An Inexpensive And Easy Solution To Improving America’s Financial Health

An inexpensive and easy way to improve a country's financial healthKnowledge brings about wealth and power. If this wasn't the case, you wouldn't have families spending $20,000+ a year for their children to attend kindergarten through the 12th grade. If knowledge wasn't so important, there wouldn't be any private tutoring or a test prep industry. If education was no big thing, there wouldn't be a tremendous amount of pressure for kids to go to the best universities that cost even more.

The very fact that people spend so much time and money learning is the main reason why I love to write about personal finance. Achieving financial freedom while doing something purposeful along the way is often the end game for those who focus on education. Yet, not everybody has the money, time, or connections to get the best education possible. Therefore, to be able to democratize access to knowledge is quite fulfilling.

If you learn nothing else from Financial Samurai about the stock market, real estate investing, asset allocation, early retirement, entrepreneurship, tax minimization, behavioral economics, or debt management, at least come away motivated to improve your finances based on the target income and net worth charts I've created.

Given Financial Samurai gets roughly 1 million organic pageviews a month, I'm able to test new hypotheses that may help different types of people in various situations. The latest problem I want to tackle is figuring out an inexpensive, easy way to fix the financial crisis in America. I'm thinking simple policy changes that will strengthen our country for generations to come.

Hypothesis: Those who read more about personal finance topics tend to earn more, be wealthier, and lead happier lives than those who do not.

To test this hypothesis we will first compare overall American income and wealth numbers by race with the income and wealth numbers of American personal finance readers.

We will then see if the racial makeup of American personal finance readers reflects the racial makeup of the overall population. Finally, we'll then assess whether an overrepresentation by one race correlates with higher income and wealth and vice versa.

Key Assumptions:

* More education is better than less eduction.

* More reading is better than less reading.

* Access to the internet is available, low cost or free.

* Intelligence across races/ethnicities is more or less equal if you control for environment

* The larger the sample set, the more significant the data.

The Racial Makeup Of America

Racial Makeup Of America

Median Household Wealth And Income By Race

Let's look at the Urban Institute's calculation for average family liquid retirement savings by race. There's a massive difference between White, African American, and Hispanic retirement savings.

For those wondering why Urban Institute refuses to include research on Asian Americans, I've asked why and they've said they don't have enough data. Same response from Pew Research. When I dug further, they said Asian American income and retirement savings is equal or greater than Whites, so they don't want to talk about it. Hmm, makes  you wonder what their agenda is.

Average retirement savings by race

Now let's take a look at the racial makeup of America based on 2010 census data.
Now let's look at the income by race data provided by the Census Bureau. Asian median household income leads the way at roughly 30% higher than White median household income. African American and Hispanic incomes are lower, which correlates with the retirement savings by race chart by the Urban Institute. A 100% difference between the highest income ($78,000) and the lowest income ($38,000) is significant.

Income by race in America

Racial Makeup Of Personal Finance Readers

If we believe financial education leads to more income and wealth, then we can hypothesize there should be an underrepresentation of Black and Hispanic personal finance readers, an overrepresentation of Asian personal finance readers, and a steady to slight underrepresentation of White personal finance readers, depending how much over/underrepresentation there is.

Based on my survey of roughly 3,000 votes, there is roughly a 30% overrepresentation of Asian readers (35% FS readers vs. 5% of US population), a 5.3% underrepresentation of African American readers (7% FS readers vs. 12.3% of US population), a 11.3% underrepresentation of Hispanic readers (5% FS readers vs. 16.3% of US population), and a 15.7% underepresentation of White readers (48% FS readers vs. 63.7% of US population).

Racial Makeup of Personal Finance Readers
Click to fill out the survey at the bottom

How can we explain the 15.7% underrepresentation of White readers? Because the total must equal 100%, we can do so by observing the underrepresentation and overrepresentation of the other races. Further, the data from the Census Bureau is lagging by several years.

A 30% overrepresentation of Asian readers on Financial Samurai is startling.  Perhaps some of this can be explained by my site's name and the fact that I'm Taiwanese/Polynesian American. Everybody tends to gravitate towards people most similar to themselves. Just look around at all your friends, everybody in senior management at your firm, the people Presidents choose as their cabinet members and so forth. Homogeneity reigns supreme because we're all biased for those who look and talk like us.

But since 70%+ of Financial Samurai's traffic is from search engines like Google with traffic coming from all over the country and the world, and only 5 out of 1,397 of my article's have titles with “Asia,” “Asian,” or “Chinese,” one can assume a smaller percentage of the 30% overrepresentation is due to the site's name and my race. If my site had less than 10,000 pageviews a month, my site's name and my background will have a bigger impact. But my site generates over 100X that and is therefore, statistically significant.

Feel free to peruse my most popular articles and see for yourself. The most popular articles relate to retirement savings, investing, and earning more money. These topics are relevant to all races.

As Black and Hispanic Financial Samurai personal finance readers appear underrepresented and correspond with Census Bureau-provided lower income and wealth figures, and as Asian readers appear overrepresented and correspond with higher income and wealth figures, it seems clear there's a correlation between higher income/wealth and reading personal finance articles.

Savings survey of personal finance readers
Savings survey of personal finance readers with a median age of 34-39 are much higher than the median American household savings of ~$17,000 – $50,000 depending on survey

The Solution To Improving The Financial Health Of Our Country

Read more personal finance sites. It's that simple.

Anybody who started reading Financial Samurai since its 2009 beginning has probably crushed the average American in terms of wealth creation because we've been talking about investing in the stock market, bond market, and real estate market all this time.

Even as the stock market marched to new record highs, you could read articles talking about investment ideas at the top of the market to let you make even more money. You would have likely also started building your passive income portfolio to give yourself more options versus others who just rely on a day job income.

If you bought property in SF, NYC, Denver, Vancouver, Toronto or most big cities in 2012 with a 20% downpayment, your equity is up over 300%. Meanwhile, the S&P 500 is up over 70% during the same time period. You could have also learned to save a lot on mortgage interest expense by not taking out a 30-year fixed mortgage as we enjoy a permanently low interest rate environment.

The same cannot be said for everyone who disagreed with my 1/10th rule for car buying. You can literally read hundreds of comments from people who missed out on investing in this massive bull run because they had to drive a $50,000 truck that equaled 100% of their annual gross income.

Yes, we can hypothesize that those who are already financially savvy care more about financial information than those who aren't. But we should also conclude that over time, those who read personal finance websites tend to get richer than those who do not. How can this not be the case with all the motivation and knowledge gained?

To teachers and school administrators: Choose a handful of personal finance sites or main stream financial sites for your students to follow. Hopefully the sites you choose tell stories that make personal finance more interesting and applicable to real life.

To government officials: Make it mandatory for every student to attend and pass a basic personal finance course before they graduate from high school or college. You can't count on parents to teach all the fundamentals of personal finance when they haven't been taught themselves. There is no downside to empowering our youth to learn about the pitfalls of credit card debt, how to write a check, and the importance of compound interest. Why should learning chemistry be more important than learning how to be responsible financially? Finance is a part of our everyday lives.

To personal finance writers: Don't compromise on quality. Money is too important to be left up to pontification. Find an expert in his/her field to guest post if you don't know the ins and outs. Be open and honest about your wins and losses. Tell stories that are applicable to real life situations.

