Sustainability and personal finance

Great questions. I was a total financial rube when I started college. Unfortunately, my mom wasn't the best example when it came to financial planning and I had no concept of budgeting, etc. I started working when I was 16, but didn't manage my money well at all (didn't get my first checking account until I was 18).

I think that schools need to teach the basics of financial responsibility from the very beginning. Kindergarten isn't too early to start learning the concepts of saving money. Too many kids are graduating from high school without understanding the importance of paying bills on time, spending within set limits and so on.

How about incorporating personal finance units into high school math courses? While personal savings may have little to do with geometry and trigonometry, I can see applications in algebra and statistics.

However, we need to make sure that we get these personal finance units in grades before students begin to drop out. I remember some personal finance examples in my math classes, but we need to emphasize this more.

Personally, I think that this may work because people are already attending high school and math courses are currently taught and required. Thus, we don't need to create a new program or service.

How can our communities find the best ways to prevent financial falls?

Monitor the honesty of advertising!
and HONESTLY Educate the consumer, including CLASS expectations ~~!!!
L.

There is no question that we already have far too many "financially illiterate" people in our society. Living paycheck to paycheck and maxing out credit cards, however, is a symptom of a deeper problem for many of these individuals and society in general. What do they value in life? I am guessing that their values are a product of the increasingly materialistic and lazy culture in which we live. It seems we have gone way beyond merely "keeping up with the Joneses" to wallowing in a pit of excess.

Among my friends and colleagues alone, I can count far too many who have relatively high incomes with little to no savings and tremendous debt. They routinely pay for frivolous and non-essential services, buy the latest designer fashion accessories, and complain about their cash flow. They are literally one paycheck away from bankruptcy in some cases.

In our society, it is likely that we will always have the "working poor," or those individuals who truly are struggling to make ends meet. Social welfare programs and other means of public support will continue to be needed to help these individuals. What we must put an end to now, however, is the culture that has created the "consumer monster" responsible for the overwhelming debt and "financial illiteracy" in this country.

I agree, for the most part, with what everyone has said. I have to reiterate that I believe schools need to take a bigger role in teaching financial responsibiliy. Of course, it all needs to start at home, but for many kids that doesn't happen. It wasn't until I was turned down for a car loan after college that I finally learned about credit scores and how they affect almost every part of your life.

Hmmm, some really good points here. What is the best way to teach the next generation? Families may have their own set, but I wonder if schools can reinforce the importance of credit scores, or show kids the consequences of not paying bills on time etc. Learning that in real life is a hard way to go about it.

Simulations? Having a class manage "money" with a goal or savings to distribute?

Steve's points about college costs reminded me of the ripple effect. So the students amass debt, and how do they dig themselves out? They're starting "real life" with a very large bill that must be paid. It can take YEARS.

Has anyone here successfully managed their student loan debt _and_ built the savings / investment portfolio they planned for?

It's a tough battle in a 'buy, buy, buy' culture, isn't it? Everywhere you look it's messages about what you lack & what to buy make up for it. It's nearly impossible to avoid it. But in the end it comes down to each person's own volition. Living free from debt is easy, really, just stop buying stuff you can't afford, right? Sounds simple.

& here it is right on this web page... click through to our sponsers...

I leave it up to the individual to figure it out for themselves.

I just don't see how you are going to teach someone earning $7.00 per hour or less to manage that income into paying their own health insurance, save for their child's college, save for a down payment for a home, put aside some for retirement, keep some in the bank for unplanned expenses. . .

Earth to Cena.....you have to teach them other things too. Like how to have drive, ambition, and want to move up the company ladder to succeed in life, not just how to live off the government nipple.

See here in the comment section how true Liberals view this problem and we wonder why we have such problems now in the States with any sort of personal accountability

Bruce, I actually do consider myself a true liberal. I also believe in financial responsibility/accountability and don't think the two are mutually exclusive.

Dear Liberals Suck,
Steve Peterson, and obviously you feel we need millions of low wage earning individuals to keep our economy going. How much room do you think there is at the top for all these unambitious workers. Seems like to me it must take a huge amount of ambition to show up at a job that pays so poorly. But then you have made so can all the others, right?

