Conversation with co workers/ financial literacy among non-boglehead types

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TomatoTomahto
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by TomatoTomahto »

PersonalFinanceJam wrote: Mon Oct 03, 2022 9:51 am
like2read wrote: Mon Oct 03, 2022 6:56 am ...
I appreciate your optimism. A lot of us can be quarterbacks without being professional quarterbacks.

l2r
True, and I guess it's optimism. It could just be disbelief in the narrative based on what I see in the world around me. To continue with a sports metaphor. Given the level of effort, attention, and yes even math I see go into a person's fantasy sports league I have a hard time buying into the narrative that your average person isn't capable of managing a simple retirement plan. Added again to the topic at hand, if just even a fraction of those fantasy sports conversations were instead around savings/investing I think we'd all be better off in the long run.

Maybe that's what I should do. For every person who asks if I'm in a fantasy league I should say "no, but I'm in an Investing league would you like to join?"
Heck, I told someone I know who was very involved in fantasy stats and league mechanics that the amount of gray matter it involved was sufficient to get him through medical school. Although many people are innumerate, I think for many it is a matter of just not caring, a version of "don't worry your pretty little head over this." Retirement is far away, until suddenly it isn't.

I remember trying to get co-workers to contribute to a 401k where the employer was matching 2:1. These were software developers at a bank. All had at least bachelors degrees. They were young and immortal.
I get the FI part but not the RE part of FIRE.
delamer
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by delamer »

Wannaretireearly wrote: Sun Oct 02, 2022 11:03 pm 3 pages, wow. I’ll need time to catch up with this thread!

There is something deep rooted here. School or any formal education does not teach folks to be a smart shopper. Unfortunately unless you learn this early, it’s a hard road.

Simply put, if your not a smart shopper, your also not going to buy into the most optimal and proven long term investment philosophies. There is a reason why this site is largely self selecting, most ppl who stick around here, already come with a ‘smart shopper’ attitude or aspire to have one.

Simple examples:
- how you shop for big purchases like cars and houses
- how you shop for smaller purchases and ensure you are being frugal

Suddenly expecting the general population to understand Roth Vs. Tax deferred vs taxable vs ??? Is just a step too far. Ppl zone out/gloss over. It’s just too much for the majority of the population :(

Not to get political, but the govt (any in US, Federal or State) does not help either. When was the last time you saw the govt explaining the benefits of various retirement accounts and which to use when? Why doesn’t that happen if the govt is supposed to work for the people?

Outside of the US, you will find much more govt encouragement and advice. I’d love to hear counter arguments!

Edit: Even when our company runs sessions on topics like Mega Backdooor Roth, I’m guessing less than 20% of super smart and well comped folks understand it. I’d guess less than 10% sign up.
Everytime you fill out your taxes, there are lines for IRA distributions and capital gains distributions. Anyone with a bit of curiosity can easily find out more. When I googled “IRA starting,” I got 187 million hits!

And there is one federal government agency, the Consumer Financial Protection Bureau, dedicated to helping consumers navigate financial issues.

I agree that schools could do a much better job of educating young people on financial matters. But there is a lot if information out there if people would take advantage of it. As I mentioned before, I’m completely self-educated when it comes to investing and I learned 75% of it pre-Internet. All the information on the internet can be a little overwhelming, but it’s there if you look.
Last edited by delamer on Mon Oct 03, 2022 10:35 am, edited 1 time in total.
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arcticpineapplecorp.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by arcticpineapplecorp. »

homebuyer6426 wrote: Mon Oct 03, 2022 9:58 am
Florida Orange wrote: Sun Oct 02, 2022 7:20 am Here's one small example. From a news article recently about financial literacy and the American public. In a survey of thousands of randomly selected adults, one question was "If you deposit $1,000 in a bank account that pays 2% interest per year and you don't touch the money, at the end of one year will you have A) More than $1,000, B) Less than $1,000, C) Exactly $1,000? Most people got the answer wrong.
Quite possibly because it doesn't specify real or nominal dollars. If real, any of those answers could be correct. It's easy to formulate questions to make most people get them wrong.
while that is a more nuanced look you're reading WAY more into the question than actually exists and giving more benefit of the doubt than reality dictates.

If you asked the same "thousands of randomly selected adults" what the difference between nominal and real returns are, most of them (as the original question suggests) wouldn't have a clue. So that in no way gives cover for their wrong answers which only asks them to compute 2% interest over one year on $1000, which anyone with a high school degree or equivalent should be able to provide (because that is taught in elementary school). Nothing more, nothing less. An amish child who doesn't go to school past 8th grade would probably do better than the average American who gets this question wrong. That's a damming indictment of our public education system (and that's coming from someone who was educated at public schools).
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by nisiprius »

Don't forget the counter-education that goes on.

I used to be an occasional substitute teacher at the local high school, and occasionally I would be asked to supervise an accounting class. I say "supervise" because the substitute's job is to be an adult body capable of taking attendance and overseeing the students' work on a prepared assignment. But of course...

One day, the assignment for the honors students was to play The Stock Market Game, a classroom exercise with a website that simulates stock market investing. The point is that the students are being taught to trade imaginary stocks and look at their portfolio on a daily or hourly basis.

I pretty much did my job, but at one point I said something like this:

"You all seem to be trading individual stocks. But I think you should know that there are things called ETFs that let you invest in a whole basket of stocks under a single ticker symbol. For example, SPY is an ETF that trades like a stock but tracks the S&P 500 index. Can someone tell me what the S&P 500 index is?"

Silence. Just like the Ferris Bueller scene. I might have even said "Anybody? Anybody?"

They are doing simulated stock investing and none of them knew what the S&P 500 index was.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by snackdog »

Unless someone comes to you and specifically requests your financial advice, it is almost always better to avoid the topic entirely. They don’t want your advice no matter how great you may think it is!

A few months ago a younger friend said he wanted to bend my ear on investing. I foolishly wondered if he wants tips on how to retire early and well. Instead, he wanted to give me a 30 minute lecture on why I should be stockpiling gold bullion ahead of the apocalypse. I listened politely and thanked him.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by LittleMaggieMae »

upstate90 wrote: Sun Oct 02, 2022 12:56 am
To make this story actionable ill ask everyone how often they encounter non-boglehead types who don't even seem to have basic 101 financial/tax/investing knowledge and if you do encounter it with a co worker, friend, or family member, how much effort do you put in to trying to explain, or teach them things that could help them?
Oh gosh. I tend to encounter someone who's got a tenuous grasp of finances pretty much anytime something "financial" comes up that is being talked about - so anything that can be thought of under the "the way the world works for people who have never thought about how finances work"

Two instances that aren't that common but made me "face palm" from the past:
back in my 30's I had a similar age/income coworker who was paying a heck ton of fees every month on their checking account - ATM fees, overdraft fees, an actual fee just to have the account.... and who thought NOTHING was unusual about this except when the amount of fees went over some amount (their typical monthly fee expense). They pretty much expected to have X dollars in total fees every month and accounted for it. They were cussing out the bank one month for an unsually high amount of fees and asked me if I thought it was outrageous to get charged so much more per month... and I was like - I don't pay anything for my checking account and my ATM use. I have a 0$ monthly expense. They looked at me like I had two heads. When they asked me about my banking experience is when I found out they thought nothing of spending $100 a month on bank fees... and that was stupidly high back then. We both had incomes that would allow this though.

