Category: Behavioral Finance

Reading List for July 19-21

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Jul 19, 2019
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Financial Literacy, Cryptocurrencies, Economics, Investing, Paying for College, Behavioral Finance
Financial Literacy A Forbes article last week tries to explain the drop in financial literacy across the board as revealed in the FINRA 2018 National Study of Financial Capability. Economics The St. Louis Fed provides a comprehensive explanation of the Federal Reserve’s dual mandate, and specifically explains the two percent inflation target. (Medium) Cryptocurrency The proposed Facebook cryptocurrency Libra faces was the subject of congressional hearings this week....

The Financial Behaviors Encouraged By Research Findings

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Jul 16, 2019
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Behavioral Finance
This recent research out of UCLA provides a useful reminder of the importance of behaviors (and habits) when it comes to financial capability which I have written about here, here and here.  Here's a few of the financial behaviors which often have an emotional component to them also: Paying down loans with lower balances (vs. higher interest rate loans): "Research shows that consumers often have better success if they repay smaller debts first. The psychological lift of being able to pay...

Activity idea: Have you been persuaded by these marketing techniques?

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Jul 14, 2019
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Behavioral Finance
Enjoyed reading this article from Jim Wasserman (he's on the NGPF podcast here) which highlights 20 ways that marketers nudge us to make decisions to purchase a given product.  See if you can match up these terms with the resources below: Bandwagon appeal (aka FOMO, fear of missing out) Bundling Flattery Freemium Aspirational buying After completing the exercise, answer the following: Why do you think these techniques are effective?  Which of the five listed above do you see most...

Reading List for 4th of July Weekend

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Jul 04, 2019
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Personal Finance, Behavioral Finance, Economics, Investing, Credit Cards, Employment
Happy 4th of July!!  In case you aren't attending a cookout or don't like fireworks, you can get a jump on the weekend reading list! Personal Finance From Investopedia – how to “Declare you own Financial Independence.” Michelle Singletary offers some sage advice for how to handle a delicat situation—when a friend or loved one in financial dire straits asks to move in. (WAPO) Cincinnati’s Julie Heath compares Ohio to the National results from the 2018 Financial...

NGPF Podcast: Doug Lynam Describes His Transition from Monk to Money Manager

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Jun 07, 2019
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Investing, Podcasts, Behavioral Finance
Monk, personal finance educator, Marine and financial advisor. That's just part of Doug Lynam's CV which makes for a fascinating podcast. Doug shares how each of these experiences has shaped him and ultimately led to his current role as money manager. You will also learn about the motivation and key insights from his current book, From Monk to Money Manager. Enjoy!   0:00~1:12 Introduction 1:12~6:46 Early experiences with money 6:46~9:27 First job and lessons learned 9:27~15:14...

QoD: Which of the following factors has the MOST negative influence on money habits: family, friends or social media?

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Jun 05, 2019
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Question of the Day, Behavioral Finance
Answer: Social Media.  Questions: Who has had the most positive influence on your money habits? Explain. What are some examples of how social media can lead to bad money habits? Explain a situation where a friend may have had a negative influence on how you manage your money? Click here for the ready-to-go slides for this Question of the Day that you can use in your classroom. Behind the numbers (Schwab Modern Wealth Report): Includes many interesting insights, including: Americans...

Savings QoD: How much (in billions of dollars) are Americans losing by keeping their money in low-interest savings accounts?

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Jun 04, 2019
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Savings, Question of the Day, Research, Behavioral Finance
Answer: $50 billion Questions: Why do you think Americans leave their money in low-interest savings accounts when they could earn more by switching banks?  Would your answer to the previous question change based on the amount of money you had in your savings account?  Online banks tend to have the highest interest rates on savings accounts. Would you trust your money with an online bank? Click here for the ready-to-go slides for this Question of the Day that you...

Reading List for May 31-June 2

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May 31, 2019
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Investing, Credit Cards, Behavioral Finance, Budgeting, Research, Retirement
From 403(b) plans to goal setting to digital decluttering and graduation advice...enjoy these weekend reads with your favorite cup of joe:  Thinking that annuity in your 403(b) is gouging you? You are probably right (from Barrons): "Teachers’ 403(b) plans are sold directly to individuals, rather than to employers, so the interest of the salesman was coming first. “Imagine you’re a kindergarten teacher and they’ve given you a 400-page prospectus about variable...