To those who want to help others: Spread the word about your favorite sites, especially to those who you think need the most help. There are personal finance sites written by every single race, age, and gender if you feel more comfortable reading articles by someone who looks and talks more like you. There are over 100 reasonably high quality sites that will entertain, educate, and motivate you to improve your finances. Here's a directory of over 1,000 personal finance sites that are free to consume.

Educational attainment by race
Correlation between education and income/wealth

Education Will Improve Financial Health

You don't have to be rich to get a great education because access to information is now free. I wish I was reading personal finance sites back in 2007. If I did, I wouldn't have over-leveraged myself into a vacation property that ended up losing half its value a couple years later. I wish I read even more about entrepreneurship. If I did, I would have started this site years earlier and left the salt mines of Corporate America sooner.

Soak up as much information as you can and share your favorite articles with as many people as possible. Personal finance sites aren't going to eradicate poverty. But imagine if every single person in the country read a personal finance article at least once a week. I'm absolutely positive we'll see a tremendous improvement in our finances over the next generation. Once you have your finances sorted out, you can focus your attention on more important things such as family, health, and happiness. And when your finances are really good, you can even spend your time and money helping other people!

To sign up to receive FS posts in your e-mail every time they are published, click here. Frequency is 2-4X a week. To sign up for my private newsletter that has more nuanced information, click here. Frequency is every 1-2 weeks.

For those who have the joy of going back to school, share this no-brainer idea. I'd love to hear what your school administrators or teachers think. My mind is hardwired to come up with solutions. And this one is a no-brainer.

Readers, why do you think the government and schools don't do more to highlight free personal finance sites to help our country get financially healthier? A good personal financial site makes financial education more entertaining and applicable to real life situations. If you don't believe in my hypothesis and solution, please share why. 

109 thoughts on “An Inexpensive And Easy Solution To Improving America’s Financial Health”

  1. I often wonder how large a role education and particularly, financial education helps citizens make better choices. I guess my curiosity is more related to socio-economic factors and cultural norms in lower classes outweighing large benefits provided by financial education. Those in lower classes who also have cultural upbringings downplaying the importance of financial security and/or education have so much more working against them then say an low income immigrant family who has the cultural background of valuing work, financial planning, and education. So even for those in lower income brackets, is it easier for some groups to move out of that class due to family values? Or do you believe every one has equal opportunities to put their money to work and education is the main missing factor?

    I’m so interested by what you discovered about asian americans being excluded in those reports! Wow, I’ll have to go dig into this myself some time :)

  2. After getting inspired by your blog and countless others like MMM, ERE, Mad Fientist and Jim Collins, I decided to document my own personal finance journey as well. My case is a little different as I am on a work visa which gets over in 3 years and then I’d have to return to my home country. I am in wealth building phase and hope to be FI (in my home country) by the age of 35 so I can focus on endeavors I truly care about!

  3. I have always wondered how I ended up understanding basic money concepts because my parents never discussed any of it. This article reminded me that in middle school (early 80’s) I would stay up late to listen to the Sally Jesse Raphael show on the radio. It didn’t come on until 10, so I just listened to the radio playing Bruce Williams!!! OMG I learned so much, even when I didn’t understand it all. I haven’t thought about that in years, just wow. Thank you Bruce!

  4. Reading a personal finance site doesn’t help those that earn so little that they have no excess after paying bills. If one works at Walmart a personal finance site won’t help that person. It does help those with excess, or unknown excess. Uber and Lyft is one of the best things that have entered into the economy. Unfortunately as easy as the jobs that both have created have entered the economy those same jobs will also one day go away. Anyway, the creation of jobs and the improvement of unskilled labor and wages is a key element to improving financial health. Strengthening of unions would also be a positive. Forcing those that have been hoarding cash for decades to pay more taxes would also be a positive.

    As for your poll numbers, you have written a couple articles about your vacation to Asia with several Asian countries sprinkled through out the articles. Those articles alone will increase your Asia readership. Write an article about Alonzo Ball’s 500 dollar sneakers and the same thing would occur with your other lower readership poll numbers lol

    1. Got it. So you don’t believe there is a correlation with financial education and wealth. Like no way out. What is your background and what are some of your suggestion to help folks directly?

      I may take you up on your offer to see if writing about Lonzo ball’s shoes increases my readership for a certain race. Which race would that be and by how much?

      Will be cool to 6X one race and build more diversity and readership on FS! Thanks for your suggestion.

      1. The way to help folks directly is through the creation of jobs. Personally have an idea that been thinking of for a while but haven’t started working on it yet. It has large scale potential and would be economically helpful.

        Anyway, the Alonzo Ball article would target NBA fans and financial readers but blacks, hispanics might stumble across it via SEO.

        1. Wonderful. What is stopping you from starting a company and hiring people? It’s a rewarding experience that is mutually beneficial. I’ve come across too many people who have ideas but don’t take action and then end up wondering “what if.”

          With my current number of visitors, do you think my Black and Hispanic readers will double (forget about 6X with the Asian demographic) if I write an article about Lonzo Ball and the NBA?

          Before I get started, can you let me know if you have a digital marketing background or something related with some case studies before I get started? I’m always happy to try new things and take advice from experts in their field.

          Btw, wouldn’t writing an article about taking a trip to Asia attract non-Asian readers since Asians already live in Asia or have been to Asia more than other races?


          1. Don’t think it’ll be “what if”. There hasn’t been a black tech billionaire yet need to be careful about when and how it’s done. Haha Always felt that the first black tech billionaire will be older in age than zuckerberg for multiple reasons (not saying that it will be me). I’ve already told you my background the last time you asked.

            If I was planning a vacation to Bangkok, I might run across your article. All I’m saying is that if you wrote one targeted article every few months towards those ethnicities that the numbers are low on they would come up over time and they might like it and stay.

  5. Eyes Wide Open

    I would consider myself a “silent reader” who frequented this site for many years. I still compare my financial progress against the “Above Average Net Worth” figures, along with other great advice.

    Sam, your knowledge of PF is vast and authentic, however every FS article that brings race into the picture seems disingenuous and quickly reveals the biased, troubling opinions of some of your readership.

    If we look at the key assumptions of this article as well as your recommendations, are they not all universal? Is there some recommendation you’d provide to one group over others? If so, it calls into question the choice of focusing on race, other than click bait.

    1. Sorry you feel this way. A click bait article would have a controversial title and really thin content. This article is 1800 words long. The goal of the article is to indeed provide a simple solution to help people get to head. All this data is useful to come up with a conclusion.

      Do you feel very uncomfortable about your race and education hence your comment? Tell me more about yourself and why you decided not to add value to the discussion and offer suggestions to help others in this topic.

      Everybody has a story to tell and I’m interested in yours. There’s always something behind a comment that is a reflection of the reader. Thank you.

  6. “I believe that every race has similar cognitive abilities”

    “There is a mean difference in black and white scores on mental tests, historically about one standard deviation in magnitude on IQ tests (IQ tests are normed so that the mean is 100 points and the standard deviation is 15). This difference is not the result of test bias, but reflects differences in cognitive functioning.”

    – Charles Murray (author of The Bell Curve)

    I personally like to believe that unicorns exist but sadly they don’t.

    1. Thoughts about controlling for environment? As well as having white people take a test that was created by non white people in a different country?

      I think you’ll be surprised to learn that people of similar origin of the creators of a test tend to score better. Look at the studies done for the simple SAT test. Good luck trying to score as well on an IQ test in China.

