Any argument against teaching financial literacy can also be applied to pretty much any topic taught in schools.
You could also write the same clever-sounding contrarian think-piece about why teaching Home Economics doesn't make sense until you have your own home to run; teaching CPR doesn't make sense unless there's someone choking right in front of you; etc.
Using the logic underpinning this article, the only things taught in school should be how to play video games, how to find the best parties and how to get laid; since those are the only things actually relevant to students at that stage of their life.
Obviously studies will show that most students don't become financial wizards after taking financial literacy classes, because that's how it is with all education. How many kids who take English class become good writers?
Doesn't mean we shouldn't offer the knowledge for those willing to take it.
This is the question most kids ask when offered education. If you answer that first, everything else follows.
Start with why. (Thank you Simon Sinek.) Are there meaningful, ongoing benefits to learning how to make specific decisions with your money? Should you care enough to learn the more mundane details like reviewing expenses or filing your own taxes?
I know there are attempts, like showing those log graphs that try to impress upon young minds the long-term value of compound interest. I'm sure those help a few people, but I do wonder if there might be other more impactful concepts.
Personally, I get a great deal of satisfaction out of things like efficiency, self-reliance, and so on, but I don't know if valuing those things can be taught, or just develops organically. Regardless, I think you always need to impress upon students the motivations for their decision-making and try to help them care. The rest can come later.
The thing I think you’re missing is that financial literacy is not like most subjects taught in schools. Schools teach math so that students can do sums; they teach reading so that students can read. But financial literacy, sex education and civics are not about knowledge; they are about *character: they are less about what students can do and much more about what they ought to do.
The methods used to inculcate character are, I think, different from the ones used to build knowledge.
When I was in middle school we actually cooked and baked in home economics, we didn’t memorize recipes showed on an overhead projector. In Physical Education we ran the mile, didn’t want videos on optimal technique. I think this is the main point.
i think your examples are actually fantastic. a home ec class where kids actually cook something is much better than just reading a bunch of recipes. a CPR class where you practice on a dummy is better than just watching a video on it.
fwiw i had the same experience with money that the article talks about. my parents tried to impart alot of wisdom on me but it hits different when you have actual money in the market and see it go down.
You grossly misrepresent the points of the article!
I usually hate such one-liner responses, but in this case, really, it is the article that needs to be read, not my reply. I could not say nothing and let this stand though, the contrast between the comment and what is actually in the article is too large.
I mean ... once you put it that way, yes, I'm actually willing to bite that bullet! (Or at least a cleaned-up, steelmanned version of it.)
It's vanishingly unlikely that any student who learns "personal finance", with no practical application, is going to retain it for the 5+ years until they'll actually need to use it. Learning doesn't work that way -- with, as you note, a few exceptions for unusually motivated students ... who would probably be able to learn it on their own when the time comes.
Ditto for the famous meme about "why don't schools teach something useful, like doing my taxes?" Because it would come across as an ungrounded, garbled mess that you'd forget by the time it was actually relevant.
So yes, I'd say that generally, education should work by grounding lessons in some kind of practical application. And indeed, like the other comments note, that's how it works for some of your other examples, like actually cooking something for home ec, or doing CPR on a dummy (which mimics most of the dynamics of the real thing, even if imperfectly).
I think there's a real human need being expressed by the common complaint, "When are we ever gonna use this stuff?" I'd phrase it as, "You're not grounding this material in a way that allows me to reason about it, and what's important vs isn't."
So, to the extent that we want to prepare students for "the real world" -- in particular, things like "doing your taxes" and "evaluating a car loan" -- I'd say the best way to address it would be by teaching the (meta-)skill of "learning an unknown domain". (Yes, "learning how to learn" ... but as an explicit skill, not one applied to material that is itself too artificial.) That's something you could apply to practical problems, even if they're not the same ones students will be solving later.
Applying this insight to the teaching of literary analysis: frame it as refuting an internet comment that doesn't understand that a song is a metaphor.
In fact, one thing that frustrates me about how the teach estimation in math is that they teach a useless version of it: you do something that takes about as long as calculating the exact value, except you add some rounding steps because you're told you can't give an exact answer. What you should instead do is give a timed test, which much more problems that usual, and only require approximate answers. Then you're forced to save time by rounding.
Late edit:
>Using the logic underpinning this article, the only things taught in school should be how to play video games, how to find the best parties and how to get laid; since those are the only things actually relevant to students at that stage of their life.
Yes, it does annoy me when the education system neglects the teaching of some skills that don't come naturally to some students, but not other skills.
The article's argument is that experience is a better teacher than a person with a curriculum and a chalkboard, which I agree with, but the proposed solution: "so, let's just give them experience!" is a shallow proposition—I doubt anyone knows how to start 4 million small businesses per year, with meaningful revenue, using a workforce that hasn't (yet) graduated high school.
Experience is hard (if not impossible) to scale. And it could easily backfire: imagine the scenario where the experience is miserable and results in failure. What if the students' lesson learned is "why bother trying?"
The most effective way we have to scale experience is through simulation. And we know how to provide that pseudo-experience to young kids without a lot of investment: story telling.
Maybe we should scour the globe for compelling stories that teach lessons about delayed gratification, the value of saving, and self-confidence vs. vanity in terms of spending money, so that we could start telling them to students at an early age.
Many people I know need some lessons in basic financial literacy.
I’ve been living in an apartment for the past 18 months while saving to build a house and I’ll be here until the home is completed in October.
It has been very alarming watching how my neighbors behave and spend money.
I myself come from an impoverished background. Single mom, multiple violent stepfathers, no money, left home at 16 to escape the abuse, etc.