Also back then with another coworker - I joked about the "extra check" we were getting that payroll cycle (26 pay periods means there's two months when we got 3 pay checks. They thought I was crazy. I explained about the 26 pay periods for the year... and they looked at me like I had two heads. I tended to budget my "monthly,6month/yearly expenses" based on 2 pay checks per month. Which means in a pay period with 3 checks SOME of that paycheck isn't allocated to "monthly expenses" I only need some of it to cover my "two week expenses" like food and gas for my car and entertainment. So the months with a 3rd pay check - usually meant I had X amount that I could allocate to something else (since the other "bills for the month including sinking funds were funded from the other two checks) like paying down debt or beefing up my EF or putting towards something I wasn't specifically saving for via a sinking fund. The co worker admitted a few days later (after they had joked about my absurd idea of an "extra" paycheck for the month with other people who also knew about 26 pay periods per year) that they weren't aware of this and that I wasn't crazy. I'm guessing someone without a "budget" or a "spending plan" would have no idea that 2 months out of the year - there was "more money" for those months in their account.

I also have friends and family and coworkers who rarely if ever balance their checking account as long as it's not zero it's OK and who rarely review their credit card statements - as long as the amount "seems reasonable" they are good to go. They often never realize they are getting hit with a fee (on their checking account) or that they are perhaps paying for something (recurring billing) on their credit card. :(

And then there are the Feast or Famine people in my life. Every month is some new drama. Even though they have money. If they have an unexpected car repair - OMG! They might not be able to go to the concert we've planned and purchased tickets for that's two months in the future because they don't have any money (it's famine time). I guess they might not be able to come up with the $50.00 to cover shared parking costs and ONE time food/drink either before, at, or after the concert. because they had to spend that $50 they saved up on the car repair (or whatever other unexpected expense came up). So their whole future is in peril. I tried to explain the idea that car expenses (and other expenses) happen - and that they can be somewhat planned for - by putting some money on the side from each paycheck aka an Emergency Fund or Sinking fund(s) (these are NOT people who are should be living paycheck to paycheck they've got the income that if managed would cover all their bills and then some.) But it falls on deaf ears and so Drama continues. I think some people just like the adrenaline rush. :(

That Feast/Famine form of monthly money management seems to be fairly wide spread even for people who have plenty of income. I get the Feast Famine thing when you literally have just enough income to meet your monthly fixed expenses. I'm guessing most people here have plenty of income which is why I always bring up "budgeting" and knowing your expenses. Just winging your monthly finances works great until you spend (or commit) to too much in monthly expenses. And you can avoid that by having at least a rudimentary "budget" or "spending plan" that covers monthly, semi monthly, yearly expenses.

I have a friend who recently paid to have a flat tire fixed out of her 'weekly budget' - so she went into "famine" mode and canceled our weekend trip to go apple picking. I was like - do you not have a car repair "fund" or line item in your monthly budget? Do you not have an emergency fund? Or is this an excuse to not go apple picking because something more fun came up that you'd rather spend money on? My friend should have plenty of income to cover the unexpected cost of a flat tire (either already set aside car repair money or EF money) without having to spend their "fun money" or "allowance" money on a known expense. I don't get the "joy" of living with this kind of drama.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Ivygirl »

Some people I care about I did intervene with. My approach was to keep bringing the discussion back to the reality of it. So not so much specific advice, but emphasizing dollar amounts and what they will buy.

One person who announced taking Social Security at age 62 so "the government wouldn't get to keep it," did not know that she could not work and earn an unlimited amount at that age. I mentioned that part but it was not effective, she earned too much and had to give some back.

One person who intended to quit work, take SS at age 62 and supplement with food stamps and welfare; I looked up the usual food stamp allowance and we discussed some actual welfare programs, and also how to get a SS statement that would show the actual dollar benefit. She did calculate it, and it was not enough dollars, and not practical. Still too early to tell if she will make the mistake but at least I tried and her eyes are open.

One person who never saved I advised to contribute to the company 401(k) and she did; a period of unemployment happened and she panicked and withdrew it all, but is building it up again from nothing with few years to contribute.

I would be open to talking about financial news, the stock market, effects of inflation, etc. at work but only once in a great while do people want to.

One person at work I did discuss with how to make financial assets available to whoever has to take over my affairs if I die, so it's not a burden.

Specific advice requires specific knowledge of the advisee's circumstances, which I generally do not have, so I just talk about realities in as value-free a way as I can manage. Whatever part of it they can take in, that's what happens.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Dottie57 »

SuperTrooper87 wrote: Mon Oct 03, 2022 7:29 am
Dottie57 wrote: Sun Oct 02, 2022 4:28 am I really am worried about them. But neither wants to hear from me or my cousin who is a certified financial planner. Cousin would not sell them anything and her advice is mostly bogleheadish.
Do you think it is an issue of pride or possibly intimidation? It is bad enough getting critiqued by a stranger in the profession - do you really want that person to be the one sitting across from you at family gatherings? I can certainly see it both ways and I would rather work with a trusted family member than try to locate a trustworthy CFP out in the world.

Maybe you have a trusted friend in the business you can refer them to that is likeminded - allowing them to get similar advice, avoid the family conflict and the embarrassment if that's the issue? Good luck.
I guarantee he is intimidated by me but is a spender. Always has been. Doesn’t look into consequences.

My cousin CFA , would talk to him and SIL if they would just ask. I don’t think they realize that emptying their 401k in one swoop will have a big tax implication.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by drumboy256 »

upstate90 wrote: Sun Oct 02, 2022 12:56 am I don't consider myself an expert about finances/taxes/investing by any means but do consider myself more knowledgeable than most, as are most people on this forum I assume. Just the fact that someone is interested enough to find and read parts of this forum put them ahead of most people I think.

I (32) had a conversation with two co workers the other night (63&52) about recent market volatility and our 401ks etc. During the conversation I realized that both were of the opinion that 401k money was completely tax free after age 59 1/2. (they definitely don't have Roth based on the look on their faces when I asked). I informed them that only applied to the 10% early withdrawal penalty and a few other very specific circumstances. After some (friendly) arguing I finally just googled it and showed them. I was very surprised that something so basic (I thought anyway) wasn't even known to someone (the 63 year old) who plans on retiring in a couple years and a 52 year old who should at least be planning and thinking about retirement. I could tell after a few minutes that I as a 32 year old has spent more time thinking and planning about retirement/taxes/investing/ finance knowledge than two people much older than me.

Later when talking to the 52 year old about overtime they said they didn't work as much since they take so much more out in taxes for that pay period to which I replied that when you file taxes it will all even out anyway, which they didn't seem to understand and I didn't care enough to go into detail.
A few months ago I heard the classic "don't want to go into the next tax bracket" line as if once one dollar crosses a new bracket you have to pay all previous income in that bracket as well.