Cena, the ambition and drive part will get the worker out of the low paying job if they have it. If they don't, they stay in the low paying job. Who's fault is it? What part of drive and ambition don't you understand?

>>How much room do you think there is at the top for all these unambitious workers<< Are you for real? So you are saying that there is not enough room at the top so to hell with it? You don't have to be AT THE TOP to be successful but you do have to have ambition and a yearning to be.

>>But then you have made it so can all the others, right?<<

That Cena is a true statement.

I look to all political perspectives to suggest ways to respond and prevent future instances of bankruptcy.

Have you ever tried to determine how close you personally are to bankruptcy?

Imagine you're a few paychecks away from serious financial trouble. How would you personally manage that situation?

Andrea,
sorry I agree. I should have said real ...I'm not sure. Check out the link.

Julia,
Be careful, be smart, spend less than you make, save and invest 10% of every dime you make no matter what, put off buying something on the spur of the moment...the passion for the item might pass etc etc etc.
And always remember that It is easier to save a dollar than to make one. None of this is fun, sexy and even feels a little un-American but don't count on anyone being there for you to bail you out. One of the wealthiest men in the world drives his old Volvo around Switzerland because he told an interviewer 'It does the job just fine, thank you"
Self control and self responsibility need to be taught in America.
It's not easy but Good luck

by the way: I don't need to Imagine you're a few paychecks away from serious trouble...been there done that a long time ago then someone explained the cold hard facts to me, its no fun but it works and the feeling is pure freedom.

I can't believe the people here who think I am liberal and who think being conservative is is defined as being financially solvent think I approve of irresponsible credit habits. I merely asked:
How are you going to teach someone who makes $7.00 per hour or less how to pay their own health insurance, save money for retirement, etc etc, etc.
I have seen no answers not even from the ones preaching financial responsibility.
In my Random House Dictionary a liberal is a progressive, meaning moving away from monarchies, dictatorships to a more representative form of government. Liberal has noting to do with thinking the government is going to take care of me, or you. That is a label invented by conservatives.

Cena, there are so many issues brought up by your question and I can't begin to address them all. I hate to sound like a broken record, but I really do feel schools need to take a more aggressive role in teaching finance. From kindergarten on up, kids need to be taught the fundamentals. Maybe that's happening more nowadays, but it didn't for me. At the very minimum, kids should know what a credit score is and how it will affect them in almost every aspect of their lives. Tell them what paying just one month late on a credit card or car payment, etc will do to that score.

As for only making $7 and trying to juggle all that you mentioned...well, I don't know that it's possible. Ideally, a $7 job is a stepping stone to something at a higher pay, but I know realistically that doesn't always happen. At that point, something will fall by the wayside. I know it did when I was a college graduate making less than $9 an hour. I paid for my health insurance, but didn't contribute to a 401k nor did I put much into savings.

>> Liberal has noting to do with thinking the government is going to take care of me, or you. That is a label invented by conservatives.<<

So why are 99.99999997% of Government entitlement recipients Liberal?

Because they look to someone else to foot the bill.

Republicans think you should earn your keep.

Well I disagree with you on the recipiants of government entitlements being Liberal. Last time I looked Conservatives as well as Liberals get medicare and disability pay. Children of conservatives of also attend public schools and colleges and universities. Do I need to go on?

Please do....

Well,
If we stick to data on Federal Entitlements, the three largest are
This first part is from U S News and World Report, The second part is from a publication called the Green Book Overview of Entitlement Programs, And is a list in order of funding. I will find what the most recent values are I don't know if 2005 numbers are available.
As for individual states programs I don't think any of them are funded to liberals only. I have never heard of a program funded just for liberals?
WASHINGTON - Three growing entitlement programs consumed nearly half of all federal spending in 2004, and budget analysts expect them to make up an even bigger share in the future.
Social Security, Medicare and Medicaid accounted for more than $1 trillion in the 2004 budget year, according to the Consolidated Federal Funds Report released Tuesday by the Census Bureau.
So anyway, the 3 biggies are Social Security, Medicare, Medicaid.
Here is a list of other Federal Entitlement Programs, Again I have heard of no qualifier that recipients be political liberals to receive the funds.
Section 1. Social Security: The Old-Age, Survivors, and Disability Insurance (OASDI) Programs (347 kb)

