Comments on: Education is not the solution to all personal-finance problems

By: Tom

Tom — Mon, 26 Oct 2009 05:27:08 +0000

In Australia we have a system of enforced retirement savings called “superannuation”.

Basically 9% of your salary is paid by your employer straight into a fund (that you can choose), and you can’t get to it until you’re 65 (or you face some really serious emergency).

The result? After over a decade of compulsory contributions, Australian workers have over $1.177 trillion in superannuation assets. Australians now have more money invested in managed funds per capita than any other economy.

By: Sunday Link Rodeo 5 « Evolution of Wealth

Sunday Link Rodeo 5 « Evolution of Wealth — Mon, 26 Oct 2009 02:40:25 +0000

[...] Education is not the solution to all personal finance problems from @ramit I love how creates a bit of controversy but then continues on to address it at the end. He makes some pretty good suggestions to. Perfect post to end on. Maybe the best for last? [...]

By: lindsay

lindsay — Sun, 25 Oct 2009 17:13:05 +0000

Wish you had an option on your blog articles to send the article to friends. i always look for it after I read your blog posts.

i could copy and paste it into an email – but that is a barrier i seem to hit continually

By: Miss Minchin @ Business Women's Finishing School

Miss Minchin @ Business Women's Finishing School — Sun, 25 Oct 2009 15:02:15 +0000

[Your Bhangra comment was hilarious - but should we conclude that you do break it down at the club to Bhangra anyway, but are just annoyed that it's expected? (like this post, you do comment on the article but are annoyed it's expected?)]

Back when I was a kid, my sister and I didn’t wear seatbelts and fought over who got to sit in the front seat. I slept up in the backwindow of our volkswagen rabbit on long distance trips. Looking back I realize I would not have survived a crash. Then seatbelt laws were passed, car seats were invented, public service announcments aired and hundreds of thousands of lives have been saved. If we know the potential devastating effects of not having a safety net, why do we (as a society) not take steps educate/mandate self-protective measures? (and I don’t think Social security and unemployment do this). When it comes to finances, the every-man-for-himself mentality prevails and unfortunately it means that ignorance is perpetuated so it can continue to be exploited. Case in point: past poster who correctly pointed out that if we defaulted 401k enrollment, employers would reduce matching accordingly.
Wow that came out very conspiracy theorist…

By: links for 2009-10-23 | Yostivanich

links for 2009-10-23 | Yostivanich — Fri, 23 Oct 2009 14:04:12 +0000

[...] Education is not the solution to all personal-finance problems | I Will Teach You To Be Ric… “So when it comes to education, I start rolling my eyes when people suggest education is the magic bullet. Let’s get real, please. As heretical as it is to say in our society, “education” is not the panacea for personal finance. That’s a simplistic throw-away answer that does nothing to address real solutions.” (tags: education finance) [...]

By: SP

SP — Fri, 23 Oct 2009 02:25:02 +0000

I like this. I hear on (smug) pf blogs a lot about “personal responsibility” and how if people can’t (or won’t) figure out this money stuff on their own, tough luck to them. Because the rest of us have got it all figured out. They just won’t educate themselves, so they deserve to miss out on the 401k match, pay overdrafts, and have to starve on social security when they retire. I hate that view.

Do we really want to punish people, or do we want to have the most people possible making good choices? I love the idea of making good choices the default.

By: Credit Card Chaser

Credit Card Chaser — Thu, 22 Oct 2009 20:45:32 +0000

The sooner that we can all agree with the fact that humans (every single one of us) are inherently lazy and irresponsible then the better it will guide us to make smart choices. Notice that I did not say that we are all lazy and irresponsible just that each and every one of us left to our own natural inklings tend to be lazy and irresponsible.

From an organizational or social policy point of view I am a big fan of the aforementioned Libertarian Paternalism approach just so long as it is not twisted into some kind of controlling approach and not administered correctly – as you put it: “And it’s not about making an irrevocable choice for them, but making intelligent defaults and always allowing them to opt out.”

That being said, the Libertarian Paternalism approach can only go so far and in the end it all comes down to the issue of good ‘ol personal responsibility. Absent mind control or an organization/government making decisions for us (which none of us want – I should hope) then it is left up to each one of us to proactively educate ourselves – and that’s the way it should be.

By: Rick Francis

Rick Francis — Thu, 22 Oct 2009 17:24:15 +0000

Ramit,

>“Hey Ramit! I really want to become financial literate!” Its dry, boring, and unrewarding.

I guess that is why you didn’t name your site I Will Teach You to be Financially Literate! But can someone learn to be rich if they remain ignorant on interest, investing and inflation? Maybe you need a post category: Boring Things You Still Need to Know About…”

I think that education is the answer… although not necessarily through the traditional educational system! Today, people who read blogs are the elite. Twenty years ago only the elite had email or read internet news groups. That will change… maybe you just need to get to #1 on the NYT bestseller’s list for it to happen a bit sooner.

-Rick Francis

By: Nikc

Nikc — Thu, 22 Oct 2009 17:05:12 +0000

Kevin, your casual use of the words “morons” “slugs” and “chumps” to describe people signals to me that your ideas are not on the right track.

No matter what the default is, there will always be incentive out there for hard-working people to do better than default.

By: Jaki

Jaki — Thu, 22 Oct 2009 17:02:57 +0000

Certainly your ideas on what we “should” do have merit. You are making an assumption that corporations/businsses will do what they “should” do – like making powerful defaults that do the right thing because people will never change their defaults. Why do you assume that corporations/businesses will do what they “should” do when you don’t assume that an individual will do what they “should” do – like understand their personal finances better and change their defaults because they “should”?
The business that produced the GPS device you use in your vehicle is making money from your fallibility. Is that the same thing as asking a business to create products that make up for one’s fallibility when it means cutting into their profit potential?
Aren’t we already segmenting people who take the time to understand their personal finances (and understand them really well) and providing them with bigger wins – like a lower rate for a better credit score or a higher rate for having saved more money?
I’m not sure education is the answer to financial ignorance but I’m not sure your suggestions hit the mark.