I kind of think these kids need training even more, since when they start out they’re going to be in a lot different situation from their parents. For instance, if you never have a credit card balance, the card you choose might be very different from that if you sometimes are tight enough to carry one. If you’ve got money, budgeting can be a lot looser. Plus, a kid might not have the same habits as the parents. I suspect growing up in a house where money is always an issue is a lot different from growing up in one where it is seldom an issue.
Yes. Use the same pictures, too.
Ack!..A lot of comments that I missed over the long weekend. At this point it looks like I’ll just have to agree to disagree with the majority of the dopers on here. But I do want to address a few comments here:
Sort of…but you missed the main point. Today at my salary being frugal means that I only go out to the movies once or twice a month instead of every week…or only getting a couple of new polo shirts instead of one in every color just so I don’t have to choose. Back then being frugal and living within my mean meant that I was eating Roman noodles every night, or splurging twice a week for Kraft Mac and Cheese. The difference that $50 made a month was huge then…now I wouldn’t even notice it. My point was that sometimes I honestly had no choice but to float that negative balance for a day or two until payday. Just so I could afford gas for the car to get to work, or to pay the rent on time instead of when my payday fell. The $700 credit card debt that I ran up to make ends meet back then doesn’t affect me at all now. I’ve since gotten to a point that those mistakes don’t haunt me anymore…of course I realize that not everyone is in my same situation.
I don’t think that’s a good idea either. Kids also need to learn the 1000 little skills that come with living on their own. I had to figure out how to sew on my own, as I didn’t take home ec in school. Cooking was the same…but it sure as hell would have saved me a lot of nasty food (which would have saved me money) if I had been taught how to cook a meal. Although this is also something that parents should be showing their kids how to do at home. So rather than cut it out completely it should act as a catalyst to get kids interested in what running a household means…so budgeting and financing should be included.
This is really more of an off-topic subject but I’ll address it. The company I worked for previous to my current job I invested all my 401K into the company stock. Why? Because I’ve worked in my field for a long time, and know a bit about it. I knew the current president would be in office for a while and that meant a strong republican sway to the government budget. Since I work as a government contractor that directly effects me. I also knew that the founders of the company were coming up on retirement age…they had started the company 20 years ago. So, that $12 a share stock (when I started) was at $42 a share when I left and they bought back my shares. Why did I suspect that it was going to go up that much? Because as they got closer to leaving the company it was beneficial for them to have the stock worth more…so that when the company had to buy them out they would get as much as they could. Is that illegal?..ehhh…borders on a grey area. What they did was make sure our debts were far enough in the future to not impact the contract that had been awarded to us…so our profit was very high for a couple of years. Why did I leave the company and cash out before they went public? Couple of reasons…I personally find that working for a company that is publicly traded sucks. Because the employees aren’t the shareholders anymore a company tends to treat them as only numbers…not assets. And also because I knew that the price they had set was higher than what it would actually sell for in the market. There are only a handful of other contracting companies in our field, so it’s very easy to compare stock prices.
The job I have now though I’m not putting any of my 401K into the company stock even though it’s employee owned. Why? Because Bush is coming to the end of his term…it will most likely be a democratic president next election since he fucked up so much. That combined with a democratic majority will have a huge impact on defense spending. We’re already starting to see budgetary difficulties…so it doesn’t make as much sense for me to put all my eggs in one basket at this particular time…even though this company is much smaller so owning stock in it would help my standing with the CEO/founder. Make sense?
So what I’m saying is that I think parents should teach their kids to think and analyze their financial situation just like they should every other aspect of their lives. Don’t just blindly follow what the “accepted” wisdom tells them.
Oh, and over the Easter weekend, almost all my family members and friends agreed with you guys. Not that I’m going to admit that I’m wrong. 
Interesting story snipped. There is a lot more control in a privately owned company. Still, I know people in startups who took a bath - they couldn’t sell their stock when the company went public until after it had plummeted. If they had bought any, they’d have really lost.