Section 2. Medicare (403 kb)

Section 3. Supplemental Security Income (252 kb)

Section 4. UnemploymentCompensation (125 kb)

Section 5. Earned Entitlements for Railroad Employees (72 kb)

Section 6. Trade Adjustment Assistance (46 kb)

Section 7. Aid to Families with Dependent Children and Temporary Assistance for Needy Families (398 kb)

Section 8. Child Support Enforcement Program (398 kb)

Section 9. Child Care (227 kb)

Section 10. Title XX Social Services Block Grant Program (42 kb)

Section 11. Child Protection, Foster Care, and Adoption Assistance (449 kb)

Section 12. Social Welfare Programs in the Territories (49 kb)

Section 13. Tax Provisions Related to Retirement, Health, Poverty, Employment, Disability and Other Social Issues (228 kb)

Section 14. The Pension Benefit Guaranty Corporation (47 kb)

Section 15. Other Programs (490 kb)

I'm staying away from the debate over the definition of "liberal."

Julia, in response to your question about dealing with pending financial troubles, I found the attitude of that bankruptcy judge in the American Radio Works documentary (which I listened to for the first time today at http://americanradioworks.publicradio.org/features/bankruptcy/index.html) about this topic interesting. He's the one who said that it dumbfounded him when people would file for bankruptcy but refused to give up their country club memberships or stop buying expensive new cars. I think people who are facing financial troubles need to definitely scale back where possible. They definitely need to focus on needs -- and not wants -- and stop worrying about keeping up with the Joneses.

One other quick thought…To understand my point, I need to inform you that I'm LDS, and Mormons are known for their emphasis on food storage. While many Mormons think that this is in preparation for the supposedly pending 8.0 earthquake along the Wasatch Front in the Salt Lake City area or for other disasters, I would argue that food storage is meant for a lot more. For instance, we are encouraged to achieve a self reliant state by our church leaders, and food storage is one component of this. If a family's breadwinner becomes very ill, loses their job, or for some other reason cannot earn money for a while, then that family could use their food storage. This would help them save money since they do not need to buy as many groceries. Thus, if someone is close to financial troubles, they would have less things to worry about if they prepared temporally in advance for such problems.

Julia,
Thank you for your article, and even that article, stressing personal responsible cites the changed labor market as a driver to bankrupcy filings. My original question how on $7.00 and less per hour, still stands.

As for you Liberal Sucks, I do love a great argument.

Spending more than one makes is not a matter of lack of education, but rather a matter of expectations - expectations of a prosperous society. There seems to be three things at play here. First is the desire to achieve greater success than our parents. In many other societies, the expectation is to achieve at least the success of parents, but in the US, the expectation is to achieve greater success. This leads to the notion that we should start at the same level of our parents and move forward. So, if you grew up in a new suburban home, your expectation is to move from your parents suburban home into your own new suburban home. To do otherwise would be to move backwards. Extend this to cars, clothing, and other stuff and you see the problem.

Second, growing up in prosperity, we have developed the expectation for instant gratification. If you want a new toy (or whatever), it is purchased. You observe your parents taking out the credit card at the store to meet this expectation. This is driven by your parents wanting you to have the best childhood possible. When you leave home you simply follow this pattern – and you can see the problem.

Third, consumerism has become a religion. In such a religion our rightness with God is measured by your financial prosperity – God's blessings. If you are right with God, God will bless you with material wealth. This translates into, "I go to church, etc., so therefore I deserve the materials things that I desire." Besides, "if I don't look prosperous – well, what will people think?"

As for education, you don't need to take a course to learn that if you spend more than you make, you will go into debt.

As for liberals vs conservatives, the residents of Red States are in deeper debt than residents of Blue States. The notion of being conservative meaning being thrifty has been long lost – look the conservative administration currently in office.

I suppose a fourth thing is that we have become too disconnected from the means of production. We no longer see the connection between effort and the concrete results of that effort. When you see the hours and hours of effort to turn a tree into a chair, you learn to value and charish the chair. When all you see is the swiping of a credit card for a chair the chair has little value to you and if something goes wrong with it, you throw it away.

