# Why is it so difficult to teach people to manage money?



## sydboy007 (7 July 2014)

http://www.vox.com/personal-finance...-cant-we-teach-people-to-be-better-with-money

I found it quiet depressing that financial literacy classes within schools seem to provide little to no benefit to students in the long run.  The Oklahoma financial syllabus looks comprehensive and very grounded in real life, yet students don't seem to be able to apply what they learn later in life.

_Just 17 states require personal finance courses for students, and only six test students on what they've learned. But those classes don't seem to make much difference anyway: students who took a semester-long class in personal finance fared below average on the Jump$tart survey.

There is no evidence that the classes actually made students worse at managing money, the group wrote in its report. But it certainly didn't make them any better.

Academic research backs up that conclusion. A 2008 study from two Harvard Business School professors studied the relationship between education and saving and investing behavior. They found state-required financial literacy education had no effect on graduates' saving behavior later in life.

The money spent on financial literacy education, they concluded, produced little in return._

Possibly some research like what Derek Muller did

[video=youtube_share;AcX3IW00nuk]http://youtu.be/AcX3IW00nuk[/video]


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## Value Collector (7 July 2014)

sydboy007 said:


> http://www.vox.com/personal-finance...-cant-we-teach-people-to-be-better-with-money
> 
> I found it quiet depressing that financial literacy classes within schools seem to provide little to no benefit to students in the long run.  The Oklahoma financial syllabus looks comprehensive and very grounded in real life, yet students don't seem to be able to apply what they learn later in life.
> 
> ...




perhaps it because money is tied to some very powerful human desires that can't be over come by a high school course.

I think there is probably a few things working against people. 

1, the human brain in most cases doesn't seem to deal with delayed gratification well, we want what we want now, even if it means having less later. this can lead to debt and a failure to save.

2, Humans tend to have a need for status in their social group, having things eg, expensive clothes, car, house, holidays etc is a way people try and establish status, this can lead to doing silly things with money, 

3, The human brain tends to think in linear way, Meaning it doesn't really understand compounded growth intuitively. Hence the benefits of doing smart things don't seem as great as they really are, and the financial punishment of doing the wrong things doesn't seem as harsh.

As procrastination is a big part of the human behaviour, we all know we should exercise today, but we can always do it tomorrow or the next day, or we will start on monday we procrastinate with doing the right money things too.


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## pavilion103 (7 July 2014)

Very true


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## DocK (7 July 2014)

Excellent video sydboy007, I found it very interesting despite the fact that I'm one of the dummies who would have given the wrong answer on the initial question - but then again, I didn't study physics.

I agree with Value Collector's comments.
I think some other reasons it's difficult to teach people to manage money are:

People tend to follow the example set by parents/family - and that's not always the best.

Fear of making a mistake - sometimes the easiest and safest thing to do is just leave your money in the bank.

Entrenched belief, mainly by older Australians, that you can trust experts in their field.  A lot of us were brought up to believe that if our car wasn't running properly we should take it to a mechanic.  If we needed help with our tax see your accountant.  We were led to believe that doctors were the next thing to God and could be trusted to take care of our health.  Likewise, the bank manager was an important and trusted person about town.  We are constantly told to "see your financial adviser" when looking at insurance products, superannuation funds, managed funds etc - and the majority of us believed that they could indeed be trusted to have our welfare at heart.  The number of dodgy schemes uncovered recently, not to mention the current investigation into Commonwealth Bank Financial Planning and Macquarie Prime will go some way to dispelling the notion that anyone can be trusted with your money but yourself.  

The sheer amount of information, products, choices, tax ramifications etc can be overwhelming, especially to those of medium to lower intellect.  Information overload or indecision between investment choices leads straight back to - yep, seeing your adviser - and for some they'd be better off just leaving it in the bank and taking their chances with inflation.

Lack of time is a real issue for some.  Unless you give managing your finances a high priority there often seems to be more urgent matters clamoring for attention, especially for the young.  As Value Collector said, it's much easier to put off the hard/boring stuff for another day.  I've been nagging my 18yo for two weeks to look at his first Super Fund default investments and insurance options and make some changes - even though I've pointed out to him that he doesn't need the death & tpd cover and the weekly premium on the default income protection cover is almost equal to the amount being contributed, his response to my nagging is always "yeah, I'll get around to it", yet somehow there are always computer games to play, girls to impress, mates to hang out with & a wee bit of study to be done etc etc.  

Emotion is also a factor.  Some people cheer themselves up with a shopping spree - even though this may be the very cause of distress when the credit card statements come in.  Advertising is designed to appeal to our emotions.  Love for children can lead to parents paying for clothes, gadgets, education, sporting fees etc that perhaps they can't afford. 

Good thread


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## tech/a (7 July 2014)

*Unless you need to use it you wont.*

90% of businesses fail so your own micro business when your a kid ---- is no different.

Failure is often the same as that of business.
Under capitalization and poor/no management.

Its only when you actually accept that you *need* to run your own finances that you do.

*The availability of easy finance has a lot to answer for!* 

I think the only way to make it sink in is to limit credit availability.

Then your forced to budget and manage your finances.
But that's not going to happen.


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## Wysiwyg (7 July 2014)

At work when new processes are being explained to us, most nod they understand and when I ask for further explanation about a new process I get ridiculed by the team. As if I am a dummy. So I asked one of the nodders to explain the new process in front of everyone, they fumbled their way through and got one of the steps wrong. I think the nod in agreement is to look smart as if not understanding is a sign of low intelligence.


