to understand investments.
|
| [1] https://www.google.com/finance/
|
| [2] https://seekingalpha.com/
|
| [3] https://www.mrmoneymustache.com/
|
| [4] https://www.financialsamurai.com/
|
| [5] https://www.investopedia.com/
|
| [6] https://www.tastytrade.com/
| kafkaIncarnate wrote:
| > You probably don't remember learning much about money or
| finance in high school.
|
| I do.
|
| > A 2014 meta-analysis of 169 papers and 201 studies, however,
| found that "interventions to improve financial literacy explain
| only 0.1% of the variance in financial behaviors studied" -- and
| that low-income students had even weaker correlations.
|
| That's because only two kids in a class of 40-ish were paying
| attention. It's the same two kids who were paying attention in
| science, math, literature, history, etc. That asinine argument
| can be made about education itself. Nobody is paying attention
| and actively prides themselves in not learning and never reading
| a book in their lives, that's the problem. That doesn't mean it
| "doesn't work", and that you should short change the students
| that actually want to participate.
|
| It certainly helped me get out of poverty. The only people I've
| ever heard argue against this (until now) were people who
| actively wanted me to fail in life because they couldn't imagine
| themselves understanding it ever since they were already
| financially illiterate adults.
|
| I took the lessons and the beatings so that I wouldn't have to
| continue taking the beatings later in life. The small fraction of
| students that you end up teaching actually do appreciate it.
| ngold wrote:
| I would avoid anyone that named themselves kafkaincarnate.
| That's just terrifying.
|
| On a side note, my favorite kafka story out of all his saved
| works was, the blind paranoid mole digging tunnels. I'm a big
| fan of kafka but would never want to align my brain with his
| tragic way of thinking. But he was not wrong to be paranoid, he
| lived a pretty terrible life in a pretty terrible time.
| bedhead wrote:
| I'm guessing you had great parents?
| MeinBlutIstBlau wrote:
| >not learning and never reading a book in their lives,
|
| Maybe because the education system isn't devised to educate but
| to babysit?
| kafkaIncarnate wrote:
| Or maybe because when you start to educate someone, they
| throw a textbook at another student and they have to
| interrupt the class to deal with disciplinary measures and
| EMTs. At that point, sure it becomes babysitting for the rest
| of the students.
| kiba wrote:
| OK. So you're educated about finance.
|
| But personal finance is mostly about personal habits and
| actions. You can understand what is a financially sound plan of
| action all you want. For example, I wasted money on eating out
| three times last week, whereas previously I only eat out once
| per week successfully for weeks on end.
|
| Information is insufficient. Practice is required.
|
| I am unsure exactly what information these firms provided. Even
| if it's sound information, it doesn't necessary translate to
| practice.
| b3morales wrote:
| > I wasted money on eating out three times last week
|
| Was it definitely a waste? The time you spend preparing your
| own food has value. As does the mental impact of (depending
| what you bought) the pleasure of a meal you could not have
| made for yourself; and the relief of pressure of not having
| to do it yourself.
| inglor_cz wrote:
| It is worth trying, though. Some people find out that
| cooking gives them more pleasure than waiting for their
| order to arrive.
| b3morales wrote:
| Personally, I enjoy both, equally, at different times.
| avalys wrote:
| Yes, this is called "people who enjoy cooking".
| inglor_cz wrote:
| True, but in order to find out if that is your case, you
| must try it out, and probably more than once.
|
| Most hobbies aren't immediately awesome, a certain
| section of the learning curve must be climbed.
|
| I still remember my silent desperation when I sat in
| front of a PC back in 1994 for the first time. Computers
| were totally alien to me at that time. Ten years later I
| was programming in several languages.
| kafkaIncarnate wrote:
| That's literally what my personal finance class taught in
| high school as a part of the government mandated financial
| literacy class.
|
| How to budget. Why to budget. How to write a check. What is a
| bank account? How to open a bank account. What food costs.
