Then again, that‘s not going to happen as it would eventually destroy whole industries and populist voter bases.

I smell a non-profit I should do one day…

Remember, these are the people who require your drivers ed instructor to tell you to go 55 on I95 where the traffic goes 85. They're optimizing for covering their own butts while nominally educating people. They don't really care about truly education people so those people can go do to what will result in the best outcome for them.

They'll do something self serving and asinine like tell students you should make minimum payments on high interest debt rather than ask for a financial hardship extension/reduction for government services/fees/fines (which in many cases are legally required to take that into account).

Besides, the alternatives to public education are all worse.

Catholicism has fewer cultural proscriptions than what the predominant waspy culture wanted. For example, Catholic schools in native American reservations didn't seek to undo Indian culture. This state of affairs was not acceptable and there was a chance said children would become catholic.

Thus, the WASPs, unable to organize schooling in their own churches for their children at an affordable price (a problem which still exists today.. catholic schools are empirically cheaper than other christian schools), turned to the government as the only way to combat the papists.

https://en.wikipedia.org/wiki/Compulsory_public_education_in...

I am not anti public school, but I just take issues with the idea that public schools original purpose was for equality. As Thomas Sowell points out in "education in america", catholic schools do better than public ones for minorities even when accounting for socieconomic factors. This is probably why minorities disproportionately favor vouchers.

Public schools leading to equality is today a 'fact' asserted with little empirical data and any attempt at refutation is met with all kinds of accusations.

I didn't say it was.

> For example, Catholic schools in native American reservations didn't seek to undo Indian culture.

Are you sure about that?

> Public schools leading to equality is today a 'fact' asserted with little empirical data

I know of no person who asserts that fact.

Yes. Whether it was the California missions or the Jesuit missions of Canada, by far the missionaries were better than the other European authorities. Perfect? No. Better... Yes

This is a good article detailing the original approach of the church before the authorities started getting involved. It's not what you think it is.

https://forheavenssake46778317.wordpress.com/2021/06/08/resi...

But with all respect, you don't in fact know what I think.

That's fair. I shouldn't have said that.

Re the blog post... it cites several books and scholarly texts, and mainly chooses which ones to present. Now of course, that's a form of bias, but the books and source materials are explicitly listed and I believe they paint the picture even clearer than the blog post.

There are millions of people who went to charter schools, private schools or were home schooled who would take issue with his last sentence. They got fine educations. I'm a big believer in good parents making up for bad schools but you can't just hand wave away the productivity of all the professionals involved in schooling by saying "their parents cared they would have turned out fine wherever they went" (which is the typical retort).

Pretty sure learning about interest was part of the curriculum.

I went to a shitty public school in the middle of nowhere and they taught us to budget, handle bank accounts, etc. We even had fake jobs with fake bills and had to make a household budget. They even offered a class with fake babies that girls had to carry around to teach them parenting skills.

The problem with teaching life skills is that they are not retained if they are not relevant to a person's situation. Kids don't have bills or jobs; money is an abstract concept to them. With this in mind, financial literacy should not be taught in schools, it should be taught to 20-30 year olds who long since left school.

They were extremely easy classes taught by not-the-best teachers (often gym teachers) but still pretty informative and I did learn how to sew pretty well.

My wife attended well-known private schools in the US and Korea and never learned these skills.

The man showed us his wallet full of credit cards, but I think (and hope) that we were all old enough to understand what was going on and simply feel a little bad for him. The moral of the anecdote, though, is that sometimes the code doesn't run the way you planned it to, and good ideas run through the wrong systems result in strange errors.

My father teaches so long as he stubbornly refuses to retire, and as of 5 years ago was still required to teach about floppy disks. He is in a non-tech field. I'm a product of my experiences, but I skeptically and open-mindedly remain on the 'damn gubmint' side for now.

Tbf, I have no idea what the average level of financial literacy is. But I worked in financial services and I can confirm that: having a lot of cash from a job in which you are supposed to have financial literacy (corporate lawyer, accountant, etc.) and/or working in financial services in which you have completed exams on financial literacy...does not mean you have financial literacy/will make reasonable decisions.

It shifts your view of reality significantly when you are in your early 20s, just out of college having to explain basic elements of finance to: a financial adviser managing $100mm of other people's money, a corporate lawyer worth ~$10mm, [insert other horrific situations].

...there is no other way to gain knowledge apart from learning, it is not some innate skill. But that supposes that people designing the course know what they are doing, this is a fairly ambitious assumption given that anyone who has financial competence is, generally, not designing courses for the state govt.

And, ofc, lack of information isn't why people make poor financial choices. One of the flaws of financial regulation (and economics) is assuming that if everyone had perfect information, they would make the same decision. This is equivalent to the guy who has a view on the death penalty and thinks anyone who disagrees with them does so because they don't have the "correct information". The issue isn't information, people know they shouldn't take out the high-interest loan when they have to speak to some sleazy guy in an ill-fitting suit at a strip mall (these heuristics work well). People take out these loans because of poverty and a lack of options (particularly in the US, massive unbanked population, large banks won't deal with poor people, unconscionable level of arbitrary fees that fine poverty). Unless the course teaches people how not to be poor, it is flushing money down the drain.

(A side-note for the target reader: the reason why rich people make bad decisions also isn't bad information...it is usually a combination of greed and studying to get stupid i.e. subjects like economics. Wealthy people only see upside, they will believe utterly ludicrous shit that makes no sense because...hey, they are wealthy, and they got wealthy through those smarts (as an example, every wealthy investor I have ever met has gone through the "goldbug" phase...it is amazing how consistent this is). Again, you can't teach it. Ironically, if you combined the paranoia of a poor person with the risk tolerance of a risk person, you would actually have someone who makes decent decisions...but those two attributes tend not to be found within one individual.)