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## Value Collector (7 July 2014)

Derek's teaching method certainly works, But it does generate some haters who think he is just trying to much people look stupid by starting videos with misconceptions.

He made this great response to people that say this.


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## sydboy007 (7 July 2014)

Value Collector said:


> perhaps it because money is tied to some very powerful human desires that can't be over come by a high school course.




Very true.  Our brains are still based on primitive impulses.  Society has changed much faster than our ability to mentally cope with it.  Companies bombard us with too many choices which helps intertia to keep people from making a decision.



DocK said:


> Excellent video sydboy007, I found it very interesting despite the fact that I'm one of the dummies who would have given the wrong answer on the initial question - but then again, I didn't study physics.




I agree, how your parents manage money can be a big influence to how you will likely manage money.  All the scandals we're seeing around CBA and financial advice helps make people fearful - damned if I try to do it myself and damned if I seek help because they're likely trying to rob me.

Glad you enjoyed the video.  I found myself watching too many of them on a day off, but getting some of my misconceptions fixed.




tech/a said:


> *The availability of easy finance has a lot to answer for!*
> 
> I think the only way to make it sink in is to limit credit availability.
> 
> ...




Fully agree.  When you look at Australian debt it just hockey sticks after financial deregulation in the late 80s.

I'd like to see a lot of macro prudential brought in.  Certainly need to col the housing market, while making it easier for viable businesses to get funding to expand.



Wysiwyg said:


> At work when new processes are being explained to us, most nod they understand and when I ask for further explanation about a new process I get ridiculed by the team. As if I am a dummy. So I asked one of the nodders to explain the new process in front of everyone, they fumbled their way through and got one of the steps wrong. I think the nod in agreement is to look smart as if not understanding is a sign of low intelligence.




I've never understood this.  If I don't know I ask.  If someone wants to try and make me feel silly that's their problem.  I always find the person who truly understands is able to explain a concept in a number of ways until they see the aha look on the face of their student.



Value Collector said:


> Derek's teaching method certainly works, But it does generate some haters who think he is just trying to much people look stupid by starting videos with misconceptions.
> 
> He made this great response to people that say this.




I quite enjoyed having some misconceptions fixed.  Anyone who thinks his videos are make people look stupid need to realise those in them have gave their permission to have them on youtube, so if they don't have a problem with it why should anyone else.  Some people just have to find fault with nearly anything in life


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## sptrawler (7 July 2014)

Managing ones money is no different to managing ones weight, it takes self discipline, effort and saying no to yourself.

That is why out of 100 people, only about 5% become financially well off.


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## Wysiwyg (7 July 2014)

sptrawler said:


> Managing ones money is no different to managing ones weight, it takes self discipline, effort and saying no to yourself.
> 
> That is why out of 100 people, only about 5% become financially well off.



Many of the 95% don't want to be financially well off so don't seek the knowledge. They reach a comfort zone and look no further. Others prefer to deal with life stages, e.g. marriage, mortgage, raising children, retirement when those stages arrive. Creatures are habitual too and as someone mentioned previously, bad financial habits can be passed on.


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## sptrawler (7 July 2014)

Wysiwyg said:


> Many of the 95% don't want to be financially well off so don't seek the knowledge. They reach a comfort zone and look no further. Others prefer to deal with life stages, e.g. marriage, mortgage, raising children, retirement when those stages arrive. Creatures are habitual too and as someone mentioned previously, bad financial habits can be passed on.




Very true, I've grown up with a lot of friends. We all started off on the same footing, we have all ended up in different financial spaces.
It isn't dependent on their marital or single status, it has been their ability to live frugally and invest their money in something that makes money. Rather than something that gives immediate gratification.
Of the circle of friends, there is only two who have 'made it', one is older than me and one is younger than me.

As for bad financial habits being passed on, I found my parents bad financial habits as a motivation not to end up in the same situation.
Nothing like the police arriving with a bluey, to spark the old man up.lol
Unfortunately you have to be from my generation to understand that.


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## Julia (7 July 2014)

sptrawler said:


> Managing ones money is no different to managing ones weight, it takes self discipline, effort and saying no to yourself.
> 
> That is why out of 100 people, only about 5% become financially well off.



Exactly.
You can come  up with all the esoteric reasons you like for why people fail to observe basic money management and investment.
Essentially, they just can't be bothered.  Prefer to indulge their impulses to buy stuff all the time, mostly what they don't need.  

And then they whine about the unfairness of why some people are financially OK and they are not.


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## sptrawler (7 July 2014)

Julia said:


> Exactly.
> You can come  up with all the esoteric reasons you like for why people fail to observe basic money management and investment.
> Essentially, they just can't be bothered.  Prefer to indulge their impulses to buy stuff all the time, mostly what they don't need.
> 
> And then they whine about the unfairness of why some people are financially OK and they are not.




It's not rocket science, you can spend now and enjoy life, or you can save some now for later.

I had a lot of arguements with my wife when we were young, 'why can't we have what the Jones have'?

Well now my wife says look at the Jones, they don't have their own home and are coming up to retirement. 
It's funny how people forget the arguements, now I'm told we have plenty of money why keep worrying about it.

You can't change your DNA, what made you save your nest egg , will make you keep it.


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## luutzu (7 July 2014)

Beside the usual personal responsibility like "don't waste money, don't buy things you do not need", there are more important things to teach kids than personal finance if that is defined as saving accounts and financial planning, stocks and bonds.