| What does produce cost? Compare that to X restaurant. What
| are good ways to save money? What are the costs of renting vs
| owning, etc.
|
| This wasn't a "stock market" class, though they briefly
| covered business and what a stock/investing was.
| kiba wrote:
| They are useful information. For a lot of people, that's
| great.
|
| But it is not the same thing as practice, as in actually
| doing the work of saving and resisting temptation such as
| eating out.
| kafkaIncarnate wrote:
| Okay I understand what you're saying, but I'm not sure
| why this is being used as an argument against teaching
| personal finance...
|
| Academic vs. real life is a strange debate to me. It
| seems that to some people that academics itself is
| sacrosanct and plenty, and to others real life is
| sacrosanct and plenty. This entire article is about
| academic data being sacrosanct about these classes, and
| that's literally what I railed against. To me, I believe
| in both. They go hand in hand.
|
| So for instance, if you're talking about the action of
| cooking, I also was required to take a Home Ec class
| independently of the personal finance requirement. There
| are many requirements in a high school, this is just one
| class we are talking about. The Home Ec class had grades
| based on how well we would sew up and patch clothing,
| create pillows and such, and cook various things. So
| there's some practical experience.
|
| Now, you're also debating about an essentially real world
| "resisting" of urges and that's clearly not going to be
| able to be "taught" as you say. But we're talking about
| preparing children for adulthood, and in adulthood,
| you're going to experience that either way.
|
| If they don't know what the term "interest rate" is, how
| exactly are they going to learn it from a 10+ page credit
| card legalese document? That seems enormously more opaque
| to me. You can learn it from others, sure, but they had
| to learn it somewhere and they likely learned it from a
| book or from school, or from learning it by screwing up
| the hard way.
|
| If we're trying to reduce the amount of people that long
| term screw up, then having them equipped to understand
| the language of the real world is a great place to start
| instead of at the ground floor with zero knowledge. And
| yes, real world experience is necessary, too, but short
| of giving kids raw eggs and meat and having thousands of
| stoves in the lunchroom instead of prepared food I'm not
| sure how you would accomplish that.
|
| Some people are privileged enough to have parents that
| can teach them this stuff, but largely after generations
| of not knowing these things in impoverished areas or
| having parents that have to work to do the things like
| cook for their children and pay their own bills when they
| get home, those fresh "graduates" are going to start from
| scratch not knowing the language nor having the
| experience and wind up screwing up, possibly in a way
| that is impossible to get out of and end up homeless or
| buried in extreme debt with interest rates they do not
| understand. Increasing the odds of your success by
| helping you understand the terms being thrown at you is
| going to help prevent that. As is having you go through
| the motions of doing the cooking, in this example.
|
| But it comes down to for me as I said, I believe in real
| world experience AND education on a subject. Education
| can teach you what you need to practice in the first
| place sometimes, rather than end up unable to understand
| why you are trapped and what could potentially help you
| become untrapped. I don't see these as mutually
| exclusive.
| enkid wrote:
| But it is a prerequisite.
| JumpCrisscross wrote:
| > _personal finance is mostly about personal habits and
| actions_
|
| It's also about common knowledge and frameworks.
|
| Knowing you should not have to pay to maintain a checking
| account, for instance. Or that filing a tax return can
| produce a refund. How to pay down debt when you have spare
| cash and different types of debt, or how to compare two
| purchasing options--a monthly or an up front.
| antiutopian wrote:
| So if your explanation is right, then we should also expect to
| see only a tiny effect in the practical use of math, reading,
| writing, etc. between people who went to school and people who
| didn't. Because only 2 cared enough to pay attention. Right?
| pjscott wrote:
| Beyond the really elementary things that get repeated often
| enough and insistently enough for most people to learn them
| whether they're interested or not -- basic reading, basic
| writing, addition and subtraction -- yes, as far as I can
| tell most people don't retain much from school. Not for long,
| anyway. It's easy to think otherwise if you're (for example)
| an engineer surrounded by unusually studious people in your
| day-to-day life, but standardized tests administered more
| broadly give a less encouraging picture.