      I think you will be surprised to see a correlation with test scores and children who have parents who are wealthier than average or who have two parents in the household.

      And at the end of the day, even more reason to help others if you believe what you say is true.

      1. Charles Murray’s research on IQ is sound. I suggest you familiarize yourself with his work. Especially the tests. There is no bias.

        As for the SAT you are 100% correct. Many research papers have been published showing it is biased.

        IQ is genetic and sets the baseline. Studies have shown that the diet of young children has an effect IQ. Maybe being wealthy affords the food that provides the advantage? Maybe attaining wealth means the parents are above average intelligence and therefore passed those genes to their children?

        There are also many studies showing that the largest impact from schooling occurs until about the third grade. After that the “mold” has been cast. Tell your great state of California to stop wasting money giving away free college and focus those funds on the first few grades. Sadly people like handouts and children can’t vote.

        All the knowledge you need to be a millionaire is on the internet. Free, accessible and easy to find. It’s not the lack of knowledge holding people back.

      2. This is simply untrue. Please do research on culture fair IQ test results which consistently show the patterns that have been discussed. On tests more culture fair and with higher g factor loading, the gap between Europeans and African-Americans actually widens. One is fine to think wishfully if one so chooses, but one is not entitled to make up facts to align to such wishful thinking.

        And before launching the typical tired ad hominem attack, I am not some Eurotrash or toothless redneck; I have been educated at the top undergrad and graduate schools in STEM, have an IQ > 150 as measured by Stanford Binet psychological assessment, and have a net worth approaching 8 figures…I am just tired of this pc nonsense. When James Watson and James Damore are fired simply for hypothesizing politically incorrect postulates, someone has really gone wrong with society and people need to push back.

        1. Thanks. Please feel free to provide the research that you are commonly referring to. Let’s get research conducted by all races and cultures to keep things balanced.

          Do you have any inexpensive and easy suggestions to help other people with their finances instead of just saying one race is more intelligent than another? It’s good to always focus on solutions, so if you have better solutions please share given your educational background.

          Do you feel you could’ve done better with your finances and life given your education and age? Is there something that is bothering you that you would like to share? I’d love to know more about you. Thank you.

  7. I have a strong suspicion the reason the Asian income is higher is because most are recent immigrants (last 50 years) and they are arriving in higher income regions in the United states with high skills.

    I think the Asian income bonus will fade out over time.

  8. Grant @ Life Prep Couple

    This can be said about anything really. People that read health and fitness blogs tend to be healthier and fitter. People that read about golf tend to be better golfers than those who don’t. I know I found you because I was trying to figure out if should focus savings towards 401K or IRA. People that aren’t already interested in fiances don’t find you because they aren’t searching.

    I agree that much more needs to be done to educate kids about personal finances but I’m not sure if I want the government doing that. I tend to find them incompetent at best so it seems unlikely they would teach anything about finances that I would agree with. Anything would probably be better than nothing though.

    1. The government is smarter than you think. The reason why they withhold taxes from each paycheck is because they know that individuals will not pay their taxes at the end of the year or whenever taxes are due. It’s a casual safety net for them to collect money from us.

      It’s the same thing with implementing mandatory personal finance education in high school or college. It might not be super affective, but with millions of people that ever you’re having at least basic personal finance knowledge, you better believe that more people will be well off in the future.

  9. Your fourth assumption is most likely incorrect, based on centuries of empirical evidence. If you really want to explore the reality of racial differences in averages, which anyone who professes a belief in Darwinian evolution should expect given the separation of human populations for thousands of years in environments with distinct selection pressures, I suggest reading A Troublesome Inheritance (former science writer for the NYTimes Nicholas Wade), The 10,000 Year Explosion: How Civilization Accelerated Human Evolution (a 2009 book by anthropologists Gregory Cochran and Henry Harpending), or the latest white papers from the science community or work at the Beijing Genomics institute. According to Scientific American, the human brain uses more energy than any other human organ, accounting for up to 20 percent of the body’s total. To deny the possibility that evolutionary selection processes acting upon separated human groups over tens of thousands of years would be limited to trivial traits like eye and hair color but would somehow spare the most energy intensive organ, i.e. the brain, seems as foolish as those on the right who believe in creationism.

    To be clear, North Asians score highest on cognitive tests, have lowest level of incarceration and lack of impulse control and time preference, all behaviors that would point to them earning the highest incomes. This in turn is followed by Europeans, then South Asians, Hispanics and finally African Americans and lastly Africans. If one applies Occam’s Razor, what is easier to believe, an ether of Asian and White privilege is depressing the achievements of others or that there are different averages.

    Note that all groups have their own strengths – Europeans are by far the most innovative as even a cursory glance at the scientific advances and innovations that have created the modern world would clearly demonstrate and there are likely alleles that will be discovered that correlate to such innovation capabilities. Note this is despite their lower level of intelligence vs. North Asians as their overrepresentation. African Americans are clearly the most athletic group, as their dramatic overrepresentation in the NBA and all sports for which speed and leaping ability facilitated by a higher mix of dense, fast twitch muscle will attest.

    Note these are averages, and any person of any group can be anywhere along the distributions which are highly overlapping across groups. However, as anyone who knows basic statistics, small differences in averages result in big differences in the extremes assuming similar std. deviations. Examples would be every day observances we can see all around us, like despite only a 3-5 IQ point difference between European-Americans and North Asians, Caltech is ~42% Asian or the ~74%+ African American in the NBA despite the desire of so many European-American kid’s dream to play NBA basketball someday (it is definitely not cultural)!

    Isn’t this human diversity something to celebrate vs. to shun and deny? Nobody should be a supremacist, white, Asian (and I would note the Asian supremacist are by far the most common variety please travel to China, Korea and Japan if you don’t believe me), or African American. Every group and individual is good at different things. And if we don’t like these differences, then we have to acknowledge reality and quite talking about white privilege and start doing what the Chinese are doing and start using CRISPR technology to uplift the human race so all people are Caltech level geniuses, have Mother Theresa level of empathy and kindness, have that Protestant work ethic, and have LeBron’s athleticism….this is not hate this is an attempt to deal with reality and let the data lead us where it must. Otherwise, other countries will not be foolish enough to live in this false reality and will leap ahead of us. Whether the west wants it or not, designer humans are coming and my bet is the future will belong to China, who will certainly not be concerned about western morals and ethics about evil nazi eugenics and will create a race of 120 IQ+ people who will dominate the planet while the west worries about safe spaces and hurting certain groups’ feelings.

    1. Do you think it is incorrect even if you control for environment?

      I believe that every race has similar cognitive abilities if they have an environment that allows them to learn and explore. But if you compare one kid who lives in a nice neighborhood with private tutors and stable parents do another kid who lives in a foster home with a lot of violence, I think it is obvious the kid with more stability has a better chance of getting ahead.

      But if you compare one kid who lives in a nice neighborhood with private tutors and stable parents do another kid who lives in a foster home with a lot of violence, I think it is obvious the kid with more stability has a better chance of getting ahead.

      Therefore, I think it is our duty for those who have the ability to share our knowledge and the time to make effort to help those who do not have the same opportunities. I often wonder why I continue to write so much and spend so many hours, and it always comes back to giving someone a chance and hearing back from that someone years later telling me that they’ve improved their life for the better.