I slept hard for many months and I’ve been without a home on three different occasions.
However, I firmly believe that poverty is a choice for a lot of people and it’s never been more evident until I lived in an apartment complex.
My across-the-hall neighbors order food delivery 10+ times per week. Last weekend, from Friday afternoon until Sunday morning, they had food delivered 5 times.
I’ve only paid for food delivery once and that was when my son and I were stuck at home with Covid.
Many of my neighbors drive new $50k+ automobiles.
Then I hear the same across the hall neighbors arguing about money. She’s a teacher (I see her ID card hanging from the rearview of her CR-V. The husband works in a kitchen.
I’m guessing their combined gross income is maybe $100k and that’s being generous.
Yet they spend money on food delivery like they were making twice that amount.
My base salary is only $130k which is decent for Alabama, but I wouldn’t dare waste money on something like that.
I drive a 25 year old Land Cruiser that I maintain myself. Growing up poor, we didn’t pay anyone to do anything. I had to learn to repair things myself. I kept that habit through adulthood.
Sorry for the rant. It’s just wild seeing how some people live while also having to hear them complain about having no money.
A lot of people were conditioned to rely on food delivery when it was cheap. Pre-pandemic, restaurant food was much less expensive, delivery apps had low or no fees, and the options for tipping were much lower.
Now, of course, restaurant prices have skyrocketed, apps all charge significant fees and the tip expectation is around 20% (and don’t even get me started on how ridiculous it is to base tipping on food cost when none of the tip goes to anyone involved preparing the food and a 10lb bag of mashed potatoes is cheaper than a 1/2 oz container of caviar).
But people now expect their meals to be brought to their door and have a lot of resistance to going out to get it or, god forbid, preparing it for themselves.
I looked up the average cost of living in Alabama. It says it is 54k for a family. Do you think that is realistic?
The reason why I ask is that US incomes always confuse me. Incomes seem quite high and I understand that taxes are much lower than here (Finland).
As an uninformed outsider with these costs of living 100k for a couple seems quite nice and a gross income 130k appears absolutely rich. Am I missing something?
IlJust very curious always as some of the income programmers with my experience get in the US seem absolutely unachievable here.
Middle class poverty traps look like what you describe. I don't understand the compulsion to spend all of what you make every month, and sometimes more, either.
I understand where you're coming from. Some examples from people I know:
* Person making around $40K buying a $50K new vehicle
* Software engineer making $100K+ in a low cost of living area asking if $5K is a good enough down payment for a home (at least they questioned it!)
* Consultant complaining about money while taking Uber back and forth to work every day and getting all groceries delivered on Instacart
However, these examples are from people who have the means to make these poor decisions and access to credit to do so. I think you understand this from having grown up poor, but it's worth illustrating for readers who may seen your comment and blame most poorer people for their situation.
There's "poverty," and then there's poverty. The bottom 20% of households in the US make about $22K per year. People I've known working in construction get paid entirely in cash and have no credit, often having to choose between paying the water bill or the electric bill after an unforeseen emergency. At the level where you are paycheck to paycheck, assuming the paychecks are regular, you can't save for emergencies because every day is spent triaging the basics.
My wife’s parents come from poverty (they attained middle class around when she was 8-10) and she always says there’s “people who are good at being poor and people who aren’t.” We are fortunate to make a lot of money, but even then I order delivery maybe a few times a year. I had back to back meetings the other day and was feeling sorry for myself and ordered some kabobs on Grubhub and she flipped out, lol.
it's a pretty brutal version of "financial literacy" but it sounds like you had it. Not sure how you broke the cycle though; what made you aware of an alternative?
We have an entire generation of NOT poor western young adults who grew up during essentially zero % interest rates. Their parents financed lifestyles well beyond their means; that was their financial literacy education. None of your neighbours actually "bought" a $50K+ automobile. They are all paying bi-weekly (or weekly!) finance payments. Combine with our focus on immediate gratification and society is pretty messed.
And it wasn't just consumers! Nobody runnning a small business has had to figure out to make the math with double-digit business loans work for some time. Massive fiscal spending growth has also made many businesses viable on government borrowing.
Growing up poor or with money problems, seeing that struggle. One does come out different. One can potentially be more understanding when people are just continuing the lifestyle they grew up with. In this case, 2 working adults, one white collar, used to be enough to rent an apartment and eat out/ have deliveries regularly, no? That’s just a story of middle class erosion and financialization of the economy.
What makes very little sense to me is seeing people go from having very little to making a lot, and the increases in lifestyle to match income. Aka lifestyle creep. Things that 2 years ago were not even a wish are now taken for granted. And it’s all the same as everyone else.
I got that $50k automobile. And it’s absolutely worth it. It has warranty and I don’t need to spent few hours every month fixing things, that shouldn’t break. Land Cruiser is bad example because of very good build quality and excellent durability. I don’t know how it’s in US, but pretty much everywhere else Land Cruiser is luxury. I personally pay gladly additional 200€ in a month to not to do 4-6 hours chores.
But yeah, the food delivery is expensive. Never do this. Try to teach the young guys in the office, that cooking is not rocket science. 3 smallish pieces of okayish meat cost 5€, add some rice. Grab paprika, tomato or cucumber and you have super healthy 3€ meal. Instead of 7-10€ microwave crap from supermarket.
Financial literacy should be a topic in school. Repeated every couple years going from simple budget planning to mortgages, stock market and exotic derivatives. Plus a course about all the scams and basic computer security. Heck we even modeled back then strategies of fake company before graduation. But that was special school.
The article almost got it right ‘emotions, peer pressure, temptations’ and how people spend money on things they don’t need and then got it wrong by not actually saying what’s important.