| wonnage wrote:
| Sometimes it's not a retention problem, it's that they
| never learned the stuff in the first place. You're pretty
| doomed if you fall behind in school, it's all up to some
| individual going above and beyond (a teacher, a family
| member, a friend) to save you, because the system will just
| keep shuffling you along to adulthood, and then all the
| consequences hit at once. Take this loan with compound
| interest you can't understand because you can't multiply,
| buy a massive depreciating asset with it (car, mobile
| home...) because you don't know what "depreciating" is...
| ypcx wrote:
| > That doesn't mean it "doesn't work"
|
| If our education fails to teach, then our education has failed.
| MattGaiser wrote:
| People know they shouldn't carry credit card debt. They just
| want stuff too much.
|
| That's not an education problem as they know they shouldn't
| do that.
| happytoexplain wrote:
| This is reductionist to the point of uselessness. People
| "know" tons of crap, and singular known facts don't dictate
| behavior by themselves, no matter who you are. Every
| tradeoff you make is a result of all your collected
| experience and knowledge on the topic as well as your
| desires and the complexities of time-based decision making
| (bad now = good later, and vice versa, where the "bad" and
| "good" things are never quite comparable qualitatively).
|
| Education affects humans, and education can be changed to
| better affect humans, but humans can't simply be changed
| _except by education_ , so it's the ultimate irony to look
| at people doing a bad job, their fault or not, and imply
| _we somehow can 't or shouldn't use the one and only tool
| we have to change people_. Giving up is easy, especially if
| it's strangers you're giving up on and you don't care about
| the _entire_ picture of the society you live in. Bettering
| education is very hard. Taken together, it 's obvious why
| so many people just want to say "they deserve it" and no
| longer think about it.
| jopsen wrote:
| > If our education fails to teach, then our education has
| failed.
|
| Or education was not the solution?
| onlyrealcuzzo wrote:
| > Nobody is paying attention and actively prides themselves in
| not learning and never reading a book in their lives, that's
| the problem.
|
| If we had a more meritocratic society, I doubt people would
| pride themselves in their ignorance.
|
| But as it stands, our society rewards both luck and misfortune
| - and we privatize gains and socialize losses.
|
| Combine that with the fact that access corruption is rampant in
| Western societies - and the way to succeed is to take excessive
| risk, woo gatekeepers, execute, and get lucky.
|
| Only one of those requires the type of intelligence you get in
| school (execution). And if you have enough luck or corruption,
| you don't even need to execute.
|
| Why do the hard work on trying to find cures for common forms
| of cancer, make breakthroughs toward fusion energy, or increase
| crop yields on staple crops - when you can take on excessive
| risk in property speculation and your odds of financial success
| are many times higher?
|
| I'm a strong believer that the world is getting better every
| day - even in recent times. But I'm not sure how much longer
| that trend will last in a world that gives smart people very
| few incentives to do things that actually benefit society.
|
| Maybe with enough people we're destined to get lucky and
| progress no matter what.
| xyzzyz wrote:
| > Combine that with the fact that access corruption is
| rampant in Western societies - and the way to succeed is to
| take excessive risk, woo gatekeepers, execute, and get lucky.
|
| Can you name one country in the world where it is not true?
| enkid wrote:
| I don't think that type of corruption is most prevalent in
| Western societies.
| djbebs wrote:
| The reason we don't have a meritocracy society is because
| failure is being rewarded.
|
| Cut the welfare, stop punishing success with higher taxes and
| you'll see just how much better people can be.
| isodude wrote:
| That would be great for society but awful for it's
| citizens.
|
| Failure is not being rewarded, being a member of sociery
| is, it's not about performance.
| inglor_cz wrote:
| Luck sort of rewards itself, it is a part of its very
| definition.
