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It’s common knowledge that kids today aren’t learning the same things that we learned when we were younger. Take cursive, for instance. Forty-six states have implemented Common Core Standards on at least some level, which eliminates mandatory teaching of cursive in the elementary school curriculum. While children are instead learning how to type and use iPads — a needed skill in today’s technology-based word — it’s resulting in a generation of kids who cannot write their signature or read the Bill of Rights.

And, as many would probably assume, teens are also not getting a decent financial education in school. As a result, we have seen an influx of young adults who are uneducated about basic personal finance and how to properly manage their money.

fin literacy2

The JumpStart Coalition for Personal Financial Literacy spent over a decade measuring financial literacy, with one aspect being the literacy among high school students. What they found was discouraging.

The survey asked students a number of questions on personal finance — covering topics such as retirement, credit cards, savings, and insurance — and the majority of kids failed each year. The first year surveyed, 1997, the students scored an average of 57.3%. A few years later, in 2002, this dropped to a 50.2% score. Then, in 2008, this dropped even further to a shocking score of 48.3% correct.

Mind you, these are basic financial literacy questions, and these children are obviously not getting the education they need. They are going into college and their first careers without really knowing how to manage their finances, save their money, or invest. Many of them have no clue how to file their taxes, either. This could end up being a frustrating, and even costly, shortfall.

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Not surprisingly, the kids realize that they’re lacking. USA Today also reported that most students would even grade themselves as failing at their financial education. A more recent survey by U.S. Bank found that 65% of high school students across all 50 states and the District of Columbia ranked their financial knowledge as insufficient. Testing of these children’s states found that they were right, with more than half of them scoring a grade of C or less on the basic test given. In fact, 29% of them got a D or F.

So, these findings beg the question: Is a class on money management appropriate as a requirement? After all, this is a skill necessary to function properly in life. As one becomes an adult, with adult responsibilities, one must know how to correctly balance a bank account and understand credit card and loan terms.

But does personal finance fit alongside history, literature, foreign language, sciences and mathematics, art, and music — the “staples” of all public high school curricula throughout the United States? [click to continue…]


Over the course of thousands of years, the character of money has gone through various metamorphoses. Bartering was the chief method members of a society acquired their individual needs until they developed shortcuts. Since that first shortcut, societies haven’t stopped creating more shortcuts, further separating the method of acquiring something from those things that are acquired.

Money is just a temporary replacement for things, with a value that everyone accepts as a standard. If you have meat that I need, but you don’t need the clothing I create, I can give you money rather than clothing. You can then take that money to someone else and offer it in exchange for something you need, like knives to cut the meat you offer to your customers. Here, money is only a tool for getting the materials you need.

This money is the first level of abstraction — a representation, just like a word is a representation of an idea. Abstraction layers are helpful because they allow replacements to be used with the same monetary value of items that aren’t available. That is, you use coins to buy the meat because you don’t make the knives the butcher needs.

The next abstraction layer is credit. You don’t need cash on hand when you can pay with credit cards. Technology has led us to what must be the final abstraction level conceivable; a world where our “money” exists only as bits of data, zeroes and ones, in a bank’s master computer database. If we need cash, we can exchange some of those bits, lowering our balance in the database, and receive cash out of a machine, but that’s less and less necessary when we can pay for more things electronically. Debit cards, ACH transfers, and Federal Reserve wires don’t necessarily involve any cash, just a rearrangement of data in computers.

This technology makes it much easier to keep our hands off our own money. This should be one of the best things that can happen for the state of our own personal finances. Pay checks are delivered right into our bank accounts. Employers don’t send cash to their employees’ banks, they transfer “electronic funds.” The banks receive instructions electronically and increase the balance in your checking accounts overnight.

If you have created automatic savings or investments, the bank will make these transfers without any human intervention. Those consumers who take advantage of all that technology has to offer have likely put as much as possible on auto-pilot, including paying bills electronically and perhaps receiving automated shipments of underwear every three months.

Therein lies a problem. Automation is an abstraction layer that separates you from your money. While much of the automation we’ve discussed on Consumerism Commentary is designed to take good habits, amplify them, and make them occur without thought and without the interference of human error, if you take this concept too far you cede control of your finances.

