Thursday, March 6, 2014

President's Advisory Council: 20 Things Kids Need To Know To Live Financially Smart Lives

I add my (smart-ass) comments between the lines.

1) You need money to buy things.

No $hit, Sherlock.  The problem is our education system is obsolete, the product of industrial age thinking when new job creation stems from the information age.  Low-paying or no job + rising consumer prices = no money = no things to buy.

2) You earn money by working.

Again, in the "no kidding" category.  But under the welfare system (thanks to the "War on Poverty"), one can also earn money from not working--and having more babies.

3) You may have to wait before you can buy something you want.

I'm all for this concept of delayed gratification.  The problem is the media portrays a different image.  The propaganda urges people to buy NOW sexy cars, sexy clothes, sexy shoes, sexy toys--so they can appear sexy.  Can't afford them?  No problem.  Charge it on their credit cards.  And the government incentivizes the public to mortgage their lives away to buy homes and cars they can never pay off, and to pay for tuition (and healthcare) they can't afford.  Problem.  But hey, all this consumption surely stimulates the economy, right?

4) There's a difference between things you want and things you need.

Agreed, but then gain, this depicts a mentality of scarcity, not abundance.  Give up on your hopes and dreams to match your lack of income.

5) You need to make choices about how to spend your money.

This seems oversimplified.  Does this address discernment--and dialing down your lifestyle?  Or is this about method of payment--"will that be cash or charge?"

6) It's good to shop around and compare prices.

This is the one skill consumers are good at it.  The problem is they still can't afford the item.

7) It can be costly and dangerous to share information on-line.

You mean with the NSA?

8) Putting your money in a savings account will protect it and pay you interest.

That's only if you're not worried about inflation risk, credit risk, liquidity risk, systemic collapse risk, or counterparty risk.  Other than that, you're fine.  And oh by the way, to reward you for taking on all the aforementioned risks, you're getting 0% returns.

9) You should save at least a dime for every dollar you receive.

Sage advice, although dollar debasement will ensure loss of purchasing power.  Your savings are being destroyed by dollar devaluation.

10) Entering personal information, like a bank or credit card number, online is risky because someone could steal it.

Agreed, but banks and governments have shown time again that "riskless" assets carry huge risks.  See AAA-rated subprime mortgage--backed securities.

11) The sooner you save, the faster your money can grow from compound interest.

And the faster your money can be flushed down the toilet due to hyperinflation or financial catastrophe.

12) Using a credit card is like taking out a loan; if you don't pay your bill in full every month, you'll be charged interest and owe more than you originally spent.

So why is the government and media encouraging the masses to spend even more money they don't have, piling up unsecured consumer debt in the process?

13) When comparing colleges, be sure to consider how much each school would cost you.

For most, an arm and a leg.   And tens of thousands of dollars of suffocating debt.

14) You should avoid using credit cards to buy things you can't afford to pay for with cash.

What if you want to flip houses with no money down?

15) Your first paycheck may seem smaller than expected since money is taken out for taxes.

But hey, we all have to sacrifice our lifestyles for the BEAST, Uncle Sam.

16) A great place to save and invest money you earn is in a Roth IRA.

Except any qualified or non-qualified government-sponsored retirement plan benefits the government more than the saver.

17) You should use a credit card only if you can pay off the money owed in full each month.

Without a job and limited job prospects, sometimes a credit card is the only thing preventing a household from being homeless.

18) You need health insurance.

As in "affordable" healthcare insurance where premiums are skyrocketing?

19) It's important to save at least three months' worth of living expenses in case of an emergency.

By using your credit card.

20) When investing, consider the risks and annual expenses.

And the fact that all markets are manipulated, thanks to an over-reaching Fed.

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