|
| But I would not be so hostile to luck. We need it. _The Lord
| of the Rings_ would never exist if Tolkien wasn 't lucky
| enough to come down with a trench foot and thus survive the
| Great War. mRNA vaccines might not exist if Katalin Kariko
| did not beat that cancer in the late 1990s. Etc.
| throwdecro wrote:
| Real-world success is generally a matter of luck no matter
| what the incentives are. You can't make your cancer research
| pan out, you can only do it diligently and find out later if
| it was the right direction. You can definitely _screw it up_.
| But you can 't make it work without a bit of luck.
|
| If people can't keep their luck-based gains, no one has any
| real reason to try anything unusual. Everyone would be
| chasing the puck instead of skating to the open ice hoping to
| catch a break. Society would stagnate.
| onlyrealcuzzo wrote:
| I guess if you can only imagine a society structured like
| it is today.
|
| If we all accepted that luck is the driving force, decided
| that we would rather live in a world where hard work and
| intelligence pays off - then it's possible to imagine a
| world in which you're rewarded for hard work (on areas of
| importance) and gains are socialized instead of losses. The
| socialized gains could pay people who worked hard and their
| ideas didn't pan out.
|
| I'm not saying this is a world that would work and is
| better.
|
| But it's pretty unimaginative to think it's just flat out
| impossible to have progress in any society that isn't
| structured around luck.
| notquitehere wrote:
| I think the hard part of that is socializing the
| definition of "areas of importance"
|
| Also getting everyone to accept one worldview. Maybe the
| most important area of importance would be educating
| people to see things the way you see...
| autokad wrote:
| I agree, this article was worse than crap. its dangerous
| wonnage wrote:
| This is an amazingly narcissistic viewpoint: 1. You are part of
| the blessed 5% (how do you know?) 2. Anyone who disagrees is
| actively malicious (it's not all about you, man) 3. It worked
| for you, therefore it must work for everyone (if only they were
| as awesome as you, right?)
| happytoexplain wrote:
| This is essentially the common fallacy along the lines of
| "Everybody deserves what they get and gets what they deserve".
| Society can't, and indeed does not, work that way.
| ozzythecat wrote:
| >The big picture: Evidence that financial literacy education
| works is shaky; most evidence points to it being a waste of time.
|
| "waste of time" is a link that takes you to the research paper
| from Loyola Law School, which they're using to assert this
| statement.
|
| I made it just over half way through the research paper, and then
| I stopped reading. This is a very poorly written, inaccessible
| paper, and I am left wondering if it's intentionally made that
| difficult to read. And I wonder if the Axios writer actually read
| that article or had any skepticism towards its findings.
|
| I'll call out just a few of the issues I take with this "research
| paper":
|
| >The main points of the chapter are three-fold. First, financial
| education cannot produce financial well-being in the current
| marketplace. Second, alternative interventions have the potential
| to enhance individual capacity for, and reduce marketplace
| obstacles to, good financial outcomes. Third, even programs that
| arm individuals with optimized capacities and a marketplace that
| facilitates individually optimal actions will not be enough to
| ensure widespread financial well- being. That would require
| changes in our socioeconomic order that might require a different
| intervention--finance-informed citizenship education.
|
| But if you read through the author's arguments, they're more of
| less picking apart the methodology of some studies that disagree
| with the author's perspective (against teaching financial
| literacy). Even if the methodology of these other research was
| flawed, it _doesn 't disprove_ anything. That's more of a missing
| data point. For example, the author complains that in one trial,
| the treatment group received a savings match whereas the control
| did not. And therefore, the methodology is flawed. Okay - sure.
| But in other examples, if the methodology is correct, then the
| author doesn't agree with the conclusions/extrapolations of the
| other study.
|
| And there are other parts that are perplexing:
|
| >Financial education has opportunity costs. Participants lose
| more productive uses of their time. Society suffers a diversion
| of time, money, and attention from alternatives with better
| prospects for successfully increasing financial well-being.