      1. Oh, I wish it were so, as the world would be much better off. There have been numerous twin studies demonstrating that environment cannot explain these differences away, and the latest and greatest scientific research is showing that genes and non-shared environment play a vastly bigger role in socioeconomic outcomes than shared environment. Intelligence and industriousness finds a way to succeed, as illustrated by the success of North Asian immigrants in the face of adversity in multiple western countries and the relative failure of Africans regardless of where they are in the world, whether in the west, self ruled countries like Haiti or Africa itself and over vast periods of time, including the majority of African history which predates European colonialism.

        1. quantakiran

          Heretic, I have to disagree with you on the capabilities of races. Admittedly I haven’t looked up the sources (but I will because genes fascinate me!) you have quoted but I know of plenty of smart people from all races. It seems to me that opportunity and exposure to the bigger picture plays a large part in what a person does.

          Africans created the first great ancient civilisation, Ancient Egypt. This was followed by the Asians (Middle East, India, China) and then Europe and South America.

          I think the lack of invention by races and indeed progression of the human race as a whole, is because we are too busy behaving like a$$hole$. Instead of mimicking our bodies and working together like a giant multi-celled organism, we act like individual viruses.

          So instead of having a better way of life for everyone, we have incidents such as racism or road rage where people fight over a careless slight and some tar, etc.

          1. You are of course correct when you argue that there are smart people of all races, but you are not addressing my points by claiming so. I of course agree with you on that point as I noted the high level of overlap between groups. What you have not disproven is my point about the differences in average. Of course there are many africans who are smarter than Chinese or Koreans. However, the average IQ of Chinese is much higher than that of Africans, and that results in the unequal outcomes at the extreme end of the distributions. An example is Caltech undergraduates, who are probably on average IQ 140+ type people. Note that 42% of Caltech undergraduates being Asian even though they are only 5% of the US population vs. African Americans are only ~1-2% of Caltech despite being 12% of the US population. Note too the 500 point SAT handicap vs. Asians African Americans are given.

            You are incorrect as far as ancient Egyptians are concerned. Recent DNA analysis of Egyptian mummies has recently been conducted and found that they are closely related to ancient Middle Easterners, i.e. Caucasians similar to Greeks, Syrians, etc., who inhabited the ancient Mediterranean, and not ‘black’ Africans. Proof below:

            I agree people can be jerks, but arguing should be devoid of emotion and let the chips fall where they may. I am European and nowhere am I saying Europeans are the most intelligent so no skin in the game on my part. Instead, I am just arguing that nobody rationale can really believe that Japanese are interchangeable with Nigerians….there is absolutely no evidence to support this. Reality is not unicorns and rainbows, sorry mate!

            1. quantakiran

              Thanks for the link Heretic! That was fascinating to read. I do have to point out that the mummies tested were from 1400 BCE to 400 CE.

              The pyramids and the sphinx were built circa 2500 BCE. And if you look at some of the statues from that era, Nerfetiti’s bust, etc., you will notice skin colour as well as typical African features. Black Africans built Ancient Egypt and the newer Great Zimbabwean ruins.

              Maybe once I get round to reading the sources in your first comment I might become convinced of your opinion.

  10. Reading blogs and books about personal finance have absolutely changed my own habits. That’s why I’m writing my own. I’m starting from a deep hole, but I think I’ll get out of it. I hope that if folks see that I can do it, that they’ll believe they can as well.

  11. I recently engineered my layoff into early retirement. I have tried to share saving and investing knowledge with friends and coworkers. I have given free investing seminars on implementing modern portfolio theory to investment clubs. I have failed to break through, to motivate action. Why?
    Information was not the missing ingredient. Interest, self control, planning and patience seemed lacking.
    The recipes for good health and wealth are straightforward, yet people choose not to execute. I suspect the underlying issue may be mental health related (cognitive dissonance). Have you considered exploring that topic?

  12. Adam and Jane

    I like your ideas of more financial education. It will help some people. Unfortunately, more education early in life does not mean a lot more people will listen or take any action. It comes down to the individual. The people that read PF blogs are different. We want to be educated in different forms passive incomes and investments. I don’t know of any co-workers or family members that read PF blogs.

    My family, aunts and uncles are emigrants and they all have there own businesses and many of them have rentals. My father and uncle alway lost money in the stock market. I knew from an early age that it was too much work to run my own business or to manage tenants. I got burnt during the dot com days and avoided the stock market since.

    Early financial education would have help me to learn about passive income and financial independence. I wished I knew about muni bonds in 1987 when I started working after college. My wife and I alway knew about 401K and we were depending on our pensions. Earliest retirement age for us was 55-59.5. I did not know and read about FI until 2010 when I heard rumours of laidoffs and a re-org that would have affected me in a negative way. In 2010, I had to scramble to find a way to generate income since CD rates were SO LOW. I told my wife that I would have to quit if I was re-orged to that bad manager.

    My mentor told us about muni bonds around 2008 but we did not take any action until I was forced to in 2010. I was moviated by fear.

    In 2010, I told 14 co-workers about the re-orgs and shared our plans to buy municipal bonds to generate passive income BUT NO ONE listened to me! One co-worker said being FI is fine but what do your want to achieve in the company? Huh like being a Senior Director? The point of being FI is that I don’t have to work anymore. He did not get it. Whenever I see him at work he would mock me for buying muni bonds and my pursuit of FI. Two years ago, he completed his MBA and my wife and I have a muni bond portfolio that generates 87K tax free every year. Screw him!

    I told 17 family members about muni bonds and NOT ONE of them bought any!

    In 2012, we had 350 people laid off and NONE of my co-workers took any action. They continued to buy new cars and a larger condo or homes.

    In 2016, 500 people were laid off and now my co-workers were in panic mode. For many, it was too late to invest. Then 6 of my co-workers expressed interest in munis and I showed them how to create an account and to pick individual municipal bonds. Only one person had enough savings to buy enough muni bonds to generate over 10K to supplement his small pension. I worked with this co-worker for over 2 years to reduce expenses, buy munis, purge his stuff, sell his house, relocate to Florida. Now he is FI and retired.

    I noticed that the majority of people (34 co-workers and family members) that I spoke with did not take any action. Only 6 take some action when they were forced to. Only one was extremely fearful and was committed to being FI. I too was motivated by fear and was forced to take action.

    I will try to teach my niece and nephew, who are in their early teens, the concepts of passive income, FI and municipal bonds.


    1. If only I invested a million billion into municipal bonds in 2010! Ah.. .that would have been so nice. And at least, if I had been more knowledgable and aware of a site that introduced me to muni bonds, I’m sure I would have invested at least 5% of my net worth in munis because I was looking for safe havens that I understood. A 7-year, 4.1% CD was my alternative. Better than a poke in the eye.

      Most people don’t take action… actually 97% of people don’t when I analyze the millions of datapoints from my website. But math is fun, and all you have to do to get the 100 people you care about to take action is to show / tell / do 33.3X more.

      Keep on pushing.

      1. Adam and Jane

        That is why I share what little that I know on munis on your site and on retireby40. I think munis are a great alternative to CDs especially when CD rates are so low. IMO, It is good for conservative investors. I was not aware of municipal bonds until my mentor introduced them to us in 2008. Even my accountant that my dad used for over 30 years did not tell my dad or me about it. My accountant told me recently that he had some munis that pays 7% tax free! WTFReak! Why did he keep it a secret until we bought munis?