My reason for not wanting to put lots of money in company stock kind of involves general financial planning strategies. First, I get stock from an ESPP, which is a lot better deal than getting it in a 401K. Second, good performance by the company not only lets me keep working there but gives me a good bonus. On the other hand, a disaster might mean a loss for my ESPP shares not sold, and no bonus, and maybe no job. (The first two of these have happened.) Having all my 401K in other companies and industries smooths this out. You want to guard against a perfect storm.
However, I can’t think of better advice than think and analyze. So many people don’t do either.
OK, maybe not cut sewing, but spend less time on it, and use that time to teach personal finance. Learning how to sew on a button or sew a hem is a useful skill. Spending a lot of class time sewing a decorative pillow (as we did in my 7th grade home ec class), not so much. The really necessary elements of sewing for someone who is just going to be doing minor clothing repairs (ie, not sewing clothes or anything like that) should take a lot less time. And I would say that the basics of finance and budgeting are a lot more important than being able to make your own clothes. Most people never make their own clothes, or make decorative pillows. Almost everybody will earn money or have to make decisions about spending or saving it at some point in their lives.
Most high-school graduates could probably do the math required to understand compound interest (especially with access to Google or a calculator), and probably have. But clearly they’re not applying this to things like credit-card debt, saving for retirement, and other things. I really don’t think the problem is that most people who are in financial trouble can’t do math involving exponents. I think the issue is that people need to be taught how to think about financial matters.
An example here would be math classes versus science classes. My (non-calculus-based) AP Physics class used only basic algebra, math-wise. But that doesn’t mean that everyone who takes an algebra class could pick up physics on their own. What’s taught in physics class isn’t the math, but a way of thinking about certain problems.
But not all of them will. There are a lot of parents who, for whatever reason, don’t want to discuss financial matters with their kids. My parents, while they were fairly well-off, were like that- I think the first time they ever discussed mortgages or housing prices with me, I was in my thirties. It’s kind of like sex ed in that way- all parents have at least a rudimentary understanding of sex and reproduction (they figured out how to get the job done), but we have sex ed in schools because not all parents are willing or able to convey that understanding to their kids.
My other argument against leaving financial instruction up to parents and maybe passing mentions in math classes is that that doesn’t seem to be working out too well for us right now. We have a negative saving rate, many people (including college students) thousands of dollars in debt to credit-card companies, and a rising rate of home foreclosures.
Most people, Atrael, are neither as lucky or as shrewd as you when it comes to investments. Studies show that people tend to overestimate their abilities to pick good investments in general, and even more so when it comes to businesses that they know something about. Factors like the presidential administration and retiring executives would be overlooked by most.
There isn’t anything shrewed about what Atreal did, its either luck, laziness, or its insider trading - which is illegal. Its a basic principle of finance that diversification decreases risk. Lucky Atreal ended up on the upside of the risk. Plenty of other people invested their money in what they believed to be well managed companies they knew well (and not even Enron - I have a friend who had useless Lucent options and friends still digging out from their Cisco mess). The stock market is a relatively efficient market. Factors like presidential adminstrations and retiring execs aren’t overlooked by the majority of people who trade the stock - which are the mutual fund managers whose job it is to watch those things - and they are really the people determining price.
My junior high school (back in the day, when dinosaurs ruled the earth) must have been very advanced. In social studies, we learned how to read (and fold!) a road map, as well as how to write a check and balance a checkbook. In grammar school they had “student savings accounts,” whereby you could deposit as little as 25 cents a week, and you could see the pennies add up, as well as the power of compound interest over time.
Schools could, then and now, do better, of course. When I think of all the totally stupid and impractical math “story problems” where you’re calculating the exact number of ounces of peanuts and cashews to make a pound of mixed nuts worth a certain amount per pound, I could scream. NOBODY does that. Instead, figure out how much you can get for your money if you borrow at x%, vs. charge at y% vs. save up for and pay cash, including interest at z%.
