The benefit to the country

Thanks all for the comments on my first blog.

Tech, your comments are always appreciated even if they are cryptic

Chops I intend to follow up your point at a later date (but know what your getting at )

ASX.G this following blog will hopefully follow up on my interpretation of some of the issues you have raised.

I have been thinking lately about the education at tertiary level in Australia, and even at secondary levels. I should state first up that i know nothing is going to change so im not trying to achieve that, and all of the following is just hypothetical.

I have been thinking of ways in which we could improve the financial education of the nation. Although as ASX.G stated Australians are probably more financially savvy than a lot of other countries, there is still a lot which could be done.

A 'study' i would be interested in doing (although never will) is the affect of introducing a mandatory basic finance course in high schools nationwide. This course could cover simple things such as compounding interest, basic market information and most importantly budgeting.

I would be interested to see the result of the positive impact upon GDP, lower housing foreclosures, nett worth and various other financial indicators. Obviously not all students would take notice but if even 10% did and then passed that knowledge onto their children etc etc i believe it would vastly improve the economy as a whole, no matter what the current climate was.

I think that some people never really stand a chance, as if parents have no idea about budgeting, how are their children supposed to? I am fortunate enough to have had both parents who are financially savvy. I believe that the cost of implementing such a program would be well outweighed by the economic benefits. Although of course it will never happen as any western government is too short sighted.

I also know that markets (and countries) need people with all levels of knowledge, skills etc etc, but obviously those types of people who borrow too much/spend too much/dont save would still be present, just fewer of them.

I would be interested in other opinions out there...

"A 'study' i would be interested in doing (although never will) is the affect of introducing a mandatory basic finance course in high schools nationwide. This course could cover simple things such as compounding interest, basic market information and most importantly budgeting."

After such changes I reckon you'd likely find in 20 years time there was an entire generation of Australians travelling the globe meeting their contemporaries in other so-called developed countries asking, "didn't you learn about the internal rate of return in school? we did, we started when we were like 9 or something".

Here in Sweden the kids learn English from 9 until 19, and more than 80% of the population is fluent. The generations under 30 are staggeringly good at English. Go figure...says one thing to me...there is room inside the Aussie system for teaching a language and since we already know one international business language by default (ie. English) we might as well learn the other, accounting. The more you think about it the less and less sense it makes. We get taught how to count but not what to count

ASX.G

I just thought i would follow up with a few things. I seem to have an interest in sociology (does that make me a sociologist?) but it is not a career i would ever follow for a number of reasons.

I just finished watching a program on SBS called 'decadence'. Although it was presented in fairly simple terms, it was still interesting and raised some good points.

The show basically compared the current western culture to the Roman Empire before their fall. Although it is not a new comparison, i feel it is quite apt.

It included Euroupe in its definition of western, although i personally tend to disagree, as through my limited travel experiences, i think Europe has maintained more religous and family values than the US and possibly Australia.

The show went on to state that indulgent, immoral decadance is what is now driving society with everyone striving for that bit more, due to a consumerism based economy.

An interesting point it made was that of instead of financial markets working for us, we now work for the markets. Another point was the fact that what used to be called debt (difficult and bad) is now called credit ('good' and easy).

I think that my previous education idea (last blog), would help towards eliminating some of these issues, although certainly not all. I think that in order to realise how lucky we are, we need to look outside our countries to less fortunate areas of the world.

I guess the point i am trying to make is that although our whole society is based on working and 'owning' more, there are still plenty of ways in which we can be happy, although the vast majority of people do not realise this.

A lot of it comes down to upbringing in my opinion. I have been very fortunate to be shown how lucky we really are. My plan is to work flat out (in a job i enjoy mind you) for the first 10 years of my working life, to hopefully be able to put myself in a position where i can persue my other life goals that make me happy later in life. I am flexible however and realise that not everything goes according to plan, and as long as im happy, and obey basic social norms, then not much else matters. Which is something other people should, but probably wont realise.