To make this story actionable ill ask everyone how often they encounter non-boglehead types who don't even seem to have basic 101 financial/tax/investing knowledge and if you do encounter it with a co worker, friend, or family member, how much effort do you put in to trying to explain, or teach them things that could help them?
Offffffffff. Those stories I bet are far more common than not. Generally speaking, I ask one simple question: "What's your plan?" It's broad enough to get them thinking about if they have an actual plan, what that plan entails, what that plan could look like in a good/bad environment leading up to, in or post retirement, what happens if they were disabled and could no longer work, etc. etc. I always bring up the Mike Tyson quote:

"Everyone has a plan until they're punched in the face."

While not as poetic as others, it's a great quote. A lot of times, financial questions and answers are a lot like the IT Industry in the common response is: "It Depends...." Tax brackets, financial planning, spending, etc. are factor into a good "plan" so to speak. I also think about all of the resources out there--- YouTube, Dave Ramsey, Merriman, Bogle, Dalio, Buffett, that of course have their "takes" on what a good plan should look like or include.

To try and not boil the ocean in conversations in terms of personal finance, I generally stick to a couple of core principals that people are interested in (retirement, being one of them) their savings rate (personal budget) and how you interact with those toys within your playground to be useful to you and not a hinderance. I'll admit, it's tough seeing people not knowing how to contribute to a 401k or not knowing their tax bracket--- but then again, I also always try to take the time to help those who are in fact seeking as I remember I was there once as well.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Florida Orange »

homebuyer6426 wrote: Mon Oct 03, 2022 9:58 am
Florida Orange wrote: Sun Oct 02, 2022 7:20 am Here's one small example. From a news article recently about financial literacy and the American public. In a survey of thousands of randomly selected adults, one question was "If you deposit $1,000 in a bank account that pays 2% interest per year and you don't touch the money, at the end of one year will you have A) More than $1,000, B) Less than $1,000, C) Exactly $1,000? Most people got the answer wrong.
Quite possibly because it doesn't specify real or nominal dollars. If real, any of those answers could be correct. It's easy to formulate questions to make most people get them wrong.
True, but I don't think they were trying to make people get the answer wrong; I think it was a legitimate survey. Also, even if inflation is higher than the interest rate, you would still have more than a thousand dollars in the account after a year.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by lostdog »

We/bogleheads live in a bubble.

Most people live paycheck to paycheck and don't want to talk about finances. You just don't bring it up.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Florida Orange »

MathWizard wrote: Sun Oct 02, 2022 11:09 am
Florida Orange wrote: Sun Oct 02, 2022 10:59 am
MathWizard wrote: Sun Oct 02, 2022 10:14 am
Florida Orange wrote: Sun Oct 02, 2022 7:20 am Here's one small example. From a news article recently about financial literacy and the American public. In a survey of thousands of randomly selected adults, one question was "If you deposit $1,000 in a bank account that pays 2% interest per year and you don't touch the money, at the end of one year will you have A) More than $1,000, B) Less than $1,000, C) Exactly $1,000? Most people got the answer wrong.
I'm sure the answer was supposed to be more,
though the actual answer is yes you have more, but it may be less valuable depending on how high inflation is, which is not one of the options.
The question does not include any reference to inflation or the concept of real vs nominal dollars. It is phrased in such a way that any number greater than 1,000 is more.
I understand, and yes inflation is not mentioned, but neither is it said to ignore inflation. The issue with multiple choice is that people will bring interpretations into the question.

I wrote tests for my students, and never included multiple choice in the tests because of this.
It took much more work to grade, but I could better evaluate my student's understanding this way.

If I had to ask this question, I'd have added explain your reasoning at the end.

Imagine a physics question about ballistic trajectories which did not include in a vacuum or ignore air resistance.
But it is not necessary to specify that things that are not included in the question are not included in the question. For example the question did not specify that the bank was not robbed and the FDIC simultaneously gone bankrupt so that depositors lost all their money. That does not mean that someone answering the question should assume that those things did happen.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by JoeRetire »

smitcat wrote: Mon Oct 03, 2022 8:23 am There is no direct relationship between money and happiness.
Unless you don't have enough.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by smitcat »

JoeRetire wrote: Mon Oct 03, 2022 1:40 pm
smitcat wrote: Mon Oct 03, 2022 8:23 am There is no direct relationship between money and happiness.
Unless you don't have enough.
Perhaps you mean like the two folks we have now become closer to that are well into the 7 figures, working at age 74, and never spend anything?
They do not have enough....
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by TallBoy29er »

Triple digit golfer wrote: Sun Oct 02, 2022 9:43 am A perfect example is my single, no kids friend asking me about paying extra on his 2.5% mortgage vs. investing. He is a saver, which is the most important thing, but he listens to Dave Ramsey and thinks Dave is the supreme authority on all financial issues. I told him that I wouldn't even consider paying extra on a 2.5% mortgage until all tax advantaged retirement accounts are maxed out. He asked what the max was and I told him the numbers for 401(k), IRA, and HSA. This is a guy who makes maybe $70-80k and he was appalled at the high amounts. How is he supposed to max those out?!?!?!
There's a wonderful saying that I learned on this board used by people far wiser than me: "There is more than one road to Dublin."

There are certainly worse choices to be made than your friend's.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by JoeRetire »

smitcat wrote: Mon Oct 03, 2022 1:58 pm
JoeRetire wrote: Mon Oct 03, 2022 1:40 pm
smitcat wrote: Mon Oct 03, 2022 8:23 am There is no direct relationship between money and happiness.
Unless you don't have enough.
Perhaps you mean like the two folks we have now become closer to that are well into the 7 figures, working at age 74, and never spend anything?
They do not have enough....
I was responding to the general statement, as I quoted.

If you had written "For those who are 74, still, working, and have assets well into the 7 figures, there is no direct relationship between money and happiness." I may have agreed.

Even there, it's clearly an individual thing. I know folks in that category (except they are no longer working) who still derive happiness from saving/getting more money.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by celia »

epoche wrote: Sun Oct 02, 2022 10:39 am
celia wrote: Sun Oct 02, 2022 3:53 am In the last 20 years I worked, I helped others learn by asking questions aloud at employee benefit meetings (401K, 457, Flexible Spending plan), even if I already knew the answers. Of course, the employer first had to offer these benefits.
I have to say that I love this idea! My employer keeps making changes to the benefit options almost every year, so it means I'm more likely to be in one of those meetings. I usually do ask some obscure question that I don't actually know the answer to, but perhaps I'll throw in a few I'm pretty sure about.

I find it a bit disheartening that so much of the sentiment on this forum leans toward staying out of it. Knowledge is meant to be shared.
Of course, you have to meet people when they are ready, but there are ways to prime the pump so to speak.
I’m with epoche on this. Maybe it has to do with a co-worker I once had who kept explaining the financial benefits of being a homeowner when I got my first tech job. [Off-topic comment removed by admin LadyGeek] He intentionally was modeling and mentoring young people who wanted to learn but taught more than the subject matter at hand, if you get the idea.

