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Old 05-05-2013, 11:06 AM   #161
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Originally Posted by Hamachi View Post
I know a number of successful people who have virtually nothing saved, and it stems mostly from their attitudes about money. They consider it evil, the product of exploiting others, etc., so they whisper about it the same way one would about a divorce or a venereal disease. I'm a huge proponent that a long term curriculum should exist in all public schools to teach about personal finance. In K-3, kids should learn about saving, delayed gratification, etc. In 4-8, they should learn about work, taxes, etc. In 9-12 they should learn about investing, credit, debt and the rest.

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Old 05-05-2013, 01:54 PM   #162
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Originally Posted by kmt1972 View Post
I do not feel it has anything to do with taking classes. It has to do with parents exposing to their children the world finite resources and trade offs. They should be showing to their children as early as possible how much they make and how the budget the money. Shielding them from this I feel really prepares another generation of poor financial planning.

The main reason I will be able to retire in good financial shape is because I paid attention to how my parents handled money, and then did the exact opposite of everything they did every time I was presented with a choice having to do with money. My role models were my grandparents, who modeled LBYM, saving for a rainy day, simple living, etc. Both of my parents lived high off the hog, had loads of credit card and other debt, and never saved a dime.

My grandparents' generation could have taught a class in financial wisdom, but not my parents.

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Old 05-05-2013, 04:09 PM   #163
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Wow...Great thread. Took me over an hour to get through all the comments.

I definitely agree that intelligence and financial acumen doesn't have too much of a correlation other than the obvious increase in income. I think the main reason why this problem is so pervasive, touhough, is that parents do not teach their children this topic. This imho is the main problem. Like you all have said, money is a very emotional beast. It is not something best taught in an academic setting. And unfortunately, the best education is usually painful and emotional experiences with money.

My personal experience with money. My parents are awful managing money. They had 8 kids and I believe used that as their reason for never getting their act together. They often went to their parents for help and drew on future inheritances in order to stay in the house/pay utilities/etc. As a kid, I remember the screaming matches and my mom crying when they would fight. I have memories of my dad (who has an mba from a top 5 school and is very very smart/wise), getting fired/losing confidence/and pretty much dropping out of the labor force at 45. Later on, when my parents received a large inheritance, my dad lost nearly 300k off a 700k investment with a scum broker from new york in 6 months in a rising market (half of the loss was fees alone)! From the very beginning of the experience, I told him the broker was a con man screwing him out of his money. He was to prideful to admit his mistake and just let it keep compounding. All in all, they are probably going to blow a multi million dollar inheritance within 15 years of receiving it. Their failure alone is the single most important reason why I want to attain fire. No amount of learning or education could have affected me like this one experience. Sadly, I am learning at the expense of those I love.
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Old 05-05-2013, 05:18 PM   #164
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Originally Posted by Hamachi View Post
I know a number of successful people who have virtually nothing saved, and it stems mostly from their attitudes about money. They consider it evil, the product of exploiting others, etc., so they whisper about it the same way one would about a divorce or a venereal disease.
Money isn't necessarily evil, but there is an argument to be made that excessive interest etc and the love of money is evil. Strictly speaking we are all committing a sin by taking interest on our money and being so interested in it, but I'm not a Christian so my conscience is clear. Maybe there should be a Christian equivalent of the Muslim Sharia funds, but for most people capitalism has trumped any injunctions against usury.
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Old 05-05-2013, 11:26 PM   #165
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Interesting thread, although I'll be honest - I didn't read every the original poster's question - why? I believe it's an emotional issue and not just means so many things to so many people. Having material proof of one's accomplishments or expenditure of time around them may be more important than having more free time. For some people being busy all the time allows them to avoid dealing with other issues, as well, so more free time is not what they want. One needs to truly know themselves to 'detach' and understand from an outside perspective what drives them and why. Once there is that understanding, then decisions are more easily made and behavior is more easily controlled. The book "Your Money or Your Life" does a much better job of explaining this....time is the important factor, not necessarily our indirect measures of it. However, few are able to discern this, and deal with indirect measures instead.

Nevertheless, there seems to be a small minority of people who do understand this and they end up being in control of their own destiny - either by limiting their needs and wants or amassing enough money (indirect measure of time) to do as they please.
History shows that people striate based on their ability to produce. I have a quote I keep on my computer that illustrates this:

"Since practical ability differs from person to person, the majority of such abilities in nearly all societies, is gathered in a minority of men. The concentration of wealth is a natural result of this concentration of ability, and regularly recurs in history. The rate of concentration varies (other factors being equal) with the economic freedom permitted by morals and the laws....... We conclude that the concentration of wealth is natural and inevitable, and is periodically alleviated by violent or peaceable partial redistribution. In this view all economic history is the slow heartbeat of the social organism, a vast systole and diastole of concentrating wealth and compulsive redistribution." - Will Durant

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Old 05-06-2013, 11:02 AM   #166
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Originally Posted by Free To Canoe View Post
Was it Dave Ramsey that said that money is 80% emotional? I agree with the statement and it may help explain the OP paradox.
Are smart people emotionally wise? There could be an inverse correlation here. Maybe the "smart" are using their money to meet their emotional needs, like keeping up with the Jones, power issues etcetera. I wonder how you fit this into the money basics course. Dave Ramsey is not without fault but he is one of the few that address the emotional side of the issue well IMHO.
Behavioral finance is a fascinating subject. Societal morality and shfting social norms has an effect on the human brain. I have read a lot on this subject, and it appears for the most part, people are their own worst enemies, and generally do the opposite of what logically they should (this board nontwithstanding).........
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)

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Old 05-06-2013, 03:30 PM   #167
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Having (started and) read this thread, I'm inclined to believe 'trying to buy happiness' or 'keeping up with the Joneses' is the most common cause for otherwise "smart people" who don't prepare for retirement. While I fully agree that more/better personal finance education at home and in schools is badly needed, I'd think it would occur to "smart people" to look into retirement planning at some point before it's just too late. It would have to dawn on them that they can't work forever and retirement won't just take care of itself. Many of them have been forced to sit through 401k meetings, one of which should have sparked some thought. Even if they were to go the wrong route (full service broker & BIL hot tips), I'd think they'd do something before 50 at least. So I'd chalk it up to the irresistible lure of immediate gratification theough lavish spending more often than not. YMMV

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