Money management and financial literacy involves psychology along with math. So does sex education like the article compares it to. Having sex or spending money is not the problem. Nor is putting fear of the two in your head from a young age or the desire for it.
As Charlie munger said - psychology should be taught from a young age. Maybe the most important topic missing from education.
Spending money isn’t bad and having sex isn’t either. But saving for a future you’ve dreamt of and sex with a loved one is better. This involves less math and sex education and more psychology and mental well being.
If you are a 30 something politician looking for a change and understand psychology, you might want to visit schools and give children hope and mental well being tips. They might vote for you in 15 years.
Hell, you might want to visit communities and give adults hope and emotional well being tips and they might vote for you now. It's not just kids who need this and frankly adults probably realize they need it more than kids.
IMO a bunch of the problem is distress and short-term thinking.
You're not planning for 1, 2, 4 weeks out if you're constantly so stressed you're only thinking about today.
And if you're so overwhelmed you're only thinking about today, you're not noticing that you're spending impulsively 5, 6, 7 times a week, and that it adds up.
That's really been the key thing, the times that I've sat down and tried to talk someone through who was struggling with their financial planning.
They never really internalized doing this sort of planning regularly, for various reasons, and are so stressed by the day to day that they do not spend time thinking about much beyond the immediate, not just in terms of finances, so they're not trying to save for a goal, or a vacation, they're just trying to get through the day and pass out, so that kind of planning and feedback of "oh I need to not do that" just doesn't happen, much less learning to stop and think before buying things.
I don't have great advice on how to use this for better outcomes, though - sometimes, just making the suggestion when asked that they start to do this sort of planning regularly has been massively helpful for people, but I have, a couple times, had people ask for advice, only for it to become clear that they were looking for a rationalization to externalize their problems - that is, any proposal which required they change their behavior was off the table.
(The above, by the way, is also, I think, why there's so much backlash about RTO and similar - a lot of people who had been mindlessly struggling through the day, had time to themselves now, and did some thinking they never had the energy to do before...)
I think the problem with "financial literacy" is that it is taught too polite, it never mentions the true fact that our society is filled with professional organizations that use deception to get your money, and the investment world, the contracting world, and the employment world are filled to the gills with unethical players on both sides that are professional liars. They pose as one and deliver another, their entire careers, and get away with it because they understand how to hide their tracks with financial complexity. The majority of humanity falls prey to these predators, and they are in fact a significant proportion of every nation's economy. Every single company that is "hard to cancel" is one of these predators, entirely successfully, and that is thanks to our lack of financial literacy.
I don't think that is really the source of the issues for most people that are bad with money.
They spend more than they earn. They don't earn enough and they spend too much.
It is like blaming Cocacola for people being fat. Yeah they probably have some diffuse structural blame for the situation at a societal level but nobody is forcing anyone to drink a litre of coke a day or to fritter away their money on takeaways instead of investing it sensibly.
Could you blame advertisers for people spending money. Maybe? Do ads even work? They don't seem to work at all in politics so I doubt they do much anywhere else.
The underlying philosophy is also partially problematic. That is, the idea that the next generation can just budget their way out of a problematic macroeconomic situation. Houses are utterly unaffordable now compared to 30 years ago, and no amount of budgeting will change that. But "financial literacy" shifts the blame and makes it out as an individual inability to budget. It's still useful to learn about how to use a credit card, and how not to, but that is not the root cause. Besides, the big three, medical debt, and student loan debt, credit card debt, and maybe car loans could be tackled at the macro-level, too, but that would be government overbearance again, wouldn't it...
Financial literacy has tons of fallacies but this article really only covers one of them.
The research I've read on the subject, experts nowadays are tending towards preferring "just in time" teaching. If you learned about mortgages and 401ks in 12th grade, that's not much help if you don't get a 401k until you're 22 or a mortgage until you are 25.
And that shows another issue: what does anyone even mean by "financial literacy". Does it include lessons about individual stock picking? About claiming Social Security early? About optimising taxes? About checking for better insurance every few years? About college savings plans for children?
Most people’s money problems would be solved if we taught them not to chase status instead of focusing on the numbers.
Financial literacy itself is quite simple: spend less than you make.
Everything else is an optimization and it’s pretty easy to learn with a few days of research.
I know this is the classical HackerNews type comment, but I honestly can’t understand why it’s so hard when there’s so much information available and so few pre-requisites (almost none) to learn about it.
> Education is particularly susceptible to flavor-of-the-month initiatives that promise revolutionary changes but deliver minimal results.
Then the article proposes another flavor-of-the-month solution that promise revolutionary changes - if only each student would start a business, then he would HAVE to learn math and everything will be solved.
Ignoring the issues of costs and scalability, why not try something simpler first? IMO teaching how to handle money is something that should parents start even before their kids go to school. Give them a little pocket money so they have some agency, and they will soon learn what they can buy now and how to save for a future.
> Teaching financial concepts in a classroom is like teaching swimming with PowerPoint slides. You can explain the theory of the butterfly stroke all day, but at some point you need to get in the water. And with money, the water is always cold, deep, and full of currents that weren’t in the textbook.
It is totally true that these extra-mathematical factors have a big part to play how we spend and how we save. If you’re in a certain culture that expects a certain level of spending, it’s hard to take yourself out of that.
I still don’t see even adults with a good idea of basic financial things. How much does it cost to buy a house? How does a monthly payment change with interest rates? How do you become eligible for Social Security?
You really need to keep these several-dimensional functions in your head. At the least, a good grasp of algebra is required.