The world will be much poorer and society a very dull and harsh place if kids actually took interests in money. 

I know a guy who chose to study Medicine for no other reason than because he got a really high TER/UAC score and he shouldn't "waste" it studying anything else. He's a GP now and not a very good one.

I heard of another GP doctor who's admired by some people because aside from his Medical practice, the dude is also a real estate/shopping centre/apartment developer. As in he buy the property, deal with the contractors, have the thing built, collect the rent himself kinda Doctor.

A good friend of mine did very well in the HSC, got in the 90s... and he chose to study Electrical Engineering - with cut off of 60-65? We asked him why and he said 'cause he love it. I mean, he did crash his company's entire network system on his second day as a Graduate, but yea... the guy's the most interesting person, the nicest friend you could hope to have. 

--

I think we should be glad that most young people have no interests in money - for one, most do not have any or have that much to take interests in growing what they do not have enough to spend, let alone save and grow and compound.

Most importantly, the world does not progress and Australia does not advance because people look at the bottom line or taught how to manage money better.

I don't think there's ever been any great fortune made by people just caring for money. In fact, just about all fortunes, great or small, are made by people who are passionate about the things they do, about serving and contributing to society - and in doing so, they created great value for people (the customers) and in return, great value comes back to them.

The government should fund better education, more tertiary places, more R&D support for innovators, more programmes so that a lot more than 40% of high school graduates can attend uni and not forced at least 50% to attend a technical/trade college or get a job and be made to feel that the ones that go to uni are somehow superior and they who missed out are not as intelligent - hence a tradie.

If you support scientists and engineers, promote innovators and entrepreneurs, encourage social equality and a sense of compassion for, say, refugees... maybe we'd all be better off than counting unemployment figures and admiring moneyed-people because of all the money they have.

---

Now, for those whose age of innocence has long ago disappeared... Yes, financial literacy.


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## sptrawler (8 July 2014)

luutzu said:


> Beside the usual personal responsibility like "don't waste money, don't buy things you do not need", there are more important things to teach kids than personal finance if that is defined as saving accounts and financial planning, stocks and bonds.
> 
> The world will be much poorer and society a very dull and harsh place if kids actually took interests in money.
> 
> ...




I think you will find, people who save money, do so because they enjoy the satisfaction of the achievement. 
This is no different from the engineer or the doctor, who enjoys satisfaction from what they do.

I have a daughter who is severely dissabled, yet holds down a job in mainstream, her greatest enjoyment is being able to pay her bills. 
She actually enjoys it, it gives her a great sense of personal achievement and gives me a great sense of humility and pride.

I feel humble when I see her take life in her stride and refusing assistance.
But when you see the esteem her workmates hold her in, you realise it isn't about money, it's the respect, personal pride commands. It breaks down barriers and prejudice.

It's easy to say I can't do it and put your hand out, the problem is that is becoming the norm and everyone is excusing it. IMO


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## PurePA (8 July 2014)

I’m sorry to read about your daughter and am sending her my deep respect and best wishes. It shows why some healthy and fit people who are unemployed for years or generations are so because then don’t value work or money. So if a person doesn’t value certain thing then the person won’t have the motivation and commitment (at least long term) to seek the information that is needed to obtain it. It doesn’t matter whether it is learning to manage money or any other endeavor.

I’d also add that many people may experience prosperity conflicts that can make it difficult for them to save money or win in the market on consistent basis. For example one subconscious part of a person may be dedicated to carrying out a positive intention, but another subconscious part might stop the person from carrying out such positive intention because it might want to protect the person from failure or success, or the person might have conflicting values or beliefs about money, and things like that. We as people are very complicated.


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## Craton (8 July 2014)

@sptrawler nails it on the head when he describes the joy of being able to pay ones bills. I know this feeling only too well.

Without seeing the vids and just my own personal experience.

If ya don't save and live pay packet to pay packet, dole cheque to dole cheque, living the here and now, wanting IT (what ever IT is) now, accumulating debt, there is no escape. These were my apprenticeship years.

If one saves, even a token amount, eventually there is light at the end of the tunnel. Was with AMP, saved $20 per month (I canned the yearly CPI indexation, could not afford it) for 21 years, doubled what I saved and was the most money I'd ever seen/owned to that point in time. Plus later and what luck, the AMP float got me into the stock market and a whole new world of learning about that necessary evil, money!

There is no mystery, we chose the path on how we manage money. Eventually though, the reality is that if ya don't manage it, it will manage you!


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## Judd (8 July 2014)

Probably some of the most dangerous phases when it comes to investing or other issues for that matter.

*They say you should...*

So who is “They?”  When finally identified, please let me know who “They” is because “They” needs a jolly good talking to considering the damage “They” has  caused in following “They's” suggestion.

*If you want my advice..*

Probably not since I haven't asked you for an opinion.

*If I were you...*

Well you're not so let us be grateful for small mercies.

*If I can do it, so can you..*

I've recently composed a Violin Concerto which far surpasses that of Mozart’s so if I can do it, so can you.

*It's just common sense*

A statement by which a person attempts to convey their beliefs, gathered from views of others with whom they agree, as being the norm.  It may not necessarily be the case.


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## DocK (8 July 2014)

Judd said:


> Probably some of the most dangerous phases when it comes to investing or other issues for that matter.
> 
> *They say you should...*
> 
> ...




Great post!


