What would you like to see in a Personal Finance class?

[yolfer]

I was asked to teach a 1-hour Personal Finance class, and I figured I'd sneak in as much Mustachianism as I can without being preachy. The audience will be professional/technical (mostly engineers, product managers, etc) but not financially literate.

I was thinking I'd take parts out of this talk that MMM gave: http://www.mrmoneymustache.com/wp-content/uploads/2013/09/happiness_vs_riches.pdf
Mix it with some of the F.I. fundamentals from the book "Your Money or Your Life"
And then go over some investing basics: 4% rule, asset-allocation, Bogleheads stuff.

What do you think is essential in a 1-hour personal finance lesson?

Thanks!

[matchewed]

Hrm...

One hour with no other direction than personal finance eh?

Foundations; asset allocations, fee minimization (could relate it to costs as you've got some product managers and the like) via index funds, automation of savings and increasing amount each year...etc.

In fact I'm not sure why I've posted. :) Seems like you've got it covered with your quick list.

[Adventine]

How well do you know your audience? Are they coworkers or total strangers? If you don't know them at all, is there a way to find out more about them before the day of the class?

I attended a personal finance class over the weekend that covered the basics of PF (differentiating wants and needs, types of available investments, risk profiles, etc.) but it focused more than I liked on things that weren't really relevant to the audience. Things like minimizing estate taxes after one's death and how to consolidate bank loans and credit card debt... useful stuff, to be sure. Problem was, almost every participant was in their early 20s, just starting out their careers, had no children, and had minimal/no debt.

The more you know about your audience, the more you can tailor the presentation to focus on their most pressing concerns, and the more you'll grab their interest.

[Chranstronaut]

I strongly agree with trying to target the audience as best you can.  As a person in my 20's, I'm really interested in minimizing fees, learning about asset allocation and just watching compound interest do it's thing. 

One example that lit the fire under my bum when I started my first job out of college as an example of two people, one who started investing at 25 with a modest amount yearly and one who started 10 years later with a more aggressive savings plan.  I can't remember the numbers used, but they sorted it so that the person who was 35 would never catch the person who was 25, despite investing a greater amount yearly.  I'm an engineer and loved seeing this example with plots of $ vs. time :)

[aj_yooper]

I think the MMM talk is excellent!  I like the Buddha stuff, but, for some, it might turn them away.  For your audience, I would add spreadsheets that show savings rates, expenses, and growth of a stash given a typical salary, say showing savings rates of 5, 10,up to 60.  Then, talk about tax advantaged and regular ways of getting it done. 

[samburger]

I design courses like this for a living. Some tips:

• If you're in a classroom setting and you talk for an hour, everyone in there will hate you. Talk for 30 minutes, 40 absolute max. Use the other 30 minutes for a meaningful activity to help them apply what you're talking about to their own lives. Personal finance is an especially rich subject for this, since it's literally 5% theory, 95% application.
• Give them something the can apply to their lives immediately (e.g., show them the graph of compound interest's affect on the 20s saver vs 30s saver, then help them figure out how much they can up their 401k contribution this very week, or whatever. Best if you can tie this in with your activity). If you teach them a bunch of theory, they'll walk out and forget everything.
• Don't neglect stumbling blocks. What will stop them from implementing what you teach them? Why is personal finance hard for people? Set aside time to talk them through it.

Given your short time, I'd recommend picking 1-2 main ideas. If they're not financially literate, you'd be obscenely successful if you convinced even 20% of them to go contribute to their 401ks. Forget asset allocation, early retirement, etc etc.

Feel free to PM me if you want any specific feedback.

[bearkat]

The more you know about your audience, the more you can tailor the presentation to focus on their most pressing concerns, and the more you'll grab their interest.

+1. Without knowing your audience or their needs, you're really flying blind. Hopefully you can speak to some of them  beforehand or give them a survey to fill out prior to showing up.

[samburger]

The more you know about your audience, the more you can tailor the presentation to focus on their most pressing concerns, and the more you'll grab their interest.

+1. Without knowing your audience or their needs, you're really flying blind. Hopefully you can speak to some of them  beforehand or give them a survey to fill out prior to showing up.

It is important to know your audience, but the OP already does:

The audience will be professional/technical (mostly engineers, product managers, etc) but not financially literate.