Anyway im just rambling now. Comments welcome.

Enjoy!

I disagree with ASX.G above. Why learn accounting? Why is the treatment, classification and communication of numbers important? How is it likely to value add? Better off empowering future generations to make financial decisions, both on business and personal levels.

"Why is the treatment, classification and communication of numbers important? How is it likely to value add?"

There is a show here called Lyxfällen...translated "the luxury trap". It's a reality TV show where these guys, who are basically accountants by trade, spend an episode getting someone out of the store/credit-card or mortgage over-committment or self-employed cashflow hole they've dug. I hear what you are saying though and do agree that learning in depth accounting may not be the solution...but learning some of it has to help.

I think parents have to take some of the responsibility here.

One thing I did with my kids is put them on a budget when they were 14. We worked out what was spent on them (including things like clothes, uniforms, extra-curricular sports, music etc, but not family meals/electricity etc). Once we arrived at a figure, they were given/earned an allowance to cover these things. The amount was adjusted once they had part time jobs of their own.

We are not particularly well off, but do ok, and I have to say it has worked a treat so far. The older two are 19 and 23 and both manage their money really well; the youngest is 15, so it's a bit early to tell. They learned how to save for the big things they needed/wanted, and they learned how to value things - designer labels are not high on their list of priorities!

Money is one thing we certainly don't talk enough about - unless it's about spending it. There is definitely not enough discussion about saving and managing money. I fear that the credit card generation will have to do a crash course at some time or other, though...

Maz

I think parents have to take some of the responsibility here.

Click to expand...

I totally agree Maz,

but one of the problems with this that i have raised is the fact that many parents do not know how to manage money, especially in the lower socio economic groupings, so how can they teach their children? Its like a self fulfilling prophecy and in order to get out of this cycle external forces are needed.

at least in my opinion.

Yep, I see your point, and agree that breaking the cycle requires "external forces" as you say. The other thing is, often parents are very time-poor because they are chasing their financial tails all the time.

It's a fact of life that money management is one of those "taboo" subjects in our society. And when people do talk about it they tend to "sex up" their position/prospects (to borrow a term from English politics). Being more frank about how to run our financial lives would be good for everyone, and would reduce a lot of people's stress levels, i reckon!

As someone who grew up in a household where my father was on an invalid pension and there was never any money, I can appreciate how hard it is for people, especially when they are just surviving (or not) from week to week. Although we didn't have much, I was lucky that my mother's family are all a "can do" mob, and they have all done fairly well, just from sheer hard work and persistence (their father was an abusive alcoholic).

One thing that worries me about the way things seem to be going, is that people from poorer backgrounds are being excluded more and more from good, well-resourced education. Public schools are woefully under-resourced, and, from my point of view at least, seem to be spending a lot of time on peripherals and not enough on the sort of general knowledge base everyone needs to have in order to be successful in whatever they end up pursuing.

Kids don't learn by osmosis (well, some things they do! ) - we have to teach them. And by "we" I mean the education system, government, and society in general.

I think your idea has a lot of merit. People tend to be heavily influenced by their experiences, and the perceived expectations they feel are placed on them. So if we as a society "expect" prudent financial management skills, people will start to develop them. Don't know how you would achieve this from the current starting point of consumerism and marketing, though! Education in schools would be great, but the problem of "mixed signals" would need to be addressed as well...

Maz

Hi Prawn

I was thinking u have a fair bit of scope for naming your blog.
Raw prawn, came to mind.

Interesting reading about decadence.

You might be interested in a book called
4-hour work week.

http://www.fourhourworkweek.com/blog/

I thought it was excellent. You don't have to work flat out for 10 years according to the young author, Tim Ferris.

Less is more.

LOL.

Your idea would also have social benefits like keeping more families together.. a lot of marriage breakups are because of financial conflict, eg one person doesn't understand compound interest and gets into debt traps.

Does anyone know about Sure Track Technologies?