This isn’t the place to really get into a detailed discussion on my abilities to judge my own career field. However I will state that I knew exactly what I was doing with the company I was with at that time. I know far more people that lost money because of the dot com bust and trusting others to manage their accounts. While I found the bust to work in my favor…what did I do right after everything in creation in the tech market went to shit? Hmmm…Cisco has fallen to $8.00 a share…while it wasn’t worth the $40 a share or so it had commanded a month before, it’s a solid enough company that I (as someone in a fairly technology oriented field) know is going to be around for a while, or bought. And that it’s price per share will increase to probably a nice stable $20 per share…which is much more reasonable. So I bought…why did I have money to buy? Because I don’t trust some guy to manage all my money for me. That’s little better than no financial management. Unless you can help make informed decisions about where your money is going, and what exactly is happening, then you’re better off just buying bonds or a money market savings or something. It’s a lot like voting. If you can’t walk into the polls, and know what the hell the candidates and issues really are, not just what the commercials told you over the past week, then you shouldn’t be there.
On another note, I have to say that the discussion in this thread has changed my mind. Mostly because of the parallel to Sex Ed. That is another subject I think parents should discuss with their children, but I recognize that if they don’t, there’s going to be a hell of a lot of teen-age pregnancies and other issues. Which can end up being a burden to the rest of society, as well as a huge life-impacting event for the persons involved. Finances are the same…if someone doesn’t at least have a basic understand of what not to do, then they can quickly end up in a similar situation. A burden to society, and potentially detrimentally impacting their own futures. So consider MHO to have changed. 
Definitely it should be taught. I do remember that at some point during my public school career we were taught how to write checks and balance a check book. I think it might actually have been earlier than high school but I don’t recall for sure.
We were also exposed to banking in grade school. I actually had a real bank book (remember those?) in first grade. An employee of the local bank would come once or twice a month (I forget exactly how often) and we could deposit some small amount like a quarter into our bank account. (Of course this was only the children whose parents could afford that.) IIRC this continued all through grade school. I still have that same bank account although the bank has changed name and ownership several times over the years and is now part of a large chain.
There’s no way this was profitable for the bank, but this was a locally owned bank that I suppose felt that it was giving something back to the community as well as gaining future customers. I doubt that anybody anywhere does that now. The rise of the muti-state banking chains put an end to that.
While I am sure you were brilliant I know plenty of people who lost money on their own companies, without anyone managing their accounts. At the time of the bust, there were many stories about people who did the boneheaded thing of cashing out options and then holding the stock. When the crash came, they were responsible for tax on the options at their height, but could only sell the stock to cover it at the low. I’d hope that a competent financial advisor would have told them that this was not a bright thing to do.
Though I’m sure many of us can tell stories of our financial acumen, as a general rule kids should be taught the benefits of diversification. If the only thing they hear in class are stories of this or that killing in the market, they will probably overestimate their own skill. To continue with the sex ed analogy, there might be men who never used condoms and always pulled out in time, but that’s not what should be taught.
I’m still more comfortable with the idea of teaching kids what not to do finance-wise. Rather than telling them what they should do based pretty much on someone’s opinion. We could sit here all day arguing financial investment strategy…but what it comes down to is that something worked for one person that might not have for someone else…and vice versa. So I’d rather if we’re designing this hypothetical financial management class to concentrate on teaching kids what the glaringly obviouse pitfalls that many fall into, how those mistakes impact their lives, and how to think about any financial arrangements they’re getting ready to make may affect them. Again with the Sed Ed analogy, it’s more like telling the kids to always use protection and birth control rather then trying to tell them what position is the best one or that oral sex is ‘safer’ than vaginal sex.
I think I agree. Isn’t diversification just teaching to not put all your eggs in one basket? I certainly don’t think kids should be taught to either buy or avoid equities or mutual funds, or bonds or anything else, and certainly nothing about investing in certain industry segments. If teachers could teach how to evaluate investment choices based on goals, that would be plenty. And I’m at a loss to think of how to extend the sex ed analogy this far.