Skip to main content

Sound Advice: December 4 2024

Why do consumers know so little about personal finances and what do they need to do to learn what's important?

Consumers often lack knowledge about personal finances due to several factors: 

Inadequate Education

Financial education in schools is often insufficient or nonexistent. Only 25 states in the U.S. currently require personal finance courses in high schools

This leaves many young adults unprepared to manage their finances as they enter the workforce.

Complexity of Financial Landscape

The financial world is constantly evolving, with new products, technologies, and regulations emerging. This complexity can be overwhelming for many consumers, making it difficult to stay informed and make sound financial decisions.

Lack of Practical Experience

Many people don't gain hands-on experience with financial matters until they're faced with important decisions, such as taking out student loans or buying a home. This lack of practical experience can lead to costly mistakes.

Generational Knowledge Gaps

Many adults learn about personal finance from family members, but if parents lack financial literacy themselves, they may pass on incomplete or incorrect information

To improve their financial knowledge, consumers can:

Seek out educational resources: Take advantage of free tools and resources offered by reputable organizations. For example, Experian provides free educational content and tools to help consumers understand credit and personal finance

Attend financial education courses: Look for classes offered by community organizations, banks or online platforms that cover personal finance basics.

Use reliable online sources: Although social media can be a source of financial information, especially for younger generations, it's crucial to verify information from trusted sources like national credit reporting agencies, banks, and financial advisers

Practice financial skills: Actively manage a budget, save regularly, and make informed financial decisions to gain practical experience.

Stay informed: Keep up with financial news and changes in regulations that may affect personal finances.

Consult professionals: When faced with complex financial decisions, consider seeking advice from qualified financial advisers.

Participate in financial literacy programs: Take part in initiatives like Financial Literacy Month, which offers opportunities to learn about various aspects of personal finance

By taking these steps, consumers can improve their financial literacy and make more informed decisions about their money, potentially avoiding costly mistakes, and building a stronger financial future.

N. Russell Wayne

Weston, CT  06883

203-895-8877

www.soundasset.blogspot.com

Comments

Post a Comment

Popular posts from this blog

Sound Advice: January 3, 2025

2025 Market Forecasts: Stupidity Taken To An Extreme   If you know anything about stock market performance, you can only gag at the nonsense “esteemed forecasters” are now putting forth about the prospective path of stocks in the year ahead.   Our cousins in the UK would call this rubbish.   I would not be as kind. Leading the Ship of Fools is the forecast from the Chief Investment Strategist at Oppenheimer who is looking for a year-end 2025 level for the Standard & Poor’s Index of 7,100, a whopping 21% increase from the most recent standing.   Indeed, most of these folks are looking for double-digit gains.   Only two expect stocks to weaken. In the last 30 years, the market has risen by more than 20% only 15 times.   The exceptional span during that time was 1996-1999, which accounted for four of those jumps.   What followed in 2000 through 2002 was the polar opposite: 2000:      -9.1% 2001:     -11.9% ...
Post a Comment
Read more

Sound Advice: March 10, 2021

The ABCs of Stock Picking After decades of analyzing stocks (and funds) and investing for clients, I'm happy to share in plain English what's involved, what works, and what doesn't.  Keep in mind the reality that successful stock picking is an effort to maintain a good batting average. In baseball, a batting average of .300 or better is considered quite good.  With stock picking, you need to do better than .600, which means you have many more winners than losers. No one gets it right all of the time.  It's not even close.  Wall Street shops all have their recommended lists and the financial media regularly hawk 10 stocks to buy now. Following that road usually is a direct route to disaster.  Don't be tempted. Let's begin with the big picture: The stock market goes up and down over time, but the long-term trend is up.  When there's a rally under way, everyone feels like a genius.  When the market hits an air pocket, though, with few exception...
Post a Comment
Read more

Sound Advice: January 15, 2025

Why investors shouldn't pay attention to Wall Street forecasts   Investors shouldn't pay attention to Wall Street forecasts for several compelling reasons: Poor accuracy Wall Street forecasts have a terrible track record of accuracy. Studies show that their predictions are often no better than random chance, with accuracy rates as low as 47%   Some prominent analysts even perform worse, with accuracy ratings as low as 35% Consistent overestimation Analysts consistently overestimate earnings growth, predicting 10-12%                 annual growth when the reality is closer to 6%.   This overoptimism can                 lead investors to make overly aggressive bets in the market. Inability to predict unpredictable events The stock market is influenced by numerous unpredictable factors, including geopolitical events, technological changes, and company-specific news.   Anal...
Post a Comment
Read more