In the case of speeding it is well known that higher speeds leads to more traffic deaths so we can easily calculate the death toll of people going 85 instead of 55 and implement appropriate measures to reduce that.

Just because everyone ignores or despises a law, it doesn't necessarily make it unjust or wrong.

Even with many young men, you are not cool, not a rebel, not “boys will be boys”, not “just this once”, none of that “I live nearby”. You are a bloody idiot, mate, and a wanker.

But there is a very practical point that if the "governed" are not listening, than the "governor" had better! Revolutions and civil wars have occurred over such.

Also too often "popular" is conflated with "visible/noisome support". See the gay marriage here in Australia. Lots of noise on both sides, it took a referendum to prove that 61% supported it.

Aside: my experience is it has been socially unacceptable to drink drive for 25+ years for everyone I know. You and I are having different life experiences!

Hope yours is a good one, cheers!

Things aren't always so simple when second level effects are accounted for.

Several reports point out that when the 55 speed limit was repealed, traffic deaths increased. Here are a couple of citations:

1) "Rising speed limits over the past 25 years have cost nearly 37,000 lives, including more than 1,900 in 2017 alone, a new study by the Insurance Institute for Highway Safety shows ... For the new study, Charles Farmer, IIHS vice president for research and statistical services, analyzed the effect of changes in the maximum posted speed limit in every state from 1993 to 2017. ... Farmer found that a 5 mph increase in the maximum speed limit was associated with an 8 percent increase in the fatality rate on interstates and freeways " - https://www.iihs.org/news/detail/speed-limit-increases-are-t...

2) "Long-Term Effects of Repealing the National Maximum Speed Limit in the United States" - https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2724439/

> We examined the long-term effects of the 1995 repeal of federal speed limit controls on road fatalities and injuries in fatal crashes. ... We found a 3.2% increase in road fatalities attributable to the raised speed limits on all road types in the United States. The highest increases were on rural interstates (9.1%) and urban interstates (4.0%). We estimated that 12 545 deaths (95% confidence interval [CI] = 8739, 16 352) and 36 583 injuries in fatal crashes (95% CI = 29 322, 43 844) were attributable to increases in speed limits across the United States."

But that's after it was repealed.

Going back to when the law was put into place, https://en.wikipedia.org/wiki/National_Maximum_Speed_Law#Saf... states "The limit's effect on highway safety is unclear."

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5005740/ shows "Joinpoint analysis of trends in motor vehicle traffic fatality rates, all ages, by sex, 1968 to 2010" in figure 2 you can see the decrease in fatalities after the law was put into place in 1973, followed by a regression to a decreasing mean.

This is in agreement with Wikipedia's statement "Although the vast majority of states reported fewer traffic deaths in 1974 compared with 1973, there were in fact three states where traffic deaths actually increased ... According to the National Research Council, there was a decrease in fatalities of about 3,000 to 5,000 lives in 1974, and about 2,000 to 4,000 lives saved annually thereafter through 1983".

It therefore doesn't appear that traffic deaths increased with the enactment of the National Maximum Speed Law.

People ignore the sign if the sign doesn't match the road design.

Roads designed for 30, 55 and 85 miles are completely different beasts with different lane width, straight segments length, turn radius, traffic calming elements, etc.

Puting an autobahn and plunking a 50 mph limit there is a recipe for all-out "speeding."

A lawyer got the county to up the speed limit on a boulevard I drive, after he got mad over a ticket.

(I don't know the details. It's something to do with Speed Traps I think? I remember seeing an angry Lawyer, and felt he had a right to be pissed in a local newspaper.)

That is, the contract that needs to be revisited is the contract which says that we prefer private cars over mass transit, walking, and bikes; that we prefer zoning over mixed use; that we prefer sprawl over density; that we design roads the encourage people to speed; that we mandate parking minimums; etc.

While I think you think the contract to revisit in the one which says people are breaking the law by following the speed of traffic instead of the speed limit.

As an example of this, when I took out student loans they were sold to me as "fixed interest" (literal words used and it was at the typical point where you have the option to pick a fixed interest or variable interest rate). My dad and I had a conversation about fixed vs variable interests and the risks involved. But to our surprise later we found that it was "fixed interest repayment option" and not "fixed interest repayment rate." I wouldn't say my family is financially illiterate, far from it actually. But there's still predatory behavior like this that preys on more "Swiss-cheese knowledge" that a non-expert would have and a lack of understanding all the legalize (and my dad has a JD).

So I do think we should make people more rounded in their knowledge, but we also need to do more and ensure that we curb predatory behavior. The disadvantage of making people more well rounded is that the excuse of "they should have understood" becomes more powerful. But no matter how good you are you're not going to beat a team of lawyers and psychologists that want to implement dark patterns. But then again, I think if people were more educated then this argument would be less contentious and we'd recognize that a single person is always going to be outclassed.

Any specialist worth their salt can mislead or scam a layman. In some idustries you go to jail, but in others its somehow an accepted practice.

media competency - part of history class, including evaluating sources, history of yellow journalism, etc.

scientific method - 6+ years of science class

cui bono - this is apparently a fancy term for motive, which was discussed during history class (specifically explaining the judicial branch)

negotiations, assertiveness, how to deal with bullies - a required part of working on group projects for 6+ years of life

mental health basics, mechanics of addiction - health class

Economics 101 is the only one on your list that was missing, and presumably a financial literacy course would cover this.

Similarly, science class tends to teach knowledge (including knowledge of the scientific method) but not actually applying the scientific method to any real-life scenarios. Even with science labs, students might use the scientific method during class only, without extending it to decision making in life.

Negotiations and stuff can be learned from group projects? No way. Group projects are primarily cooperative and students share the fruits of their combined labor. How does that relate to life scenarios like, negotiating a lease agreement with a landlord who has very different incentives? Or negotiating a job offer with a prospective employer when there is a clear mismatch in power between the two? It doesn't.