One of the best lessons I had was in my senior year of high school with my economics teacher. We did a project where we had to pick a career and research the average salary. Then he showed us how much taxes would be taken out of that pay check and you had your monthly spend. Then you researched a home, car, budget for food and if you could afford it, saving for retirement. Suddenly you saw how quickly the money disappeared and reality hit me. There were so many other factors you could have added in that would suddenly find yourself in negative each month like student loan payments and various "wants"
I felt I was failed by education/parents with regard to financial literacy, because the first time I ever had real money in my life was when I went to university the first time and I had no idea how to manage it, and I ended up homeless for some time.
Now I’m a parent myself, I decided I’d teach my kids about money by actually giving them money. $100 each per fortnight. I made both kids set up savings accounts that earned interest, and they had to save $50 a fortnight. The other $50 I said they could spend on whatever they liked, but that I would no longer pay for anything related to their gaming (ie, Xbox subscriptions etc), I don’t buy them toys, or nice snacks, or fancy branded clothes - that’s all stuff they now need to save for and buy themselves with the money they are given.
One kid has ADHD and the other kid is close to neurotypical. The neurotypical kid certainly learned how to manage money quicker. His savings account remained perfect, he accumulated interest as well, and can always afford his subscriptions etc. he barely ever even spends the $50 that he’s allowed to do anything with, but when he wants to use money when going out with friends etc, he just always has money, and he even keeps some cash on hand as well.
The other kid on the other hand has taken a longer time to understand but, there’s absolutely no way an ADHD kid would learn without real money to manage in my opinion and I think they benefit from having the freedom to make mistakes with money. He would spent his $50 within about 10seconds of receiving it, generally on stupid shit from Amazon. Then he never had money for his gaming subscriptions which would result in massive meltdowns when he couldn’t play his games, and then he never had money to do stuff with friends when he wanted to. He was always the “poor kid”. Then, even though he wasn’t supposed to, he withdrew cash from his savings to pay for subscriptions, losing interest etc, and then also having no savings. It took about a year, but he’s finally learned to stop buying stupid shit on Amazon. He still can’t seem to save the way his brother can, but he saves for a couple of months at a time, and then buys the next computer part he wants, and he always sets aside the money for his game subscriptions now as well. He also does sometimes put extra little bits of money in his savings when he’s particularly motivated for a more expensive piece of computer, but he still often withdraws for stupid small shit. He also compares his spending behaviour to his brothers and he realises that his brother is “rich” because he doesn’t spend money.
It’s an expensive lesson for me to teach them, but, I genuinely think that it has helped them both learn real life lessons with regard to money. I think the unfortunate thing is that the people who really need to learn money, are the ones that don’t have it. I’m very lucky that I’m in a position to be able to afford to let me kids experiment with $100 each a fortnight. There’s people out there who could probably afford more than that, but I think that in the real world, a large majority of people cannot afford to give their kids that learning opportunity. However, for me, having once been homeless, and then many years later having done an MBA which included finance, I realised the best way to help my own kids learn to manage money was to give them some money to manage.
I do much the same: slightly less but with no rule about saving. Both have learned to handle money reasonably well.
Its fits in with my general approach to parenting and education too - generally encouraging autonomy and making their own choices, "home educated" up to 16 (GCSEs - UK high school exams), managing their time (just as valuable as money).
"I think the unfortunate thing is that the people who really need to learn money, are the ones that don’t have it"
and their parents have the same problem so cannot teach it either.
That said being rich can make you stupid about money too, as it can lead people to think they have an endless flow, especially if they have indulgent parents.
It is beneficial for your kids to have the opportunity to make mistakes with the small amount of money they receive. These lessons learned will save them from future troubles. 50 bucks may not be much, but it’s enough to keep it real.
~$5000 per year, which you would have likely spent anyway just giving them things, in order to hammer in solid financial literacy skills seems like a really good return on investment. Especially for the ADHD one - even if he can't or won't save like his brother I think you are immunizing him against the worst kind of financial ruin in the future.
This is a sobering account. Thank you for sharing.
I’m curious, is the ADHD child receiving treatment? On medication?
I wish more people understood how this goes, when their answer to every social ill is “people need to do better” and there’s no allowance for those who don’t possess the same capacity.
This is fantastic and inspiring, thanks for sharing it! I'll definitely share this with my parent friends. There's no better way to learn some stuff aside from it happening to you, all driven by incentives.
My most terrible conclusion is that if everyone had perfect financial literacy, the world would be even worse for the younger generation, who's never get any change without some systemic reset to catch up.
So, personally I give everyone I know the standard advice (basket of S&P 500, never pick your own stocks, get some T bills for diversity, etc), I think in the long run this is creating a terrible economy for the young, and the old will eventually pay for it.
The article goes on to make better arguments than the comments imply, but still treats the opposition as a strawman. Showing a student how compound interest works on one loan or account is microeconomics and it was never as ineffective as teaching kids smoking public health statistics which is more like teaching macroeconomics and expecting children to be afraid they will ruin the GDP.
> What makes financial decisions hard isn’t the math.
To be fair, I've met quite a few people who also struggle with the math. To the Hacker News audience this seems unfathomable, but the very idea that you end up paying much more with the "pay only 9.99 €/month)!" deal is completely alien to many people. Or even if they understand it in principle, it never occurs to them to compare the actual numbers. Or even if they compare the actual numbers, it doesn't occur to them to add the numbers up to see how much extra they are spending on interests in total.
Many people are quite stupid when it comes to even the most basic math. Or not even math, but just thinking of or comparing numbers.
As someone who grew up in a poor area (not in US, but not really relevant, I think), the main lesson that something like home economics/financial literacy classes need to teach is basically the role model / "this is actually possible" thing.
