Author Topic: Borrowing Faster than You are Saving??  (Read 3828 times)

frugalecon

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Borrowing Faster than You are Saving??
« on: October 24, 2013, 06:43:51 AM »
Interesting article in today's Washington Post, about how people are actually accumulating debt faster than they are saving for retirement: http://www.washingtonpost.com/business/economy/many-americans-accumulating-debt-faster-than-theyre-saving-for-retirement/2013/10/23/b7a9c85e-3b3e-11e3-b6a9-da62c264f40e_story_1.html

Every year in January I prepare a household balance sheet, totaling up assets (growing!) and liabilities (shrinking!). Learning that simple practice should be mandatory in high school.

NumberCruncher

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Re: Borrowing Faster than You are Saving??
« Reply #1 on: October 24, 2013, 07:18:06 AM »
Interesting article in today's Washington Post, about how people are actually accumulating debt faster than they are saving for retirement: http://www.washingtonpost.com/business/economy/many-americans-accumulating-debt-faster-than-theyre-saving-for-retirement/2013/10/23/b7a9c85e-3b3e-11e3-b6a9-da62c264f40e_story_1.html

Every year in January I prepare a household balance sheet, totaling up assets (growing!) and liabilities (shrinking!). Learning that simple practice should be mandatory in high school.

I agree it would be interesting to have some kind of personal finance in high school...but wow would a lesson on creating balance sheets be boring to me. it's one simple equation. My one accounting class in college was slow pace enough already...

<--- gets bored easily

Greenbeard

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Re: Borrowing Faster than You are Saving??
« Reply #2 on: October 24, 2013, 07:44:05 AM »
The other day I was crunching the numbers on a possible rental property.  I was going over them with my wife and my son, who's 16, was looking over my shoulder.

He pointed to a column of numbers that was increasing over time and said "What's this?"  I said "That shows how much we would make if I invested the money in the market instead of on a rental property, so I can if I should invest it in the market or real estate."

He said "Wow, it's going up so fast!".  I said, "Yep, compound interest is a beautiful thing."

He said "Why don't they teach this stuff in high school".

A "Practical Finance" course should be part of every education.  But it's not.

The good news is: We can give our kids a huge advantage by teaching them to manage money.

dragoncar

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Re: Borrowing Faster than You are Saving??
« Reply #3 on: October 24, 2013, 09:16:23 AM »

NumberCruncher

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Re: Borrowing Faster than You are Saving??
« Reply #4 on: October 24, 2013, 09:54:21 AM »
Oh! I learned about compound interest early. My parents got us this book: http://www.amazon.com/You-Made-Million-David-Schwartz/dp/0688136346


They went over everything you could buy...and then went into how much money you'd get annually if you just got paid interest or invested it or something. I figured living off interest was a good option even then :D

ScienceSexSavings

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Re: Borrowing Faster than You are Saving??
« Reply #5 on: October 24, 2013, 10:41:38 AM »
Sadly, I don't think a high school course would help much, since it would go in one ear and out the other for most students. It would be really, really nice to have this kind of basic information more widely publicized though! You can't force motivation, but you can provide the resources for when it strikes :)

nawhite

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Re: Borrowing Faster than You are Saving??
« Reply #6 on: October 24, 2013, 01:15:12 PM »
Sadly, I don't think a high school course would help much, since it would go in one ear and out the other for most students. It would be really, really nice to have this kind of basic information more widely publicized though! You can't force motivation, but you can provide the resources for when it strikes :)

Most students don't learn anything in high school? I think a high school course on financial literacy would be super helpful for tons of students. In high school I learned how to sew. Learned how to use power tools. Learned how to put a condom on. Learned how to lift weights. Learned how to touch type. Remember all sorts of things from high school much better than the simple Reading, Writing, aRithmetic which I forgot most of after college. I'm certainly not the only person who remembered those other soft skills from high school. And none of those things had the hook of "will make you millions of dollars."

El Gringo

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Re: Borrowing Faster than You are Saving??
« Reply #7 on: October 24, 2013, 01:21:14 PM »
My public high school had a required course that was something on "life skills" that included career research, college research/applications, and also financial literacy. I can't recall if we learned much about budgeting (we must have) but the one thing I remember to this day was when they taught compounding interest and the advantage of starting to invest young.

MrsPete

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Re: Borrowing Faster than You are Saving??
« Reply #8 on: October 24, 2013, 02:15:46 PM »
Sadly, I don't think a high school course would help much, since it would go in one ear and out the other for most students. It would be really, really nice to have this kind of basic information more widely publicized though! You can't force motivation, but you can provide the resources for when it strikes :)
Yeah, you're right.  I read an article a couple weeks ago about how classes in personal finance don't tend to stick with high school kids.  The article, which unfortunately I do not have now, says that since most kids don't have much of a frame of reference, the material doesn't "seem real" to them, and they don't retain much. 

I've seen something of this in my own classroom:  I've used magazine articles about the dangers of student loans and credit card debt with my high school seniors (I've used these when they've related to a short story, etc.), and the majority don't seem to connect with the material at all.  They know that a person who spends more than he earns is making a mistake, but they can't see themselves falling into that trap -- in their minds, that's something only stupid people would do.  And anyway, they're all going to step out of school and into well-paying jobs!  Yet at the very same time, they're planning to take out big student loans so they can go to their school of choice out of state.  It all seems rather "unreal" to them while they're in high school. 




ScienceSexSavings

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Re: Borrowing Faster than You are Saving??
« Reply #9 on: October 24, 2013, 02:25:57 PM »

Most students don't learn anything in high school? I think a high school course on financial literacy would be super helpful for tons of students. In high school I learned how to sew. Learned how to use power tools. Learned how to put a condom on. Learned how to lift weights. Learned how to touch type. Remember all sorts of things from high school much better than the simple Reading, Writing, aRithmetic which I forgot most of after college. I'm certainly not the only person who remembered those other soft skills from high school. And none of those things had the hook of "will make you millions of dollars."

I certainly didn't say that most students don't learn anything! It depends primarily on motivation, which, as I said can't be forced. It wouldn't be harmful to offer it, but I wouldn't expect it to solve a whole lot. People ignore good advice all the time, regardless of the hook, and many students haven't begun to deal with many expenses and covering all of life's essentials yet.

I decided to go to grad school after finishing my Ed degree, by my limited experience sounds a lot like Mrs. Pete's! Everyone's better than the case studies lol. I took IB Economics, learned all the math, and have former classmates screaming about their debt on Facebook and blaming the schools and guidance counsellors for not telling them it would be like this. Sad, funny, and true.