Going back to the original bartering system, the things we make have intrinsic value. As you increase abstraction by using money that represents those things, the credit that represents that money, the digital bits that represent both credit and money, and the automation that keeps your brain away from the decision-making process, the real value becomes further hidden.

Here’s the result: it’s easier to spend more than you need to the further you get away from intrinsic value. We know this because despite best intentions, overall people spend more with credit cards (a higher abstraction layer) than they would with cash (a lower abstraction layer).

While it’s a good idea for the basics to remain automated, return your brain to your money and get involved with spending decisions. I have a good personal example to share. A few years ago, I set up automatic payments to take care of my electricity and gas bill from PSE&G. I’m busy, so I don’t like to be bothered with writing checks and sending them through the mail. But that’s the same excuse I have for hardly looking at the detailed electricity bill.

I used to be familiar with my energy usage trends as well as the fluctuations of energy prices, but no longer. I look at my checking account balance online every few days, so I notice when the bank makes the bill payment for me, but I have not looked at monthly trends to determine what I could do to cut costs. As a result, I’m likely spending much more than I need to.

It takes time and effort, but it will be worthwhile to become involved with your own money once again. If you made your automation decisions many years ago like I have, you might now be in a different situation requiring different decisions. If you’re not intimately involved with your money, you’re likely not making enough decisions, and as a result, your future may not be as financially secure as it could be.

Photo: jquiz, michaeldbeavers


I can’t completely fault companies like Amway, Mary Kay, and Lia Sophia. They know that friendship results in two important qualities: trust and guilt. These two qualities are important to companies because they make the process of selling products much easier. I find it relatively easy to politely decline — and hang up on if necessary — a salesperson who calls me uninvited in order to get me to upgrade my phone service or subscribe to a theater. Although I usually don’t have a problem, it can be more difficult to say no to a friend.

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In most cases, people join these multi-level marketing (MLM) programs not because they believe in the product but because there is a system designed to allow them to earn significant amounts of money if they play the game right. If you are an influencer in your social circle, you will be able to convince your friends to sell products and host their own parties increasing your income. “Party” is just a code word for “sales pitch.” You can’t achieve success as a multi-level marketer without burning some relationships.

MLM isn’t the only issue. Everyone knows someone who is a social seller. From my observations, the products involved are almost always low quality, too expensive, or both. For example, someone in my office was trying to sell Girl Scout cookies to co-workers the other day for $4 a box. When asked, she had to explain that $4 was the real price and she was not artificially marking the price up. That’s a difficult sell when another co-worker was offering boxes of Girl Scout cookies for $3.50 a piece a few months ago.

I like these cookies, so I usually buy a box each year. Although I’m driven partly by my enjoyment, I’m also driven by guilt. One box of Girl Scout cookies is as far as I’ll go, however.

Dealing with co-workers trying to sell you products you don’t want is easier that dealing with friends who try the same tactics. When a friend is the seller, pressuring you to come to a party (a code word for sales pitch), you have to be strong.

  • First, you can consider going to the party. Don’t bring any money and don’t bring your credit cards. If you see something you truly like and is a good deal, it will be available from your friend later.
  • Politely decline. If you buy from your friend and there is a problem with the product, your friendship could be ruined. If the seller is a co-worker, you could be making your work environment uncomfortable. There are many stories about friends disappearing or not answering calls once they take their money, and the sale could go bad no matter how close you are with your friend.
  • If sales pressure continues, make it clear you are not interested. Sometimes you have to say more than, “No.” Just explain that you’re not interested in the products and you’d prefer to keep the relationship away from business.

Unfortunately, just by denying a friend, you might lose your connection. That may be the fear that prevents people from saying no more often. Saying no is fine, because a good friend won’t use you for their own financial benefit, and a good friend won’t pressure you into something in which you’re not interested.

How do you deal with friends who want to sell you products?

Photo: Pictures from Heather


The concept of turning your passion into a vocation, making a living doing something you love, easily generates two opposing viewpoints. I wouldn’t say I’ve had a privileged upbringing, but it depends on the perspective. I had the freedom to explore a variety to activities to help nurture my mind, soul and body. As a kid, I explored computer programming, music performance, acting, summer camp, karate, Little League baseball, and even tennis lessons. This alone is enough to make people less fortunate scoff at the futility of my time while growing up. I could have lived in a developing country where kids have no choice but work so their families could survive day-to-day.

