Prime example of why we need financial education

[chylld]

I am absolutely gobsmacked by the lack of financial education in our schooling system. It is ridiculous that someone can enter the workforce without first understanding basic cashflow principles and how to successfully live and grow within one's means.

This fellow started a thread on OzBargain a few days ago asking for advice on moving out. Let me share his braindump:

I'm a big boy now and getting sick of mooching off my parents and putting up with their embarrassing antics and am keen to move out of home. But I'm really not sure where to start? I need to do some research obviously, at this stage my plan is to get a rental for now, maybe share with some mates.

Obviously buying a house makes more sense financially, not wasting money on rent, but I'm not sure I'm in a position financially to be able to, I have about 10k in the bank, earning 50k per year. Saving maybe 1.5-2k per month. But I got a 3 week holiday to Japan in February, and talks of NZ in June so there goes half my savings :/ And my car is dying a slow painful death, so will need another one soon, my bike needs $1000 work, and I want to get my wisdom teeth out, all of which costs money Do they still do no deposit home loans? What's the catch with these? I figure now is the best time to have a large mortgage with interest rates so low, as long as I can keep up when interest rates increase and my payments go up..

I've had a quick look at some rental prices and damn! It's not pretty And I would like a nice clean modern spacious place in a good location as well so that isn't going to help keep the cost down :/ I'm fussy

Reading this makes me cringe so much I am going to resort to point form

• buying makes more sense than renting which is just wasting money? WRONG, both are valid strategies
• 2 international holidays taking up half his savings
• impending car purchase
• impending bike repair bills (does he really need a car AND a bike?)
• he wants a no-deposit loan while interest rates are so low. holy buttf&#k.
• on top of that he wants a "nice clean modern spacious place in a good location"! at least he admits that he's fussy

and the kicker in one of his comments:

I reckon if I tried I could sustain 2k savings per month, but that would mean be leading a boring life which I don't wanna do

Now I understand that every adult will become financially responsible at a different stage in their life. And this fellow may well do an about-turn and take full control of his finances. But at the very least, schools need to start switching kids' brains on to some key principles of resource management, because while the enjoyment from small ticket purchases is part of a healthy lifestyle, the entitlement mentality that inescapably comes with it brings about much bigger, much longer-term problems in the form of misunderstood debt and a lifestyle well beyond one's means

 

[VYBerlinaV8]

These are the people we are competing with financially.

Hmmm.

 

[pieman]

Gen y all day long

 

[EN710]

I am absolutely gobsmacked by the lack of financial education in our schooling system. It is ridiculous that someone can enter the workforce without first understanding basic cashflow principles and how to successfully live and grow within one's means.

They can enter the workforce alright. The system is there to keep them in the workforce. If everyone is millionaire, who's gonna do the work?

Reading this makes me cringe so much I am going to resort to point form

• buying makes more sense than renting which is just wasting money? WRONG, both are valid strategies
• 2 international holidays taking up half his savings
• impending car purchase
• impending bike repair bills (does he really need a car AND a bike?)
• he wants a no-deposit loan while interest rates are so low. holy buttf&#k.
• on top of that he wants a "nice clean modern spacious place in a good location"! at least he admits that he's fussy

Agree
He's setting himself up to disappointment and resentment.
Have seen too many people want to many things without the commitment to make effort. And then blame the system or rich landlords that they can't have it all.

and the kicker in one of his comments:
I reckon if I tried I could sustain 2k savings per month, but that would mean be leading a boring life which I don't wanna do

... *thinking*

Ok. Yes. I live a boring life alright

Gen y all day long

Oh gesus.

Not another gen y is lazy...

 

[Peter_Tersteeg]

Look on the bright side. A lack of financial awareness means there will always be tenants.

I agree though, financial education is woeful. I don't necessarily think that it should be taught in schools. I've dealt with people from a huge cross section of employment including teachers. Some of them are financially well educated, some aren't; just like every other job.

The most surprising part is that many people in financial services have a lot of pre-conceptions that are incorrect about borrowing money. They're also rather arrogant about their situation. I'm currently working with a stock broker whose wife had a senior position with a major bank prior to having children. $100k in credit cards (all paid off thankfully) earning $80k right now but that's okay because 3 years ago he made $250k when the market was doing well.

 

[chylld]

They can enter the workforce alright. The system is there to keep them in the workforce. If everyone is millionaire, who's gonna do the work?

lol good point!

Oh gesus.

Not another gen y is lazy...

I am gen Y and if I'm honest I was not too dissimilar from this guy. Only one day when I was extremely bored I was browsing random forums and I came across somersoft. The rest is history (just like my ppor debt as of last month)

Thing is, I only happened across the right 'path' by chance, there was no encouragement at any stage from the system to go learn how the world works. I've even had top-level doctors ask me to explain how loans and offsets worked! Brain surgery yeah no problem! LOC? what's that??

 

[sanj]

the level of stupid on that thread is impressive, congrats to all involved.

while financial education at schools would be a good idea, it is also (and imo primarily) the responsibility of the parents. this idiots parents obviously have taught him nothing about it.