Basically, some of the following:
For poor kids;
Don't train or focus on a career that doesn't pay well; don't even consider it, you can't afford it. That's someone else's problem. Maybe you can do it later when you 'make it'.
(for example - low end - nursing, teaching, etc, high end - fashion, art, photography. do these after you make money)
Yes, you can make it, just because your neighbours are poor doesn't mean that you have to be
You will lose friends if you are ambitious, this is normal
etc.
Some people seem to intuitively have this understanding (personality traits that are a bit more individual, I guess), others don't.
The problem of course is that the state school system basically can't do this, because there's a conflict of interest, someone needs to do the jobs that don't make sense for an individual to pursue.
> They do it because everyone they know is going to college, because their parents expect it, because they’ve been told their whole lives that education is always worth it
Jm2c but I would not really recommend, not blindly at least, a degree to many kids today. You really like it/care? Good. Go for it.
In my countries, Italy/Poland, the average plumber or electrician makes more than the average law or economics degree.
You want to make very good money? You're more likely to do so running a bakery in northern Italy where there's very few of them.
My SO lives in Reggio Emilia, a city of 150k+ it's impossible to get a decent croissant for breakfast, it's crazy.
The new generations will have relatively low competition for blue collar jobs, but plenty in higher education.
It's especially easy on those that want to be self employed to find opportunities.
Yet, every time I say those things there will be the usual person bashing me that a very good lawyer or engineer will make more than those jobs...sure, true. But the largest majority won't.
“What [schools are] bad at is teaching people to win in adversarial environments. And they're also bad at the meta-game of reminding someone that knowing the basic mechanics of some process does not make them an expert, but does make them a mark. Said differently: if you know which hands win in poker, thinking that this means you know how to play the game makes you a mark, not an expert.”
“And it's hard for a teacher to end a class by telling students that they got an A+ in financial literacy and are now equipped to get ripped off in entirely new ways by an entirely different set of adversaries. But it's also impossible to create a repeatable standardized test that accurately simulates such an adversarial environment, because any time everyone gets the same correct answer, that answer would need to become wrong.”
[+] [-] pembrook|1 year ago|reply
You could also write the same clever-sounding contrarian think-piece about why teaching Home Economics doesn't make sense until you have your own home to run; teaching CPR doesn't make sense unless there's someone choking right in front of you; etc.
Using the logic underpinning this article, the only things taught in school should be how to play video games, how to find the best parties and how to get laid; since those are the only things actually relevant to students at that stage of their life.
Obviously studies will show that most students don't become financial wizards after taking financial literacy classes, because that's how it is with all education. How many kids who take English class become good writers?
Doesn't mean we shouldn't offer the knowledge for those willing to take it.
[+] [-] neogodless|1 year ago|reply
This is the question most kids ask when offered education. If you answer that first, everything else follows.
Start with why. (Thank you Simon Sinek.) Are there meaningful, ongoing benefits to learning how to make specific decisions with your money? Should you care enough to learn the more mundane details like reviewing expenses or filing your own taxes?
I know there are attempts, like showing those log graphs that try to impress upon young minds the long-term value of compound interest. I'm sure those help a few people, but I do wonder if there might be other more impactful concepts.
Personally, I get a great deal of satisfaction out of things like efficiency, self-reliance, and so on, but I don't know if valuing those things can be taught, or just develops organically. Regardless, I think you always need to impress upon students the motivations for their decision-making and try to help them care. The rest can come later.
[+] [-] eadmund|1 year ago|reply
The methods used to inculcate character are, I think, different from the ones used to build knowledge.
[+] [-] smadge|1 year ago|reply
[+] [-] rsanek|1 year ago|reply
fwiw i had the same experience with money that the article talks about. my parents tried to impart alot of wisdom on me but it hits different when you have actual money in the market and see it go down.
[+] [-] pyrophane|1 year ago|reply
[+] [-] masfuerte|1 year ago|reply
Proposing the teaching of financial literacy when the children are baffled by arithmetic is absurd.
[+] [-] teddyh|1 year ago|reply
— Jamie Zawinski <https://www.jwz.org/doc/groupware.html>
[+] [-] nico|1 year ago|reply
This would actually be amazing if possible.
“Operator, I need CPR lessons, now”
Like Neo in the Matrix - “I know Kung-Fu”
[+] [-] nosianu|1 year ago|reply
I usually hate such one-liner responses, but in this case, really, it is the article that needs to be read, not my reply. I could not say nothing and let this stand though, the contrast between the comment and what is actually in the article is too large.
[+] [-] SilasX|1 year ago|reply
It's vanishingly unlikely that any student who learns "personal finance", with no practical application, is going to retain it for the 5+ years until they'll actually need to use it. Learning doesn't work that way -- with, as you note, a few exceptions for unusually motivated students ... who would probably be able to learn it on their own when the time comes.
Ditto for the famous meme about "why don't schools teach something useful, like doing my taxes?" Because it would come across as an ungrounded, garbled mess that you'd forget by the time it was actually relevant.
So yes, I'd say that generally, education should work by grounding lessons in some kind of practical application. And indeed, like the other comments note, that's how it works for some of your other examples, like actually cooking something for home ec, or doing CPR on a dummy (which mimics most of the dynamics of the real thing, even if imperfectly).
I think there's a real human need being expressed by the common complaint, "When are we ever gonna use this stuff?" I'd phrase it as, "You're not grounding this material in a way that allows me to reason about it, and what's important vs isn't."
So, to the extent that we want to prepare students for "the real world" -- in particular, things like "doing your taxes" and "evaluating a car loan" -- I'd say the best way to address it would be by teaching the (meta-)skill of "learning an unknown domain". (Yes, "learning how to learn" ... but as an explicit skill, not one applied to material that is itself too artificial.) That's something you could apply to practical problems, even if they're not the same ones students will be solving later.
