Tag Archives: Habits

Solving the Financial Literacy Problem

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“A compelling body of evidence demonstrates a strong association between financial literacy and household well-being. Survey after survey shows that households that demonstrate low levels of financial literacy are those that tend not to plan for retirement, borrow at high interest rates, and acquire fewer assets.” Shawn Cole

Numerous reports show that a majority of American adults lack basic financial knowledge, behaviors, habits or skills to make good decisions about managing their money. Poor money management habits and a lack of financial literacy continue to be significant concerns for Americans and might pose a future a threat to the continued prosperity of America, since we cannot expect government to run huge fiscal deficits to provide essential needs of its citizens.

Additionally, it is one problem that has caused many Americans to be left behind despite ten years of economic expansion and a roaring bull stock market over that same timeframe. The economic good times have benefited high income and high net worth Americans; and it has led to an ever widening income gap, wealth gap and retirement gap within the United States.

Lack of Financial Literacy

“The number one problem in today’s generation and economy is the lack of financial literacy.” Alan Greenspan, Former Chairman, Federal Reserve

Forty-seven percent of college students surveyed said they do not feel prepared to manage their money. Managing money remains the most daunting challenge for college students for the fourth year in a row.

A recent survey, by financial firm AIG and education training company EVERFI of more than 25,000 college students, revealed that students struggle with even basic financial literacy about things like student loans, credit cards and investing.

When asked six personal finance questions, the survey revealed that more than one in 10 college students answered none of questions correctly, and another 20% got just one question right. Still, more than half got just two or fewer questions correct — even incorrectly answering simple questions about net worth and savings.

Furthermore, fewer than 1% of college students taking the test got them all right.

This survey reveals a widespread problem inside America. It reveals that there is a Financial literacy problem in America and one that we must solve.

This is a major issue because of the financial realities facing college students and all Americans. For example, according to Sallie US:SLM data revealed that 83% of college grads have a credit card, though only about six in 10 say they pay the balance on time and in full each month.

Not Taught in High School

“You can come from humble beginnings, live frugally, invest as much as you can, save 10% to 20% of your paycheck, invest in low-cost ETFs, and become a millionaire.’—Dan LaSalle, Olney Charter School’s assistant principal

Why the shortfall in financial literacy? The reason is because not many students in the U.S. learn about personal finance in school, regardless of the income-level where they live. According to the nonprofit Next Gen Personal Finance, only five states require high-school students to take a personal-finance class: Virginia, Alabama, Utah, Missouri and Tennessee.

In other states, personal finance classes are often offered as an elective. (https://www.marketwatch.com/story/how-one-high-school-is-teaching-hundreds-of-students-to-become-millionaires-2019-05-03). As a result, we have a nation where a vast majority do not understand or even the basics of smart money management habits and behaviors.

“The single biggest difference between financial success and financial failure is how well you manage your money. It’s simple: to master money, you must manage money.” T. Harv Eker, author Millionaire Mind

Financial Literacy is one solution

Financial literacy is about knowing how money is made, spent, and saved, as well as the skills and ability to use financial resources to make decisions. These decisions include how to generate, invest, spend, and save money.

This concept is applicable to both individuals and organizations. Individuals must be able to balance a checkbook, comprehend personal income taxes, and understand the concept of budgeting in order to make wise decisions with money. These skills are vitally important; yet, many individuals lack this basic knowledge and consequently are unable to meet their daily expenses.

References:

  1. https://everfi.com/insights/white-papers/2019-money-matters-report/
  2. https://www.marketwatch.com/story/solving-americas-financial-literacy-crisis-starts-with-teachers-not-laws-2019-11-19
  3. https://www.marketwatch.com/story/more-than-half-of-college-students-fail-this-6-question-money-quiz-would-you-2019-06-05
  4. https://www.marketwatch.com/story/how-one-high-school-is-teaching-hundreds-of-students-to-become-millionaires-2019-05-03

A Man is What He Thinks

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“A man is literally what he thinks.” James Allen

James Allen, a British philosophical author of ‘As a Man Thinketh’, wrote, “A man is literally what he thinks, his character being the complete sum of all his thoughts. As the plant springs from, so every act of a man springs from the hidden seeds of thought, and could not have appeared without them.”

The things you choose to focus on, your thoughts, determines how you perceive the world – and influences many of the experiences you have as a result. If you focus only on the negative things in your world, the world can seem like a terrible place and your mood and outlook may suffer.

“Every one of us is the sum total of our own thoughts. We are where we are because that is exactly where we really want or feel we deserve to be, whether we’ll admit it or not.” Earl Nightingale

But when you focus on the positive things in your world, you see that the world is actually full of faith, hope, love, and joy. There is kindness and beauty that inspires people to do incredible things.  Each man holds the key to their own perception and focus, good or bad. He also hold the key to everything that enters into his life. By working patiently and intelligently upon his thoughts and focus, he may remake his life, his behaviors and transform his circumstances. 

“You are today where your thoughts have brought you; you will be tomorrow where your thoughts take you.” James Allen

Thoughts of doubt and fear never accomplished anything, and never can. They always lead to failure. Purpose, energy, power to do, and all strong thoughts cease when doubt and fear creep in.

“He who has conquered doubt and fear has conquered failure.” James Allen

The will to do springs from the knowledge that we can do. Doubt and fear are the great enemies of faith and knowledge. The people who embrace readily doubt and fear, who refuses to slay them, hinder himself at every step.