I started with our own kids while they were growing up. I laughed when each one showed me the work they did for school (private school around 10th grade) where person A contributed to an account (without saying “IRA”) for 10 years and then stopped. Person B started contributing the same amount starting in the 11th year and continued until they retired. Both accounts grew at the same rate, but person A had more money by age 65. Everyone in their class was astonished that compounding was so powerful.

When we refinanced, the oldest was about 12 and I had him calculate how much more we would be paying if we kept the old mortgage and the new mortgage, both ending at the same time. The kids took turns navigating and calculating mileage and gallons when we went on trips. They learned to comparison shop and use coupons and get rewards for things we needed to buy.

I don’t think we talked about our employee benefits that much but I frequently inquire about theirs and which ones they are using. When I hear a young person (usually nieces and nephews) saying they got a new job, I ask about their benefits too and throw in a few extra questions to see which they are taking advantage of and to see if they understand their options.

We’ve also had discussions at large family functions on financial topics such as why those in their 30s and 40s aren’t buying houses. They think it is harder for them than my generation (60s and 70s), but we put things into perspective for them, telling them we didn’t have the savings options they do and that we had to sacrifice our “wants” to get homes. I shared that when we got married, we decided to live on only one salary and save the other one. Since then, two have married a long time girlfriend and I suspect they are saving similarly.

I don’t tell anyone what to do, but rather I ask them about their options just to make sure they understand the pros and cons of each. If necessary, I might ask if “X” would also be an option. If a non-relative brought up a financial topic with me, I would do the same for them.

And I’m very pleased when I hear that my kids talked to their friends about how they need to save. They’ve got others to invest in retirement accounts. (One of them was asked by her small employer to set up a 401k plan for the employees. Without already having participated in one, it would have been difficult.)
Last edited by celia on Mon Oct 03, 2022 2:35 pm, edited 1 time in total.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by TallBoy29er »

TomatoTomahto wrote: Sun Oct 02, 2022 1:44 pm Even when asked, I try to avoid giving any direct advice beyond saying what I myself do.

SIL decided I was a genius when the market was roaring. She also decided that I'm an idiot more recently. The good news is that she will stop asking me, perhaps the silver lining to all the recent bad news.
At least you were a savant at a point in time. I'm pretty sure I skip directly to identity number 2 with a lot of people I know.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Triple digit golfer »

TallBoy29er wrote: Mon Oct 03, 2022 2:01 pm
Triple digit golfer wrote: Sun Oct 02, 2022 9:43 am A perfect example is my single, no kids friend asking me about paying extra on his 2.5% mortgage vs. investing. He is a saver, which is the most important thing, but he listens to Dave Ramsey and thinks Dave is the supreme authority on all financial issues. I told him that I wouldn't even consider paying extra on a 2.5% mortgage until all tax advantaged retirement accounts are maxed out. He asked what the max was and I told him the numbers for 401(k), IRA, and HSA. This is a guy who makes maybe $70-80k and he was appalled at the high amounts. How is he supposed to max those out?!?!?!
There's a wonderful saying that I learned on this board used by people far wiser than me: "There is more than one road to Dublin."

There are certainly worse choices to be made than your friend's.
No question. I'm not saying his choices are bad at all. His reaction to my advice is what I was trying to convey.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by CyclingDuo »

lostdog wrote: Mon Oct 03, 2022 1:23 pm Most people live paycheck to paycheck and don't want to talk about finances. You just don't bring it up.
I was looking around on my commute in today at how many homes had jet skis, snowmobiles, boats, campers, RVs, multiple cars in the driveway, motorcycles, 4 wheelers, riding mowers, golf carts - or all of that. I couldn’t believe how many had all of that “stuff” and then some!

Plenty of paycheck to paycheckers out there with all that “stuff”.

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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by goodenyou »

Talking about financial matters with co-workers can be an eye-opening experience to say the least. It can bring out moments like...let's just say...it's my first signature line. I was known as the Dr. Whisperer in my practice full of surgeons because, as the managing partner, I was tasked with explaining financial matters or translating a balance sheet.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Artful Dodger »

I've worked in employee benefits for forty years mostly in medical / dental / life / disability, etc., but have taken courses in pensions, deferred comp, 401ks. I also for a time sold 401ks. So, I'm somewhat knowledgeable. In 2005, a friend told me that the best investment was index funds. I didn't believe him. I'd seen something on CNBC about getting the best returns from active funds in a turbulent market. It wasn't until 2011 after I'd read Bogle's Little Book of Common-Sense Investing and comparing my funds being managed by an advisor to a U.S. and Int'l index fund, that it hit me. The proverbial being burned touching the stove.

Any time I've told people about the positives of index funds, there's a blank stare or "they know what they're doing". I guess it's not surprising, since it was the exact response I made fifteen or so years ago.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by snowday2022 »

CyclingDuo wrote: Mon Oct 03, 2022 2:22 pm
lostdog wrote: Mon Oct 03, 2022 1:23 pm Most people live paycheck to paycheck and don't want to talk about finances. You just don't bring it up.
I was looking around on my commute in today at how many homes had jet skis, snowmobiles, boats, campers, RVs, multiple cars in the driveway, motorcycles, 4 wheelers, riding mowers, golf carts - or all of that. I couldn’t believe how many had all of that “stuff” and then some!

Plenty of paycheck to paycheckers out there with all that “stuff”.

CyclingDuo

I am a highly paid MD. Many of the techs and RNs I work with drive nicer cars and go on nicer vacations. Some have second homes. Most complain bitterly about their pay and the cost of college etc. I just avoid these topics around these individuals.

The MDs and other high income professionals I find more receptive to BH type discussions. Still, many have never heard of all of the retirement options available at the workplace, have never availed themselves of 529 or backdoor Roth, etc. Many trade individual stocks and options.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by AnnetteLouisan »

Triple digit golfer wrote: Sun Oct 02, 2022 10:07 am
AnnetteLouisan wrote: Sun Oct 02, 2022 10:02 am
Triple digit golfer wrote: Sun Oct 02, 2022 9:56 am
AnnetteLouisan wrote: Sun Oct 02, 2022 9:47 am I’ve had coworkers come by and ask if our paychecks hit our account yet and what time they are supposed to hit. For some, minutes count.
Same. I'm thankful that I'm fortunate not to be in that situation and educated enough to not get in that situation in the future.

I think my neighbors and some family members might think we are not doing great. We drive 10 year old small/average sized cars, don't wear expensive clothes, buy a lot of store brand food and don't go on expensive vacations. We're fine with that. In reality, we're worth 7 figures and doing quite well, still saving 35-40% and my wife is able to stay home and will likely soon either do something part-time or just be a full time room mom and help out at the school for our young daughter. That's the flexibility that living in a "small" house (as one friend couple calls our 1,900 square foot house) and being diligent with money will give you! People are always surprised when we sort of shrug when they ask if my wife is going back to work once our daughter is in school full time.
Same here. We all look like we earn maybe 40-70k but we are all millionaires. My richest family member got a tip once and a stranger paid for his gas at the pump once. He was cheered by the friendliness but amused as well.