No, we don't need to learn how to handle money - the math is really quite simple. What we need is an attitude adjustment. We have developed an attitude of entitlement, of immediate gratification, of waste.

And, by the way, most of the stuff people buy, is quite often not ever used. Shopping has become a form of recreation. We buy stuff we don't need, seldom use, and that requires bigger and bigger houses to store.

The solution to the problem is to SIMPLIFY, SIMPLIFY, SIMPLIFY!!!

Also, part of the problem is teenagers who have jobs but have no fininancial responsibilities. This often develops into several hundred dollars per month of discretionary spending. Then, when they leave home and get their first real job, the habit of discresionaray spending continues.
The best gift a parent can give their children is to make them responsible for at least a part of their cost of living - cloting, transportation, entertainment, and so on.

Andrea,
I don't have much faith that our schools can help. Our schools seem to have trouble with basics such as reading and math. And get this, Way back when I was in High School, College bound students took advanced math, but tudents tracked into non college courses were given some course work in how to manage a checking account, and a household budget, but not much.

First, thank you to everyone who is here and discussing this. Please message me when you publish separate articles that address the political positions - I find that interesting, but I'm really looking for first person perspectives on this topic, and some brainstorming around ways we can educate consumers.

And that's just it, isn't it. We're consumers. Gary hit upon something by stressing that people simplify. The personal "what I would do" replies (Britta's in particular, Bruce spoke to the general rule) seem to address _how_ to do that. I love that approach! What we need, what we enjoy, and what we tell ourselves we need are often very different things. Is that at the heart of how the next generation may learn about money?

I think we forget to communicate that financial security - while not sexy to borrow a phrase - is very freeing. I don't think there is a simple answer about trying to get ahead on minimum wage or what any one of us would do in the face of a devastating illness or dramatic financial loss, but I do know that we need to support each other in finding ways to minimize this for ourselves and our communities. Is it enough for us to say "buyer beware" and mean "beware the fees, penalities, and compounding interest?" Don't we have to say that, and show our kids, our communities?

Does anyone have a good resource for online savings and interest calculators? I love to see how much something *could* have cost me by buying it on credit instead of waiting for it and saving up. That has delayed many a purchase in this household, but we've always roughly estimated it. That might be an interesting teaching tool whether it is in the hands of parent, teacher, or mentor.

Cena, you said you thought the schools couldn't help. Who could? Did I stumble upon something when I suggested a mentor - what prospects do you see?

What? Julia doesn't believe the sale price is saving her money if she spends to buy it. Julia you are total failulre as a marketing target failure.. .

LOL true. Undoubtedly, that will not be the last time I hear that. But you hit it, Cena. I'm looking for ideas on how we can spread information.

Shouldn't there be a "Target Market" program about ... credit? Is there?

I am not sure Julia, but in California. The early anti smoking movement worked, my daughter's group doesn't smoke much. By the time my son was in high school the message became grotesque. A lot more smokers in that age group. So Some kind of public message campaign might be helpful. However I fear it will get as ugly as the lose weight campaign already has. But if this is about financial instutions losing money, the monies lost to consumers pales to almost nothingness compared to the bankruptcies filed by corporations and businesses . . . I wonder how we can teach our children financial responsibility when the daily news reports so often on the bankruptcy of important businesses.
ps, my kids are ok so far, but really just getting started on their lives.
It could be incorporated into math classes, but you know some attach some kind of moral issue the the money thing, that would be a huge turn off to kids. You do seem to recognize that this is not an issue for just the working class, and never was, in fact it may have once been the domain of the well off only. That might be the big difference. Low income earners are now granted permission to borrow outlandishly via credit cards. So the numbers of filers are up disproportionately. I have no idea how to fashion a marketing campaign for financial responsibility, I agree it is something to think about.

One angle is freedom to make more choices. Freedom from debt allows, career changes, moves to new places. Going back to school for that advanced degree in mid career etc. Being debt free just has to be cool and "in"

Cena wrote: "Low income earners are now granted permission to borrow outlandishly via credit cards."

So, who needs the financial education more -- individuals or credit card companies? I can't believe that credit card companies feel that they can allow people to dig themselves deep into debt. Credit card companies are acting criminally. Great point, Cena!