Reading List for Memorial Day Weekend 2019

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May 24, 2019
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Generosity, Behavioral Finance, Personal Finance, Investing
Enjoy these Memorial Day weekend reads curated by Beth with a few additions from Tim:  NGPF Podcast guest, Morgan Housel, is at it again with a valuable piece on "Realistic Personal Finance Hacks." My favorite: "A finely tuned BS radar that screams “red alert” when promises of abnormal gains without abnormal sacrifice are offered." It's a time for advice to graduates, here's a few that caught my attention (interesting to see the overlap since they come from two very...

QoD: What worries adults most when it comes to financial matters?

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May 21, 2019
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Question of the Day, Behavioral Finance, Retirement, Investing, Insurance
From Gallup: Questions: As you think about leaving high school, what would be your top money worry? How do you think your parents/guardians would answer a question like this?  What are steps that a person can take to reduce their worries when it comes to the first three items on the list? How much do you think these answers would change during a recession (we are currently in the midst of an ongoing economic expansion)?  Here's the ready-to-go slides for this Question of the Day...

QoD: How much do Americans spend monthly on subscriptions?

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May 15, 2019
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Question of the Day, Budgeting, Behavioral Finance
Answer: $237 a month Questions: Have you ever signed up for a monthly subscription? If so, what do you subscribe to and how much do you pay? If not, do you know any family members who have subscriptions (who knows, maybe you even use their Netflix account:) Have you ever heard someone complain about signing up for a subscription that they didn't even know about? What happened?  The research found that 84% of Americans underestimate how much they spend every month in subscriptions? How...

QoD: Which credit card feature is most popular with consumers: 0% interest, 3% cash back or $500 cash sign-up bonus?

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May 14, 2019
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Question of the Day, Credit Cards, Research, Behavioral Finance
Hat tip to Beth Tallman for pointing out this study from Bankrate which is full of great question material:) Answer: 3% cashback Questions: Why do you think the 3% cash back feature is so popular with cardholders?  Do you think the most popular feature might differ for those carrying a large credit card balance (i.e., you were not paying off your credit card bill every month)? Why or why not? Which would you choose if deciding between these three features? Explain your answer. ...

Reading List for a holiday weekend (April 20-21)

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Apr 19, 2019
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Financial Literacy, Career, Investing, Behavioral Finance, Payment Types, Retirement, Current Events
Financial Literacy NGPF is in this list of quality free curriculum (and training) for personal finance teachers—no excuse for not being prepared!(Marketwatch) Need some inspiration this weekend? Read this Marketwatch piece about Troy Murphy’s pursuit of spreading financial literacy. NGPF fellow Kerri Herrild’s Giving Project and Daniel LaSalle’s Philly Financial Cooperative are the beneficiaries of Troy’s work. Then listen to the podcasts Tim has done with all...

Podcast: Investing Panel with Jonathan Clements and Bill Bernstein in March 2019

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Apr 19, 2019
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Investing, Podcasts, Stocks, Behavioral Finance
What follows is a summary of the Investing panel discussion held at the NGPF Summit in mid-March 2019 in San Francisco. The all-star panel included Bill Bernstein, financial theorist, neurologist, and financial adviser/author, and Jonathan Clements, WSJ columnist, author, educator and blogger at the HumbleDollar.com. Apologies for the inconsistent sound quality.  Details 0:00~4:25 Introduction 4:25~12:42 The stock market game’s traps 12:42~24:20 Importance of friends and...

QoD: Which business has the most physical locations in the U.S.: McDonald's, Payday Lenders or Starbucks?

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Apr 07, 2019
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Question of the Day, Financial Scams, Behavioral Finance
Hat tip to Beth Tallman for the idea for this question of the day.  Answer: Payday lenders Questions: Based on this information alone, do you think that payday lending is a good business for the lenders? Explain. Payday loans carry interest rates as high as 600%. Why do you think that people continue to borrow from payday lenders despite these interest rates? What financial advice would you give to someone who finds themselves taking out payday loans on a frequent basis? Here's...