In an effort to develop artists, one recurring theme always present in my activities was the idea that life provided endless opportunities. There was no need to be resigned to an unsatisfying job, working for money rather than soul satisfaction. With enough education and practice, everyone would have a chance to find a way to earn money doing something with passion, an activity that was more than just “work.”

To characterize the two perspective, one would say that everyone, at least those with sufficient resources, can find a way to sustain a family while pursuing a passion completely. The other perspective takes the position that following a passion is a luxury and most people would be better off finding a job that pays the bills right away and looking for passion elsewhere, like with hobbies or family.

I wrote about pursuing my passion six years ago. I mentioned that I was stuck in a rut and was still trying to determine what my “dream job” would be. I went on to spend five more years working for a corporation in a job I had little interest. At the time, I didn’t really consider Consumerism Commentary a business. I didn’t consider it my passion, either. I never desired to be a writer or a publisher, but an interesting theme running through the last twenty years of my life has been building communities, particularly online, and that is a bigger passion for me than writing.

With a less personal approach, I suggested starting the decade off right by doing something you love.

I wouldn’t have been able to pursue Consumerism Commentary if I wasn’t already meeting my baser needs. I started this website after I had already started moving in the right financial direction, with a new income at a corporate job ready to help me pay off my debt and save for the future. If I had been struggling to find affordable shelter and scrounging for food, I’d have greater concerns than finding a web server.

Abraham Maslow's Hierarchy of NeedsWhen considering the idea of following a passion, particularly if that passion doesn’t naturally coincide with a potentially high-paying career like mathematics or engineering, I find that Abraham Maslow’s Hierarchy of Needs is an appropriate metaphor. Following your passion is related most to the top of the pyramid, self-actualization. All the issues pertaining to the levels below self-actualization must be met before a quest to reach one’s full potential can be moderately successful. Because of these pre-requisites, paving one’s own way to create a successful life that doesn’t rely on typical social structures (like corporations) is rare.

Once physiological needs like food, water, and shelter are met, the next needs pertain to safety: having sufficient finances, job security, and health security. A good portion of the middle class doesn’t really get past this stage of needs. Living paycheck-to-paycheck keeps the lower middle class unfulfilled. The upper middle class may not have money that could be used in an emergency other than the wealth locked in the value of their primary residence, or those who do have emergency funds would not be able to live off savings for a year to pursue a financially risky endeavor. The working class relies on employers and rarely sets out to build their own business, again due to risk.

To get past this second stage, you need to be in a position where worrying about finances is unnecessary. When there is little concern about whether you can afford to fail, you have the opportunity to try different approaches to life-sustaining pursuits of your passion.

In my work with non-profit organizations, I noticed that many people involved with activities were not in a financial situation where they needed to worry about finance. If the organization failed to provide a paycheck one week due to the company’s negative cash flow, they didn’t start a riot. If you’re “independently wealthy” the paycheck from one week to another is not the main concern, and you have the ability to take some risk in order to spend the bulk of your waking life working with your passion. If you’ve retired from your former career and just looking for a good way to spend the last few decades of your life doing something meaningful, and if you’re done raising a family and paying for a house, you have the flexibility to work for little or volunteer without concern about moving up the corporate ladder. If your spouse brings in the money and you’re only working to keep yourself from going insane alone in the house, your options are wide open.

When I was working for the non-profit, I was in a significantly different financial position, and this was a message I had some difficulty getting through to the executives. Then again, why should I receive preferential treatment of any sort when the rest of the employees were happy with the poor financial situation within the company. In the end, I made some sacrifices in my living situation and other expenses to make things work a little better, but I was also sacrificing my future financial stability. My following a passion early on in my career, I was skipping over the more basic needs like a safe living environment and financial security while seeking higher-order fulfillment. It didn’t work out so well for me.

While it’s good to persuade young students to follow their passion — and this is a great topic for motivational speakers for adults as well — it’s more important to look at any particular individual before condoning leaving reason behind to search out a living following a passion. For some, the risk of financial failure could be a good motivational tool for bringing about success while following a passion, but for others, it’s nothing more than false hope and results in a delay in building a solid financial foundation.

Abraham Maslow


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