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## sptrawler (8 July 2014)

Judd said:


> Probably some of the most dangerous phases when it comes to investing or other issues for that matter.
> 
> *They say you should...*
> 
> ...




+1 we should probably start a thread, phrases that should wave a red flag.

*Trust Me*

Why?

*You can't go wrong*

But if anything can, it will.


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## sydboy007 (8 July 2014)

http://www.thereformedbroker.com/2014/07/07/systematic-suckers/

I think this flows into the issues with savings in the sense of human mental frailty.  I'd not be surprised if the same inflows and outflows of funds occurs in Australia.


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## Tyler Durden (8 July 2014)

DocK said:


> People tend to follow the example set by parents/family - and that's not always the best.




Haven't watched the video yet, and I think the question involves a wide ambit for answers, but for now I just wanted to say in relation to DocK's point above, that I grew up around my mother mostly and she was a pretty bad example for prudential financial practices.

My mother's a housewife, having never worked ever since she got married, she spent most of her time shopping and buying things. She buys things she doesn't need, and makes impulse purchases, then the items just stay at home and she hoards them away, totally unwilling to sell them. 

I specifically remember one time when I was young, my parents were talking about buying something significant, and my mom said "just put it on the credit card and pay it back slowly". I remember thinking at the time of hearing that "yeah, let's just buy things on credit and take time to pay it back, no rush". She obviously didn't really appreciate the impact of interest.

The other thing is, she thinks something is valuable if the price tag says it is. For instance, she might see a handbag with a tag of $1500, and I'd say "what's so good about it?" and she'd give the circular reasoning response of "it's $1500". So I had to tear myself away from that line of thinking as well. 

I think I was lucky to get a decent education, otherwise I probably would still be thinking along the lines of my mother's reasoning.


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## tech/a (8 July 2014)

Your Mothers not as silly as you think!!


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## sptrawler (8 July 2014)

Tyler Durden said:


> Haven't watched the video yet, and I think the question involves a wide ambit for answers, but for now I just wanted to say in relation to DocK's point above, that I grew up around my mother mostly and she was a pretty bad example for prudential financial practices.
> 
> My mother's a housewife, having never worked ever since she got married, she spent most of her time shopping and buying things. She buys things she doesn't need, and makes impulse purchases, then the items just stay at home and she hoards them away, totally unwilling to sell them.
> 
> ...




I doubt you were 'lucky' Tyler, it's like knowing right from wrong, it's called accepting responsibility and being accountable for your decisions.

Sounds like your dad, didn't make your mum responsible or accountable for her spending.lol
I don't mean telling her off, but asking why was that bought. 
It brings on an arguement, but then at least common ground can be found and joint commitments made.
It is too easy just to say 'stuff it', rather than have an arguement, then both parties are equally responsible for the outcome.
If it was easy to become financially secure, everyone would be financially secure.
Some are unfortunate and end up poor, because of reasons outside their control, most end up where their decissions have left them.

Hope I wasn't being personal, just throwing my thoughts in, didn't mean to offend, appologies if I did.


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## Tyler Durden (8 July 2014)

No offence taken at all sp.

I suppose it is a cultural thing, but I have grown up in a Western culture, and I question her purchases, which can at times lead to fights. I think the way she sees it is, she is caring for us and the house when she buys something, so she can't understand why I don't like it. It's a bit like a cat bringing in a dead rat for the owner as a 'present' and the owner then shoo's the cat out of the house.

Another story is, many years ago my mom won a fridge, but at that time we already had a fridge we were using. So this brand new fridge is sitting at home, not being used. I've tried to get her to sell it, and tried to explain that if she sold it for $500 and put it in a bank, then she would have like $550 by now or whatever. However, she just dismisses it as "pffff, it's only a few percent interest, what good is that".


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## tech/a (8 July 2014)

Tyler Durden said:


> No offence taken at all sp.
> 
> I suppose it is a cultural thing, but I have grown up in a Western culture, and I question her purchases, which can at times lead to fights. I think the way she sees it is, she is caring for us and the house when she buys something, so she can't understand why I don't like it. It's a bit like a cat bringing in a dead rat for the owner as a 'present' and the owner then shoo's the cat out of the house.
> 
> Another story is, many years ago my mom won a fridge, but at that time we already had a fridge we were using. So this brand new fridge is sitting at home, not being used. I've tried to get her to sell it, and tried to explain that if she sold it for $500 and put it in a bank, then she would have like $550 by now or whatever. However, she just dismisses it as "pffff, it's only a few percent interest, what good is that".




Tyler
Seriously I like your mum
She doesn't sweat the small stuff.
I'll bet there were things she did sweat and
They were important to HER.

You know I find the little picture people just can't see the BIG picture.


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## sptrawler (8 July 2014)

Tyler Durden said:


> No offence taken at all sp.
> 
> I suppose it is a cultural thing, but I have grown up in a Western culture, and I question her purchases, which can at times lead to fights. I think the way she sees it is, she is caring for us and the house when she buys something, so she can't understand why I don't like it. It's a bit like a cat bringing in a dead rat for the owner as a 'present' and the owner then shoo's the cat out of the house.
> 
> Another story is, many years ago my mom won a fridge, but at that time we already had a fridge we were using. So this brand new fridge is sitting at home, not being used. I've tried to get her to sell it, and tried to explain that if she sold it for $500 and put it in a bank, then she would have like $550 by now or whatever. However, she just dismisses it as "pffff, it's only a few percent interest, what good is that".