Someone paid my bus fare once unasked and tbh I was a little shocked. I don’t look rich but I was dressed neatly and I don’t think I look like I need $1.75 from a stranger… but it was a nice gesture that I remember.

:shock:

My favorite quote from a friend: “I KNOW ya got money. I never hear you complainin’ about no bills…”
I think a lot of us here and millionaire next door types. I'm fine with being that guy on the block!
I wonder if there are any downsides to that perception though that we haven’t considered. For example, maybe that’s why others never take our financial advice! :)
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by KlangFool »

AnnetteLouisan wrote: Mon Oct 03, 2022 5:35 pm
I wonder if there are any downsides to that perception though that we haven’t considered. For example, maybe that’s why others never take our financial advice! :)
AP,

1) Versus the down side of all your friends and family member asking you to give them loans and money to help them out?

2) Folks that do not understand "The Millionaire Next Door" would not take your advice anyhow.

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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by AnnetteLouisan »

Ivygirl wrote: Mon Oct 03, 2022 7:36 am
student wrote: Sun Oct 02, 2022 12:15 pm
delamer wrote: Sun Oct 02, 2022 11:42 am 1. I lost a friend recently I believe, in part, because she resented our financial stability. She is well-educated, in her mid-60’s. But she has to work a low-paying job because she lost her professional job in her late 50’s and couldn’t find a similar job.
Oh. If she resented you for this, maybe it is for the better that she is not your friend...
The friend can't keep up any more and had to get distance. The friend can't eat where you want to eat, can't travel where you want to travel, can't entertain you except in a humble way she may be afraid you would think beneath former standards.

It's true the friend should be humble and cheerful about being elderly and poor but maybe give her a break, she hasn't had any practice. It's a shock to slide downward in life and be left behind by former peers and know there are no more years to change things.
1000 percent. Very astute.
As a follow up, what is the best thing a more affluent friend and the less affluent friend can do to maintain the friendship? It shouldn’t have to be a lost cause.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by lws »

What is the root cause of this ignorance?
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by AnnetteLouisan »

lws wrote: Mon Oct 03, 2022 6:06 pm What is the root cause of this ignorance?
The switch from the pension system to this mass of complexity we have now? People having other things to do in life besides studying this stuff? People getting burned by a fraudulent broker or reading stories and not trusting the markets?
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by delamer »

Ivygirl wrote: Mon Oct 03, 2022 7:36 am
student wrote: Sun Oct 02, 2022 12:15 pm
delamer wrote: Sun Oct 02, 2022 11:42 am 1. I lost a friend recently I believe, in part, because she resented our financial stability. She is well-educated, in her mid-60’s. But she has to work a low-paying job because she lost her professional job in her late 50’s and couldn’t find a similar job.
Oh. If she resented you for this, maybe it is for the better that she is not your friend...
The friend can't keep up any more and had to get distance. The friend can't eat where you want to eat, can't travel where you want to travel, can't entertain you except in a humble way she may be afraid you would think beneath former standards.

It's true the friend should be humble and cheerful about being elderly and poor but maybe give her a break, she hasn't had any practice. It's a shock to slide downward in life and be left behind by former peers and know there are no more years to change things.
I’m sure all of the above happens in some cases, but not with the situation that I went through.

My former friend isn’t poor, first of all. Second, it wasn’t a question of “keeping up” in terms of our joint activities. We mostly met at each other’s homes to play board games.

But she did have to keep working in order to be able to afford to stay in her home in our HCOL area because she and her husband needed to preserve their smallish savings. And I was retired, travelling, and buying things that were just out of range for her.

Also, as I noted, the financial discrepancy was only part of the reason for our friendship fizzling. As she got busier with her work, which had somewhat irregular hours, she just became less and less available. And she prioritized other friendships.

(And yes, this is guesswork on my part. She never directly said anything to me.)
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by PersonalFinanceJam »

AnnetteLouisan wrote: Mon Oct 03, 2022 6:07 pm
lws wrote: Mon Oct 03, 2022 6:06 pm What is the root cause of this ignorance?
The switch from the pension system to this mass of complexity we have now? People having other things to do in life besides studying this stuff? People getting burned by a fraudulent broker or reading stories and not trusting the markets?
The glory days of a robust pension and the company man are largely a myth, or at least greatly exaggerated. Most people were ignorant of what their pension plan rules were and how long they would have to work to even get a pension. However, they could tick the box because they had it.

https://www.barrons.com/articles/stock- ... 1664582348
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by stoptothink »

snowday2022 wrote: Mon Oct 03, 2022 4:26 pm
CyclingDuo wrote: Mon Oct 03, 2022 2:22 pm
lostdog wrote: Mon Oct 03, 2022 1:23 pm Most people live paycheck to paycheck and don't want to talk about finances. You just don't bring it up.
I was looking around on my commute in today at how many homes had jet skis, snowmobiles, boats, campers, RVs, multiple cars in the driveway, motorcycles, 4 wheelers, riding mowers, golf carts - or all of that. I couldn’t believe how many had all of that “stuff” and then some!

Plenty of paycheck to paycheckers out there with all that “stuff”.

CyclingDuo

I am a highly paid MD. Many of the techs and RNs I work with drive nicer cars and go on nicer vacations. Some have second homes. Most complain bitterly about their pay and the cost of college etc. I just avoid these topics around these individuals.

The MDs and other high income professionals I find more receptive to BH type discussions. Still, many have never heard of all of the retirement options available at the workplace, have never availed themselves of 529 or backdoor Roth, etc. Many trade individual stocks and options.
Physicians have a pretty strong reputation for poor financial acumen and that certainly matches my experience. I believe that was the impetus for Jim Dahle starting the "White Coat Investor". I do work with some nurses and techs that are clearly "$30k/yr millionaires", but most of the physicians I work with are not a whole lot better (from what I know). I have never noticed a correlation between professional status, income, and level of financial literacy and responsibility. A few of my colleagues are getting pretty close to conventional retirement age and still paying on student loans (and loans on all their toys). I don't EVER talk about finances with colleagues, unless they ask me, but I like to think I have helped a few young physicians (and physicians to be) get moving in the right direction.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by AnnetteLouisan »

PersonalFinanceJam wrote: Mon Oct 03, 2022 6:25 pm
AnnetteLouisan wrote: Mon Oct 03, 2022 6:07 pm
lws wrote: Mon Oct 03, 2022 6:06 pm What is the root cause of this ignorance?
The switch from the pension system to this mass of complexity we have now? People having other things to do in life besides studying this stuff? People getting burned by a fraudulent broker or reading stories and not trusting the markets?
The glory days of a robust pension and the company man are largely a myth, or at least greatly exaggerated. Most people were ignorant of what their pension plan rules were and how long they would have to work to even get a pension. However, they could tick the box because they had it.

https://www.barrons.com/articles/stock- ... 1664582348
My point was not that one retirement system or another was better, it was that *the switch* from one to another is a cause of the ignorance: many people who asked their parents about the new system would not have parents or other relatives who had practical experience or knew much about it. In some if not many communities, family and acquaintances lore matters. It shapes perceptions. It’s community wisdom. I often asked my parents how to make decisions around my 401k but they had nothing to tell me. Fortunately I read the WSJ and spoke to coworkers.
Last edited by AnnetteLouisan on Mon Oct 03, 2022 6:54 pm, edited 1 time in total.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by oldcomputerguy »

A trolling comment was removed. As a reminder, see: General Etiquette
At all times we must conduct ourselves in a respectful manner to other posters. Attacks on individuals, insults, name calling, trolling, baiting or other attempts to sow dissension are not acceptable.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by LMK5 »

OP, kudos to you for learning the ins and outs of investing, taxes, etc. Sadly, I would second the advice of those posters who say that you should withhold anything that can be remotely considered as advice. It's a no-win proposition.