Applying this insight to the teaching of literary analysis: frame it as refuting an internet comment that doesn't understand that a song is a metaphor.
In fact, one thing that frustrates me about how the teach estimation in math is that they teach a useless version of it: you do something that takes about as long as calculating the exact value, except you add some rounding steps because you're told you can't give an exact answer. What you should instead do is give a timed test, which much more problems that usual, and only require approximate answers. Then you're forced to save time by rounding.
Late edit:
>Using the logic underpinning this article, the only things taught in school should be how to play video games, how to find the best parties and how to get laid; since those are the only things actually relevant to students at that stage of their life.
Yes, it does annoy me when the education system neglects the teaching of some skills that don't come naturally to some students, but not other skills.
[+] [-] aaron695|1 year ago|reply
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[+] [-] gabesullice|1 year ago|reply
Experience is hard (if not impossible) to scale. And it could easily backfire: imagine the scenario where the experience is miserable and results in failure. What if the students' lesson learned is "why bother trying?"
The most effective way we have to scale experience is through simulation. And we know how to provide that pseudo-experience to young kids without a lot of investment: story telling.
Maybe we should scour the globe for compelling stories that teach lessons about delayed gratification, the value of saving, and self-confidence vs. vanity in terms of spending money, so that we could start telling them to students at an early age.
[+] [-] hollywood_court|1 year ago|reply
I’ve been living in an apartment for the past 18 months while saving to build a house and I’ll be here until the home is completed in October.
It has been very alarming watching how my neighbors behave and spend money.
I myself come from an impoverished background. Single mom, multiple violent stepfathers, no money, left home at 16 to escape the abuse, etc.
I slept hard for many months and I’ve been without a home on three different occasions.
However, I firmly believe that poverty is a choice for a lot of people and it’s never been more evident until I lived in an apartment complex.
My across-the-hall neighbors order food delivery 10+ times per week. Last weekend, from Friday afternoon until Sunday morning, they had food delivered 5 times.
I’ve only paid for food delivery once and that was when my son and I were stuck at home with Covid.
Many of my neighbors drive new $50k+ automobiles.
Then I hear the same across the hall neighbors arguing about money. She’s a teacher (I see her ID card hanging from the rearview of her CR-V. The husband works in a kitchen.
I’m guessing their combined gross income is maybe $100k and that’s being generous.
Yet they spend money on food delivery like they were making twice that amount.
My base salary is only $130k which is decent for Alabama, but I wouldn’t dare waste money on something like that.
I drive a 25 year old Land Cruiser that I maintain myself. Growing up poor, we didn’t pay anyone to do anything. I had to learn to repair things myself. I kept that habit through adulthood.
Sorry for the rant. It’s just wild seeing how some people live while also having to hear them complain about having no money.
[+] [-] pyrophane|1 year ago|reply
Now, of course, restaurant prices have skyrocketed, apps all charge significant fees and the tip expectation is around 20% (and don’t even get me started on how ridiculous it is to base tipping on food cost when none of the tip goes to anyone involved preparing the food and a 10lb bag of mashed potatoes is cheaper than a 1/2 oz container of caviar).
But people now expect their meals to be brought to their door and have a lot of resistance to going out to get it or, god forbid, preparing it for themselves.
[+] [-] plakspin|1 year ago|reply
[+] [-] washadjeffmad|1 year ago|reply
[+] [-] saguntum|1 year ago|reply
* Person making around $40K buying a $50K new vehicle
* Software engineer making $100K+ in a low cost of living area asking if $5K is a good enough down payment for a home (at least they questioned it!)
* Consultant complaining about money while taking Uber back and forth to work every day and getting all groceries delivered on Instacart
However, these examples are from people who have the means to make these poor decisions and access to credit to do so. I think you understand this from having grown up poor, but it's worth illustrating for readers who may seen your comment and blame most poorer people for their situation.
There's "poverty," and then there's poverty. The bottom 20% of households in the US make about $22K per year. People I've known working in construction get paid entirely in cash and have no credit, often having to choose between paying the water bill or the electric bill after an unforeseen emergency. At the level where you are paycheck to paycheck, assuming the paychecks are regular, you can't save for emergencies because every day is spent triaging the basics.
[+] [-] rayiner|1 year ago|reply
[+] [-] skeeter2020|1 year ago|reply
We have an entire generation of NOT poor western young adults who grew up during essentially zero % interest rates. Their parents financed lifestyles well beyond their means; that was their financial literacy education. None of your neighbours actually "bought" a $50K+ automobile. They are all paying bi-weekly (or weekly!) finance payments. Combine with our focus on immediate gratification and society is pretty messed.
And it wasn't just consumers! Nobody runnning a small business has had to figure out to make the math with double-digit business loans work for some time. Massive fiscal spending growth has also made many businesses viable on government borrowing.
[+] [-] klabb3|1 year ago|reply
What makes very little sense to me is seeing people go from having very little to making a lot, and the increases in lifestyle to match income. Aka lifestyle creep. Things that 2 years ago were not even a wish are now taken for granted. And it’s all the same as everyone else.
[+] [-] lnsru|1 year ago|reply
But yeah, the food delivery is expensive. Never do this. Try to teach the young guys in the office, that cooking is not rocket science. 3 smallish pieces of okayish meat cost 5€, add some rice. Grab paprika, tomato or cucumber and you have super healthy 3€ meal. Instead of 7-10€ microwave crap from supermarket.