Yep, I grew up in a family where dad went to work and pi$$ed it up on friday. Mum had four kids at home and struggled to make ends meet, so she thought WTF and spent whatever was left.
The result was all hell broke lose when the ends didn't meet. It wasn't pretty.lol

I thought, I'm f####d if I'm going to live the rest of my life, like that.

By the way, most new fridges have sh*ty chinese compressors, that last 3 to 5 years. 
The fridge she kept is probably running an aussie compressor that last 20 years, don't let her give it away.lol


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## Julia (8 July 2014)

sptrawler said:


> I doubt you were 'lucky' Tyler, it's like knowing right from wrong, it's called accepting responsibility and being accountable for your decisions.



Agree.   Good for you, Tyler, in learning from your mother's lacksadaisical attitude.  It's not easy to go against a parent's behaviour.
It's obvious you have a thoughtful approach to life.  You've probably started more interesting threads on this forum than anyone else.  Sounds to me like you're absolutely on the right track.

PS.  Totally disagree with Tech/A on this.


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## tech/a (8 July 2014)

Julia said:


> PS.  Totally disagree with Tech/A on this.




Thats ok Julia

My father once said to me.

"Son---you have no respect for money"

He was right!!!


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## Julia (8 July 2014)

I guess I'm just really surprised at your comment about Tyler's mother, Tech.   Over now many years and many of your posts I've had the clear impression that, yes, you take risks, but they're mostly carefully calculated, and the very fact that you've shared with us your recovery from being in a difficult financial position some years ago indicates someone who appreciates how to manage money.

I also find it hard to believe you could run a successful business without good money management.


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## Vixs (8 July 2014)

It depends on your desired lifestyle Julia.

If what you want is still too expensive, you don't have an expenditure problem - you have a revenue problem! 

That's what I tell my wife, anyway... She's the saver and the fiscally responsible one...I had to chop up my credit cards and hide money from myself.

Nearly turned the leaf on that one though - not long until the bank will be paying me interest instead of me paying them!


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## luutzu (8 July 2014)

Vixs said:


> It depends on your desired lifestyle Julia.
> 
> If what you want is still too expensive, you don't have an expenditure problem - you have a revenue problem!
> 
> ...




Even if the bank is paying you interests, it's still having one over you


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## luutzu (9 July 2014)

Tyler Durden said:


> Haven't watched the video yet, and I think the question involves a wide ambit for answers, but for now I just wanted to say in relation to DocK's point above, that I grew up around my mother mostly and she was a pretty bad example for prudential financial practices.
> 
> My mother's a housewife, having never worked ever since she got married, she spent most of her time shopping and buying things. She buys things she doesn't need, and makes impulse purchases, then the items just stay at home and she hoards them away, totally unwilling to sell them.
> 
> ...




Be kinder to your parents.

There might be a handful of reasons to disrespect your parents, maybe... them not thinking or behaving to your liking ain't one of them.

I'm a Psychologist so I can say this: your mother's shopping habits could be what they call shopping therapy.

I'm sure you also think you raised your own self up too, put your own self through schools and uni to get that "decent education". But behind every day of your life to at least your first paycheck is your mother's sacrifices and generosity - she could have just send you off to some childcare place or abort you and keep working, not feeding you or buying you things so she could afford more for herself.

I know of mothers who divorced their husband, break the bonds between father and children... all for no other reason than because her new husband has more money. There are mothers who tell their daughters to divorce their husband, send the grandchildren to the guy's parents or wherever and go for the boss with more money than a tradie. 

Your education hasn't started yet.


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## Judd (9 July 2014)

sptrawler said:


> +1 we should probably start a thread, phrases that should wave a red flag.
> 
> *Trust Me*
> 
> ...




Yes, I was being a bit tongue in cheek but there are probably elements of truth in some of those bons mots.  One of my favs is:

*"Oh, but I thought...."*

Apparently not, at least not in the way I think.

Was a phrase continually used by a lady I once worked with who, despite having a degree, was absolutely hopeless at any form of calculations to such an extent she could not perform percentages.  I had to review every bit of her work and correct those mistakes.  Five years of bemusement with a touch of  frustration thrown in.  Yes, she was very bad with money management as well.


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## Tyler Durden (9 July 2014)

luutzu said:


> Be kinder to your parents.
> 
> There might be a handful of reasons to disrespect your parents, maybe... them not thinking or behaving to your liking ain't one of them.
> 
> ...




Hi luutzu, not disrespecting my mother or father at all. I was just trying to provide an insight into the mentality I had to grow up with when it came to money.


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## Value Collector (9 July 2014)

Tyler Durden said:


> Hi luutzu, not disrespecting my mother or father at all. I was just trying to provide an insight into the mentality I had to grow up with when it came to money.




I think the views you described are pretty common, you wouldn't be able to tell from my attitude to finance now, but I got a credit card as soon as I started working full time, the first thing i bought was a tattoo and a bottle of bourban,lol I then paid it off with minimum payments


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## cynic (9 July 2014)

Recently my bank was kind enough to inform me that if I only made the minimum monthly payment, the closing balance on my credit card could be fully paid in approximately 113 years and 8 months!


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## cynic (9 July 2014)

luutzu said:


> ...I'm a Psychologist so I can say this: your mother's shopping habits could be what they call shopping therapy.
> ...



There's a lot to be said for retail therapy, provided it doesn't become an addiction and is kept to an affordable level. 

A couple I know, both earning a healthy income, had to sell their house in order to relieve themselves of debt. A sizable portion of this debt was attributable to one person's compulsive shopping habits.