Here's yet another tale: I had a co-worker who was always complaining about the amounts he was paying in daycare costs. I mentioned to him that our company had a dependent care FSA plan where he could put thousands of tax-free dollars that would cut his daycare costs. He seemed quite interested. The next year, he again was lamenting his daycare costs and I asked him if he enrolled in the dependent care FSA that we had discussed previously. He said he didn't, but he also became quite frustrated that I even brought it up. Many people would rather do it their way, even if it's the wrong way. Let them.

Part of the problem for financial illiteracy can be attributed to our education system. I could never understand why every high school student wasn't required to take a class in personal finance.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by AddingUp »

I’m enjoying this thread; it’s been fun reading perspectives and stories.

I, too, don’t offer advice about finances or even speak about money. Though I can’t say anyone has ever asked me directly about how to save/invest, etc. I attribute that not only to being a private person but also to my not showing the typical outward signs of wealth (I keep a car for 10 years and rent an apartment in a HCOL area, etc.) so as to cloud any idea of net worth. It’s funny how people think all renters are living paycheck to paycheck!

What I find more amusing is when people ask me for advice on health and exercise since I’m quite fit and look young for my age. Of course, that’s also a subject I refuse to give advice on lest I find myself offering an unintended insult.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by PersonalFinanceJam »

AnnetteLouisan wrote: Mon Oct 03, 2022 6:40 pm
PersonalFinanceJam wrote: Mon Oct 03, 2022 6:25 pm
AnnetteLouisan wrote: Mon Oct 03, 2022 6:07 pm
lws wrote: Mon Oct 03, 2022 6:06 pm What is the root cause of this ignorance?
The switch from the pension system to this mass of complexity we have now? People having other things to do in life besides studying this stuff? People getting burned by a fraudulent broker or reading stories and not trusting the markets?
The glory days of a robust pension and the company man are largely a myth, or at least greatly exaggerated. Most people were ignorant of what their pension plan rules were and how long they would have to work to even get a pension. However, they could tick the box because they had it.

https://www.barrons.com/articles/stock- ... 1664582348
My point was not that one retirement system or another was better, it was that *the switch* from one to another is a cause of the ignorance: many people who asked their parents about the new system would not have parents or other relatives who had practical experience or knew much about it. In some if not many communities, family and acquaintances lore matters. It shapes perceptions. It’s community wisdom. I often asked my parents how to make decisions around my 401k but they had nothing to tell me. Fortunately I read the WSJ and spoke to coworkers.
Neither was mine. The point was the ignorance has been with us for quite some time. Many with pensions were ignorant on how they worked or at least made the wrong assumptions. If they could have been asked, they would have passed on the same bad assumptions/ignorance.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by squirrel1963 »

I've also noticed a generally very low degree of basic financial literacy among coworkers of high-tech megacorps I worked for.
For instance almost no one knows the difference between "marginal tax bracket" and "effective tax bracket". On this specific manner, the estate attorney I hired for a living trust didn't know it either. Needless to say I no longer use his services (granted an estate attorney is not a tax expert, but I regard knowledge of tax brackets something basic that everyone should know).

In my next-to-last megacorp we had a really nice chatroom dedicated to investing. At the beginning everything was really good, most people would at least invest for the long term and generally stay away from things like crypto currencies. But this being a high-tech silicon valley company, it eventually got flooded with comments from the young engineers who think bitcoin is an investment. I appreciate the technology of Satoshi's distributed ledger (it provides a very interesting solution to the problem of distributed consensus in computer science), but unfortunately my young engineer coworkers confused the technological appeal with the soundness of the investment.
Another thing that happened is that with time the chatroom also attracted day-traders.
I pointed out that day trading is pure speculation and provided examples of sound investing techniques from Jack Bogle and Warren Buffet, saying that the vast majority of investors should listen to their advice, and in particular avoid crypto and day-trading.
I was told by these youngsters that they are old men who do not understand modern technology, the times are a-changing and day-trading is great.

Needless to say I just gave up on this, these coworkers were only interested in telling others how great crypto and day trading is, and how much money they were making (this was back in 2016-2018 and they might actually made some money).

So my belief is that unmoderated chatrooms are only doomed to fail, because eventually it will be populated by people who for the most part are rather ignorant of investing principles, do performance chasing and time the market.

In my last megacorp before retirement I just kept to myself and generally avoided the topic. Only a couple times I was in a discussion with immediate coworkers, but I didn't really dispense any advice, I simply said "I follow the advice of Jack Bogle, I do buy&hold and limit myself to index funds for the most part". One of the coworkers said "I do single stocks because I can beat the market", so my reply was "if you believe you can do that, by all means you should do it, but perhaps keep checking your returns against SP500 to see if you actually beat it".
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by student »

AnnetteLouisan wrote: Mon Oct 03, 2022 6:07 pm
lws wrote: Mon Oct 03, 2022 6:06 pm What is the root cause of this ignorance?
The switch from the pension system to this mass of complexity we have now? People having other things to do in life besides studying this stuff? People getting burned by a fraudulent broker or reading stories and not trusting the markets?
Believe it or not, I actually prefer 401k/403b than the pension system as the money is in my name and I don't have to worry about the pension system going broke. To me, the ordering is federal pension system > 401k/403b > private pension systems. I do not know where state pension systems come it as it will depends on the states.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by snowday2022 »

student wrote: Mon Oct 03, 2022 8:31 pm
AnnetteLouisan wrote: Mon Oct 03, 2022 6:07 pm
lws wrote: Mon Oct 03, 2022 6:06 pm What is the root cause of this ignorance?
The switch from the pension system to this mass of complexity we have now? People having other things to do in life besides studying this stuff? People getting burned by a fraudulent broker or reading stories and not trusting the markets?
Believe it or not, I actually prefer 401k/403b than the pension system as the money is in my name and I don't have to worry about the pension system going broke. To me, the ordering is federal pension system > 401k/403b > private pension systems. I do not know where state pension systems come it as it will depends on the states.
Agree. For savvy investors, pensions are a losing proposition. Higher fees and subject to the vagaries of the finances of the sponsoring state/company. I had the option at my state university and opted for 403b. When I ran the numbers, with a BH type strategy the 403b is a clear winner. And provides more options.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by AnnetteLouisan »