        I believe your 97% stats of people that don’ take any action. Only one out of 34 people that I shared my info with, actually took REAL action to buy a significant amount of munis to make a financial difference in their life. 1/34 is 3% so 97% of people that I tried to help also took NO action.

        I am actually shocked at your 97% stats of ppl taking no action but it matches my stats too! I don’t feel so bad. I am just happy I was able to help one person reach FI. My mentor helped us so now I pay it forward to help others..only if ppl would listen.


        1. Fascinating your statistics it up to my statistics. Thanks for sharing.

          At the end of the day, everything is rational. People won’t want to change until something is hurting them enough to make them want to change. So in that sense, 97% of people are doing just fine.

  13. Education on financial literacy is important, but also education o. the grind you have to do to actually earn money. the post about the janitor was a wakeup for me in that either i had to earn extra income through overtime at my job or put in overtime as an uber lyft driver or one of those type positions. you are not gonna get rich working only 40 hrs a week. about 60 pct wage earners earn less than 40,000 a year so we have to teach about multiple income streams for everybody. i had a coworker at my old job. he was single, lived with his parents, didnt have any bills or kids. I always asked him as to why he wouldnt want to do uber a couple of hrs everday just to make a few extra bucks in cause his parents put him out or if he wanted his own place. He always had some excuse as to why he didnt want to earn any extra $$ after his job. Some people dont really want it sometimes but if you show them the benefits of do extra when youre young it can really help them learn about how to become financially independent/

  14. Sam, I’m a reader of your site for a long time and since my financial knowledge has progressed (also thanks to you), my life quality has also significantly improved. So from this perspective I agree: better financial education = better life.
    But let me be the devil’s advocate:
    – better financial education means less spending on useless things, less debt etc.
    – less spending and less debt means less profit for companies, banks etc.
    – less profit means cost cutting at companies
    – cost cutting means more unemployed pple
    – more unemployed means even less purchase power, further decreasing profits, fall in rental and property prices
    – the above means less profits or even losses on investments

    So my question: Do you think there’s a thing like too much financial education to too many people…?

    1. I don’t think there’s any such thing as too much financial education or education in general.

      Education is what will empower the individual to live the life they want. I see this very clearly now at age 40, compared to when I was in college and couldn’t understand what the point of education was.

  15. This is one of the reasons why I created my blog, to share my experiences and bring awareness that personal finance should be a crucial for everyone. Even if you do not like dealing with numbers, at least have some basic knowledge of saving for retirement, investing, and ways to save in your everyday life.
    I find it weird that the Urban Institute does not think their’s not enough Asian representation in the US. Doesn’t Asians represent at most 10% of the racial makeup in the country.
    With lack of education in high schools of personal finance, I believe they do not want to provide any teachings of PF because they do not want to provide potential young investors to get ahead of the market and have the knowledge to understand investing. Probably believe that you should go to college and build up student loans so we can be like the rest of recent college grads and catch up on paying it off. The US is so consumer conscious that they believe debt is the way to go instead of getting ahead in the race to save and invest.

  16. Even though my professorial duties have nothing to do with finance I became a certified financial education instructor to offer more programs in personal finance. I would make a financial literacy course mandatory if I could. And it would be at the end of their time in college.

  17. Albert @ Mr. Smart Money

    I wish there were more studies to parse out the underlying reasons for the seeming over-achievement of Asian Americans when it comes to education/income.

    I like the simple solution you posit – I think it’d be funny to see grade school kids coming home with the assignment: “Read and summarize 10 articles from, etc.” LOL.

    Maybe one day?

    I’m gonna use Occam’s Razor for your question, and assume the simplest answer for why schools and governments don’t put an emphasis on personal finance (in general) is that they simply don’t care.
    They all have “bigger fish to fry” in their eyes. Govts more worried about N.Korea, Russia, and China. Could probably care less about education…

    To see what people really care about – see where they spend their money. Spending on education is paltry… sad but true.

    1. That would be funny, and frankly, A no-brainer to try to understand what are the derivative meanings of my posts. I often try to embed three different lessons in each post, but they aren’t obvious unless you start really analyzing the writing.

      And then I think it be fun for the students to try to dissect the comments, which are always a reflection of what someone else is or is thinking eg angry comment is from an angry person, arrogant comment is from an arrogant person, lovely comment is from my lovely person etc. I’ve witnessed this phenomena 1000+ times. Whenever there is a nasty or critical comment, there’s always something bothering the reader if you can dig deep enough. I always try, but they often don’t reveal understandably.

  18. I’ve been investing in the Stock market since high school and only started reading PF books and sites within the last 8 years. Wish I had done so from the very beginning and not have to learn the hard way.

    And now I am constantly nagging my boys to read your site or other PF sites, but, I think I’m falling on deaf ears. Hopefully some day they will see the light.

    1. Thanks for nagging Dick. Maybe they’ll come around when they’ll have to survive on their own with no help from you.

      Generally, people don’t start reading about personal finance until they have a financial dilemma or difficulty. The best way to learn is by experiencing trauma.

  19. Albert Jeans

    Actually when I first started reading Financial Samurai I had no idea that you were Asian American. So I’m not sure that Asian readers read your blog because of that. It was the content which attracted me (I’m Chinese American).

    So true about people spending beyond their means on quickly depreciating assets like cars. I live near some Title 8 housing and it’s amazing how many people there drive expensive cars. They’re probably paying high interest loans on those cars, and thinking that it’s okay to splurge on a car since they can’t afford a house. I guess there are no spending requirements to qualify for Title 8 housing, only income requirements.

    1. Thanks for the feedback. That’s what I’m hoping to do, make my content colorblind.

      At the end of the day, who doesn’t want to achieve financial freedom sooner rather than later?

  20. I agree.. more financial education is better.. but i think you are forgetting an underlying exogenous variable here.. people who come to your site, are probably already more interested in personal finance, and thus are knowledgable, and thus they come to the site, to gather more knowledge. However, the underlying variable is that they are interested, and willing, and capable, and thus they have a higher income. Reading financial sites, only enables this further, buts it’s not the significant factor that changes their wealth, its their original behavior that led them to your site.

    1. I didn’t forget. Most people who come to my site are from search engines, and most people who use search engines have a question they need answered. I’m actually very knowledgeable about online marketing and SEO. Are you in the digital marketing business? What else can explain a 600% over representation of Asian readers on the site and the corresponding higher income and wealth numbers?

      Are you not a strong believer that education helps and power someone to make a better financial decisions? If so, why not? What is your background? Thanks!

  21. Working Optional

    I strongly feel that financial ed in high school is desperately needed. While STEAM+ is great, we really need basic finance skills – not just balancing a checkbook type stuff but also basic concepts about interest, savings, debt and what a stock market is.

    I’ve been catching up on The Wire (HBO series) and in Season 4, Roland “Prez” Pryzbylewski is able to teach a group of highly dysfunctional kids basic skills and teach them in a way they understand: Maybe that’s the kind of ‘unorthodox’ approach we need – either in the public school system or as a non-profit.

  22. Kristy Clark

    Education starts at home. If parents are not teaching personal finance, then it will not work. And even still, children, just like adults have different personalities when it comes to finance. We talk about money and saving ALL the time at home. We purchased both of our kids piggy banks that have 4 sections: Save, Spend, Invest and Donate. Our 11 year old purchased her first stock when she was 7. Our 8 year old has yet to do so and he SPENDS everything he makes/earns or is given. We thought we were teaching both of them the same things, but unfortunately, I have a feeling that our 8 year old will be a spender and our 11 year old will end up a saver.

