Thank you so very much for the education you provide. I have much to learn, but now I invest with intentionality and purpose, rather just trying to follow what is aggressively marketed or is currently the hot stock or fund. – Brian S.
I’ve been thinking a lot about financial education for young people and also for their teachers who, according to a Washington State mandate, will soon be charged with providing financial ed classes, kindergarten through grade 12.
As most of you know, investing has never been easier. When I think back to Jack Bogle’s story of his “folly” 40 years ago, trying to launch the first public-access mutual funds in what he described as, “the worst underwriting in history,” we’ve certainly come a long way, baby. But the fact is one thing hasn’t changed: human emotions.
With the internet’s abundance of information, advice and one-click investing, it should be easy for anyone to invest. But still, for most people the world of investing is a mystery and the choices are overwhelming. My goal is to present a list of 20 things you should do – of the thousands of things you might do – boiling down the knowledge path to 20 ideas so they can invest in their own best interest. But after that, the greater challenge is: how to motivate them to save, to overcome the constant messages about spending?
I think the answer lies in changing who we trust. In every presentation I make to young people, there is always at least one anti-capitalist. I point out that there are 3 things we each can do to have an effect on change: vote, campaign, and/or stop buying unnecessary things and save your money. The latter will lead, if prudent, to having money to do what you want… retire in style, dropout of the race, support people and causes, or whatever you dream up. Saving or spending (and spending wisely) is within each person’s control.
Ultimately, we must be able to trust ourselves, and that means feeling well educated by trustworthy people and empowered to make the right choices for our own situations and goals.
It’s easy for me to say, “Buy an index fund. Trust the market.” But for some 50 teachers with whom I spoke, few knew of Jack Bogle (Vanguard) or what a target date fund is. They are being tasked to teach financial literacy to students, K-12. I imagine they know, from personal experience, the basics of bank accounts, credit, getting a mortgage and budgeting. But the investing process means managing risk, and your emotions.
My goal, by end of July, is to make 20 3-to-5 min videos – with technical support from Western Washington University – that address the 20 most important financial decisions I think each person needs to make to be a successful investor. I want to ensure that all teachers have access to these, for their own futures and for that of their students. These videos will be available to all WWU students and faculty, not just those who enroll in the accredited Personal Finance class I helped create four years ago.
This is exciting. But even more exciting is that these videos will be available on our website to help your family and friends understand the investment process.
I hope those responsible for implementing the Washington state mandate will distribute them to teachers and students statewide. And, moreover, that high schools, colleges, businesses and organizations throughout the U.S. will use them to help educate and encourage every viewer to save, make better choices, positively manage risk, invest in what is in their best interest, and make the future better for every individual, their families and communities.
I hope you will join and support me in sharing these videos when they become available. We are all in this world together and I thank you for trusting this old guy for sharing the best sound investing advice I know, gained over the past 50 years. I’ll keep you posted, and thank you in advance.
Recommended reading on financial education
The Merriman Financial Education Foundation is pleased and honored to have on our Board of Directors two exceptional individuals, Paul Heys and Lew Mandell. This article by Lew points out some of the challenges to effective financial education classes. You can start reading it here and click the link to continue.
Using Technology To Make Financial Education More Effective For Minorities
By Dr. Lewis Mandell
Since the financial literacy movement began to gain popularity some 20 years ago, many goodhearted people have believed that the consequences of bad financial decision-making could be reduced or even eliminated through financial education. This may well be the case, but to date, no one has come up with a scalable financial education program that has been shown to make adults better able to handle their finances.
While improved financial decision-making ability would be useful to everyone, the problem is most acute among minorities, including African-Americans, Hispanic Americans and Native Americans whose incomes are substantially lower than whites. By definition, lower-income families receive less to support their needs, thereby increasing the importance of careful spending and saving. They also accumulate far less wealth than families with more income, rendering them less capable of surviving unfortunate events such as illness, accident or death of a breadwinner. 2013 data from the Survey of Consumer Finances found that the median net worth of whites was nearly 13 times that of blacks. Continue reading at Huffington Post.
I hope you had a wonderful 4th of July celebration. Ours included time with good friends, a traditional small town 4th of July parade, too much sun and way too much good food. The only losers were our 3 dogs. They hate the 4th of July. It looks like they’ll be sleeping with us again this year.
To your success,