All Forum Posts by: Scott Trench

@Scott Trench 

I am pro 401k.

Long term, dollar cost averaged, deferred tax, S&P 500 index fund investment seems a fine way to build a stream of wealth on the effort of American industry that one can not touch day to day and should worry little about.

Set it and forget it, as I learned from late night TV.

I see it as insurance and likely as a way to estate plan.

I hope not to use more than its required minimum distributions when I am in my 70s.

By then I'll have rolled it in to a Roth IRA, paid the necessary taxes, and set it up as my grandchildren's inheritance.

If the rules are the same then as they are now, they will have a small, annual, tax free, required minimum distribution to take over their lifetime, after my passing, with which to enjoy life and remember their grandparents.

I also agree with @Dawn Anastasi 

We are also pro real estate. 

We'll invest more time in building our real estate business for sure.

Real estate should be the larger portion of our estate.

But I see no reason to avoid a 401k.

We'll just enjoy both streams of wealth generation.

Thanks for asking the question,

Jonathan

Parents have different methods of teaching their kids financial skills.... if they have any at all. Lets take a step back, most people have a poor grasp on their own finances, I wonder what financial lessons they'd try to teach their kids. I have friends whose parents gave them allowances and taught them to budget, but as adults they still have debt.

I definitely think kids should have more formal lessons. Kids in school constantly complain about the lack of future use for algebra and geometry, so teach them the same lessons with financial applications. Kids can't argue that they'll never use money. Instead of senseless word problems about Jane buying 1,000 watermelons, why not fill math books with word problems related to finances. 

I've taken economics at a college level and didn't learn anything about personal finances. Most people have no idea how a credit score is calculated, the difference between a roth IRA and regular IRA, how to calculate ROI, etc. Schools leave teaching life skills to parents who don't adequately teach their children, it's kind of a broken system.

@Scott Trench 

A good topic... I would make them take "personal financial management".  Required reading for the course would include:

 "The Richest Man in Babylon"  By George Samuel Clason

"Think and Grow Rich" (original 1937 edition) by Napoleon Hill

"The Science of Getting Rich" by Wallace D. Wattles

I would also require them to submit a class project, which would be a business plan and requirement to raise capital and take action to actually implement the business plan (I started a lawn moving business at 12 years old).

For those who are on Bigger Pockets who have a good grasp of personal finance, have you considered volunteering to teach a short class through your city's Parks and Recs Department? They usually have social programs.

@Scott Trench 

It would be great to have personal finance classes in school, but I think the best way for kids to learn is through their own experience. 

My family was poor and I never had money to buy video games. My mother told me If I created my own ventures, she would allow me to use that money on video games. That created the drive for me to start numerous kid ventures, which were all fun for me, and fun for her because I wasn't bugging her anymore. Long story short, that taught me the value of a dollar and it propelled me to learn finance.

It seems kind of crazy to me that a society the runs based off money doesn't teach the basics of how it works to our children. Even most college graduates have probably never taken a personal finance course ever in their life. It's an afterthought if it's done at all.

I actually did a thesis on the concept in college. My conclusions were basically that people who have taken a personal finance course on average had improved financial outcomes, but it was a weak predictor. I suspect it's weak because of a selection bias on who takes that kind of class. As someone else mentioned, it's often used like a remedial course. I know in my high school the only kids to take the one business course offered did so as an alternative to taking a more difficult math class. A bigger predictor to improved financial outcomes was if their parents taught them about money.

So my thoughts are that:

1. Even a single personal finance course would probably be helpful

2. But more would probably be better

3. And parents ought to be teaching their children about money

Of course the problem with number 3 is that many adults have never really been taught anything about money so it makes it hard to teach their children. So schools should be picking up the slack. If they did, maybe in a generation or two there would be less money problems in the country. That would help not only individuals but the whole economy.

Of course actually getting it implemented wouldn't be easy. There would be a lot of politics about it among teachers, school administrators, and of course, politicians. When I was doing this thesis I talked to some various people about why it wan't required at my college. The answer was basically it's not because it never has been. It's hard to add more required courses. You'd probably need to remove a different course from being required to make it work because you can't have too many required general education classes. And all departments in the college would fight tooth and nail to make sure it wasn't one of their courses that got removed. So it would be very difficult to add just one course at one college. Imagine the difficultly of doing it nationwide.

Yes, personal finance should be taught, however, grade school is getting a little ahead of things, the math skills aren't there yet to go into evaluating opportunity costs, differences in interest charges or the maturity to concepts of priorities of a car payment or insurance or rents or life insurance, I doubt the average 6th grader would get it.

Simplistic ideas of products, costs, profits and business should be taught, from the time they are old enough to have a kool aid stand.

I'm speaking from a position of teaching the subject, elementary school is pretty objective, facts are taught, business and finance quickly get into subjective thinking which really isn't developed as to making choices until the 7th and 8th grade as well as the math skills needed to apply concepts.

Personal finance includes understanding investments vs savings, a 5th grader can get savings, but not yields of mutual funds, IRA advantages, what types of risks should be insured and why, comparing insurance, how and when to borrow......heck, we have adults who can't get it and why it should be required in high school.

I'm not sure there would be enough basic information that could make up a class for 45 minutes 3 days a week ( like my Spanish class) over a school year.

IMO, the introduction should begin at the 7th grade.

AND!!!!!

Can you believe it, some kid can go to medical school and never have to take a finance class! Dentists and young doctors are the favorite targets of insurance salesmen, stock brokers, Realtors and others selling financial products, and unless they took some classes as electives, they are on their own.

It doesn't matter what your kids end up doing, wealth can be built over time from almost anything, the key is in making good personal finance decisions, if you can't do that you're sunk regardless of what you do. :)    

I think it's a good idea, but not at all hopeful about its successful implementation in our government schools. 

I do think parents should teach their kids personal finance and investment.  I'd add innovation and entrepreneurship. When they aren't giving out jobs, create your own.  Better yet, create 10 jobs. Give your kids a huge advantage. Don't have the knowledge yourself?  Well, there are these useful inventions called books and the Internet.  Embrace websites like BiggerPockets. Learn together.  

It wasn't until I was a college graduate that a guy I just met white boarded the rule of 72 for me. Epiphany.  Do this for your kids. Makes math more fun. 

I have lost any hope in today's US school system: 30+ kids in a class,  teacher's unions, "no child left behind", "Common Core, a.k.a. rotten to the core" and $250k student loans - pick your poison.

Today's parents are too lazy to spend time with their kids so they try to offload their parenting responsibilities to the schools. If you want to teach your kids the things that are important to them - you have to do it yourself. Please spend 30-60 minutes a day reading and discussing economics with them. There are plenty of good books out there that with your help can be very beneficial to your kids.

I have started my kids at age 8 with books like "How the economy grows and why it crashes", The Uncle Eric series (Whatever happened to penny candy, the money mysteries, etc.) and now at age 9 we are reading Rich dad poor Dad. They enjoy our reading and discussion time and get disappointed when we have no time due to school activities.

Don't cop out, do it yourself. 

1st reaction is that it's a great idea.  2nd thought is that the public schools would never be willing or able to deliver a useful education in finance.  I'd bet they'd do more harm than good.