    1. I can’t wait to get my son a piggy bank! SO FUN! :) And of course educating him on economics, the stock market, bond market, real estate, risk management, and asset allocation.

      Glad your kids are getting some good PF training at home! Yay mama.

  23. Longtime fan here. Teachers themselves are helpless with personal finance. Please read What other profession has salesmen hawking two percent fee 403b annuity plans in the lunch room? Not to mention the surrender fees!

    I work with a lot of people paying 3-4%! Makes no sense to even use a 403b tax deferred vehicle.

    Would love you to make a post on the unfair policies allowed in schools regarding 403b plans.

  24. I like your blog because it’s practical, and our backgrounds are similar enough where what you have achieved seems within reach for me. I will say that for a lot of other people, just getting by is hard enough, so talking about wealth creation and retirement is not even something on the radar. I’m not saying that financial education isn’t critical for everyone, that seems obvious enough and our educational system needs a serious overhaul if kids today are going to stand a chance in this brave new world. But as for race and income/wealth, I applaud you for not shying away from controversy (or maybe that’s the point as a blogger!) but that is a far more complicated issue than you are making it out to be and you can see from the current state of affairs in this country that there are a lot of opinions about it. I think a lot of white and Asian folks just seem really tone deaf when it comes to this. If the solution for income disparity among different groups in this country were as simple as reading a blog or telling people to just pull themselves up from their bootstraps, well then why hasn’t that worked? I think it behooves us all to figure out how to help all Americans succeed financially and to implement real policies that actually work for lower income folks, particularly groups that have experienced discrimination in the past. I’m not at all suggesting that liberal and/or progressive policies are the answer, it’s not clear to me that they’ve actually worked that well, but I do think that structural racial discrimination is a real thing and needs to be targeted specifically.

    1. I’m definitely tone deaf, which is part of the reason why I write these articles to be less tone deaf. Many people like you believe Asians are not a minority in America (Urban Institute, Pew Research), even though Asians are only 5% of the population. But I urge you to look at the data.

      What are some SOLUTIONS you are suggesting to improve the financial health of all Americans? The thing with me is, I don’t like to just talk about problems. I want to focus on data and solutions.

      “Behooves us all to to figure out how to help all……” – Are you saying you don’t think education about personal finance wouldn’t help people at the margin? How else can you explain the correlation with education and income/wealth?

      Dean, tell me about your background. Let’s hear some solutions and what YOU are doing to help. Thx!

  25. It is in ‘their’ interest to keep you a 0% saver, debt-laden consumer. Of course they don’t push it.

    Imagine if everyone saved 20% post tax? The economy would tank i’m sure…

  26. I always try to understand why personal finance isn’t a mandatory subject in school, and part of me thinks the “system” actually benefits from people being poorly educated financially, and as such don’t really want to teach everyone how to be careful with their money. People making crappy financial decisions actually benefits business, encouraging growth, inflation, GDP, employment etc. If everybody was diligent and responsible with their money, I can only imagine what would happen to society as a result.

    In that regard, maybe it’s best for those currently reading personal finance blogs that the rest of society remains ambivalent towards managing their money effectively, as it is these people that actually benefit those that do take care of their money. I know my stock investments are greatly helped by all the people using consumer debt to make luxury purchases they don’t need, for example.

  27. Chicken Or Egg? I love the initiative, and agree with your suggestions. However, I do wonder whether folks who read PF blogs get wealthy because they read them, or do they read them because they’re more responsible, and already on their path to wealth?

    1. Bingo. I don’t think it’s simply an education issue, although I applaud the suggestion and support more financial education (although NOT at the federal policy-level) over less. I’m an executive in healthcare, and there’s a similar suggestion about personal health and responsibility that ties very closely to socio-economic status, this being that ‘education’ is the key to improving our nation’s poor health. Is lack of education a factor, just like it’s a factor in personal financial well-being? Sure. But ultimately it comes down to personal responsibility (action), even when you know what the right thing to do is (education).

      I’ll stir the pot a bit and relate this analysis to the similar questions raised in the Google ‘Manifesto’. We see these types of social discrepancies by gender, race, age, etc. but have seemingly become too sensitive of a society separated by idealistic polar politics to have open and honest discussions about the root causes and drivers. Similar to the argument in said manifesto, I don’t believe we can solve these issues without first honestly understanding the problems. Otherwise, what we get are federally-mandated ‘solutions’ that cause more harm than good.

      Even in Sam’s article, to suggest that parts of big, bad racism can be rationalized* by “Homogeneity reigns supreme because we’re all biased for those who look and talk like us.” is NOT a position that your typical politician/person of influence is willing to take.

      *I’m in no way rationalizing the extremes of racism that we’ve been seeing in Charlottesville, etc. There’s the bias Sam is referencing, and then there’s unfounded hate.

  28. Sam, your article about above average net worths kicked my ass. I thought to myself, I want to be above average, too, and I started figuring out ways to get there. If I hadn’t read it, and read Mr. Money Mustache, too, I’d probably still be only saving 15% of my income. Thank you for running such an awesome site and for being so generous with information and advice.

    1. It’s both. I’ve had so many readers over the past 8 years who were clueless, write emails of thanks for helping them invest, buy a property at an appropriate price, manage their debt, building side incomes etc. these readers all said they would never have done any of these things if not for getting into PF reading.

      We just went through the biggest bull run. Those who mobilized assets won. Those who splurged or just held cash lost. But, there’s always the next 20 years!

  29. Awesome points, Joe! For as much as I recommend PF sites to those that might not be on the best track financially, the disinterest is generally pretty high.

    Regardless, I do agree that reading them has helped to increase my knowledge tremendously – not to mention the motivation. It’s sad that finance in general isn’t a mandatory part of the curriculum in our education system. It’s rare to find schools or classes that do a good job with this.

    — Jim

    1. Jim @ Route To Retire

      Haha, that “Joe” part was me replying (unsuccessfully, albeit) to Joe at RetireBy40… lest anyone think I was referring to Sam by the name Joe! :-)

      — Jim

  30. The map to wealth and a solid future is clear. you may move the needle for individuals but the stratification of race in the data you have above will stay the same no matter what, unfortunately. Any study of deferred gratification, future time orientation or intelligence will show the same racial rankings that you see above. Hopefully over time the outliers will have a positive effect on the cultures that don’t value hard-work and education

  31. PF was not caught in school and I think that’s a giant conspiracy of some kind. Some loaded lobbyists are throwing big money to keep the poor in the dark. The greatest equalizer is the internet. Growing up lower income, there’s no knowledge around me that was worth learning. But I go on the internet and there’s everything to enlighten me.

    It’s weird they don’t include Asians! What’s not enough data? There’s almost 5% of us. The harder part is separating out the definition of Asian but don’t spit on my cupcake and call it frosting. I want to be represented.

  32. Reading personal finance blogs is a great way to get ahead and stay ahead. If you’re reading PF sites, then you’re already interested about it. Those readers want to improve their finance and they just needs to learn how. They are already self motivated.
    People who aren’t interest in finance will have a hard time getting ahead. PF sites aren’t fun for them.

