Author Topic: Should FIRE principles be taught at schools?  (Read 1516 times)

QueyWet

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Should FIRE principles be taught at schools?
« on: May 14, 2019, 05:19:13 AM »
Yes, or No?
What do you think?

I think they definitely should be.
If I knew about FIRE, when I graduated from highschool 10 years ago, i'd be in a much better place right now.
Instead of being 28, with 10k in debt, earning $1000 a month and need financial support from my parents which are in their 60's and approaching retirement.

The problem is that the large corporations will probably never let this happen.
They thrive on mindless consumerism and debt accumulation.
So they would lobby against this and pay a lot of money to the politocians who are responsible for the education programs in schools.
« Last Edit: May 14, 2019, 05:34:33 AM by QueyWet »

MidwestTrails

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Re: Should FIRE principles be taught at schools?
« Reply #1 on: May 14, 2019, 05:31:03 AM »
Something I can contribute to!

I'm a high school math teacher at a career center. I teach a "financial algebra" class, which is really a personal finance course. We read a couple of MMM articles and completely threw out the "traditional" guidelines for housing, transportation, etc. when budgeting. (3 times your income for a house in a LCOL area? No need! $40,000 trucks? What are you compensating for?!?)

More than anything, I show my kids what my family spends and how living below your means can still mean a happy, fulfilling life.  They know my husband and I travel and live well on educators' salaries...as I point to my well-used Honda Civic in the school parking lot.

Rather than tell schools we should teach yet *another* life skill and then blame schools for people making bad decisions, I think we would be a lot better off if everyone were more open about their finances and decisions.

As an aside, I don't think any corporation is infiltrating what my school should be teaching (at least, not in this area.).

Seadog

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Re: Should FIRE principles be taught at schools?
« Reply #2 on: May 14, 2019, 05:56:58 AM »
The problem isn't an academic one. Perhaps people don't quite have the mathematical fortitude to realize quite how magically compounding either works for or against you, but just the same as with diet, people inherently know that eating a whole cheesecake, or buying a $500 dress that looks amazing is a bad idea long term, but they just don't care. Cheating on spouses, using a pay day loan to finance your marching powder habit, short term gain for long term pain is the million year old lizard brain hard at work in it's glory mode.

At my old job where we did a lot of potentially dangerous things, we did a course on human factors/decision making. Largely common sense, but the big take away was that people only consider things that are certain, extreme, and timely. So how do you motivate people when that isn't the case? The answer was very, very difficultly.

Saving today is a certain short term loss - of social status, good times, good food, and good company. It will happen soon, it's certain that if you don't go you will miss out, and in hindsight not so much, it seemed pretty extreme when I was a teenager that I couldn't hang out with certain friends.

Contrast that with *probably* setting yourself up for future prosperity, but maybe not even that, just humdrum mustachian living, and it happens way down the line.

You see the same choices made over and over in realms of smoking, drug abuse, cheating on spouses or on tests, petty thefts and scams etc. People respond to short term, extreme, and certain motivators. The best thing that they did to lower smoking rates was make them cost $12 a pack. The equivalent of a clown car payment going out *today* to pay for your habit ironically motivates people a hell of a lot more than the prospect of being hooked to a machine while cancers eats away at your lungs in 40 years.

Unfortunately, there is a great big machine designed to separate you from your money, so it's in their short term interests to hide all the long term pitfalls, while maximizing the short term stimuli that turns on the lizard brain. "I want it now, and damn the expense!"

I'm not sure if it's true or not, but there are studies saying people are less happy and less connected than ever. I've read theories that this directly links to people's lack of happiness and fulfillment, and that the increase in financial, health, and substance problems we've been seeing in the past few decades are linked to people trying to satiate those issues with external means. Not sure, but food for thought.

MonkeyJenga

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Re: Should FIRE principles be taught at schools?
« Reply #3 on: May 14, 2019, 06:22:34 AM »
The problem isn't an academic one. Perhaps people don't quite have the mathematical fortitude to realize quite how magically compounding either works for or against you, but just the same as with diet, people inherently know that eating a whole cheesecake, or buying a $500 dress that looks amazing is a bad idea long term, but they just don't care.