Best subjects for what?

The school system has always seemed aimless to me until you hit university where the goal more clearly is to either make you a great professional or a great researcher.

Edit: As an example of this, most Americans can recite both the pledge of allegiance and a canon of children’s rhymes — yankee doodle, mary had a little lamb, etc. Knowledge of which act as an immediate shibboleth to others that you on some level grew up American.

This is actually very important for a melting pot country of immigrants.

People say that schools are failing, but compared to their stated goals they seem to be humming along alright.

These are all, in principle, taught at most public schools. The problem is students don't learn them.

Edit: quick google suggests it still exists: https://education.alberta.ca/media/160199/calm.pdf

20% of teens in America are obese. I think you underestimate how much of a problem it is. Here's a source https://www.cdc.gov/obesity/data/childhood.html

> We need followups to adolescent health education in adulthood.

Sure, but having a basis in high school wouldn't hurt.

i learned a lot more in casual life advice from good teachers than i did from the teacher who was forced to teach a government defined "life advice" course. i wish there was a reliable way to impart that important advice to high-school students, but i don't think a government-enforced cirriculum is the way to do it.

I'm much more doubtful about the scope of the positive impact it would have.

I think it's roughly the idea that lack of culture is caused by a distribution problem. I think internet more than showed that improving distribution works only up to a limit.

There is a theory - the paradox of abundance - that paradoxally after you reach this limit you actually decrease access to the ones that need it the most.

https://perell.com/note/the-paradox-of-abundance/

I'm someone who liked school for the most part, and even I treated it as a "just pay attention enough to pass the test" class.

None of this content will help if people don't simply learn to appreciate knowledge, and when they do none of the content will matter.

So, most Americans will know the difference between a period and an exclamation mark. That Lincoln was president during the civil war even if they can’t the battles. Mice come from mice not grain. Basically the kind of basic facts that seem inherent until you realize you needed to learn them somewhere.

And of course people who went further into Math, History, etc where building from foundations created in those years.

I'd add anger management (though perhaps mental health basics would cover this), practical logical fallacies, sunk costs, and basic law.

What gets cut? P.E? Foreign language? History? Math? Electives? English?

Most of it amounts to moving around for 30 min and you get graded on wether you brought a change of clothes.

Thats not to say PE couldn't be useful. Physical fitness was never my strong suit in highschool and PE did nothing to change that.

After making a good salary in a startup, I worked with a personal trainer and learned about muscle hypertrophy, starting strength and general strategies for conditioning along with diet with particular goals. Maybe if we taught that stuff in PE, it would be worth keeping around.

Btw, one of my English teachers, taught us also in Chemistry and did that in English for a year. That was 25 years ago.

I would rather we fix foreign language education rather than just cut it. Besides, why not teach parts of these "life lessons" during foreign language class? Might be interesting to compare home economics in different cultures.

That's why it should be opt-in. The people that are capable of getting value from it (you) join in and the people guaranteed to get no value due to a lack of interest (me) can do something else.

The same thing shouldn't apply to critical/foundational classes like basic math. But foreign languages aren't that.

That being said, they fact that reading math scores are so low in many places my pre-supposed “advanced” topics life financial literacy.

I would require basic law, accounting, and economics classes.

35 years later, the ability to write English has probably had at least the same amount of positive influence over my career as my ability to write C++ or Javascript. I should probably apologize to my high school English teachers.

I'm torn on foreign language. I think everyone should be bilingual, at least. But how it's taught in US schools is mostly useless. I took Spanish every year from 7th grade through 12th, but my Spanish even just a few years later was conversationally useless. I think kids should be learning a second language pretty much immediately when they start going to school, and there should be an effort to ensure it gets used outside that language class. (Easy if they only teach a single second language, but harder if students/parents get a choice.)

We did have a home economics class at some point in either middle or high school. I don't remember it very well, but I think that could have been a good place to teach some basic financial literacy. What I do remember was a bunch of sewing projects, and while I do think sewing is an essential life skill (I still on occasion hand-sew things), I don't think learning how to sew a stuffed animal is more important than learning how debt works.

The course teaches you things like paying your taxes, writing a check, how to vote, etc.

People still complain it doesn't exist. I still have old classmates that make this same "They didn't teach practical skills in school!" posts. They even took the damn class with me. It's maddening.

That is absolutely correct!

Alas, let's look at the bright side, learning all those topics you mentioned in you "Life School" are only one google search away, free (monetarily); they only require an investment of time.

People learn complex things like playing Fornite and Minecraft or understanding Baseball/Football and other sports the same way.

Maybe it's a matter of twisted modern darwinism?

This is my issue with these topics. Like most classes kids will do the bare minimum to pass and then forget it all.

He was getting up there in age and had horrible skin cancer but still literally sprinted down the halls after truants.

He is my all-time favorite teacher, although I actually don't remember that many life skills from him :)

Do It. I love this idea.

My question is something like, would a non-profit be considered as start up? Think of funding and long term sustainability of an idea.

Secondly, I can't read a health insurance policy and fully understand all of it's implications, and I doubt you can either unless you have some spesific traiing in the matter

What does this mean, exactly?

I was dumb in college and graduated with about $4k in credit card debt. It didn’t take a classroom lecture to realize that spending more money than I earned was not a sustainable practice. It’s also not that hard to keep track of how much you spend and make sure it’s less than how much you make.

For almost anything personal finance related there is free information available all over the Internet if you care to spend a couple minutes googling for it.

Likewise with taxes, if you have a regular W2 job, taxes are not hard, just read and follow the instructions. It doesn’t help that people keep repeating the dumb meme that if you make a typo on your tax return the IRS will immediately throw you in jail. They won’t, they just send a letter telling you they corrected it for you (guess how I know).

But it’s also important to recognize that it’s difficult to know what you don’t know.