On the subject of psychology, there tend to be a lot of "qualified" people about these days, which leads me to wonder how it is that there are so many people in the world whom don't have the slightest notion of their own agenda and the manner in which it influences their perception, demeanour and resultant behaviours.

Some(not all) psychologists seem to be terribly deficient when it comes to self awareness, which leads me to seriously question their ability to assist and/or guide their clients.


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## luutzu (9 July 2014)

Tyler Durden said:


> Hi luutzu, not disrespecting my mother or father at all. I was just trying to provide an insight into the mentality I had to grow up with when it came to money.




Sorry, i probably misread what you were saying.

I agree with Julie and trawler that it's good we learn from our parents - imitate the good and try to avoid what we think is wrong. Sometime we could take that too far and disrespect our parents because we know more than they do or think differently.


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## luutzu (9 July 2014)

cynic said:


> There's a lot to be said for retail therapy, provided it doesn't become an addiction and is kept to an affordable level.
> 
> A couple I know, both earning a healthy income, had to sell their house in order to relieve themselves of debt. A sizable portion of this debt was attributable to one person's compulsive shopping habits.
> 
> ...




Yea, from stories I've heard, a lot of addictions - like gambling, shopaholic -ism [?], though yours the first I've heard of a shopaholic... but a lot stem from people trying to do something to temporarily distract their current unhappy/depressive state and it got out of control.

Sometimes we just need a sounding board, a friend to talk our troubles over.. but for different reasons couldn't and so tend to get into things that later prove destructive. That's my analysis anyway 

I think a good counsellor/psychologist doesn't guide their clients... they only assist in being a good listener and let the person talk and bring up suppressed feelings and memories, and in the process, the client themselves figure out their own solutions... Most often, after realising the causes of their current state, most people will start to feel better, would start to realise the issues.


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## sydboy007 (10 July 2014)

After reading the letter I doubt anyone will be willing to speak to a financial advisor again.  I'm not sure what comes after psychopathy, but Deeb certainly seems to be way out there in his lacking of empathy.  The below is just an extract, the whole letter is even more disturbing.  To think he's trying to pimp out his mother, but hen it sounds like she'd do it for him 

http://www.smh.com.au/business/mark...chs-traders-twilight-zone-20140709-zt1fr.html

_I write to report a tragedy: My notional superiors have failed to award me the $US13 million they promised to me. I told you of this promise over Christmas, as you will soon remember. My spectacular decision to short the subprime mortgage market, after manipulating that market so that my short could take place at artificially high prices, is the stuff of legend. In spite of what many refer to as "The Triumph of Deeb," they have elected to pay me the disgraceful sum of $US8.25 million, making vague promises to "make it up to me in the future."

I can hear you saying, "Deeb, what is the matter with you? I raised you to take what is yours plus some of what belongs to others and you are failing me," or "Deeb, when will you learn to guard your narrow interests in spite of any social consequences, as I have taught you?" Before you lambast me, and my character, I will tell you that I will not be taking this lying down. I will soon go to battle with Goldman Sachs. In this battle, I will require your assistance.

Next, we must accept the risks of this communication. I know enough about "ordinary folk" to know that they will never understand what it feels like to be me. They can have no idea how difficult it is for me to make bets with billions of dollars of other people's money, knowing that, if the bets work out, I will receive only tens of millions. They may even seek to ridicule my plight, if you can believe that. Do not worry: I will crush all detractors, in time._


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## Tyler Durden (10 July 2014)

sydboy007 said:


> After reading the letter I doubt anyone will be willing to speak to a financial advisor again.  I'm not sure what comes after psychopathy, but Deeb certainly seems to be way out there in his lacking of empathy.  The below is just an extract, the whole letter is even more disturbing.  To think he's trying to pimp out his mother, but hen it sounds like she'd do it for him
> 
> http://www.smh.com.au/business/mark...chs-traders-twilight-zone-20140709-zt1fr.html
> 
> ...




I saw that. Aside from the disgust I felt, I thought it showed that everyone's problems are relative. 

Someone on $30,000 pa might think they are struggling. Someone on $70,000 pa might think they are struggling. Someone on $250,000 pa might think they are struggling. And indeed, someone on millions of dollars a year could think they are struggling.

Guess grass is not always greener on the other side.


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## sptrawler (10 July 2014)

Tyler Durden said:


> I saw that. Aside from the disgust I felt, I thought it showed that everyone's problems are relative.
> 
> Someone on $30,000 pa might think they are struggling. Someone on $70,000 pa might think they are struggling. Someone on $250,000 pa might think they are struggling. And indeed, someone on millions of dollars a year could think they are struggling.
> 
> Guess grass is not always greener on the other side.




The problem with more money, comes bigger expectations and goals. This then leads to more stress of failure, as a bigger loss is at stake.
There is a lot of truth in the old saying, money can't buy happines.


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## ROE (10 July 2014)

Tyler Durden said:


> I saw that. Aside from the disgust I felt, I thought it showed that everyone's problems are relative.
> 
> Someone on $30,000 pa might think they are struggling. Someone on $70,000 pa might think they are struggling. Someone on $250,000 pa might think they are struggling. And indeed, someone on millions of dollars a year could think they are struggling.
> 
> Guess grass is not always greener on the other side.




