What Do You Want to Learn During Financial Literacy Month?

Is there anything that GRS hasn’t covered? I don’t think there is anything left to be covered.

Maybe, there will be interest in some case studies, especially or people in their teen or early twenties beating student loans and have laid good foundation stones for financial independence.

Otherwise, I don’t think there is something GRS has missed. I think everything is described in detail here and in my another favorite blog, which is Free Money Finance.

I’d like to know why this stuff is rarely taught in school and, if it was, what would you teach first and at what age?

I would like to learn how to do a budget so I know where my money is really going.

#2 I also agree with Writer’s Coin. The things I am reading now in PF books & on PF websites/blogs (such as GRS) should be taught to teens in H.S. In Jr. H.S. kids should be learning about, and how to use, savings accounts, checkbooks, & what credit is really all about. I think there would be less of a mess now if people knew how to handle credit & money & how to save & budget their money.

I’d like to know more about:

1. ETF’s. Exactly what are they and what is the case for or against them?

2. Bonds. How do they work and when would they be a good idea?

3. Roth vs. 401(k). Is after tax or pre-tax better? Some of both? If some of both, how much of each? If there’s no 401(k) match at one’s employer, is it best to skip it and go straight for the Roth?

To speak to financial education in schools, having been in secondary education for a number of years, it is true that financial education is sorely lacking. The main reason for this, that I can see, is because of state and federal “standards.” So much time is spent on teaching to these tests and benchmarks (which do not include financial education as part of their requirements) that there is virtually no time left for anything else.
I taught English, so whenever possible, like when we were doing a nonfiction unit for example, I tried to include reading on basic financial topics that would be of use to the students. Most do not do this, however.

For Beth (Comment #5 above) about Roth vs. 401k:

As to the question of after-tax vs. pre-tax it comes entirely down to whether you think your current tax bracket is greater than the tax bracket you’ll have in retirement.

If you think the two are the same, then after-tax vs. pre-tax is a wash. Reason: Remember the commutative property of multiplication from 5th grade? Here’s a real life example!

However, there are generally going to be differences as to the two plans (401k vs Roth).

With a Roth you will have more investment options.

With a 401k you’ll (likely) get some employer match.

With a Roth you’ll have lower expenses. (Most 401k or 403b plans charge an administrative expense in the range of 0.5% to 1% of assets per year on top of the expenses of the funds.)

Hope this helps.

@Oblivious Investor — Thanks, that does help.

I would be very interested in a discussion of the difference between APR (Annual Percentage Rate) and APY (Annual Percentage Yield) as they provide different numbers on the same financial transaction. It’s a flavor of fun with math that can be a bit misleading. I sort of get it but would like a discussion on the topic. Perhaps there are other formulas that you could include in the discussion.

Mark

I’d like to know more about different stock market transactions, like the difference between a regular purchase and short sale, etc. Most of what I read is filled with a language foreign to most everyday people.

I would like to see advice for baby-steps investing — I have been setting aside money for my brokerage account, but it seems so daunting sometimes to save for months and months to meet the minimum to put into a mutual fund I’ve chosen, and then that’s what I’ve got, it’s not diversified outside of the fund. I’ve been picking index funds but it sort of feels weird to still have just one choice in there. Are there better options out there for people who haven’t got much (or are wary of doing much) to start investing in relatively small amounts?

Also, seconding WheelDancer at #11 — a commonsense primer talking about APR/APY sorts of issues might be interesting. Throw in a discussion of the different ways interest is calculated on, e.g., credit cards or savings accounts, and if you’re daring some of the equations used to calculate things like mortgage amortization. I’m actually taking a math class now that covered a lot of that stuff and it was really sort of eye-opening to be able to calculate my own amortization table and tweak figures, instead of just feeling like “this is too hard, I just have to blindly give the bank money and let them do the math.” Sort of a borrower’s toolbox of definitions and tools, maybe.

I would like to see a discussion about emergency funds. What do people really do about this (1 month, 3 months, 6 months)? Do they factor in Employment Insurance (here in Canada) when calculating how much it should be? How to trade off saving for this versus retirement versus saving for recurring expenses vs having some money for fun… There are so many pots to put money in, but I liked your recent post on the dangers of over-saving & would love to see what people do about actually finding a balance…

I would like to see what investment mix in a 401K or IRA that the professionals recommend – split out by age groups. Whenever I try to do research in this area, it seems a bit daunting.

Also – homeowners insurance is something that I need more education. I know it differs by state but would love to know the steps to get educated on what you need and the different types of insurance.

Personal finance for freelancers!