My first year in college I was placed into “math in the real world”—the class for kids that can’t even cut it in a 100-level math course.

In of the first lessons the professor asked us how we might purchase something we don’t have money for. No exaggeration: I was the only person that suggested saving up for the item.

Every single person in that class was competent enough to understand basic financial literacy. But somehow they made it 18-20 years before learning about savings, compound interest, etc.

It gets more difficult, too. I bet most people don’t know that overdrawing and other “bad” behavior can lead to you getting blackballed in Chex, making it really difficult to open bank accounts elsewhere. How do you even search for that?

I’ve had to stop and remind people that when you transfer money from a tax-advantaged retirement account you need to make sure to transfer it directly—withdrawing it into your bank account can cause a taxable event.

Stuff like that is easy to look up. People should look it up. But how do you know you need to look it up?

I kinda agree. For myself, I have formed a habit of searching for "${NEW_THING_I_DONT_KNOW_MUCH_ABOUT} downsides/problems" - helps with atleast the big-ticket pitfalls.

There are deep systemic issues that stack the deck against the working class financially. There are also plenty of people that make very detrimental decisions when it comes to money and dig themselves into a deep hole, even without any obvious cause.

Both are problems that need to be addressed. The presence of one doesn't invalidate the other, and the solving of one doesn't solve the other. Normally these discussions are people talking past each other as they haggle over the proportion of blame to assign to the individual or system. I say address both simultaneously and let both sides think they're right.

I'm not trying to crash the party here but globally this is impossible. If someone spends less than they make, someone else spends more than they make. If everyone tries to spend less then everyone will be worse off.

Thus we need an institution that can run a deficit for all eternity. Call it "government".

There are other ways but right now that is just how the current system was built. There is no need to feel sad or worry. I personally worry more about idiots who want to keep the current system and avoid government deficits, now that is truly horrifying.

Further what system would you replace it with that somehow defied the finite value law? What your suggesting is that $1, or any countries currency, doesn’t represent any value at all and is just arbitrarily assigned a value.

I know fairly smart people who understand calculus but just cannot accept that there is a problem with paying interest on all of their purchases.

They simply do not understand that eliminating high interest debt as soon as possible (or never acquiring it in the first place) is essential to ever having financial security.

Honestly it sometimes feels like the normalizing of financial illiteracy is intentional, although I'm willing to accept that the lenders of high interest debt are just taking advantage of the situation they've found.

I do not think this is a problem with education. It sounds like they understand, they just do not care. I think that is a different (harder) problem.

You're unhappy that people do not believe it is beneficial to be debt-free. As you note - there are many groups who benefit (profit) from this kind of spend-spend-spend consumption culture.

Frankly, I am astounded that COVID did not bring about a massive economic collapse that would have driven the point about financial security home in a dreadful way. I'm grateful it didn't, though.

To understand loans, I taught students how to determine the monthly payment for a loan using a blank spreadsheet. For students who were intimidated by spreadsheets, we'd start the process on a whiteboard. Just a simple spreadsheet with columns like month, current principal, payment, towards interest, towards principal, new principal. Then guess-and-check to see what the payment needed to be in order to pay off the loan in a specified time period.

That was great, because it let everyone see how loan payments are calculated in the first place. Then it let curious students explore the impact of paying above the minimum, making lump sum payments at various intervals, different interest rates, initial no-payment periods, and other loan "features". We also looked at cumulative interest and other long-term aspects of a loan. Students could do their own projects about car loans, home loans, business loans, and more. Every time I've taken out a loan in my life, I've done this myself, and it's made the experience better every time. Just doing this once lets you talk to a loan officer on a much more eye-to-eye level. This is education as consumer advocacy, fighting back against predatory practices one class at a time.

For taxes, I just had students either bring in their own pay stubs or W2s, or work with a sample set related to a field they were interested in working in. Then I had them fill out a 1040 by hand. They had to start out with the simplest 1040, and they could choose to try a more complex version after that. I had them repeat the process for several income levels; most students had no idea what a "tax bracket" actually is. I'd start with a question like "You're making $__k/yr, and you're offered a $1k raise. The raise will bump you into the next tax bracket. Should you accept the raise?" Many students said no, because they had no concept of incremental tax rates.

You have to present this material carefully. If you tell a whole class of math students, "Okay, everyone's learning to analyze loans this week!" they'll hate it. If you say, "We're learning to analyze numerical patterns, and one of the patterns you can analyze is how banks determine the monthly payment for the car or house loan you might want in a few years", they'll jump on it.

This then explains why when you get a bonus it is taxed at 22% as those balls go in the last bucket with room in it (or 24%..., whatever the highest marginal tax rate someone is in).

Thank you, this looks like a really clear and concise way of explaining the topic! I've been looking for a better way to explain it, particularly the bonuses.

Calculus on the other hand is bit too beautiful. At high school level at least, you get all these smooth curves, everything has a nice closed form answer, and you start to think that maybe these beautiful shapes describe the universe. It's actually not that easy to do, it just happens that we found some examples where it works quite well, and they are just the kinds of things we teach in physics in those same years.

When we then get to an economics class, it unravels. There's a whole menagerie of calculus assumptions that creep into the minds of credulous students. Lets assume Cobb-Douglass production function. Let's say the utility must be this shape. Oh look at what beautiful conclusions we get.

Low interest rates on loans are actually a pretty bad idea to stimulate an economy because the majority of people do not have access to them. If you gave people a $1000 coupon that lets them borrow $1000 at 0% interest regardless of the default rate you are going to see a bigger impact on inflation rates. The benefit is that people only take the loan if they actually spend it, therefore this is superior to helicopter money. If they default that's fine because then it turns into helicopter money which is still better than more loans for houses.

Because the purpose of high school and basic university mathematics is to make people smarter. Algebra or calculus deal with abstractions and concepts that are hard to master. They are like lifting heavy weights. A course on statistics and finance is easier and hence like lifting light weights.