Financial literacy should be a topic in school. Repeated every couple years going from simple budget planning to mortgages, stock market and exotic derivatives. Plus a course about all the scams and basic computer security. Heck we even modeled back then strategies of fake company before graduation. But that was special school.
[+] [-] bustling-noose|1 year ago|reply
Money management and financial literacy involves psychology along with math. So does sex education like the article compares it to. Having sex or spending money is not the problem. Nor is putting fear of the two in your head from a young age or the desire for it.
As Charlie munger said - psychology should be taught from a young age. Maybe the most important topic missing from education.
Spending money isn’t bad and having sex isn’t either. But saving for a future you’ve dreamt of and sex with a loved one is better. This involves less math and sex education and more psychology and mental well being.
If you are a 30 something politician looking for a change and understand psychology, you might want to visit schools and give children hope and mental well being tips. They might vote for you in 15 years.
[+] [-] jimkleiber|1 year ago|reply
[+] [-] rincebrain|1 year ago|reply
You're not planning for 1, 2, 4 weeks out if you're constantly so stressed you're only thinking about today.
And if you're so overwhelmed you're only thinking about today, you're not noticing that you're spending impulsively 5, 6, 7 times a week, and that it adds up.
That's really been the key thing, the times that I've sat down and tried to talk someone through who was struggling with their financial planning.
They never really internalized doing this sort of planning regularly, for various reasons, and are so stressed by the day to day that they do not spend time thinking about much beyond the immediate, not just in terms of finances, so they're not trying to save for a goal, or a vacation, they're just trying to get through the day and pass out, so that kind of planning and feedback of "oh I need to not do that" just doesn't happen, much less learning to stop and think before buying things.
I don't have great advice on how to use this for better outcomes, though - sometimes, just making the suggestion when asked that they start to do this sort of planning regularly has been massively helpful for people, but I have, a couple times, had people ask for advice, only for it to become clear that they were looking for a rationalization to externalize their problems - that is, any proposal which required they change their behavior was off the table.
(The above, by the way, is also, I think, why there's so much backlash about RTO and similar - a lot of people who had been mindlessly struggling through the day, had time to themselves now, and did some thinking they never had the energy to do before...)
[+] [-] bsenftner|1 year ago|reply
[+] [-] unknown|1 year ago|reply
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[+] [-] milesrout|1 year ago|reply
They spend more than they earn. They don't earn enough and they spend too much.
It is like blaming Cocacola for people being fat. Yeah they probably have some diffuse structural blame for the situation at a societal level but nobody is forcing anyone to drink a litre of coke a day or to fritter away their money on takeaways instead of investing it sensibly.
Could you blame advertisers for people spending money. Maybe? Do ads even work? They don't seem to work at all in politics so I doubt they do much anywhere else.
[+] [-] juujian|1 year ago|reply
[+] [-] freddie_mercury|1 year ago|reply
The research I've read on the subject, experts nowadays are tending towards preferring "just in time" teaching. If you learned about mortgages and 401ks in 12th grade, that's not much help if you don't get a 401k until you're 22 or a mortgage until you are 25.
And that shows another issue: what does anyone even mean by "financial literacy". Does it include lessons about individual stock picking? About claiming Social Security early? About optimising taxes? About checking for better insurance every few years? About college savings plans for children?
How much ground do we need to cover?
[+] [-] lucasfcosta|1 year ago|reply
Financial literacy itself is quite simple: spend less than you make.
Everything else is an optimization and it’s pretty easy to learn with a few days of research.
I know this is the classical HackerNews type comment, but I honestly can’t understand why it’s so hard when there’s so much information available and so few pre-requisites (almost none) to learn about it.
[+] [-] jakubmazanec|1 year ago|reply
Then the article proposes another flavor-of-the-month solution that promise revolutionary changes - if only each student would start a business, then he would HAVE to learn math and everything will be solved.
Ignoring the issues of costs and scalability, why not try something simpler first? IMO teaching how to handle money is something that should parents start even before their kids go to school. Give them a little pocket money so they have some agency, and they will soon learn what they can buy now and how to save for a future.
[+] [-] someothherguyy|1 year ago|reply
As the article states, people still go into debt even when they have real world experiences with financial transactions.
Vulnerabilities will always be exploited if there is something to gain from it. Rules can be implemented to protect the vulnerable.
[+] [-] pradn|1 year ago|reply
It is totally true that these extra-mathematical factors have a big part to play how we spend and how we save. If you’re in a certain culture that expects a certain level of spending, it’s hard to take yourself out of that.
I still don’t see even adults with a good idea of basic financial things. How much does it cost to buy a house? How does a monthly payment change with interest rates? How do you become eligible for Social Security?
You really need to keep these several-dimensional functions in your head. At the least, a good grasp of algebra is required.
[+] [-] BugsJustFindMe|1 year ago|reply
Big part of that is because the answer is "twice as much as 10 years ago", which is simultaneously mindboggling, appalling, and hard to keep track of.
[+] [-] jlintz|1 year ago|reply
[+] [-] Quinzel|1 year ago|reply
I felt I was failed by education/parents with regard to financial literacy, because the first time I ever had real money in my life was when I went to university the first time and I had no idea how to manage it, and I ended up homeless for some time.
Now I’m a parent myself, I decided I’d teach my kids about money by actually giving them money. $100 each per fortnight. I made both kids set up savings accounts that earned interest, and they had to save $50 a fortnight. The other $50 I said they could spend on whatever they liked, but that I would no longer pay for anything related to their gaming (ie, Xbox subscriptions etc), I don’t buy them toys, or nice snacks, or fancy branded clothes - that’s all stuff they now need to save for and buy themselves with the money they are given. One kid has ADHD and the other kid is close to neurotypical. The neurotypical kid certainly learned how to manage money quicker. His savings account remained perfect, he accumulated interest as well, and can always afford his subscriptions etc. he barely ever even spends the $50 that he’s allowed to do anything with, but when he wants to use money when going out with friends etc, he just always has money, and he even keeps some cash on hand as well.