|
| Yes, any kind of education has an opportunity cost. So what? My
| high school had geography class taught by football coaches. We
| simply copied the textbook onto a sheet of paper and turned it
| in. There are many countries that I couldn't identify on a map.
| That form of learning wasn't effective. I would have loved to
| learn about savings and compound interest. My expectation in high
| school was that I could have a 9/5 job that makes me a multi-
| millionaire.
|
| Then the author goes on to state other reasons against financial
| literacy:
|
| >It can increase financial confidence without a commensurate
| improvement in knowledge (Bucciol et al., 2020).
|
| But is that a strong reason to not provide financial literacy at
| all? Because person A doesn't have sufficient self control and
| might dump their savings into meme stocks, is that a reason to
| not teach children about the stock market at all?
|
| I try to avoid being overly critical - but this is a poorly
| written, joke of a research paper. I'm honestly questioning if
| the author or faculty are under the gun to produce these papers
| as some performance metric.
|
| And shame on Axios for pointing to this garbage as an
| authoritative source.
| wyxuan wrote:
| As other people point out, a lot of the efforts seem a little
| half assed - rebranded marketing materials or simply boring.
|
| I'm working on a simulator platform that leverages dapps built on
| Ethereum on a testnet to teach various financial concepts, and
| then abstracting away the complicated defi/blockchain gibberish
| to better reflect the real world.
|
| Yield farming -> high yield bank account
|
| NFTs -> buying illiquid assets like art or a house
|
| altcoins -> buying stocks
|
| p2p transactions -> cashapp/venmo
|
| eventually there can be a way to surfacing more blockchain
| related concepts, but you can go quite far even with this
| simplified model. Ultimately, it'll be a lot more interesting
| than reading a book or watching a video.
|
| Email is in bio if you think this is interesting and want to talk
| more.
| perardi wrote:
| Nothing says "basic financial literacy" like altcoins and NFTs.
| pydry wrote:
| The idea of financial literacy was always a "shift of
| responsibility" tactic. Credit card and payday loan companies and
| other financial companies that preyed on people could avoid
| regulatory clampdowns by recharacterizing a problem with their
| business models as an educational issue or a personal
| responsibility issue.
|
| It's broadly similar to how oil companies became so very keen on
| recycling and "everybody doing their bit" in the 1970s onward.
| xyzelement wrote:
| A little off topic but I noticed whenever these financial
| literacy threads come up - the only people whose point of view I
| care about are those who had been poor and found ways out of it.
| Those are the people who "figured it out" and I want people to
| know what they know.
|
| Everyone else is theorizing. If you had always been rich, you may
| think poor people are lazy, or you may believe they are deeply
| stuck. If you're poor, you may also think you're stuck because
| you're not seeing ways. Both of these categories of people's
| views are irrelevant to the topic. I don't want to hear that
| something is "easy" or "impossible" from those who haven't done
| it.
|
| I want to hear from those who've done it and learn from them.
|
| As a conceptual shortcut, I'd want to understand what immigrant
| and first-generation Asians do, and do that.
| jopsen wrote:
| > the only people whose point of view I care about are those
| who had been poor and found ways out of it. Those are the
| people who "figured it out" and I want people to know what they
| know.
|
| Apologies for not being one such person. But doesn't this
| assume the libertarian (or conservative) view that financial
| wellness is a result of individual action?
|
| As the article says at the end:
|
| > Such curricula also tend to reinforce a libertarian view of
| financial wellness, based on individual rather than collective
| action -- one where poverty and debt are less a societal
| problem and more a consequence of bad individual financial
| decisions.
|
| Of course there is an individual component to it. But the most
| effective way to get people to save for retirement, is to make
| such savings the default configuration.
|
| There's many subtle ways to configure society such that people
| make good financial choices.
|
| Educating people to take action, seems a lot harder than just
| making sure your life has a sane default setup, if you do
| nothing :)
| vsskanth wrote:
| > As a conceptual shortcut, I'd want to understand what
| immigrant and first-generation Asians do, and do that.