This has independent of the fact that high school teachers and underpaid, overworked, undertrained, and are forced to teach to the test, and so unable to really teach mathematics as they students deserved

We don't teach specifics like 'how to do your taxes' or different retirement account types. But we teach general skills that enable those.

And frankly, those change too often (both time and jurisdiction) and are far too broad to be very useful.

When English teachers discuss Shakespeare, or history teachers discuss analyzing documents: they are generally not expecting students to have to read those particulars, but instead aiming for attainment of a more general skill (literacy, analysis, veracity).

Basically, I think it's better to just teach math and literacy in general. Then if they want to know how APR is calculated, they will have the ability to research it.

School cannot possibly teach everything one could want or need to know in life. It's more about setting a foundation.

In my area (Fairfax County, VA), home ec class in the 90s was cooking and sewing. The "economics" part disappeared from the curriculum sometime before I entered high school.

Also, many college-bound students weren't allowed to take the class. It was a known waste of time - counselors actively pushed students towards more useful courses. In my case, that was a year of Latin as a senior (on top of 4 years of French).

An real home economics class - with personal finance as a primary focus - would be very useful, IMO. I'm sure we covered interest rates somewhere in high school math, but it was purely academic - not taught in terms of useful life skill.

Home economics has always included a variety of household skills, and was never limited to just personal finance.

there was a 7 week segment some time in high school that discussed economics, but it was a sort of math-free intro to macroencomics, as i recall. ("here's what the fed does", "the stock market exists", etc)

Unfortunately the financial literacy we learned in home economics was limited, mostly around budgeting. We had some other classes that covered other finance/life aspects more but they were non-mandatory and post when many people left school in those days, probably would have been better off incorporated into home economics.

An actual home economics course - one that covers compound interest, net present value, discounted cash flow, different asset classes, efficient market hypothesis, supply & demand, and reading financial statements - would be hugely valuable to kids.

Giving capital to people who are not financially literate will likely end up with that capital quickly moving out of their hands to people who are financially literate.

Financial literacy should include this stuff, plus how to get help if you can't make rent, are going hungry, or are homeless.

But is it obvious there isn't enough money? My in-laws, immigrants with almost no skills and mext to zero English, work at Walmart. Their income sucks (<40k combined [1]), and they have zero financial skills (they grew up in communism).

The one thing they know, however, is that my wife is very sharp. therefore, they have given her full access to their all their accounts.

Result?

They’re contributing to a 401k despite always blowing money on flashy iPhones (they’re fairly irresponsible).

They also bought a modest house (ill admit we did lend them the money for a 10% down, which they've paid back) since rent had become more expensive than a mortgage.

They’ve been in the US for just five years and, with very little material help from us, have a reasonable shot at retirement income [2].

The big difference with many others is that my wife took a chunk of their financial autonomy with automatic withdrawals so they wont blow too much money (lottery tickets, booze, fancier iPhones, etc)

[1] Note, they don't have to take care of anyone but themselves with <40k

[2] retirement means selling the house and coming to live with us as soon as either of them can no longer work.

I still remember my grade 10 business teacher (mandatory class) urging us to start contributing to our retirement and showing us the graphs of how impactful it would be to start early?

We got told to bring our parents into a car dealership for extra credit.

And sure, that's all well and good. Did they also teach you how to contribute while you are low income or if you wound up not actually working because you were taking care of a spouse, child, or parent? Probably not. I'm gonna guess that statistically, you are more likely to be the poor person that can't save.

$100 initial capital invested at 50% annual returns becomes $330K after 20 years. This is like a successful startup on its growth curve, or some of the very best hedge funds (eg. Medallion). It's less than most cryptocurrencies (eg. Bitcoin has returned about 70% annually over the last 7 years).

$10K at 20% annual returns becomes $383K after 20 years. This would be a very good active investor or someone who hits a hot company. Most FAANG stocks have returned about 25% over the past 10 years.

$100K at 7% annual returns becomes $386K after 20 years. This is a typical index fund return.

$250K at 2% annual returns becomes $371K after 20 years. This is a typical high-yield savings account return.

$1M when you lose 5%/year becomes $358K after 20 years. This is typical of somebody who holds mortgages or student debt where their asset value & income isn't increasing, or someone who has credit card debt equal to a quarter of their net worth.

Most people underestimate the power of compound interest and exponential growth, which is one of the things that a financial literacy course really needs to teach.

This is generally uncommon, at least for mortgage debt. If you take care of your house, it usually is an appreciating asset, and makes the debt financing worth doing.

> or someone who has credit card debt

... or a car loan. Very common. Almost nothing that people pay for with consumer credit is an appreciating asset. Though of the two, perhaps a car loan is justifiable if it enables you to get a (better) job and earn more money, even if the asset itself depreciates rapidly.

"In retrospect, I wish I had known more about the hazards and difficulties of such a business, especially during a recession of the kind that hit New England just as I was acquiring the inn's 43-year leasehold. I also wish that during the years I was in public office, I had had this firsthand experience about the difficulties business people face every day. That knowledge would have made me a better U.S. senator and a more understanding presidential contender. Today we are much closer to a general acknowledgment that government must encourage business to expand and grow. Bill Clinton, Paul Tsongas, Bob Kerrey and others have, I believe, changed the debate of our party. We intuitively know that to create job opportunities we need entrepreneurs who will risk their capital against an expected payoff. Too often, however, public policy does not consider whether we are choking off those opportunities."

   -- George McGovern

As a 24yo European I never had more than 5k € of debt at any point in my life.

The end result is the entire working class is enmeshed in debt all the time just to stay even with where they would have been if the interest rates weren't so low.

It's astonishing how effective the upper class was at coming up with this policy to endebtify the entire middle and lower class without ever once talking with each other about how to do this or coordinating any actions to produce this result. It just sorta happened. Neat for them.