  33. Great stuff FS, per usual. Watched a documentary on Netflix last night called “What The Health”. There are vested interests in keeping the populace dumb….whether it be in regards to their diet/nutrition/health, or personal finance.

  34. Ms. Conviviality

    I’ve known that my income was above average but didn’t really know where it fell. So, I found the Pew Research Center’s website where I could punch in my income/location and it shows that I’m in the top 17% for my city. Being that I’ve always felt that I had a comfortable life, I never gave thought to maximizing my wealth. It took an annoying underwater property I owned to cause me to seek out solutions and that’s how I stumbled upon Financial Samurai. It has been 1.5 years since I started reading Financial Samurai and my net worth has increased by 53% (percentage doesn’t include the underwater property or my mortgage free primary residence because I’ve resigned to setting the underwater property in its own little corner where a few years from now it will create positive cash flow and don’t see the equity in the primary residence as money I can use). I certainly feel that reading Financial Samurai had a direct impact on my wealth!

  35. As a native American I feel we are hugey underrepresented in the financial field. My goal is to show all Native Americans we can save and become financially safe as well.

  36. Darren @ Learn to Be Great

    This is why I don’t have a problem seeing more personal finance blogs as long as they don’t publish garbage. So far, the majority of what I’ve read has provided, at least, some value. We all have our own unique voices that may cater to different crowds. I agree that people flock to others who are similar to them, not just physically. I tend to read more military PF bloggers because I’m retired military. I never had any Asian friends but I tend to gravitate towards Asian PF bloggers, too. I didn’t even know The Luxe Strategist was Asian until just recently.

  37. robert clayton

    Great article! Education is important to make a good income, but to gain wealth you need to understand finance, and saving. I gave my children (16,13) the assignment of reading the Millionaire Next Door this summer because I believe the education system doesn’t do a good job on teaching about saving. My wife has a PHD and lacks basic knowledge in this subject. I share your articles with her on a regular basis, and together we are making good progress to financial independence. Keep up the good work.

  38. Love the stats.

    Sometimes I wonder if the government would have the best interest of its people when it comes to personal finance.

    Consumer credit cards for instance, rely on people who don’t pay off their monthly bills to make interest. From a marketing, advertising perspective, I am sure there are whole bunch of lawyers, lobbyists backing them.

    The upside is that the internet is empowering people beyond the reach of those lawyers and lobbyists.

  39. Asian here I do feel a bit of a kinship with fellow asians. Like you said it’s the familiarity and what human beings inherently tend to prefer. Thanks for the admonition to fellow PF bloggers about the importance of providing quality content to one’s readers. Ultimately the more viewership you get the bigger your responsibility to create accurate and helpful content. And for you Sam, at your large viewership level, you’re leaving a legacy as well.

  40. Brian McMan

    If education is the key then why am I not a millionaire yet? I’m reading your blog after all!

      1. Brian McMan

        I’m sorry Financial Samurai, I didn’t mean to belittle or make light of the incredible work you’ve done on this website. Thanks for taking my question seriously, so I’ll answer. I’m nearly 30, and I’ve been reading personal financial sites daily for nearly 4 years now. That’s not to say I didn’t start earlier, but before that it was mostly books, formal education, word of mouth, documentaries, internships, etc was the way to learn.

          1. Brian McMan

            No, I was expecting 300,000 by age 29. I’ve grinded myself into the emergency room working so hard. I work 10 hours a day 6 days a week, and haven’t missed a second of it in years. I don’t take very many risks in the sense that I don’t want to introduce anything that might destroy my sole income. I tried starting a blogger to connect with other people online who make what I do but I’ve quit doing it because I can’t figure out how to have a high net worth without earning it through a high income. I work as an administrative assistant currently making around $11 an hour.

      2. Ms. Frugal Asian Finance

        And have you implemented any of the advice/lessons/knowledge you’ve gathered about personal finance? Reading is great, but it simply isn’t enough. Action will take you to where you want to be.

        1. Not following. I try and have some actionable advice within each post, because otherwise, it’s just talk. I try to be very thorough in my analysis, see different perspectives, and then implement.

          From an investing point of view, I don’t tell anybody to do anything, I provide a framework and go ahead and invest my own money how I see fit. If people want to follow, do so with caution b/c our financial situations are different.

          1. I meant to direct the response to Brian. I think if he took action to follow the PF advice, he will become a millionaire soon. Sorry about the misunderstanding, Sam >_< (I think I hit the wrong Reply button).

            1. Brian McMan

              I’ve often prayed for the ability to take action, to do the things that I want to do or know I should do. I certainly would like to take action, but I’m never able to actually do it. It is indeed one of my weaknesses, did you have any suggestions how to fix it?

            2. Thanks for your honest response, Ryan! I think that we all have a lot of plans and not enough resources to do them all.

              You can start looking at the reasons why you haven’t done certain things yet. Is it because of the time/resource limitation? Is it because you’re not so passionate about such plans? If yes, is there anything you can do to improve the current situation?

              For me, prioritizing is key since it enables me to focus on what’s really important and to allocate sufficient resources to actually getting it done. :)

            3. Brian McMan

              I may have priorities, but as a video game addict I have no time or energy to devote to them. Money is a different story though, since gaming is such a cheap thing to do even I can come up with an extra $50 a month to purchase Exxon stock through its DRIP.

              Its so weird, I was able to quit smoking cold turkey, but I can’t quit gaming. Do you think prioritizing my wealth is enough for my to step away from my gaming addiction and take action to increase my wealth? By what process would I come to such priorities and inject passion into them?

              Most importantly Ms. Frugal Asian Finance, and this is big, so listen, how did you know my name is Ryan when I’ve only used Brian McMan to post?

  41. Thank you for another great article. I think the lack of financial education is the result of majority rule. Most of the people I know and work with have no interest in reading about personal finance. They live paycheck to paycheck and the idea of planning ahead is foreign to them. We constantly see articles about how unprepared most Americans are for retirement (including high income earners), and this convinces me that the majority are not “planners.” So, if the majority don’t personally care about healthy finances and the policy makers are representative of the majority, there won’t be a push for increased financial education. Hopefully the internet and all the free education it contains can help change our instant gratification culture. I’m now curious to know what impact it has had so far on the financial education of the average person.

  42. Interesting post. As a person who spent 25 years in school, I completely agree with your premise that education is important. The complete lack of understanding of basic financial concepts even among highly educated people is startling, and sites like this are providing a great service to folks by providing an easy-to-access resource for financial information.

    I do think the “experiment” in the article has a few flaws though. While most of the site’s traffic may be from search, I suspect most of the people voting in the poll is from regular readers. The article notes the correlation between reading financial blogs and high income / net worth, which I agree is likely true, but also suggests a causal link between financial education and high income / net worth. People who are already interested in personal finance, have a well paying job, and have some amount of wealth are the ones most likely to be reading this type of blog in my view. When you are living paycheck to paycheck and have no ability to save for an emergency account, you aren’t worried about the asset allocation in your non-existent back door Roth account.

  43. I think it all has to do with the status quo. The people making the decisions either are bad with money(and don’t know it) or are great with money (and expect everyone to get there the same way they did).

    The education system is underfunded and poorly managed as it is. We have the teachers with the skills but aren’t giving them the ability to do their job.

    My problem is my kids aren’t even in elementary school yet so it will be a while before I have any voice to advocate for a personal finance class. When that time comes I hope I won’t need to. (can we hope for a fixed system?)