|
| It's pretty simply actually. They try to hold a steady job,
| save a high percentage of their income, don't have expensive
| hobbies, buy some property in the best school district they can
| and spend a lot of time on their kids education to get them
| into good colleges and elite professions like doctor, engineer
| etc.
|
| Kids learn good financial habits from their parents, and repeat
| the cycle with some additional knowledge (index funds, rental
| properties etc.) until they "make" it.
| Ozzie_osman wrote:
| (Disclosure: I work on a startup in the personal finance space).
|
| This is actually a much wider problem on two dimensions:
|
| 1. Beyond personal finance, a LOT of content out there right now
| is basically content marketing for something that's crafted more
| around "can it get SEO traffic" and "can it convert that traffic
| to something monetizable". It's just a giant funnel.
|
| 2. Even in personal finance, it's not just content. A lot of
| products that in theory should be helping you improve your
| finances are lead generation funnels too (especially the free
| ones). In other words, the marketing funnel extends beyond just
| content and pervades the very products we use.
|
| For instance, a really popular (tens of millions of users)
| personal finance product just sent me an email recommending that
| I invest in art since "art has outperformed the S&P 500". It was
| an ad, but you'd have to read the fine print to see that. Another
| popular one (over 100M) has a tab on their site called "My
| Recommendations", with fine print saying "We suggest offers based
| on your credit, Approval Odds, and money we make from our
| partners". It's all for credit cards and personal loans.
| paulpauper wrote:
| Personal finance is such a huge, profitable niche for YouTube.
| So much content, a lot of it machine-generated or paid. It's
| like an elite college in same way that there is an instructor
| for every student but rather a content writer or card offer for
| every viewer.
| hogFeast wrote:
| A lot of the very old marketing in financial services was
| content marketing. So you have seen relatively little
| disruption amongst the most sophisticated marketers...they do
| the exact same thing they were doing three decades ago, they
| just send it by email instead of calling or mailing.
|
| There are differences: Motley Fool and Simply Wall St are two
| example of "innovators" (nominally SEO but in reality they just
| got into Google Feeds when it was easy to get in).
|
| My point though is that industry hasn't really changed. They
| are still selling the same dogshit products. As a startup, you
| have to literally drag your customers kicking and screaming
| away from stuff that will bankrupt them...every...single...one.
|
| (I say this as someone who ran a startup in the space that
| failed and then went into wealth management...the industry is
| horrible, horrible, horrible...with my startup, I made a couple
| of thousand and had individual clients who made $100k+ with my
| advice...still wouldn't listen to reason. When I worked in
| wealth management, we had clients who had money with us, were
| doing well, and then sold their business and decided they
| needed the "big name" financial advisor who would rip their
| face off in fees...I remember seeing the marketing docs for one
| of these pitches...$2.5m liquid cash account, I actually
| laughed at how bad it was (they had tried to construct a stock
| portfolio to generate fees, it was basically an index
| tracker)...I now do something else because I was just so
| jaded...but the irrational behaviour of people is brutally
| different to comprehend...it is anything to do with financial
| literacy either, some people just have no common sense, Warren
| Buffett is an example of how to do things, he decided what he
| was going to do, only people who aligned with the mission
| joined him...obviously, that doesn't really work outside of
| asset management).
| vmception wrote:
| Credit Karma is interesting as they routinely have not
| differentiated between which things are informative and signals
| for your credit score and which things have nothing to do with
| that.
|
| I believe they've gotten better after complaints and regulatory
| actions, but it is still largely ambiguous unless you know from
| other sources.
| simplrly wrote:
| This shouldn't be a shock since people have been telling
| stories about capitalism pyramids, supply side economics, and
| trickle down forever.
|
| The goal isn't perfect mind control; it's to keep us from
| creating a publicly owned distributed ledger.
| forgotmypw17 wrote:
| I think a human should be able to live without doing any
| paperwork, and I think we have the ability to support this today.