Household debt is overwhelmingly about home ownership, first of all which affects richer working people. Housing prices mainly have to do with housing scarcity in good areas, which is a density problem.

Workers have been getting fucked, but blaming interest rates is simplistic and counterproductive as the ability to do more fiscal stimulus as aided by low interest rates would be in their favor.

No, but they are definitely A problem.

Housing prices in a given market vary inversely with interest rates. Sure, scarcity has an effect which is why I said "in a given market". When someone goes to a bank looking for a home load, the first thing they are is what your income and expenses are. From there, they figure out how high your monthly payment can be, and from there using the current interest rates they calculate how much you can borrow. Everyone - sellers, agents, banks - pressure you to spend as much as possible, and one average they succeed. That means lower interest rates will enable you to pay more at the same monthly payment. In other words, the buyer will have roughly the same monthly payment regardless of interest rates. Those rates will determine how much money goes to the seller vs the bank over 15 or 30 years.

Low interest rates cause artificially high prices which don't benefit society, just the sellers. They also lead to banks not paying interest on savings, which discourages savings. They also encourage all sorts of high prices. The current cost of a college degree is due to government guarantees on student loans, which largely didn't exist when I got mine (at a much lower price even adjusted for inflation).

And finally, something I think is true but haven't worked out all the math. It's not lower interest rates that stimulate the economy, but the act of lowering them. If we were at a steady state, reducing rates by a fixed amount and keeping things steady should produce a short-term (perhaps a few years long) spike in GDP, after which things will return to an equilibrium possibly lower than before the rate decrease (or the same or slightly higher I don't know) but less than the short term bump. The opposite is also true, raising rates will cause problems so much be done very slowly. The Fed has the US economy backed into a corner of sorts. The only way out seems to be to ignite a lot of inflation and raise rates slowly so as not to cause another collapse like 2007 (which was triggered by an abrupt rate increase).

> In other words, the buyer will have roughly the same monthly payment regardless of interest rates. Those rates will determine how much money goes to the seller vs the bank over 15 or 30 years.

Yes

> Low interest rates cause artificially high prices which don't benefit society, just the sellers.

Private ownership of land is a racket, yes, but you as you just said the mortgage payment should be the same as effects bank vs seller's cut. The payment structure matters more than the total price.

> They also lead to banks not paying interest on savings, which discourages savings.

Was there every a time when working class savings amounted to something in aggregate? I suspect the whole "the holloi polloi needs to learn to be frugal" has been all moralization not economics for quite some time.

> The current cost of a college degree is due to government guarantees on student loans, which largely didn't exist when I got mine (at a much lower price even adjusted for inflation).

The problem here isn't rates, but the moronic guarantee without strings attached. This is classic privatization -> regulatory capture. The government should just fund public schools and private schools can go fend for themselves.

> And finally, something I think is true but haven't worked out all the math. It's not lower interest rates that stimulate the economy, but the act of lowering them.

Certainly monetary policy is overhyped and not neutral as the neoclassical ones believe. (Anybody with half a brain can see that the COVID stimulus payments had affect that a decade of QE didn't.)

Maybe check out https://jwmason.org/slackwire/the-natural-rate-of-interest/ I think that is pretty close to what you are saying. If there is no natural rate, but many different equilibria, then we do care more about changes to the rate than the rate itself in some sense.

They are what you get when people save too much money as money is zero sum. If one person saves, someone else doesn't. The only way to break this game is to stop saving or to lend the savings out. The private sector doesn't want them so rates drop to 0%. The government doesn't want them (ok biden changed course, go biden!). People hate government debt just as much even though they don't know that if the government doesn't take the debt it's the private sector that has to take it on and rich people have an easier time pushing the debt off to the weaker part of the population. e.g. financial crisis with subprime mortgages.

>They also lead to banks not paying interest on savings, which discourages savings

Everything would be fine if those savings were gone. For obvious reasons. Too much savings means there is no need for savings. Savings are only virtuous when they are needed. Kind of paradoxical isn't it? Because people want to be virtuous someone has to create a destination for those savings and it turns out the biggest destination is housing.

>It's not lower interest rates that stimulate the economy, but the act of lowering them.

It's much simpler. The 0% interest floor is purely man made and interest rates are still too high.

>The opposite is also true, raising rates will cause problems so much be done very slowly.

Raising rates would cause problems because rates are too high to begin with. Why would you want them to be even higher?

>The Fed has the US economy backed into a corner of sorts.

It hasn't. The Fed doesn't do anything. It's the private sector (companies, consumers, rich people) and the government that are doing everything to back the US economy into a corner. The Fed is merely the institution that has to act when everyone else failed to act and since the problem wasn't caused by the Fed it also cannot be solved by the Fed without giving it additional powers.

>The only way out seems to be to ignite a lot of inflation

The only way out? We are talking about an institution that is unable to meet its inflation goals. Of course it needs high inflation, not as a way out, it needs them to do something as boring as meeting its inflation target.

>and raise rates slowly so as not to cause another collapse like 2007 (which was triggered by an abrupt rate increase).

2007 wasn't caused by abrupt rate increases, it was caused by savers dumping their money into bad debt. The interest rate increase just caused all that bad debt to fail.

Be happy you guys got Biden. He's doing everything possible to ensure that the US economy recovers. Meanwhile I get to live in a country where the incompetent do nothing party got elected 16 years in a row. See you in 2% inflation heaven while we suffer in deflation hell.

Stimulus, incidentally, has much the same problem. Yeah, great, everyone gets $3000 or whatever, but now you're just in competition with other people who just got $3000. It's not a complete loss, of course, but people advocating for it always want to talk about the benefits in pre-stimulus currency, but people spend it in post-stimulus currency.

Just let the government take the debt and get this thing over with.