Ahh Steve, I just can't blame the Credit Card Companies. . . .

Ok, Steve, I had turned off the pc, but am back. Credit Card Companies are just marketing their product as are the makers of items and providers of services for which the cards are used. But. . . .as part of credit responsibility education. Children need to be taught very early to recognize when they are being "sold" to and "marketed" to. Julia, I do believe this is part of credit responsibility education.

I concur. My parents taught me to treat credit cards like debit cards; you can only spend as much as you have in an account. If the credit card companies are all ready acting nefariously, then why don't they just lie to us and market credit cards as debit cards to us?

Cena, glad to hear your kids are ok while starting out. You're right that the message that "being debt free is cool" is important, and I'm really digging the idea of a much more comprehensive credit education that includes your suggestions. Steve makes a big point too: if people treat credit cards as if they were debit cards...

This artticle is full of hope. Kudos to Judge Ninfo for serving young people by talking to them and offering educational setting on the subject he deals with everyday! Notice the love and caring of Annika Graham who is helping her friend and co-worker as well as herself. Really our true currency is us, particularly our thoughts. The Judge strikes a balance between self impowerment and accountability.

I think there's a much greater "ill" at work in our society than mere "financial illiteracy." Financial illiteracy (and bankruptcies) are merely surface symptoms of a deeper problem revolving around the metrics we use for measuring "success" and "quality of life." Quality of life has become a sort of misnomer, effectively replaced by "quantity" of life. Somehow we have "built" a consumption-based machine that (among other things) is designed to fioll us with the fear that we are somehow "missing out" on life if we don't have a big house, a late model car, flat-screen TV, hip cell phone, swank health club membership, vacations to Bora-Bora and $200 sneakers.

Repairing the train that's careening down the track, out of control, has to start with a redefinition of "what is important in life?" I remember some years back, am agency of the UN conducted a survey of nations on the meaning of "contentment." Contentment in other countries (including wealthy nations like the Scandinavian countries, the Netherlands and Japan) has a completely different (and non-competitive, non-financial) "tone" than in the US. In this country, we are stuck in a pattern of comparing our lives (to each other, and to the ideal) in terms of dollars and cents, rather than the more subjective measures such as "inner peace" and "happiness." Changing that starts with an education in families, not just schools... perhaps centered around the eternal "comparisons" (and striving) as to whether we are "better off/worse off" than our parents. And our neighbors. The so-called "work ethic" can be fine and dandy and undoubtedly has its place, however, we're being shown that it can also run amok and contribute to the decline of a culture.

Very good stuff! I think most people have every intent of paying for things they buy. But, if they can't pay for it right away, they must do EXTRA work to pay for it, and that is where many are too lazy or busy to make up for that. I think the first step is understanding that it actually takes years of hard work (in most cases) to gain financial stability. Being lazy for months out of the year, or days out of your week only keeps you from gaining that financial stability. STAY DRIVEN!

I wonder how much of this insight could apply to small - and unfortunately, large - businesses?

Liz, you made me think. I wonder how people can be encouraged to live within their means. Can they? Do we live by example or ...

Thanks for replying, Liz. Your point about buying/trading locally with cash is an interesting one, and inspired this train of thought: Automatic deposits, electronic bill paying, credit & debit cards can feel like... magic. Vapor. The money isn't real.

Julia, I'm glad you mentioned Automatic deposits and electronic bill paying, as I sit here with my paper checkbook in hand, actually writing those numbers in the little box on the left, recording it on the stub and deducting it from my balance. I need to do this, or else I know it would be "out of sight, out of mind."

I will not succomb to all the pleas I get from every vendor to "go electronic". This is my way of reminding myself about "reality".

Lifestyle choices are also intrinsic to this debate. My SO and I, my daughter and her husband have all made the same choice that has had a great impact on our financial health and our physical health (which of course is directly related to our financial health - you can't separate these two things.) We do not own cars. The only one among us who has a license is my son-in-law. We all take public transportation. We walk. My daughter has two kids. They ride bikes and have carts attached to the back for groceries. We buy local. We are all lean and fit and healthy.

Our annual savings, from this one lifestyle choice is enormous.