"Not financially literate" is a ton of information in the context of a personal finance class.

That said, it never hurts to be ready to switch gears if you get in-the-moment feedback about needing beefier material. But it's always easier to complicate a topic than it is to make it simpler.

[StarryC]

For people who have demonstrated a failure in personal finance or are really financially illiterate (most 14 to 22 year olds?)  I'd start with the concept of a budget- How much money do you have coming in, where is it going to go, how to stick to it (write it down, cash method, checking receipts against budget, mint?)    Then, I'd move on to interest- for and against you: Showing a savings account, the market, and a credit card over 1 year/ 5 years/ 10 years/ 30 years.  Then- Free money- pre-tax accounts for retirement, employer matches.    Activity: Budget- income of $3,000 a month, employer match to 3% of 401K, 1 person, with options for housing, food, transportation, spending.   OR online game: "Spent" about minimum wage.

Assuming that because these are professionals, I think you might want to leave out budget and credit cards and savings accounts, and start with the market.  How to minimize fees/ maximize stability and returns, and then "Free money."   I think the most mustachian thing could be to discuss how your home might be an asset, and if you buy an expensive one, and can't invest in the market your portfolio is out of balance.  Or, your home can be an expense, but then you shouldn't be thinking of it as an asset.   Maybe also how to determine "what you can afford" in a house you are buying (probably better targeted at younger professionals rather than older). 
Activity: if it's a workplace, hand out the forms for the 401K and do the math on your policies.

[oldladystache]

How about a quick comparison of paying interest vs collecting it? For example buying a $20k car with 2k down, $xxx a month payment and expensive insurance, or paying 2k for a beater and banking the payment and extra insurance?

Where would they be after 5 years? 10 years?

[BikerSaver]

How about an example showing how much that latte from Starbucks really costs? $5/day * 365 days invested at 7%.  I don't think that people always realize the impact of small changes and that there may be room in the budget to invest.

[yolfer]

I strongly agree with trying to target the audience as best you can.  As a person in my 20's, I'm really interested in minimizing fees, learning about asset allocation and just watching compound interest do it's thing. 

One example that lit the fire under my bum when I started my first job out of college as an example of two people, one who started investing at 25 with a modest amount yearly and one who started 10 years later with a more aggressive savings plan.  I can't remember the numbers used, but they sorted it so that the person who was 35 would never catch the person who was 25, despite investing a greater amount yearly.  I'm an engineer and loved seeing this example with plots of $ vs. time :)

Great idea! I think ERE has a post like that. Or maybe it was MMM...

[yolfer]

Great ideas, everyone!

I think I'm going to go light on the nuts and bolts of why/how to spend less and save more (people already know that). I'll focus on the philosophy, mindset, and habits behind mustachianism (with some tips and humor thrown in to hold peoples' attention).

Like Antoine de Saint-Exupery said, "If you want to build a ship, don't drum up people to collect wood...Teach them to long for the endless immensity of the sea."

[yolfer]

I design courses like this for a living. Some tips:

• If you're in a classroom setting and you talk for an hour, everyone in there will hate you. Talk for 30 minutes, 40 absolute max. Use the other 30 minutes for a meaningful activity to help them apply what you're talking about to their own lives. Personal finance is an especially rich subject for this, since it's literally 5% theory, 95% application.
• Give them something the can apply to their lives immediately (e.g., show them the graph of compound interest's affect on the 20s saver vs 30s saver, then help them figure out how much they can up their 401k contribution this very week, or whatever. Best if you can tie this in with your activity). If you teach them a bunch of theory, they'll walk out and forget everything.
• Don't neglect stumbling blocks. What will stop them from implementing what you teach them? Why is personal finance hard for people? Set aside time to talk them through it.

Given your short time, I'd recommend picking 1-2 main ideas. If they're not financially literate, you'd be obscenely successful if you convinced even 20% of them to go contribute to their 401ks. Forget asset allocation, early retirement, etc etc.

Feel free to PM me if you want any specific feedback.

Thank you! This is great advice! I was thinking about how I'd pack in as much as possible in 60 minutes, but now I see the error in that train of thought!

These are folks who are used to holding attention at 60 minute meetings, and hopefully my presentation will be more interesting than the average work meeting, but I'll still break it up to hold the audiences' attention.