The 411 on Money Kid
When I was a kid my Father taught me how to balance a check book. That was all he knew how to teach me. Years later I sat in a Money and Investing class in College wondering why everyone else knew what a Call on an Option was. Some where along the way I didn't learn about money. Even today I feel like a kid who doesn't know anything about money. Join me in my journey of discovery!more...
Latest Thoughts
The Problem
What is the problem? Why does it matter if people do not understand money?
I recently heard of a family that declared bankruptcy. The story is a tragedy. The husband serves the United States of America honorably in the US Navy. Recently he completed a tour in the Persian Gulf supporting the war in Iraq. The wife works to make ends meet and attends night school in order to complete a degree and attain better employment. They have four children--the oldest just completed the requirements to be awarded an Eagle Scout. Many people might jump on this example to point out things that are wrong in society: the government pays sailors too little; some people have too many kids; and on and on. However, I think the real problem is that they never learned how money works.
They have regularly bought cars on debt. When buying the cars they went beyond their means to buy something nice. They bought a house that was beyond their abilities to pay for hoping that it would appreciate and they would be rich. Once in the house they tore the place apart trying to improve it--but that type of effort took greater debt to accomplish. They purchased cool toys on debt. They even bought nice presents for friends and relatives that they could not afford. All along they were sure that they earned enough money that they could pay the debts. They didn't understand the reality of interest. They didn't use good judgment.
Where did it all go wrong? When should they have learned how money works?
He grew up the son of a Navy man. She grew up the daughter of a civil servant. Neither family knew how money worked. And what of the children? How will they learn about money? From the parents that just declared bankruptcy?
Does this all matter to the rest of us? Here is one study that makes the connection: FDIC Study. Every person in society pays a higher rate of interest to cover the cost to banks for writing off the bad debt that disappears in a bankruptcy proceeding. That debt doesn't just evaporate. In order for the bank to continue operating someone has to make up the difference somewhere. There is no free lunch in bankruptcy. This is why it matters to everyone.
What can I do? The cycle must be broken--educate the children. Make use of the resources on the internet and make a difference.
I recently heard of a family that declared bankruptcy. The story is a tragedy. The husband serves the United States of America honorably in the US Navy. Recently he completed a tour in the Persian Gulf supporting the war in Iraq. The wife works to make ends meet and attends night school in order to complete a degree and attain better employment. They have four children--the oldest just completed the requirements to be awarded an Eagle Scout. Many people might jump on this example to point out things that are wrong in society: the government pays sailors too little; some people have too many kids; and on and on. However, I think the real problem is that they never learned how money works.
They have regularly bought cars on debt. When buying the cars they went beyond their means to buy something nice. They bought a house that was beyond their abilities to pay for hoping that it would appreciate and they would be rich. Once in the house they tore the place apart trying to improve it--but that type of effort took greater debt to accomplish. They purchased cool toys on debt. They even bought nice presents for friends and relatives that they could not afford. All along they were sure that they earned enough money that they could pay the debts. They didn't understand the reality of interest. They didn't use good judgment.
Where did it all go wrong? When should they have learned how money works?
He grew up the son of a Navy man. She grew up the daughter of a civil servant. Neither family knew how money worked. And what of the children? How will they learn about money? From the parents that just declared bankruptcy?
Does this all matter to the rest of us? Here is one study that makes the connection: FDIC Study. Every person in society pays a higher rate of interest to cover the cost to banks for writing off the bad debt that disappears in a bankruptcy proceeding. That debt doesn't just evaporate. In order for the bank to continue operating someone has to make up the difference somewhere. There is no free lunch in bankruptcy. This is why it matters to everyone.
What can I do? The cycle must be broken--educate the children. Make use of the resources on the internet and make a difference.
Welcome
This is a web site that I have created for a class assignment. I am an MBA student studying Finance. I hope to make a lot of money when I graduate. Fortunately, I have a professor who wants me to learn that there is more to life than just making money for myself. He sent me into a local elementary school to teach some classes on money.
The lessons covered the concepts of interest, using a check register, and personal budgeting by defining wants and needs. I realized how great the need for financial literacy was when a girl in the back stated that "Banks are a bad place to put money--someone might steal it."
My final assignment is to reflect on what I learned. Rather than reflect I chose to do something simple that could further the effort to educate children. I have created this sight as a clearinghouse of sorts for links, resources, and commentary. My primary discovery is that there is little that has not already been commented on in the realm of educating children on money. For this reason I believe the problem is motivation. People just do not understand that there is a value to understanding money. In fact, I am not the first to realize this (just read some of the articles I linked to at the right). People even tend to talk down money in such a way that others feel embarrassed to be interested.
Talking about money does not have to be for the sake of making us all millionaires. But it can be done with a desire to help everyone prepare for retirement; or to help a college student understand why it might be a good idea not to buy a fancy car until after graduation; or easier yet, to help a young person understand the benefit of placing some summer job income in a savings account instead of buying a CD.
This web site is not a complete work. I intend for it to live on. As such I have several invitations for those who come here. The first is to send me feedback on what I might comment on or what I might link to on the right hand side. The second invitation is to become a contributor. I can easily set up people to post to this website. Granted the value of any one person posting is enhanced by the reading by other people. So that is my final challenge--make this a part of your routine in surfing the web.
Thank you!
Email me!
The lessons covered the concepts of interest, using a check register, and personal budgeting by defining wants and needs. I realized how great the need for financial literacy was when a girl in the back stated that "Banks are a bad place to put money--someone might steal it."
My final assignment is to reflect on what I learned. Rather than reflect I chose to do something simple that could further the effort to educate children. I have created this sight as a clearinghouse of sorts for links, resources, and commentary. My primary discovery is that there is little that has not already been commented on in the realm of educating children on money. For this reason I believe the problem is motivation. People just do not understand that there is a value to understanding money. In fact, I am not the first to realize this (just read some of the articles I linked to at the right). People even tend to talk down money in such a way that others feel embarrassed to be interested.
Talking about money does not have to be for the sake of making us all millionaires. But it can be done with a desire to help everyone prepare for retirement; or to help a college student understand why it might be a good idea not to buy a fancy car until after graduation; or easier yet, to help a young person understand the benefit of placing some summer job income in a savings account instead of buying a CD.
This web site is not a complete work. I intend for it to live on. As such I have several invitations for those who come here. The first is to send me feedback on what I might comment on or what I might link to on the right hand side. The second invitation is to become a contributor. I can easily set up people to post to this website. Granted the value of any one person posting is enhanced by the reading by other people. So that is my final challenge--make this a part of your routine in surfing the web.
Thank you!