The other kid on the other hand has taken a longer time to understand but, there’s absolutely no way an ADHD kid would learn without real money to manage in my opinion and I think they benefit from having the freedom to make mistakes with money. He would spent his $50 within about 10seconds of receiving it, generally on stupid shit from Amazon. Then he never had money for his gaming subscriptions which would result in massive meltdowns when he couldn’t play his games, and then he never had money to do stuff with friends when he wanted to. He was always the “poor kid”. Then, even though he wasn’t supposed to, he withdrew cash from his savings to pay for subscriptions, losing interest etc, and then also having no savings. It took about a year, but he’s finally learned to stop buying stupid shit on Amazon. He still can’t seem to save the way his brother can, but he saves for a couple of months at a time, and then buys the next computer part he wants, and he always sets aside the money for his game subscriptions now as well. He also does sometimes put extra little bits of money in his savings when he’s particularly motivated for a more expensive piece of computer, but he still often withdraws for stupid small shit. He also compares his spending behaviour to his brothers and he realises that his brother is “rich” because he doesn’t spend money.
It’s an expensive lesson for me to teach them, but, I genuinely think that it has helped them both learn real life lessons with regard to money. I think the unfortunate thing is that the people who really need to learn money, are the ones that don’t have it. I’m very lucky that I’m in a position to be able to afford to let me kids experiment with $100 each a fortnight. There’s people out there who could probably afford more than that, but I think that in the real world, a large majority of people cannot afford to give their kids that learning opportunity. However, for me, having once been homeless, and then many years later having done an MBA which included finance, I realised the best way to help my own kids learn to manage money was to give them some money to manage.
[+] [-] avdlinde|1 year ago|reply
[+] [-] graemep|1 year ago|reply
Its fits in with my general approach to parenting and education too - generally encouraging autonomy and making their own choices, "home educated" up to 16 (GCSEs - UK high school exams), managing their time (just as valuable as money).
"I think the unfortunate thing is that the people who really need to learn money, are the ones that don’t have it"
and their parents have the same problem so cannot teach it either.
That said being rich can make you stupid about money too, as it can lead people to think they have an endless flow, especially if they have indulgent parents.
[+] [-] ugurs|1 year ago|reply
[+] [-] hiAndrewQuinn|1 year ago|reply
[+] [-] relaxing|1 year ago|reply
I’m curious, is the ADHD child receiving treatment? On medication?
I wish more people understood how this goes, when their answer to every social ill is “people need to do better” and there’s no allowance for those who don’t possess the same capacity.
[+] [-] OldOneEye|1 year ago|reply
[+] [-] whatever1|1 year ago|reply
[+] [-] mihaic|1 year ago|reply
So, personally I give everyone I know the standard advice (basket of S&P 500, never pick your own stocks, get some T bills for diversity, etc), I think in the long run this is creating a terrible economy for the young, and the old will eventually pay for it.
[+] [-] snailmailstare|1 year ago|reply
[+] [-] vjk800|1 year ago|reply
To be fair, I've met quite a few people who also struggle with the math. To the Hacker News audience this seems unfathomable, but the very idea that you end up paying much more with the "pay only 9.99 €/month)!" deal is completely alien to many people. Or even if they understand it in principle, it never occurs to them to compare the actual numbers. Or even if they compare the actual numbers, it doesn't occur to them to add the numbers up to see how much extra they are spending on interests in total.
Many people are quite stupid when it comes to even the most basic math. Or not even math, but just thinking of or comparing numbers.
[+] [-] naming_the_user|1 year ago|reply
Basically, some of the following:
For poor kids;
Don't train or focus on a career that doesn't pay well; don't even consider it, you can't afford it. That's someone else's problem. Maybe you can do it later when you 'make it'.
(for example - low end - nursing, teaching, etc, high end - fashion, art, photography. do these after you make money)
Yes, you can make it, just because your neighbours are poor doesn't mean that you have to be
You will lose friends if you are ambitious, this is normal
etc.
Some people seem to intuitively have this understanding (personality traits that are a bit more individual, I guess), others don't.
The problem of course is that the state school system basically can't do this, because there's a conflict of interest, someone needs to do the jobs that don't make sense for an individual to pursue.
[+] [-] epolanski|1 year ago|reply
Jm2c but I would not really recommend, not blindly at least, a degree to many kids today. You really like it/care? Good. Go for it.
In my countries, Italy/Poland, the average plumber or electrician makes more than the average law or economics degree.
You want to make very good money? You're more likely to do so running a bakery in northern Italy where there's very few of them.
My SO lives in Reggio Emilia, a city of 150k+ it's impossible to get a decent croissant for breakfast, it's crazy.
The new generations will have relatively low competition for blue collar jobs, but plenty in higher education.
It's especially easy on those that want to be self employed to find opportunities.
Yet, every time I say those things there will be the usual person bashing me that a very good lawyer or engineer will make more than those jobs...sure, true. But the largest majority won't.
[+] [-] petalmind|1 year ago|reply
https://capitalgains.thediff.co/p/teachingfinance
“And it's hard for a teacher to end a class by telling students that they got an A+ in financial literacy and are now equipped to get ripped off in entirely new ways by an entirely different set of adversaries. But it's also impossible to create a repeatable standardized test that accurately simulates such an adversarial environment, because any time everyone gets the same correct answer, that answer would need to become wrong.”