Doesn't matter what you earn whether it is a million or 10K if your out going > income you will live on struggle street

granted the one with smaller income has less wiggle room but the guys on big bucks and they are struggling they have an expensive habits no amount of money can fix


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## Craton (11 July 2014)

Re: http://www.smh.com.au/business/marke...709-zt1fr.html

Is this for real?  I read it and wept.

OMG! Quoting Deeb, "....I will crush all detractors, in time." Surely he is just a product of how the Street's chasing of the almighty dollar with continued and every increasing profits is simply ludicrous and yet, it affects every last one of us.

This, the letter, is a great reflection of what ails our world in so much that we are losing our ability to connect with our humanity and the links that bind us, all for more and more $$$'s. In time, it will be Mother Earth, or the market, that will crush all detractors but until that happens, who cares?

Shame on us for allowing such a system to function or even exist in this way, no wonder for the great majority its a struggle to get ahead. Can't they see the harm when people allow themselves to work for such institutions that nurture such a culture, CBA locally comes to mind, obviously not.

No, nothing wrong with profit but the blatant manipulation stated in the letter is really troubling and I'm sure it is endemic within not just the financial system. With plicks like these working in the marketplace, we are surely doomed and no wonder we had the GFC. No doubt too, this sort of thing is still going on so the question now is, how long before the next variant of the GFC?

Maybe I have a too simplistic view of the world, maybe I'm not that different but I know one thing for sure, I do have a conscious and that conscious is revolted to learn that such a thing can exist and have such an influence on my own life.


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## Wysiwyg (11 July 2014)

The necessities of life? 

Food - Woolworths, Coles, ALDI, IGA, Grow Your Own
Clothing - Target, Myers, David Jones, St. Vincent De Paul etc., online, multiple other specialty outlets    
Shelter - Mortgage, Own, Rent, live in the bush (alter food source there) 
Transport - Bicycle, Motorcycle, Car, Truck, Feet, Skateboard, Plane, Train

How much one allocates or has available to allocate to each necessity is infinite and varied as human beings on the planet.


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## qldfrog (11 July 2014)

am I the only one to find this letter too caricatural to be true?


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## Craton (11 July 2014)

qldfrog said:


> am I the only one to find this letter too caricatural to be true?




+1 but truth can be stranger than fiction besides, after more spying allegations by the USA in Germany today, them Yanks are capable of anything...


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## Calliope (11 July 2014)

Why is it so difficult to teach people to manage money? I think everybody knows the answer. Since the advent of the credit card and later the mobile phone, parents have stopped instilling into their children the value of money.


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## Tyler Durden (12 July 2014)

sydboy007 said:


> _I write to report a tragedy: My notional superiors have failed to award me the $US13 million they promised to me. I told you of this promise over Christmas, as you will soon remember. My spectacular decision to short the subprime mortgage market, after manipulating that market so that my short could take place at artificially high prices, is the stuff of legend. In spite of what many refer to as "The Triumph of Deeb," they have elected to pay me the disgraceful sum of $US8.25 million, making vague promises to "make it up to me in the future."
> 
> I can hear you saying, "Deeb, what is the matter with you? I raised you to take what is yours plus some of what belongs to others and you are failing me," or "Deeb, when will you learn to guard your narrow interests in spite of any social consequences, as I have taught you?" Before you lambast me, and my character, I will tell you that I will not be taking this lying down. I will soon go to battle with Goldman Sachs. In this battle, I will require your assistance.
> 
> Next, we must accept the risks of this communication. I know enough about "ordinary folk" to know that they will never understand what it feels like to be me. They can have no idea how difficult it is for me to make bets with billions of dollars of other people's money, knowing that, if the bets work out, I will receive only tens of millions. They may even seek to ridicule my plight, if you can believe that. Do not worry: I will crush all detractors, in time._




Tying this back to the thread topic, I think there is a general consensus (rightly or wrongly) that someone who makes a lot of money would be able to decently manage it. It's hard to distinguish between making/earning money and managing it, and most people seem to blur the two together. That's why it's so surprising when we hear about 'rich' people having no money left because they've spent it all.

I suppose the logic seems to be, if someone can make that much, why can't they manage it? What prevents someone with such high earning capacity to manage what they earn?

I think one aspect of the whole problem comes down to emotions. A lot of decisions made in spending money are emotional decisions, rather than logical. Money is power, and power is closely related to emotions. It takes a lot for people to have power and not to exercise it. Most people who have power will exercise it, if not abuse it.

I think those who are good at managing money understand this, and are able to separate their logic from their emotions when making a decision.


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## Calliope (12 July 2014)

Tyler Durden said:


> I think those who are good at managing money understand this, and are able to separate their logic from their emotions when making a decision.




You would expect that those managing other people's  money would be rigourisly regulated. Not so;  



> If you take a look at most of the member trustees in the industry super funds, they are generally union officials with no financial expertise or qualifications whatsoever. One I came across that I particularly loved was a trustee with a BA (incomplete).
> 
> To be sure, the trustees may be qualified electricians, nurses, teachers and the like, but when it comes to overseeing the management of a large investment portfolio, most member trustees of industry funds have no skills apart from their on-the-job learning.




http://www.theaustralian.com.au/opi...from-a-regulator/story-fnbkvnk7-1226986006304


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## sptrawler (12 July 2014)

Tyler Durden said:


> I think those who are good at managing money understand this, and are able to separate their logic from their emotions when making a decision.




A lecturer on economics, in a post graduate diploma, said buying shares was the same as going to the casino. It cracked me up.
Lucky it was my wife at the lecture, if I'd been there, I would have asked him to expand on the theory.