| hellisothers wrote:
| It seems reasonable but nobody is going to agree on what "live"
| means
| forgotmypw17 wrote:
| I'd say it means, at minimum, have a place they are allowed
| to shelter, and find enough food to sustain their existence.
| xyzzyz wrote:
| "Find" food, as if the food just naturally appears in the
| world, waiting to be found.
|
| Who produces this food? Who builds this shelter? Why do
| they do this? What makes them keep doing it? What would
| make them stop?
| forgotmypw17 wrote:
| In the Western world, there is currently a mind-boggling
| abundance of food, with double-digit percentages being
| discarded.
|
| With regards to shelter, it often does not require
| building in many places. What I am advocating for is
| allowing people to stay in public spaces if they are
| comfortable with it.
| mandmandam wrote:
| Food does naturally appear in nature.
|
| In fact, we survived the vast majority of our millenia of
| existence eating food that we found growing or wandering
| about.
|
| It's _weird_ that we've created a situation where this is
| no longer the case, due to overpopulation, pollution,
| etc.
| xyzzyz wrote:
| > In fact, we survived the vast majority of our millenia
| of existence eating food that we found growing or
| wandering about.
|
| Yes, and those that failed to do so, starved and died.
| This has been very common occurrence, given the very low
| population numbers, 3-4 orders of magnitude below current
| ones -- had there been more food, exponential growth
| would have ensured quick rise in population figures.
| Given plentiful food supplies, human population can grow
| extremely quickly. For example, Massachusetts colony
| population has grown 15-fold between 1650 and 1770, with
| almost all of this growth being natural. The point here
| is that hunter-gatherer communities never see their
| figures swell 15-fold in just 120 years, and that's
| because of lack of resources, mostly food. Is this the
| regime you are recommending we return to?
|
| > It's _weird_ that we've created a situation where this
| is no longer the case, due to overpopulation, pollution,
| etc.
|
| Ah yes, the original sin of invention of agriculture.
|
| The thing is, last 200 years is the only time in human
| history when we _don't_ have overpopulation. For most of
| the past history, the world has been filled with as many
| humans as their current technology and practices could
| have supported. It is only very recently that we have
| fewer humans than there could be, and this is most surely
| not thanks to the food naturally occurring in the nature.
| bob229 wrote:
| This is a nothing article. It says literally nothing, not even
| the obvious
| dan-robertson wrote:
| One problem with personal finance is that good general advice is
| often simple and changes infrequently, and good specific advice
| is not generally applicable. This is a problem because anything
| in the media which wants to cover personal finance is not
| generally willing to print the same bit of advice week in week
| out. And the problem is compounded by the people with that simple
| good advice being worried about laws on giving financial advice.
| So if one follows personal finance media, one may get the
| impression that it is hard to make good investments and that one
| must find weird risky lucrative opportunities, because much
| content is either about new investment possibilities (advertised
| or not) or sob stories about people who fell for some dodgy scam
| while thinking they were making the most risk free investment
| possible (and generating a 10% return). There can sometimes also
| be commentary on tax rule changes which I don't really have much
| to say about.
| ozim wrote:
| I would argue that most of the time you don't need good
| specific advice.
|
| One can get by quite well with just following good general
| advice.
|
| From anecdotal experience I see people who don't have basics
| like "spend less than you earn" are looking for magic fixes
| like "buy those magic stocks or coins" ... no you cannot invest
| in stocks/coins/anything if you consistently fall behind with
| your utilities payments or spend all your salary on booze on
| first weekend after payday.
| dan-robertson wrote:
| Right. The point I was making is that the generally
| applicable advice rarely changes and so is not interesting to
| a publication (or broadcaster) and the specific detailed
| advice is usually only useful for a very small number of
| people so is not so useful to the readers/listeners/viewers.
| bradleyjg wrote:
| Investment choices advice can almost always be generic.
| Things like how much to save less so, but rules of thumb are
| still widely applicable.