Changing the Subconscious Mind

Daily affirmations are techniques you use to begin he process of improving your life. Affirmations are simply statements that describe a goal or thought in its already completed state. Positive affirmation helps eliminate negative and limiting beliefs.

Affirmations can transform an individual’s comfort zone from a limited one keeping them trapped in mediocrity to a more expanded one where anything is possible. It helps to replace your “I can’ts” with “I cans,” and your fears and doubts with confidence and aspirations.

Affirmations are reminders to your unconscious mind to stay focused on your goals and to come up with solutions to challenges and obstacles that might get in the way.

“These things we bring on ourselves through our habitual way of thinking,”

Daily affirmations are simple, positive statements declaring specific goals in their completed states. Affirmations also hold a key to creating the life of your dreams. Successful people have long known that using willpower alone to energize their success isn’t enough.

Let go of negative beliefs

It is important to let go of and not focus on negative thoughts and images. Instead, individuals should bombard their subconscious mind with new thoughts and images that are positive and stated in the present tense.

In closing, William James said: “The greatest discovery of my generation is that human beings can alter their lives by altering their attitudes of mind. We need only in cold blood act as if the thing in question were real, and it will become infallibly real by growing into such a connection with our life that it will become real. It will become so knit with habit and emotion that our interests in it will be those which characterize belief.”

James also said,

”If you only care enough for a result, you will almost certainly attain it. If you wish to be rich, you will be rich. If you wish to be learned, you will be learned. If you wish to be good, you will be good – only you must, then, really wish these things, and wish them exclusively, and not wish at the same time a hundred other incompatible things just as strongly.”

References:

  1. Allen, James, As a Man Thinketh: Original 1902 Edition
  2. http://www.jamesallenlibrary.com/authors/james-allen/as-a-man-thinketh
  3. https://www.jackcanfield.com/blog/practice-daily-affirmations/
  4. https://www.jackcanfield.com/blog/become-a-millionaire-never-too-late/

U.S. Markets Overreacting

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Updated:  Monday, 2/3/2020 at 8:25 am

We never want to downplay the threat posed by the Novel Coronavirus in China and globally. The highly contagious coronavirus is a pneumonia-causing illness that infects an individual’s respiratory tract. It is now responsible for a reported 360 deaths in China as of Monday morning and 17,000 infections, according to Chinese officials and official figures from the World Health Organization. Furthermore, it can be confidently assumed that the Chinese Communist government has drastically under reported the magnitude of the spread and the total number of its citizens effected by the virus.

Consequently, the U.S.represents a relative virgin population for the Novel Coronavirus. Americans have little to no immunity to this strain of virus from previous spreads or vaccination.  Thus it does pose a potential temporary risk and impact to the U.S. economy.

Subsequently, the World Health Organization has declared the fast-spreading coronavirus a global health emergency — a rare designation that should help to contain the spread and outbreak.

On Friday, the Federal government decided to quarantine Americans arriving on U.S. soil from Wuhan and the Guangdong province in southern China. Additionally, the U.S. initiated measures to screen passengers arriving from all other regions of China. Those found without symptoms are released and asked to self isolate themselves for the fourteen days, the prescribed incubation period for the Coronavirus.

U.S. Influenza Season

However, most Americans are not aware that the CDC estimates that there has been 25 million cases of seasonal influenza in the U.S., 250K hospitalizations and 20,000 deaths reported. This is not abnormal for influenza season in the U.S. Moreover, influenza has been assessed as widespread in Puerto Rico and in 49 states.

Image if the media chose to report these statistics like the quantity of seasonal influenza cases, hospitalizations and deaths in the U.S. every hour and had quasi-infectious disease experts on-air to pontificate about the potential severity and potential deaths. Additionally, image if they had their reporters stoke fear by wearing a nurse’s mask to cover their respiratory system and displaying concern in their voices while reporting live from a mall in Chicago.

More than likely, the market would have been impacted by the over reporting of news.

Conclusion

Bottom line, the market has been  freaking out over the coronavirus outbreak, which doesn’t pose a threat to any long-term investor, as long as they remain calm and disciplined.  The media’s coverage and reporting of the coronavirus might be best described as over-dramatic. The effect has been the market sell off and market volatility. Additionally, the media appears to be now over hyping the preventive measure U.S. officials have taken to prevent the spread of the highly contagious virus on U.S. soil.

Friday’s U.S. stock market two percent sell off was definitely an overreaction to the over-reporting and over-hyping by the U.S. entertainment media.

References:

  1. https://www.cdc.gov/flu/weekly/index.htm#ILIActivityMap

The Power of Habit: Why We Do What We Do in Life and Business

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Habits are choices that you continue doing repeatedly without actually thinking about them.

The Power of Habit, written by New York Times business reporter Charles Duhigg, explains why habits exist and how they can be changed. According to Duhigg, if people can understand how behaviors became habits, they can restructure those patterns in more constructive ways.

Additionally, understanding and changing habits is one of the most important thing in developing good personal financial behaviors or eliminating bad personal financial behaviors.

Source:

  1. https://charlesduhigg.com/books/the-power-of-habit/
  2. https://www.shortform.com/summary/the-power-of-habit-summary-charles-duhigg
  3. https://fastertomaster.com/the-power-of-habit-by-charles-duhigg/