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## sydboy007 (12 July 2014)

Calliope said:


> You would expect that those managing other people's  money would be rigourisly regulated. Not so;
> 
> http://www.theaustralian.com.au/opi...from-a-regulator/story-fnbkvnk7-1226986006304




Yet they don't fee gouge like the MBA and "qualified" money managers.  Possibly they have their member's interests ahead of their own.  Certainly the private sector funds are as much about clipping the fee ticket as actually making money for the benefit of their members.  I'd not be surprised if some of the average people actually have a better sense of money management that say the Macquarie high flyers or AMP product sellers.

But wait, you don't actually need any skills to be a financial advisor.  No uni degree required, well at least for those who are covered undeneath someone who actually does have a FSA licence.

From the application process to be a financial advisor - 1 day a month seems like a nice pass time.  

B1.5 What financial services will this person be a responsible manager for? 
Present their selections from A3.2 and allow them to tick one or more 
B1.5.1 On average, how many days will this person spend on duties related to the 
provision of financial services by the applicant or its related body corporate? 
 Less than 1 day per month 
 Less than 1 day per week 
 1 to 3 days per week 
 More than 3 days per week 

Have a read of a sample application.  Definitely doesn't inspire confidence in the vetting process, especially when considering how ASIC did all it could to ignore the CBA scandal for so long.


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## sydboy007 (12 July 2014)

Tyler Durden said:


> I think one aspect of the whole problem comes down to emotions. A lot of decisions made in spending money are emotional decisions, rather than logical. Money is power, and power is closely related to emotions. It takes a lot for people to have power and not to exercise it. Most people who have power will exercise it, if not abuse it.
> 
> I think those who are good at managing money understand this, and are able to separate their logic from their emotions when making a decision.




Very true.  Too often people allow their emotions to get the better of them when making financial decisions - whether spending or saving.

But it's hard to follow Buffet and be greedy when others are fearful and fearful when others are greedy.


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## sydboy007 (12 July 2014)

sptrawler said:


> A lecturer on economics, in a post graduate diploma, said buying shares was the same as going to the casino. It cracked me up.
> Lucky it was my wife at the lecture, if I'd been there, I would have asked him to expand on the theory.




Considering how HFT has corrupted the whole market I can sort of understand what they're saying.  When the algos can send tens of thousands of fake orders a second to try and confuse the other algos, the real investment process is being corrupted.  What is the "real" demand for shares when over 70% of it is driven by HFT these days?

The last 6-7 years would make any sane person wonder if the odds are stacked against them when investing.  With financial repression rampant within the OECD, savers are being force to bail out those who over indulged in debt.  Who do you go to for advice?  Is self education always the best way forward?

Sometimes it does feel like gambling where the odds are stacked in the house's favour.


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## Julia (12 July 2014)

sptrawler said:


> A lecturer on economics, in a post graduate diploma, said buying shares was the same as going to the casino. It cracked me up.
> Lucky it was my wife at the lecture, if I'd been there, I would have asked him to expand on the theory.



Here's another:
A person assured that, although they had zero experience in the stock market, they'd easily be able to get the right advice because he/she 'knew people who had lots of money'.  Further questioning elicited the info that said people had
1.  Made their money from a piggery and an abattoir.
2.  Had inherited family money.
3.  Had multiple rental investments.


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## sptrawler (13 July 2014)

sydboy007 said:


> Considering how HFT has corrupted the whole market I can sort of understand what they're saying.  When the algos can send tens of thousands of fake orders a second to try and confuse the other algos, the real investment process is being corrupted.  What is the "real" demand for shares when over 70% of it is driven by HFT these days?
> 
> The last 6-7 years would make any sane person wonder if the odds are stacked against them when investing.  With financial repression rampant within the OECD, savers are being force to bail out those who over indulged in debt.  Who do you go to for advice?  Is self education always the best way forward?
> 
> Sometimes it does feel like gambling where the odds are stacked in the house's favour.




Well if you think it is bad now, wait untill you have to live on your investments.

Then there is no pay check, just earnings from your savings, the only growth is speculative and losses are non recoverable.lol


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## tech/a (13 July 2014)

sptrawler said:


> Well if you think it is bad now, wait untill you have to live on your investments.
> 
> Then there is no pay check, just earnings from your savings, the only growth is speculative and losses are non recoverable.lol




If you don't have a large enough nest egg you need to have a way of generating some income during retirement.
If you haven't got one or more spend time making one tater than accumulating.

It can be done and many are doing it.
Trading is one method----HFT or not.
Housing rental another
Trading on e bay another
Any number of small businesses.


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## Smurf1976 (13 July 2014)

Humans by their nature tend to respond only to actual problems whilst ignoring what may lie ahead. There are individual exceptions of course, but that's how we tend to do things. End result = a crisis has to occur in order to get any real action, by which time it's too late.

To pick one random example, bush fires. It's the same every time there's a major fire. All sorts of promises are made that it won't happen again, we'll do all sorts of things to prevent it, we'll buy better fire fighting equipment and so on. But let's face reality - it's July now, an El Nino seems likely, and we're not really doing much at all to prevent fires next Summer. It WILL happen again.

As a species, humans really don't think that far ahead generally. So if someone has a current income which exceeds their genuine needs, and has not personally experienced difficult financial circumstances, then I can understand why they take no action to manage their money well. Only when the elephant really is in the room will they think differently, by which time it's too late to do anything of real benefit.


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