60 Minutes - People losing their homes..

[Dis]

I dont know why they dont use financial scenarios to teach maths in High school. Rather than the stupid problems they give, use examples like

a) How many hours a week does John have to work to pay for his car?

b) If Sue pays for her holiday on Credit card, how much does it really cost her?

c) How much do interest rates have to rise before Mark cant pay for his house?

After a few months of answering questions like this, the penny is bound to drop....

 

[granev]

i guess that gets down to the individual maths teacher and their style , but if the education department made it part of the curriculum , then great idea.

there are a lot of subjects that should touch on it , ie maths , accounting , buisiness studies , but i just dont think financial commonsense is part of the curriculum , and teachers can only teach what they are told to by the department.

 

[Arkay]

but if the education department made it part of the curriculum , then great idea.

Isn't that the nub of it though. Do you really think the Government has any interest in teaching this stuff in the public school system. I think it isn't taught on purpose. For the sole reason of churning out tax paying employees to keep the country running.

To my knowledge much of the type of financial education we're talking about here is taught in the private school system and the greater portion of Government spending on education goes into the private schools..

As much as we might like to ignore the fact the class separation is intentional.

I am from the "wrong side of the tracks" and only began learning IP/investment through circumstance more than anything else at age 30.

The greater majority of the population simply won't ever witness circumstance that leads them to research and learn and the public schooling system will never be the catalyst. Private school is beyond their reach.

So not only do you have to fight life circumstance you also have to fight forces of Government and Society to make a break in the right direction.

I can't see that the widely accepted 95/5 percentages will every change.

Cheers,

Arkay.

 

[alexlee]

I was never taught personal finance, and I went to a private school.

If anything, I think the supposed 'elite' who come from supposedly good schools, unis, and 'good' professions tend to be the worst at financial matters. Maybe because they've been told how good they are to have graduated from whatever course and landed whatever job that it hasn't occured to them that they might need something more than just their job to succeed. It just doesn't occur to many lawyers, accountants, doctors, etc that even though they did all that study and has all that job experience, the job isn't enough.
Alex

 

[granev]

Isn't that the nub of it though. Do you really think the Government has any interest in teaching this stuff in the public school system. I think it isn't taught on purpose. For the sole reason of churning out tax paying employees to keep the country running.

To my knowledge much of the type of financial education we're talking about here is taught in the private school system and the greater portion of Government spending on education goes into the private schools..

As much as we might like to ignore the fact the class separation is intentional.

I am from the "wrong side of the tracks" and only began learning IP/investment through circumstance more than anything else at age 30.

The greater majority of the population simply won't ever witness circumstance that leads them to research and learn and the public schooling system will never be the catalyst. Private school is beyond their reach.

So not only do you have to fight life circumstance you also have to fight forces of Government and Society to make a break in the right direction.

I can't see that the widely accepted 95/5 percentages will every change.

Cheers,

Arkay.

they dont teach these sort of things at private schools either , public school teachers and private school teachers do the same degrees at the same universities and are all taught the same way , some ( like my partner )have taught at both , she teaches the same way , its just that in general , the private school kids pay more attention - the curriculum for both is basically the same

 

[Arkay]

Ok. I stand corrected then

Cheers,

Arkay.

 

[alexlee]

Unfortunately, our secondary school system is designed to produce uni students, and unis are designed to produce employees. How many parents would send their kids to a school that puts actual education above getting into uni? Parents might be willing to let smaller kids try different things, but once they hit a certain age it's into the factory they go.
Alex

 

[steveadl]

Unfortunately, our secondary school system is designed to produce uni students, and unis are designed to produce employees. How many parents would send their kids to a school that puts actual education above getting into uni? Parents might be willing to let smaller kids try different things, but once they hit a certain age it's into the factory they go.
Alex

Well said Alex.

 

[natmarie73]

I brought it up because I remember being taught very basic finance stuff in year 12 "veggie" maths in the forms of problems like Dis suggested. I distinctly remember my maths teacher telling us that if we were to save $20 each month in a savings plan with an X% rate we would have 1 million dollars by age 30 or something like that. That was pretty much the only thing I learnt in 12 years of school that stuck with me even if it did take 10 years of wasting money before I finally started investing.

I think that any financial education is better than none at all and like someone said, you don't need to have worked as a chemist to teach chemistry etc. As long as the fundamentals are sound and the curriculum is well researched and presented any teacher can teach it, maybe as part of the maths curriculum. But yes, there is more than a grain of truth in the fact that our education system is not geared into producing wealthy entrepeuners (sp) but ensuring that there will be enough workers and consumers to keep the economy going.

 

[wylie]

I was checking my 11 year old (grade 6) boy's homework last week.

The whole worksheet was based on three of four people who had a certain amount to spend on "things". It was maths work and the kids had to work out what they could afford, how much was left after buying the three most expensive things, and least expensive etc.

I was quite impressed by the content and at how "real" the lessons were and how the kids had to think about how little money would be left after buying some "toys".

Wylie

 

[Gcs15]

Unfortunately, our secondary school system is designed to produce uni students, and unis are designed to produce employees. How many parents would send their kids to a school that puts actual education above getting into uni? Parents might be willing to let smaller kids try different things, but once they hit a certain age it's into the factory they go.
Alex

When I was at school the school careers guidence officer interviewed each student

"So, what University Course are you going to do when you graduate"

Moi - "None"

"None? You have to go to uni to get a good job."