It absolutely was a knowledge issue for me. I had only spendy examples in my life and in the limited pf books I read, so even though I wanted to retire early, I thought I needed millions to do so. There are a ton of people who stumble across MMM or ERE or one of the other FIRE sites and have a lightbulb click on.

If I had known FIRE on a small amount was possible, and if I had been taught about tax advantaged accounts and the true ability of compounding, I would have gotten there earlier.

Does that mean I think FIRE itself should be taught? Not sure. But more hands on personal finance classes, where you can practice setting budgets and see investment results, yes. And maybe put Your Money or Your Life and a couple blogs/books on an optional reading list, so the really motivated people can run with it.

tyler2016

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Re: Should FIRE principles be taught at schools?
« Reply #4 on: May 16, 2019, 05:00:38 AM »
I think personal finance, among other things should definitely be taught in schools. I think mentioning FIRE could be as controversial as evolution, big bang, etc. If I were teaching it, I would use the Millionaire Next Door as a text book. Since it is more academic than most personal finance sources, it would be viewed as more credible. Judging by peoples comments, I would say a sizable proportion of people have misconceptions about wealthy people and how they got there.

I also think schools should require a course on relationships and interpersonal communication. I ate a humble pie when reading books such as Crucial Conversations and Fighting for Your Marriage. Also listen to some of Chris Voss's talks on Youtube. I feel weird saying this, but people don't seem to get people. I certainly didn't and probably still don't. Bad relationships = Bad life.

The last thing I would add to HS would be a mental health class or make it half of normal health class.

nereo

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Re: Should FIRE principles be taught at schools?
« Reply #5 on: May 16, 2019, 05:08:13 AM »
What is "Marching Powder" @Seadog ?

Maenad

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Re: Should FIRE principles be taught at schools?
« Reply #6 on: May 16, 2019, 05:13:02 AM »
"Bolivian Marching Powder" = cocaine

Cromacster

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Re: Should FIRE principles be taught at schools?
« Reply #7 on: May 16, 2019, 07:15:16 AM »
I'm not sure if FIRE itself needs to be taught, but concepts of saving and planning for retirement should definitely be pounded in more.

I remember having a guest speaker come to my economics class in high school.  I don't remember much of what he said, but one take away I remember was him talking about how to become a roth millionaire.  Start at 18, $100/month in an index, with average returns you will have around a million by retirement age.

I even opened a Roth IRA shortly after this speaker came to class.

nereo

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Re: Should FIRE principles be taught at schools?
« Reply #8 on: May 16, 2019, 07:36:40 AM »
I'm not sure if FIRE itself needs to be taught, but concepts of saving and planning for retirement should definitely be pounded in more.

I remember having a guest speaker come to my economics class in high school.  I don't remember much of what he said, but one take away I remember was him talking about how to become a roth millionaire.  Start at 18, $100/month in an index, with average returns you will have around a million by retirement age.

I even opened a Roth IRA shortly after this speaker came to class.

Similar to my thoughts.  At present, most kids come from households that are in poor financial shape (the broader reflection of a nation that is bad with saving and investing).  FIRE is a rather advanced financial concept, and currently we're falling short in teaching the basics. IIRC the only financial education I was given by my school consisted of a single quarter in civics class where we were given a salary and told we had to make a theoretical budget that included rent, food, transportation and clothes. Even this was woefully broad, and we never touched on taxes, retirement planning, managing debt or tax-advantaged 'buckets'.

We need better education of the fundamentals, like how bad carrying cc debt can be, and how you need to have an e-fund/surplus each month in order to handle the inevitable unexpected expenses, and how one needs to contribute to retirement accounts early and continuously (i.e. the 'magic' of compounding).  FIRE can be mentioned as motivation ('look what can be achieved if someone really puts effort into it') but until student internalize the messages of "spend less than you earn each month and invest the difference" it would be putting the cart before the horse.


 

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