 

[vbplease]

I say cut him some slack.. He's got $10k in savings and he's keen to learn. He's in a much better position than most gen Y's. I agree they should have a subject in school about this.. life skills 101. At the moment his dreams and reality are a bit disconnected but he's wanting to learn.. can you direct him to this forum?

 

[MTR]

Financial education is woeful?? no such thing in the current school system.

I would not expect the education system to provide this, what they would teach would be totally the wrong mindset in my opinion and a waste of time.

I think the best teachers will be you, it should start at home and grow. You can be the example. My daughters talk investments though one at school one at uni, they see what can be achieved, and it aint gonna happen in a day job.

 

[EN710]

Thing is, I only happened across the right 'path' by chance, there was no encouragement at any stage from the system to go learn how the world works. I've even had top-level doctors ask me to explain how loans and offsets worked! Brain surgery yeah no problem! LOC? what's that??

Gen y too here. I think family education will have more impact than formal education. I grew up in the family where irresponsible spending of money was the main cause of quarrels.
I'm taught to:

• prepare umbrella before it rains - i.e. safe money! Parents open a saving account for me where I can go safe my pocket money myself
• not get into debt - this is actually prohibitive for investing at some point (i don't like debt!)
• not waste money on unimportant things

Education on how the system work (loan, loc, etc) came after.

 

[chylld]

I say cut him some slack.. He's got $10k in savings and he's keen to learn. He's in a much better position than most gen Y's. I agree they should have a subject in school about this.. life skills 101. At the moment his dreams and reality are a bit disconnected but he's wanting to learn.. can you direct him to this forum?

Yep I applaud him for wanting to take the next step. His situation chimed with me because I vividly remember the moment where I broke the $10k savings barrier. I felt rich!! And what did I do? I spent it.

It was my money, I earnt it for msyelf, no one can tell me what to do with it plus it's best to spend it before I have any ongoing costs like a mortgage or rent, eww.

There are too many in this situation to help at an individual level. The system needs to be tackled, and tbh I don't know whether that should be kick-started by responsible parents or (especially when the parents are living paycheck-to-paycheck) the school system. I cannot think of anywhere else where such important issues should be addressed.

Unless ISPs host financial quizzes with unlimited bandwidth prizes... hmmmm

 

[jackbak]

well, not the smartest cookie in the jar but don't think he's as bad as some are pointing out. Just sounds like a kid who's probably led a sheltered life and needs a dose of reality, which he will get very soon, probably describes most of us at 18?

 

[MTR]

Gen y all day long

I don't buy this at all.

Age is totally irrelevant.

Education starts at home, wonder whether his parents are on the same page as him??

 

[DaveM]

Reminds me of a comment from the chat room where some guy applied for a 50k car loan when he had $8 in his bank account then wondered why he got rejected

 

[chylld]

Education starts at home, wonder whether his parents are on the same page as him??

It would be wonderfully ironic if by the following he is referring to his parents' attempts to play silly games like "the co-contribution piggy bank!" or "let's play along with share prices!"

I'm a big boy now and getting sick of mooching off my parents and putting up with their embarrassing antics and am keen to move out of home.

 

[sanj]

I don't buy this at all.

Age is totally irrelevant.

Education starts at home, wonder whether his parents are on the same page as him??

totally agree!

it id largely a product of environment and upbringing and not a generational thing.

i'd argue that gen y may "waste" more money than previous generations but that is also due to the fact that they have more money to waste. previous generations in this country are often just as hopeless with money, look at how many retire broke despite living through many booms.

we are notoriously hopeless with money management in this country

 

[Danrc]

These are the people we are competing with financially.

Hmmm.

This.

It makes me feel better at being in my 20's and starting to invest now

 

[marg4000]

Why is it the responsibility of schools to teach kids absolutely everything these days? Whatever happened to parental responsibilities? Or the wider community?

Disclaimer: I work in a high school.

There are often calls for schools to include in the curriculum areas such as nutrition, driver education, financial awareness, social etiquette, alcohol issues, manners etc.

Next day there are complaints that the "three Rs" and basics aren't being taught !!!
Marg

 

[EN710]

Next day there are complaints that the "three Rs" and basics aren't being taught !!!
Marg

What're three Rs?

 

[chylld]

Why is it the responsibility of schools to teach kids absolutely everything these days? Whatever happened to parental responsibilities? Or the wider community?

Disclaimer: I work in a high school.

There are often calls for schools to include in the curriculum areas such as nutrition, driver education, financial awareness, social etiquette, alcohol issues, manners etc.

Because school is the only compulsory attendance for a child in the education system. Not all kids talk to their parents, go to church, play sport at a club, etc.

Keep in mind that the role of a high school is to teach kids how to learn. The subject matter itself is often irrelevant to life (although that irrelevance is convenient for evaluating teaching methods and learning behaviour.) I aced 4-unit maths (97%) but I have yet to use hyperbola formulae in the real world.

There are supplementary educational services available Australia-wide however only a minority of children benefit from these. So the schools might as well try to teach relevant subject matter