|
| But when it comes down to something like tax optimization the
| variables start multiplying quickly---state of residency,
| income, employer benefits, etc, etc. There's a need out there
| for decent advice but not an exorbitant cost. On the flip
| side, as an advisor it's tough to make a living without
| charging a lot because there's a lot of overhead and non
| billable time.
|
| All of this wasted time is unnecessary, there's no good
| reason that the systems have to be so complicated that even
| intelligent people get lost in all the details.
| [deleted]
| jrm4 wrote:
| Relatedly, I've never liked "literacy" as the word here; actual
| literacy is (at least where I'm from) a relatively low bar and
| mostly a binary, either you can read or you cant. And most
| importantly, the economic system I live in isn't primarily
| pointed towards thwarting your "reading."
|
| Again, for better or worse. Not to necessarily judge capitalism
| as inherently bad, but it feels like calling it "literacy"
| carries some judgmental baggage; what we call "financial
| literacy" is more difficult and shifting all the time.
| dredmorbius wrote:
| Literacy is a skill. Skills have degrees of proficiency.
|
| Literacy is _not_ a binary, _can_ be quantified, and _is_.
|
| And on average, it's far lower than you might think, expect, or
| hope.
|
| "Adult Literacy in the United States" (2019)
|
| https://nces.ed.gov/pubs2019/2019179/index.asp
|
| (https://news.ycombinator.com/item?id=28348039)
| thomascgalvin wrote:
| I think the phrase "how literate are you?" has meaning, though.
|
| I'm a native English speaker, and fully literate when reading
| an English text. However, if that text is about macro-economics
| and written at the PhD level, I'm going to struggle with it,
| even if I know what all the words mean in isolation. But if
| it's about software engineering and written at a college level,
| I'll have no trouble.
|
| Also, in these contexts, "literate" is used more to mean "has
| read and understood," not "could read and understand." Being
| financially literate doesn't mean "if I read an article about
| why carrying a high balance on a high interest rate credit card
| is a bad idea, I would walk away understanding those concepts,"
| it means "I know why carrying a high balance on a high interest
| rate credit card is a bad idea, _and I don 't do that_."
| paulpauper wrote:
| The problem with financial literacy is that it is mostly gained
| by experience, at which point it may be too late.
| jopsen wrote:
| The article raises a very good question: does financial
| literacy make a difference?
|
| We all know not to eat junk food or buy stuff on credit..
|
| Perhaps, we should make it harder to get credit, take loans,
| etc.
|
| And could make we should make it easier to save for retirement,
| maybe a monthly contribution should be the default.
|
| IMO payday loans or quick loans should be regulated to have
| limited interest. And if issued to someone the bank didn't
| verify as having credit worthiness the loan should be forfeited
| without being repayment. Or something like that.
|
| There's too much predatory lending today. Certainly the barrier
| to taking such loans could be higher.
|
| I think that's more effective than education.
| hogFeast wrote:
| It isn't.
|
| The same things have been happening in financial markets for
| two centuries. I will say it is remarkable how few people take
| an interest in looking at this kind of thing. History,
| particularly in the US, is regarded with derision. Economists
| believe that nothing in the past could be relevant any
| more...their expert guidance has moved us to a higher plane of
| existence...
|
| ...and if you look at history, you will see that almost
| everyone back then thought the exact same thing too (I say
| almost, when things really went to shit you find that humility
| tends to last a bit longer...there is zero humility today).
|
| This all applies to personal finance too. All the financial
| problems that people have are problems of human nature.
| paulpauper wrote:
| Personal finance is way different from macro finance though.
| 'Personal' introduces new problems that cannot always be
| picked up a textbook. Personal means it's your money. So you
| have full accountability and so many pitfalls.
| hogFeast wrote:
| Again, the problems that people were having 10, 50, 100
| years ago are largely the same ones as today.
|
| The financial industry has changed in some ways but most of
| it is exactly the same.
|
| Viewing everything as personal is why people don't learn
| from history. This is why financial markets have cycles.
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