* Student debt. University costs a fuckton of money in the US, and you can pretty much find some way to cover it in debt. For young people this is probably the #1 category of debt.

* Mortgages. Basically, of all the debts, mortgages are the ones that don't really "count," since it's generally acquired for the purpose of specifically obtaining an asset and its bottom line on your net worth is going to be around 0. Also, there's some tax advantages to mortgages, so it's not really an issue to have mortgage debt.

* Medical debt. Yeah, this sucks.

* Personal debt, primarily credit card debt. Credit card debt is something that is likely to really screw financially literate people over: it tends to be very high interest, it tends to be marketed heavily to suggest that you're not being screwed by high interest (e.g., cash-back rewards!). The minimum payments are pretty low, so it's pretty easy to cut back on paying the card if finances are tight, without realizing just how much you're being screwed by the interest.

https://www.investopedia.com/personal-finance/american-debt-...

I vacillated as to whether or not to include it as a separate category, but ultimately I think it's reasonable to consider them as personal debt insofar as they contribute to a debt epidemic.

Additionally, credit cards are a way of buying things where the actual cost is wholly disconnected from the purchasing activity.

Purchasing something for $1 using a credit card feels (and acts) identically to purchasing something for $2000 using a credit card. The only difference is the size of the number being added to the balance, so buying "more than one can actually afford" via credit cards is far too easy, because for many it does not feel like "spending". I.e., there's no "physicality" of having to count out cash bills and seeing the pile grow.

As well, credit card payback rates as calculated by the banks are structured such that the principal is paid down as slowly as legally allowed, which naturally increases the banks profits at the detriment of the individual paying the bill (as most of the payment goes to interest, not principal, if paying the "minimum payment" calculated by the holding bank).

So it is simply very easy to obtain plural credit cards, and to use them to fuel an instant gratification lifestyle well beyond ones means without considering the consequences of loading up 20k or 30k or more onto credit cards on a take home salary of 2-3k/month.

And, once someone has gotten themselves dug into this deep pit of debt, it is extremely difficult to climb up out of the hole.

FYI, you can opt out of receiving these

https://www.consumer.ftc.gov/articles/prescreened-credit-and...

Denmark, the Netherlands, Iceland, Norway, Switzerland, Ireland, Sweden, Portugal, Finland, Spain, Greece, Belgium, and the UK all run higher household debt than Americans -- much higher in the case of the ones earlier on the list.

Source: https://www.oecd.org/sdd/fin-stats/statisticalinsightswhatdo...

Then you show up at college, and on your way to class on day 1, you are accosted by various banks handing out credit cards (or at least this was the case in the late-90s when I was at UVA).

Then, you finish college, and because real wages haven't changed in 40 years, you borrow more money to pay rent, pay back student loans, etc.

Americans have an unhealthy relationship with consumerism and credit. Doesn't help that credit is currently cheap, so buy-now, pay-later is the norm.

It's completely crazy, no disagreement. But, it's been this way for decades.

From Wikipedia... Eliminates excessive marketing to young adults. Consumers under the age of 21 must prove that they have an independent income or get a co-signer before applying for a credit card. The Act also prevents credit card companies from mailing offers to consumers under 21 unless they "opt in," and prohibits companies from wooing students with T-shirts, free pizza and other free gifts at university-sponsored events.

Not sure how much companies toe the line/what was going on at the event you saw.

from https://www.ftc.gov/sites/default/files/documents/statutes/c...:

(2) INDUCEMENTS PROHIBITED. —No card issuer or creditor may offer to a student at an institution of higher education any tangible item to induce such student to apply for or participate in an open end consumer credit plan offered by such card issuer or creditor, if such offer is made

Switzerland Australia Denmark Netherlands Canada Norway Cyprus New Zealand South Korea Sweden

But you as a European can't understand how people can have so much debt. Well maybe you don't understand that Europe is not homogeneous and vary a lot. So maybe your comment is relevant for a country but it's definitely not for Europe. Saying that you're European tells us nothing since it's to diverse.

My parents helped me with school a little bit, and I was before the recent increases, so I think I graduated with maybe 25k in debt for 5 years of college. I paid it off quick as I had an amazing job out of college and sold the business I built.

I've watched my sister who is 13 years younger have a lot more debt and facing a really long march to pay it off. It is doable as she has a masters in a great field with great pay, but it is still a many year process...

https://en.wikipedia.org/wiki/List_of_countries_by_household...

(And that's not even touching how much more stressful debt is in some parts of europe. In the US the bankruptcy courts and laws make it so much easier to bounce back after a going bankrupt, whereas it can be a completely life shattering experience in the old continent. Unless things changed recently)

Drowning people in debt is kind of what American society is optimized for.

> As a 24yo European I never had more than 5k € of debt at any point in my life.

Europe is...not America.

“The average loan debt for a bachelor’s degree among the class of 2019 was $28,950.” [0]

[0] https://www.nerdwallet.com/article/loans/student-loans/whats...

It is dreadfully easy to get lines of credit as a college student, and the banks specifically target students because they are a good combination of financially naive and likely to have high future earnings potential. My first week on campus I was handed over a dozen credit card applications.

It's always been one of my pet peeves that basic personal finance classes weren't taught more in schools. Some of the biggest financial decisions in a person's life comes right as high-school is ending. Not everybody is going to become rich, but at least give people the tools they need to maximize their gifts. The system feels intentionally designed to leave them ignorant, allow them to make dumb decisions, and extract wealth from kids for decades from that.

Also, I doubt we'll ever see this as a basic public school requirement, but I'd love to see risk-management explicitly taught as part of that. To me, this guides so much of what smart decision makers do in life and would be wise for everybody to be a little familiar with.

It's too bad that home-ec and shop were closed in many schools and either defunded or replaced by other less impactful classes.

These things impact the long term finances of many young people, many more than other niche classes would. This is probably more beneficial than a second language very few put to use.