snowday2022 wrote: Mon Oct 03, 2022 8:46 pm
student wrote: Mon Oct 03, 2022 8:31 pm
AnnetteLouisan wrote: Mon Oct 03, 2022 6:07 pm
lws wrote: Mon Oct 03, 2022 6:06 pm What is the root cause of this ignorance?
The switch from the pension system to this mass of complexity we have now? People having other things to do in life besides studying this stuff? People getting burned by a fraudulent broker or reading stories and not trusting the markets?
Believe it or not, I actually prefer 401k/403b than the pension system as the money is in my name and I don't have to worry about the pension system going broke. To me, the ordering is federal pension system > 401k/403b > private pension systems. I do not know where state pension systems come it as it will depends on the states.
Agree. For savvy investors, pensions are a losing proposition. Higher fees and subject to the vagaries of the finances of the sponsoring state/company. I had the option at my state university and opted for 403b. When I ran the numbers, with a BH type strategy the 403b is a clear winner. And provides more options.
I like the current system too especially since it is portable. I just meant the switch from one simple system to a more complex one may be one cause of the ignorance.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Ivygirl »

AnnetteLouisan wrote: Mon Oct 03, 2022 5:56 pm
Ivygirl wrote: Mon Oct 03, 2022 7:36 am
student wrote: Sun Oct 02, 2022 12:15 pm
delamer wrote: Sun Oct 02, 2022 11:42 am 1. I lost a friend recently I believe, in part, because she resented our financial stability. She is well-educated, in her mid-60’s. But she has to work a low-paying job because she lost her professional job in her late 50’s and couldn’t find a similar job.
Oh. If she resented you for this, maybe it is for the better that she is not your friend...
The friend can't keep up any more and had to get distance. The friend can't eat where you want to eat, can't travel where you want to travel, can't entertain you except in a humble way she may be afraid you would think beneath former standards.

It's true the friend should be humble and cheerful about being elderly and poor but maybe give her a break, she hasn't had any practice. It's a shock to slide downward in life and be left behind by former peers and know there are no more years to change things.
1000 percent. Very astute.
As a follow up, what is the best thing a more affluent friend and the less affluent friend can do to maintain the friendship? It shouldn’t have to be a lost cause.
I don't know. Just love I guess. Not giving up on each other. Making space for each other as you are.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by cowbman »

Ron Ronnerson wrote: Sun Oct 02, 2022 6:31 am I find that people have different belief systems when it comes to personal finance and some are downright misinformed about things. Unless someone happens to ask me a specific question about a specific topic, I stick to the policy of minding my own business. When it comes to things like religion, politics, and money, offering advice generally comes across as meddling and is a recipe for ruining people’s moods and potentially straining relationships.

In short, I figure it’s not my job to educate the world about this stuff. I’m an educator, by the way.

Speaking of which, I’ve seen coworkers innocently go into the teacher staff room and sign up for what just about everyone on this forum would consider atrocious investments with terribly high fees. They thought the person who brought in sandwiches had good intentions and was a kind-hearted expert who was there to help. It kills me a little bit each time one of my colleagues (some of whom I consider friends) is taken to the cleaners.

I weep for them on the inside. On the outside, I just smile and talk about other things with them. My relationships stay good as a result and I won’t shoulder any blame for financial outcomes of others as I have kept my mouth shut.

Whether you have good intentions or not, if you give advice, you are setting yourself up to be blamed. Imagine you told someone to invest in the stock market at the start of the year. They would see all these recent losses and possibly think it’s your fault. They might panic and then sell, having turned each hard-earned dollar into a fraction thereof. When they see you, they will associate their losses with you.

If you tell them how taxes work on bonuses and about brackets, you’ve robbed them of the secret joy they derive from complaining about the ways of the world. Meanwhile, you’ve come across as a know-it-all.

Do you really want people to go running when they see you coming? Instead, I offer (and sometimes seek) advice on this forum, where people actually ask questions and want some random stranger’s opinion who happens to be up at 4 am on a Sunday morning.
Ron,

Everything you said is true. I wish it wasn't though. I genuinely enjoy these discussions and find this is how I learn.
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by SteadyOne »

AnnetteLouisan wrote: Mon Oct 03, 2022 6:07 pm
lws wrote: Mon Oct 03, 2022 6:06 pm What is the root cause of this ignorance?
The switch from the pension system to this mass of complexity we have now? People having other things to do in life besides studying this stuff? People getting burned by a fraudulent broker or reading stories and not trusting the markets?
Yes, as not everyone can be a doctor, not everyone can be an actuary and run an individual pension plan and know and implement all the tax, investment rules, etc. It’s just unworkable for vast majorly of population.
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cowbman
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by cowbman »

AnnetteLouisan wrote: Sun Oct 02, 2022 7:35 am I was generally laughed at, denigrated, reproached and actively dissuaded from budgeting and saving money in my 20s and 30s. One friend asked why I was saving so much. I told him if you save and start early, it accumulates and then your money makes money and after a while you can live off the interest. He said, astonished at my ignorance, “….but, that’s not possible!”

Anyway, whatever. I’m in my 50s now and very comfortable, which is what I wanted.

I find many coworkers don’t do the flexible spending account because they view it as too much trouble and they are dissuaded by the use it or lose it feature despite the grace period. They also say … which is a little more worrisome … that they don’t have enough medical expenses in a year to bother. Which implies they aren’t getting preventive health and wellness visits in.

I don’t discuss finances with friends and coworkers anymore. People tend to shoot the messenger.
Similar to what Ron said. The question is why?
Wannaretireearly
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Wannaretireearly »

delamer wrote: Mon Oct 03, 2022 10:31 am
Wannaretireearly wrote: Sun Oct 02, 2022 11:03 pm 3 pages, wow. I’ll need time to catch up with this thread!

There is something deep rooted here. School or any formal education does not teach folks to be a smart shopper. Unfortunately unless you learn this early, it’s a hard road.

Simply put, if your not a smart shopper, your also not going to buy into the most optimal and proven long term investment philosophies. There is a reason why this site is largely self selecting, most ppl who stick around here, already come with a ‘smart shopper’ attitude or aspire to have one.

Simple examples:
- how you shop for big purchases like cars and houses
- how you shop for smaller purchases and ensure you are being frugal

Suddenly expecting the general population to understand Roth Vs. Tax deferred vs taxable vs ??? Is just a step too far. Ppl zone out/gloss over. It’s just too much for the majority of the population :(

Not to get political, but the govt (any in US, Federal or State) does not help either. When was the last time you saw the govt explaining the benefits of various retirement accounts and which to use when? Why doesn’t that happen if the govt is supposed to work for the people?

Outside of the US, you will find much more govt encouragement and advice. I’d love to hear counter arguments!

