Do people need to explicitly be taught “You bring home $5,000 after taxes. You spend $2000 on rent, $1000 on fixed bills, $1000 on semi-fixed expenses, and $500 on fun. Do not buy a thing that raises your fixed expenses by $2000”?
I guess so.
I mean, I think a lot about a guy I worked with years ago. He said as soon as he turned 18 he got a credit card and maxed it out. No plans to pay it. Just enjoyed having a new TV, clothes, xbox, shoes. And then he got in a lot of trouble, which should have surprised no one. But at least he was getting his life together, ten years after the fact. Though we haven’t talked in years. I worry he’s a trumper, despite him being hispanic.
American society tries to force debt on you and they try to hook you as soon as you can legally sign a contract. . When you get into college, you are inundated with offers from tons of CC companies with seemingly good terms but they’re actually horrible. It’ll say something like 12.9% interest rate, but in the fine print it tells you that it jump to 23.9% if you’re late on a payment. One brain fart or patch of bad luck and you’re fucked for as long as they can keep you under their foot.
If you’re fortunate, you had parents who taught you how to avoid the worst of them and to manage debt. But even so, it’s not easy because there are so many traps. Worse still, you have to do it. If you don’t get a credit card, you will have a very bad credit rating. That means when you go to buy a car or anything else that has to be financed you will get shit terms. It even makes it harder to get an apartment because the manager will check your credit before offering you a lease.
If you’re fortunate, you had parents who taught you how to avoid the worst of them and to manage debt.
My parents didn’t especially go out of their way to teach me to be frugal, but I guess I learned from watching them. The idea of buying something I can’t actually afford on a high interest credit card makes my skin crawl.
In your over simplified example I still say yes they should. However we both know it’s more complex than that. Loans, interest rates, interest types, payoff schedules, taxes, credit cards, other types of financing - to a huge chunk of people it is overwhelming. Most Americans go into buy a car or get financing and don’t even ask about interest rates, most only want to know what the monthly payment is.
Well, economics is a mandated class in my city (not sure about state), so yes, we did the basic “never spend more than what you have” and “calculate plan A vs plan B vs buying something outright” and showing how by-now-pay-later/credit is always worse than just spending what you own, but try to at least get something with low APR when you do have to get loans. Like I looked at whoever had the best APR rates when choosing a credit card for college students, although I always pay the full balance every statement.
But like the other comment said, it’s the fact that it’s hard to teach an 18 year old not to be impulsive with their money, especially if said 18 year old’s parents never really emphasized frugality to their kid. Some people are just crazy and learn only by being burnt, so while I feel negative spending any kind of money outside of bare necessities (gas, lunch), some people max their card out buying Gucci and a PS5 Pro.
We’re taught debt is a scary bad thing, but we also need to learn how to turn your life back around when you start going into debt, or when you’re deep in. Gen Z is already experiencing far more debt than any previous generation, and we have no idea how to get out.
A poll by Talker Research for Newsweek revealed that Gen Z—born 1997-2012—carries the highest average personal debt when compared to older counterparts. Gen Z carries the highest average personal debt, at $94,101—far above millennials ($59,181) and Gen X ($53,255)
Economic reports, including recent findings from the New York Federal Reserve, confirm that Gen Z is falling behind on debt payments at increasing rates, with more than 90-day delinquencies at their highest level in three years.
Youre assuming people put in the effort to know where there money actually goes. A lot of americans have never made a budget. They get to the end of the month/pay period, see how much money they have left, and go spend it.
And like someone else mentioned, its not always consistent. Different months have different needs and income can fluctuate. And they certainly never account for that
Do people need to explicitly be taught “You bring home $5,000 after taxes. You spend $2000 on rent, $1000 on fixed bills, $1000 on semi-fixed expenses, and $500 on fun. Do not buy a thing that raises your fixed expenses by $2000”?
I guess so.
I mean, I think a lot about a guy I worked with years ago. He said as soon as he turned 18 he got a credit card and maxed it out. No plans to pay it. Just enjoyed having a new TV, clothes, xbox, shoes. And then he got in a lot of trouble, which should have surprised no one. But at least he was getting his life together, ten years after the fact. Though we haven’t talked in years. I worry he’s a trumper, despite him being hispanic.
American society tries to force debt on you and they try to hook you as soon as you can legally sign a contract. . When you get into college, you are inundated with offers from tons of CC companies with seemingly good terms but they’re actually horrible. It’ll say something like 12.9% interest rate, but in the fine print it tells you that it jump to 23.9% if you’re late on a payment. One brain fart or patch of bad luck and you’re fucked for as long as they can keep you under their foot.
If you’re fortunate, you had parents who taught you how to avoid the worst of them and to manage debt. But even so, it’s not easy because there are so many traps. Worse still, you have to do it. If you don’t get a credit card, you will have a very bad credit rating. That means when you go to buy a car or anything else that has to be financed you will get shit terms. It even makes it harder to get an apartment because the manager will check your credit before offering you a lease.
My parents didn’t especially go out of their way to teach me to be frugal, but I guess I learned from watching them. The idea of buying something I can’t actually afford on a high interest credit card makes my skin crawl.
In your over simplified example I still say yes they should. However we both know it’s more complex than that. Loans, interest rates, interest types, payoff schedules, taxes, credit cards, other types of financing - to a huge chunk of people it is overwhelming. Most Americans go into buy a car or get financing and don’t even ask about interest rates, most only want to know what the monthly payment is.
Well, economics is a mandated class in my city (not sure about state), so yes, we did the basic “never spend more than what you have” and “calculate plan A vs plan B vs buying something outright” and showing how by-now-pay-later/credit is always worse than just spending what you own, but try to at least get something with low APR when you do have to get loans. Like I looked at whoever had the best APR rates when choosing a credit card for college students, although I always pay the full balance every statement.
But like the other comment said, it’s the fact that it’s hard to teach an 18 year old not to be impulsive with their money, especially if said 18 year old’s parents never really emphasized frugality to their kid. Some people are just crazy and learn only by being burnt, so while I feel negative spending any kind of money outside of bare necessities (gas, lunch), some people max their card out buying Gucci and a PS5 Pro.
We’re taught debt is a scary bad thing, but we also need to learn how to turn your life back around when you start going into debt, or when you’re deep in. Gen Z is already experiencing far more debt than any previous generation, and we have no idea how to get out.
Youre assuming people put in the effort to know where there money actually goes. A lot of americans have never made a budget. They get to the end of the month/pay period, see how much money they have left, and go spend it.
And like someone else mentioned, its not always consistent. Different months have different needs and income can fluctuate. And they certainly never account for that