Moi - "Well I want to be a Soldier"

"What if you can't be a Soldier?"

Moi - "I'll be a Sailor"

-Que going through every level of the defence force

"Well let's just say that you can't join the defence forces. What will you do then?"

- To be honest I had no idea. All I ever wanted to do was be like my old man. My own man but in my fathers image. So we put down some business courses that were chosen at random. Sadly due to a sporting injury i was medically unfit for the military. This pissed me off as I was in peak fitness and shatted all over the physical requirements "We're not talking 5 years but we're concerned if you will be able to do the job in 20 years." WTF?

 

[HiredGoon]

Ok, here's a quick quiz about money and finance. Enjoy!

1. Where does money come from, and how is it created?

2. If everyone paid off their debt, would we all be rich?

3. When you get a loan, you have to pay back interest + principle. Where does the money for the interest come from?

 

[Kingbrown]

Oh I love quizes!

1. Money comes from the Reserve Bank. Your question does not clearly state which form of money you are talking about.

2. If everyone paid off their debts, that has no bearing on whether I am rich or not. I may owe 5 billion dollars, I may have 20 trillion in the bank. Your question is a bit vague.

3. See answer 1.

 

[HiredGoon]

If everyone paid off their debts, you'd have $0 in the bank. That's a hint for the rest of the questions!

And by money, I mean the broad money supply, not just physical notes and coins. Whatever you could redeem for notes & coins.

 

[Kingbrown]

BZZZT WRONG! What if I had 1 million dollars in a safe at home? If everyone paid off their debts, I would still have that money. I also have eighty golds bars in another safe.

Also, EVERYTHING can be redeemed for notes and coins, so the question is still very vague.

 

[markpatric]

There is always a flip side to the situation.
Some are asking how these people get into so much debt, well I am amased myself that someone would even ask that question?????.
Starting or buying a business as we all know is a huge risk and this is the price you can pay.
These people would have read all the self motivating books and decided to go for it and put it all on the line for something they believed in, they see all the success stories of those who started with nil and take a chance.
The owners hanging on probably feel if they lose the house they may never get another opportunity, maybe they can hang in till the next rise and leverage thier way out!.
When you start behind the eight ball you cannot just magically do things the right way when prices are moving out of your reach.
A bigger, better house or quality real estate usually equates to higher gains when the market does move, I am guessing these people were told to not buy anything smaller than four five bedrooms as they take longer to sell, if at all.
I read some of these posts on this thread and wonder why I even look at this forum anymore.

 

[DrGraeme]

Financial education etc.

I believe Robert Kiyosaki and co have said it all before

 

[BoatBoy]

I believe Robert Kiyosaki and co have said it all before

And what did Robert Kimosabi and co say Doc ?

Dave

 

[jingo]

How many parents would send their kids to a school that puts actual education above getting into uni? Parents might be willing to let smaller kids try different things, but once they hit a certain age it's into the factory they go.
Alex

Very true Alex. Being a teacher I see this constantly. In many cases it usually happens around Year 9 or 10. Once the student (parent/s) has identified an area or direction he or she would like to pursue, anything that doesn't help in boosting VCE scores is often dropped like a hot potato! Extra curricular activities are often the first to go.

Regards Jason.

 

[HiredGoon]

First of all, you are confusing currency and money. Most money (broad money supply of Australian dollars) exists as records in a bank. Only a small percentage of this is in circulation as physical pieces of currency (notes, coins) at any one time.

1. Money is created by banks. Banks have been given the power by the government to monetise debt.

Say you walk into a bank and take out a mortgage for 500,000. The bank takes your promise to pay and then types the numbers into their computer. They type in that you owe them 500k and they create the 500k credit out of thin air.

The Federal reserve in each country sets the reserve requirements (typically ~10%) so if they have $100 on deposit, they have to keep 10% so can only lend out $90. But that 90 can be deposited and then 90% of that ($81) can be lent out etc.

But if the banks lend out 90% of your deposit, how come you can take it out again without them calling in the loan? Because only a small number of people try and take their money out of a bank at once. If more than a small number did, the bank would collapse. This is called a run on the bank. One of the other purposes of the federal reserve is to inject money into banks that have runs to prevent banking collapses.

In effect money IS debt. The money in your bank account or you use to buy groceries was created when someone took out a loan or a mortgage.

Eventually when the loan is repaid to the bank, the money is destroyed again.

2. If everyone paid off their debts, there would be NO money as money = debt. If you have 1 million dollars in your safe, then that means that someone hasn't paid off all of their debts.

Gold is not a promise to pay anyone, nor are other physical goods. I was not talking about things of value, but MONEY as in legal Australian tender.

3. When you get a loan, you have to pay back interest and principle. But when you take out a loan, you only create the initial principle.

Thus, borrowers have to pay back more money than exists. This means that a certain amount of borrowers must default on their debts and foreclose. The alternative is that other people take out more and more debt to increase the amount in the economy so that you can get your extra bit to pay interest + principle. But this just causes the problem to get bigger, and pushes the foreclosures into the future.

Australia has been increasing it's borrowing at a rate of 16% compounding annually since the 1970s. We're currently at a debt:GDP ratio of 160% and starting to see a record number of foreclosures. Pointing out that 16% growth in debt with 4% wage inflation is not sustainable is hardly necessary.

This probably sounds like I'm making this up. I wish I wasn't. Ask Alex Lee, he works in a bank.