If $100,000/yr millennials can't balance their books[1]... then how can people of lesser means balance theirs?

[1]https://news.ycombinator.com/item?id=27575872

[2]https://news.ycombinator.com/item?id=27581105

Necessity is a hell of a motivator.

Don't mistake the standard practices of a 100k/yr single person for what everyone is doing. People who are living on easy mode won't develop the same skills people living on hard mode will.

I agree those $100,000 millennials can pick up the pieces/recover much easier due to a deeper well of marketable skills and resources.

You have enough money to hire a financial advisor, if you care. They can usually give you much better advice than random resources online (since their advice can be specific to your situation--things like taxes can be a bit complicated).

At first, I used a fairly cookie-cutter "three-fund portfolio," as recommended by the Boglehead community. I choose VTI ("Vanguard Total Stock Market"), VEU ("Vanguard All World ex US"), and BND ("Vanguard Total Bond Market") as the three ETFs. In retrospect, I would probably pick VXUS ("Vanguard Total International Stock") in lieu of VEU. But that basic structure is still a good starting point for a new investor.

Most brokers these days have features such that you can set up auto deposits from your bank account, and invest them according to a pre-set asset allocation. So say you want 15% in BND, 15% in VXUS, and 70% in VTI. If on the day of deposit your account is at 14% BND, 13% VXUS, and 72% VTI, then only BND and VXUS shares would be purchased, to make the allocation as close to the desired goal as possible. Likewise, any dividends received can be automatically reinvested.

Another commenter mentioned M1 finance, which I have not used, but from what I have read, looks like a great platform.

For your savings, M1 Finance offers 1% interest, which is better than nothing. IMHO it is a difficult time to start investing your non-retirement money because that the market has gone up a lot recently and bonds are at all times low. I wouldn't feel bad about staying out of things right now until you can learn a lot more.

I would recommend reading everything written by Lyn Alden if you want to learn about all the macro forces effecting finance.

My personal opinion is that the system is set up to screw people out of their money, with the push for (expensive, self-funded) college education instead of on-the-job training or government-funded college education, the low minimum wage, especially for employees in tipped positions, the nerfing of union power, the high cost of a privatized health system, the difficulties of switching jobs due to employer-funded medical insurance, the lack of funding and political support things like the Consumer Financial Protection Bureau, high banking costs, and so on.

Do these personal finance classes teach about these systemic issues? Or do they imply that the student is responsible for a system weighted against them?

I wonder what part of the existing school curricula will be removed in order to have the time for this class.

I hope they also teach the kids that "stonks" and crypto are no better than gambling. There should be a fictional Lamborghini dealership in this software, to teach the kids that buying a super expensive car is a waste of money.

Hah, writing this makes me wonder why I am lusting for an Alfa Romeo Giulia...

what do you think _can_ be taught to people (K-12 students) who have no practical knowledge of anything?

I work with cyber.org and hear states all the time talking up Computer Science and Cybersecurity. That's great! It's on message for us! ...but something else has to go. What it will be varies from state to state, but education is not something you can continue adding and adding and adding. (Unless you're advocating for longer school days/school year which is a whole different conversation.)

Some things I have learned that have become invaluable:

- Risk/reward with stocks, how bonds work.

- Balancing budgets, monthly, yearly.

- 401k, roth IRAs, saving for retirement.

- Credit debt and how to avoid it.

- Interest rates for housing and how it affects the housing market and purchasing power.

- The importance of a "rainy day savings fund".

I doubt the 20yr old me would've listened anyway.

I, too, racked up some CC debt (nothing crazy) in my early 20s. I knew most concepts outlined above but it's really about dealing with temptations when you finally making real money with full-time work.

How did you rationalize building up big credit card bills? You knew you'd have to pay them back some day.

Were you spending without thinking about the bills? Did you not understand what interest was?

Could you afford the monthly payments, and think that if you could everything must be fine?

But no really great for RI, wish my HS would have had a financial literacy class.

Looking back, I think it was about as effective as one could hope for when teaching bored fifteen-year-olds how to calculate interest compounding. Which is to say mostly not very.

Of the concepts you listed, I think I understand compounding, at least the one pertaining to interest rates. The others are a mystery to me. I'm in a stable 6-figure career and in my 40s.

Tons of people on WSB understand these concepts. I am not saying to emulate the behavior of WSB, but these are not concepts that are out of the grasp of a typical teenager.

Imo financial concepts should have been taught along with math, because math is pretty boring to most students the way it is taught currently.

- Nutrition

- Financial literacy

- Logical fallacies

- Emotional intelligence

- The creative process

we subject students to learning about stuff few of them care about. what's the argument for keeping all of that material, but rejecting this?

> Without "hooks" like actually paying rent, electric, etc. it feels so abstract that nothing sticks well.

what are the hooks for getting other high school material to stick?

yeah because they find other subjects more captivating? May as well replace one boring subject with a boring one that at least has more applicability to real life.

Detailing how compound interest works and how easy it is to begin investing in the free market with a small bit early that can turn into much more 25 years down the road, for example. FWIW I had a similar class in high school and loved it. Learning about markets as well as basic things like managing a checking account were fun and felt empowering. It was a very practical course and I'd agree with you that avoiding the abstract is probably important.

Kids, and many adults, really do not understand the relationship between money and time and what time is better to teach people about that than when they have a lot of time left?

I think it's important to champion capitalism and free, public, markets, as it is our proven way of life, and teach young people how they can choose to participate in it without much to start with. Much better than trends in teaching kids it is hopeless and we need to socialize everything.

a student going through this class will make fun of it with their peers, but then be completely shocked at how useless and poor the decision making is from people outside their school.

The idea that actually useful information should be excluded to maintain ideological purity is both stupid and surprisingly prevalent.

This is not because of lack of financial literary. it's due to not making enough money.