    What drew me into personal finance sites and making my own was all about real life examples.
    What little time they spent teaching us about budgets when I was a kid I had a hard time applying the concept of a budget since I didn’t have any real world experience. PF sites have the real numbers and real experiences. My school experience was using a dry text book but PF sites have the conversational tone that makes it easier to digest.

  44. My daughter’s guidance counselor recently told us that her high school is considering making personal finance a mandatory course for graduation.

    I agree with you that this is a very good idea.

  45. Regardless of your methodology, which honestly I find a bit loose with stats this time, I agree with your solution. The keys to fixing this area is education and culture. Education can help to lead to that cultural change. It won’t be a light switch but starting now will mean our kids of the future will be prepared to apply their learnings for a better financial future. Of all the things we teach our kids it boggles the mind we never teach such an essential life skill as how to manage your finances.

  46. I have always believed in personal finance education and instilling financial education in kids while they are young. While I do believe that personal finance education should be taught in school and mandatory, it should also come from parents too.

    I think that kids learned a lot of their financial behaviours (both good and bad) from observing their parents. For myself, I would rather pass on the knowledge to my kids to teach them how to save a million dollars rather than leaving them a million dollars. It never hurt to set a great example by starting to save for that amount yourself.

  47. Mr. Freaky Frugal

    Sam, interesting idea and I think you’re right! If Mr. Money Mustache or FS had been around when I was 25, I would have FIREd much sooner than I ultimately did.

    I took an elective Personal Finance class in High School that was the most practical course I ever had. It helped me understand compound interest, banking, and more. But the biggest thing that helped me was that I had frugal parents and a Dad that was interested in investing in stocks and accumulating wealth. I watched and learned and then applied what I learned.

    Everyone needs some kind of personal finance mentor or mentors. That can be a relative, a friend, blog, or forum.

  48. This is an interesting study and analysis. I agree with you that knowledge is power. If we had spent more time looking at the details of every insurance policy, we wouldn’t be so surprised when an insurance company drops the bomb that they don’t cover the expenses for a particular health condition.

    I think one key problem with the health care system in the US is the lobbying power of status quo. Insurance companies, doctored, nurses, administrators and those who currently benefit from the existing system block reforms that risk their pay and perks.

    Capitalism is great, but sometimes it means putting the well-being of the masses at the mercy of the wealthy and powerful.

  49. Brad -

    Not only does our education system not highlight free personal finance resources – they often tend to ignore the topic altogether! It’s way past time that we should be teaching basic personal finance in our schools.

  50. Apathy Ends

    I credit FS and The Automatic Millionaire for the abrupt and successful change we made a few years ago. I binge read 10-15 posts a week, staring in awe of the “Above Average Net Worth” posts wondering how people could do it.

    Definitely a correlation between financial success and reading/learning, especially if people are consistent with their reading and actually applying the knowledge.

  51. Spot on in terms of education. There is basically none in the educational system, and, unless you have a parent who could at least give you the basics, you’re probably SOL unless your inspired to look for information online, and that’s assuming you can comprehend the concepts, much less put together a cohesive plan.

    The information is definitely out there, but one has to know to look for it and to take an honest assessment of what they are doing and incorporate these principles into their life. For some it comes easily. For others, they need an epiphany. Once you realize the math works, it makes it easier to stay the course.

    When I’m done with corporate America, I think I’d like to hit up high schools and give symposiums on this to the younger set who is surely caught up in the consumerism message being sold to them via mass media. Even if you reach a few of them, perhaps instead of the idea of ‘getting rich’ though some stroke of luck or fame or a sports career, they can latch onto the idea that if they start planning early, time is their asset and they can truly be free in their 30s and 40s.

    I’m sorry there was no one to deliver this message to me when I was younger, but you can always be smart today.

    1. I really like your plan to advocate for financial literacy in high schools. Financial education early on in life can help our youth to avoid the many financial traps that we can fall into as adults. What better gift/legacy to give than that of a sound financial education that can guide one to a more stable and less stressful future?

      1. My feeling is it would probably fall on deaf ears for most with people chatting, staring at their cellphones, posting on Instagram, etc. But for the very few who are actually inspired, they will be free early and the ones who ignored the advice will wonder how that ‘lucky dog’ was able to finish so soon while they look forward to another 20+ years behind a desk wondering where it all went wrong. While no one know the exact future, if you follow the principles here, life is less of a mystery and its a matter of plugging in numbers and adjusting as time goes on.

        1. I had a teacher in high school (history/social studies) who taught us about compounding interest. He would go on a tangent, stopping class to show us how investing early created huge returns in comparison investing later in live (he modeled starting at age 20 vs age 30).

          It stuck with me. I was clueless about personal finance after high school, but I remembered his lessons and checked the box for 401K contributions because I could hear Mr. F’s voice telling us “Invest as early as possible”.

          Here’s to spreading the word and helping others create a financially sound future for themselves! :)

    2. Ms. Conviviality

      J K, I’m with you on wishing that someone had taught me the importance of personal finances. I was never one to purchase material things but other investment or major purchase decisions I’ve made should have been entered into with more caution/planning. Ever since I started mentoring a middle school student last year, I told myself that I would share this website with her when she becomes a junior or senior in high school.

  52. I absolutely agree, financial literacy and education is currently a huge gap in America… even though there is an abundance of free, sound financial information out there for anyone to access.

    I’m not sure why the government has not encouraged financial literacy in the past. I wonder if it is a result of a lack of belief that education will improve anything… an assumption that people won’t change their ways and the solution is to provide “bandaid” fixes when individuals fall into financial distress or poverty.

  53. I would love to see a math class Senior year that teaches how to live in the real world. While Trigonometry was super interesting I honestly can’t remember a single thing from it but I still remember an exercise when I was in 8th grade about how much it takes to live in the real world. It was a two week end of the year lesson plan. But it made a huge impact on me.

  54. So true!! I went to public school and I remember that the one mandatory finance class was a joke to everyone.

    That’s a huge part of what and why we want to teach our kids. We homeschool, so from the very beginning we wanted to teach them about money and finances. I think the debt situation would improve greatly from that, if all parents incorporated it into a regular routine. But even more, if high schools would provide a more thorough base for kids so they can leave with a better idea of what debt is and the long term effects.

    1. Good point about starting the education early. High School is a good time to cover more topics (where I also had a basic but insufficient course), but I wish the education started earlier in school (besides what one might acquire at home). Ron Lieberman of the New York Times recently wrote a great book on this topic.

  55. This is why I started my Maximum Cents blog last month. You were an inspiration and I want to help people increase their net worth. I have been reading personal finance sites since 2006 so I have learned a lot over the years. The internet is a great way to reach people around the world at little cost. Thanks for all you do for the community.

    1. Same thing happened to me, inspired by this blog and by Sam’s articles I decided to invest in a website and to try a side business. Moreover, I started to save aggressively and to increase my savings rate every quarter. In the past 2 years, I’ve seen a huge increase in my net worth thanks to early investment and now I’m sort of in the process of preaching finance to my friends as well trying to improve their lives as well.

        1. Thanks, Sam!
          You always write from your experience and you get into details on what happened and why it’s important to have optionality. It’s a no brainer for me now that I don’t have to be a super genius to have a decent life and I can see that this lifestyle can be for everyone. Thanks for writing great content!

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