Edit: Even when our company runs sessions on topics like Mega Backdooor Roth, I’m guessing less than 20% of super smart and well comped folks understand it. I’d guess less than 10% sign up.
Everytime you fill out your taxes, there are lines for IRA distributions and capital gains distributions. Anyone with a bit of curiosity can easily find out more. When I googled “IRA starting,” I got 187 million hits!

And there is one federal government agency, the Consumer Financial Protection Bureau, dedicated to helping consumers navigate financial issues.

I agree that schools could do a much better job of educating young people on financial matters. But there is a lot if information out there if people would take advantage of it. As I mentioned before, I’m completely self-educated when it comes to investing and I learned 75% of it pre-Internet. All the information on the internet can be a little overwhelming, but it’s there if you look.
I learnt early and the hard way, which is often the best.

Only after doing my own taxes year 1, and finding mistakes with my tax preparer did I start the journey of learning the tax system. I guarantee the majority of even smart highly educated people, have not done their own taxes. I’m not even talking 1040 but even TurboTax!

I’ve been a trust but verify type person, which I 100% attribute to my upbringing. I’m trying to pass on that torch to my kids!!

As AL mentions above, the missing part is any simple to understand system. We have a taxation and retirement planning system aimed at the top 5% of the population (iq, intelligence, etc). That is not how these systems should be. They should benefit, be understandable and be simple to the mass population. Not the most intelligent 5%.

An example from a quick search re: UK ISA information from the Government (not a blog, vendor, for profit company, etc):
https://www.gov.uk/individual-savings-a ... -isas-work

Does anything like this exist on the US govt website? Simple language? Easy to find? I’d love to see if this exists!!
“At some point you are trading time you will never get back for money you will never spend.“ | “How do you want to spend the best remaining year of your life?“
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squirrel1963
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by squirrel1963 »

SteadyOne wrote: Mon Oct 03, 2022 9:40 pm
AnnetteLouisan wrote: Mon Oct 03, 2022 6:07 pm
lws wrote: Mon Oct 03, 2022 6:06 pm What is the root cause of this ignorance?
The switch from the pension system to this mass of complexity we have now? People having other things to do in life besides studying this stuff? People getting burned by a fraudulent broker or reading stories and not trusting the markets?
Yes, as not everyone can be a doctor, not everyone can be an actuary and run an individual pension plan and know and implement all the tax, investment rules, etc. It’s just unworkable for vast majorly of population.
I would agree with this, but in regard to pension plans I also think the current system is wildly complex, and unfortunately far too many 401k plans offer funds with high ER. I think by default everyone should be enrolled at 15% salary contribution with a low cost target date fund, so people who don't know anything would at least be on a reasonable path to retirement
LMP | Liability Matching Portfolio | safe portfolio: TIPS ladder + I-bonds + Treasuries | risky portfolio: US stocks / US REIT / International stocks
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AnnetteLouisan
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by AnnetteLouisan »

snowday2022 wrote: Mon Oct 03, 2022 4:26 pm
CyclingDuo wrote: Mon Oct 03, 2022 2:22 pm
lostdog wrote: Mon Oct 03, 2022 1:23 pm Most people live paycheck to paycheck and don't want to talk about finances. You just don't bring it up.
I was looking around on my commute in today at how many homes had jet skis, snowmobiles, boats, campers, RVs, multiple cars in the driveway, motorcycles, 4 wheelers, riding mowers, golf carts - or all of that. I couldn’t believe how many had all of that “stuff” and then some!

Plenty of paycheck to paycheckers out there with all that “stuff”.

CyclingDuo

I am a highly paid MD. Many of the techs and RNs I work with drive nicer cars and go on nicer vacations. Some have second homes. Most complain bitterly about their pay and the cost of college etc. I just avoid these topics around these individuals.

The MDs and other high income professionals I find more receptive to BH type discussions. Still, many have never heard of all of the retirement options available at the workplace, have never availed themselves of 529 or backdoor Roth, etc. Many trade individual stocks and options.
Maybe they value the nicer cars and vacations more than they value amassing money for a future they can’t imagine or can’t even be sure they will have. (Not defending this btw, just noting it’s apparently their choice among many, and not entirely beyond comprehension either given the marketing).

For some folks, even if they read about it and make an effort to learn, they might not act on it. I read about the 3 fund portfolio in a WSJ piece by Mr. Bogle in the mid 90s. I clipped the article, put it in a file and said to myself, if I ever invest, that’s how I’ll do it.
Last edited by AnnetteLouisan on Tue Oct 04, 2022 8:17 am, edited 3 times in total.
NYCaviator
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by NYCaviator »

This is an extremely interesting thread to read, and my own experiences mirror much of what others have said.

There is no denying that the average American is embarrassingly financially illiterate. We are a consumer and debt driven culture, taught to keep buying. Yes, you can afford that $60,000 SUV on your $70,000 household income if you just extend the payments out to 84 months. Of course you can afford that new $1,200 iPhone, there's a payment plan tailored just for you. You can even "finance" clothes and household essentials using services like Klarma now. We just keep finding new ways to go into debt. Most other countries view debt as a bad thing and a sign of irresponsibility.

All of this - in my opinion - comes down to a complete lack of financial education in schools here in the US. We aren't teaching kids basic skills/concepts like what compound interest is, how interest on debt can snowball over time, why credit cards can be dangerous, etc. That needs to be taught every year, beginning in grade school (at a very basic level) all the way through high school.

While the 401k has been around for quite a while, I believe we are really going to see this financial illiteracy problem manifest itself in the coming decades when more and more people try to retire and realize that social security isn't going to cover their expenses and they didn't save nearly enough during their working years.
Brofessor
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by Brofessor »

The inner battle is sometimes our silence is complicity. But human nature is a little primitive and all our egos want to eliminate anxiety any way possible. So sometimes friendships can be strained and silence is the best option to avoid those nasty egos.

Sins of omission is a failure to act against injustice.
Lies of omission is "playing dumb."
Exclusionary detailing is leaving out the important details.
Continuations of misrepresentations is not clarifying a misconception.

What we ignore, we condone.
What we permit, we promote.

A much stronger fiduciary duty is needed. Education is needed in public schools. Consumer watch groups are needed.

But I trust everyone here weighs each social situation and then chooses the best path or picks their battles to spread the bogle knowledge.
Last edited by Brofessor on Tue Oct 04, 2022 7:42 am, edited 1 time in total.
stoptothink
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Re: Conversation with co workers/ financial literacy among non-boglehead types

Post by stoptothink »

AddingUp wrote: Mon Oct 03, 2022 7:02 pmWhat I find more amusing is when people ask me for advice on health and exercise since I’m quite fit and look young for my age. Of course, that’s also a subject I refuse to give advice on lest I find myself offering an unintended insult.
Don't get me started on this one. I get random emails from people in our neighborhood, questions from co-workers and people at church, and yes PMs from members of this board at least on a weekly basis. I don't intend to be rude, but I either provide a one sentence answer, recommend a book/website, or don't answer at all. For the most part, health and fitness is a simpler concept than financial literacy.
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