Has anyone ever made a simple list (or detailed analysis, for that matter) of the financial pros and cons of being a freelancer rather than an employee (health insurance, taxes, etc.)? How does one create a budget on a variable income? We all know it’s critical to contribute to company-matched retirement accounts — but what if you’ve never had a job that offers such a thing?

I’m a freelance musician and music teacher: four semi-regular part-time jobs and lots of one-time gigs.

I’d like to know about BUYING index funds, I’ve heard so much about why they’re good, but I don’t know where / how to pick them.

Diversification, what kinds of different asset classes there are and what I should be looking at picking.

ETFs: more information about them. I’ve always wanted to invest in ETFs but I don’t exactly know how they compare to index fund. (The bank says that there’s a fee for purchasing them, except if I go into DRIPs with them)

Thanks!

I’d love a really basic, beginner’s explanation of the stock market and all the lingo involved. Starting with a little of the history, and explain where exactly our money actually goes when we invest in different things like index funds, mutual funds, and a single stock. (and is it really “invest”, or should the right word be “buy?”

Also I would LOVE more info on socially responsible investing.

Thanks JD!!!

One thing that I’ve been interested in lately is whether the common financial ‘rules of thumb’ (e.g., 10-20% for retirement, 6 month EF, a house worth 2-3 times income, etc.) are applicable across income levels or whether people in the highest and lowest income ranges (and tax brackets) need modifications and if so, in what way. Relatedly, how does current net worth affect these rules of thumb? Our household income increased dramatically after graduate school, so while we now have a high income we have little net worth. Does that affect the financial advice?

@ Writer’s Coin and the Other Ann (#3 and #5)-

Some of this stuff is taught in schools as an option. Personally, I volunteer with Junior Achievement to teach kids about the basics of economics. I find the kids are more receptive than the adults I sometimes coach as a personal favor.

I would like to know about how the “Power of Compounding” effects stocks.

Example: I buy a 100 shares of a mutual fund (w/no dividends)at $10 and hold it for 30 years. It then is at $50 when I sell it at retirement. So all said in done, I make 4 times the initial principal and make only $4,000 profit. Not near the amount that is showcased by compounding.

I understand that dividends might actually be considered compounding, but considering they constantly change and don’t usually hold the magic 5% – 8% guarentee for as long as you hold it, it certainly wouldn’t show the full effect.

So how does compounding actually work for stocks? Thanks.

A couple people have mentioned life insurance — I definitely agree. I always get the feeling that I’m being marketed snake oil when reading about life insurance or talking to agents. And I haven’t been able to find any good, *unbiased* explanations of the different types and what’s good for whom.

Are rates fixed at the level you enroll, or do they fluctuate (increase) as you get older? It seems some life insurance policies have current “cash value” — what’s this all about, and what good does it do me?

I have/can buy pretty large supplemental life insurance policies through my employer. From what I’ve seen, my employer’s supplemental life is cheaper than the term life options available elsewhere. Should I also/instead have my own policy?

Including examples of what one might expect to pay for different levels and types of coverage would be useful. Even if the specific example doesn’t apply to everyone, it seems like the relative difference in premiums would be instructive.

It may be worth creating an introduction document.

This would go through the basics of financial awareness in one line sentences, with links to previous articles.

Then separate posts could be done, writing about what people want to know about, but hasn’t been covered previously.

This introduction, would also be helpful to you to find out areas you may have missed.

At the end of the month you could even pull all of these articles into a downloadable PDF.

Also, any ideas / thoughts on long term care insurance? Who needs it? How do you consult with your parents to see if they are covered or have adequate savings, etc? Thanks!

After last night’s discussion, would it be beneath GRS to cover the basics? It may be just the thing that parents need to start the discussion with their kids.
• How to balance a checkbook and track your spending
• How to write a check (yes, I have seen teenagers have problems)
• How do credit cards work
• How to compare mortgage rates for the long term

I would like to know if it is better to pay off your mortgage and invest only a little in the market, or only invest in the market with a little towards your mortgage.

I’m interested in knowing more about pros and cons of different retirement funds. I know the basics, but have a difficult time knowing if what I’m doing (20% to a 401k; nothing yet to an IRA, Roth or otherwise) is the right thing for me. I’m 28 and want to make sure I’m on the right track for me before I get any closer to retirement. I know I can research this stuff myself, but I haven’t because, well, I guess I’m a little lazy. And intimidated. Thanks for asking!

I think you should do a post on life insurance. When and why you need it, that it is not a savings vehicle, etc.

How about something on how to read a financial prospectus? I get totally lost when trying to evaluate a company for its investment potential.