What role does "financial literacy" play in your country?

How educated are you when it comes to managing your finances? It seems to me that “financial literacy” is yet another field in which the US leads the pack. They have very comprehensive resources and programs in place to educate their children about money. For example, the US government is running the Financial Literacy & Education Commission with several federal agencies whose job it is to provide useful information on how to deal with money.

Many kids in Germany are rather uneducated about financial issues and as a result often create debts long before they start earning money.

So what is the situation in your country, how much do you know about your personal finances?[YSaerTTEW443543]

TOEIC listening, question-response: Do you prefer lobster or crab?[YSaerTTEW443543]

In Bulgaria, rarely do kids get educated about finances. Actually, most of them are quite “unbridled”, letting cash flow through their wide spread fingers. However, there are exceptions - where the “street” teaches kids how to manage their money, because there are plenty of poor households, bordering with penury. Luckily, I study in an economics school, and my father is a “financial advisor”, if that can be defined as an occupation… But nothing such as “financial literacy” is taught in non-specialized schools.

Hi Dimitar,

Thanks a lot for sharing your experiences with us. Why do you doubt if financial adviser can be defined as an occupation? In my opinion this is a profession with a very high reputation. Maybe this is different in Bulgaria?[YSaerTTEW443543]

TOEIC listening, question-response: Would you like to take a break?[YSaerTTEW443543]

You have a point there. That was because advising is one of the many things he does…
P.S. I am very pleased you have remembered my name.

The US may have lots of financial education resources – including lots of books and other resources for children – but that doesn’t mean the people are better educated about their finances, and it doesn’t stop people from making bad financial decisions.

The problem is this: Americans don’t like to do anything that’s boring, and most of them are not taught math or even simple arithmetic well.

When you present a teenager with a book or some other media that will improve his financial literacy, he will be fascinated by the initial portion that describes what the long-term results of good financial planning are, but he’ll drop it when “the boring part” starts. This “boring part” is the actual nuts and bolts of how to invest and manage one’s money, and there’s no real way to make this interesting to the average kid that age, or even the average young adult. This way, the kid learns all about how rich good financial planning can make him, but he never learns anything about financial planning. Therefore his income is limited to his wages, and he may not start saving any money until middle age.

Another factor is that many adults got into the workforce in an era that is now in its twilight. It’s the one where the company pension funds took care of the person for the rest of his life. This has been replaced by a system in which the person’s pension contributions are put into a private account that he’s supposed to manage (usually with some help, if he asks for it, which he won’t), and the employee takes the fund with him as he changes employers. It’s better to have this money under the control of the employee, but often people not only don’t have the motivation to educate themselves as to what to do with it, some of them don’t even know that they have to educate themselves.

Economic illiteracy here is really astounding, considering the amount of information available. This is why people can be manipulated with weird, socialist economic slogans. It’s not uncommon to see a person support some politician’s plan to “make the rich pay their fair share” by heavily taxing stock dividends. Often this person receives a lot of dividends himself, but he doesn’t know it, so he supports a tax plan that actually damages him. I get students in my classes – adults, born and raised in the US – who think you can’t invest unless you’re already rich. I tell them they can open an investment account with as little as $50, and then make small, regular contributions, and they’re shocked. The people in their 30s may even get upset at the fact that they didn’t know this at age 18 and had therefore lost 10 or 15 years of potential financial gains.

A very strong post there, Jamie. So, the truth is the ‘average Joe’ is unable to contemplate what is good or bad for him, nor does he know that he has to improve and educate himself? This is sad.

The hilarious thing is that you can’t tell from looking at anybody who is financially literate and who isn’t. I went into a private bookstore near a university once, and I saw two African-American employees in their 20s arguing about something. One looked like a very clean-cut, well-dressed young man that any parent would be proud to see their daughter on a date with. The other one had long dreadlocks, a Jiffy Pop hat, a wispy goatee and old, ratty clothes. You expected him to be half stoned on pot. The clean-cut one was asking the Rastafarian-looking one to let him leave work early to get a haircut. Mr. Dreadlocks thought this request was quite unnecessary, asked Mr. Clean-Cut where he got his hair cut. Then he asked how much it cost. It was $50. Mr. Rastafari got angry and disgusted, and shouted at Mr. Clean-Cut, “FIFTY DOLLARS?! THAT’S A MINIMUM INVESTMENT IN A DAMN MUTUAL FUND!” and then gave the kid a lecture. So the kid who looked like a young businessman was blowing all his money on looking good, and the guy who looked like an indigent stoner was adept at personal finance.

Torsten, there are a lot of investment-savvy people in the US.

Conversely, there are perhaps as many whose primary strategy is to buy lottery tickets… which are a terrible investment.

One of my friends worked the lotto machine in her brother-in-law’s liquor store for a while. It shocked her how many people who needed every penny they had just in order to live, would nonetheless buy $150 a week in lottery tickets.

And some of the customers are crazy. One man thought that if she looked at his ticket with her big eyes, she would jinx his numbers and cause him to lose. When that man came in, she had to have her brother-in-law come over and issue the ticket.


it’s sad, they waste their money and then blame the government (mostly President Bush) for their negative economic situation

…when they could be using that money to buy stock, mutual funds, or other (far more dependable/productive) investment tools.

or heck, just keeping it in a bank account would be a vast improvement.

Funny you should mention that. The US is in a (certainly temporary) stock slump, with banking stocks suffering in particular. This has occurred because, as often happens when the economy is booming, banks have had a lot of money to lend, and they start lending it to riskier and riskier clients. In the 1980s they lent it to insolvent Latin American governments. In the 2000s, they’ve been lending to risky home buyers. Some of that money eventually becomes uncollectible, and financial stocks crash until they get the problem worked out. People see a lowering in the value of their stock and mutual fund portfolios for a while.

The accurate information is all over the newspapers and TV, although the severity of the problem is sometimes exaggerated. Even so, I saw a man last weekend who claimed his portfolio value decreased because “Bush took all my money away.” How did Bush “take away his money”? By lowering taxes? They make it sound like Bush is an evil anti-Santa-Claus who climbs down people’s chimneys and looks for ways to cause them trouble.

Santa Bush – I like that idea. When something goes wrong, people always blame the government, they rarely want to take responsibility for their bad decisions. That’s the case in all countries, however it seems that Americans are less inclined to blame their government than other nations. Also, I still think that despite the recent financial crisis Americans are much better educated financially than many East Germans.

The generation of my parents are very suspicious of stocks, bonds and any other kind of financial investment products because this type of market was almost non-existent when we were a socialist country. The percentage of homeowners was extremely low and most people would keep their money in state owned banks generating interest rates slightly above inflation.[YSaerTTEW443543]

TOEIC listening, talks: Employee is summarizing results of brand recognition study[YSaerTTEW443543]


Yeah, stocks are down… but long-term, the stock mkt is a much better bet than Powerball tickets. hehe

you know, this has something to do with finance – taxes and tax cuts. There’s a bit of what Jamie’s acquaintance in here… the one who whined that his financial woes were due to President Bush. Here’s a viewpoint some might not have heard. Enjoy!

A Simple Introduction to Our Tax System

Here is a very simple way to understand our tax system. Let’s put tax cuts in terms everyone can understand. Suppose that every day, ten men go out for dinner. The bill for all ten totals $100. If they paid their bill the way we pay our taxes, it would go something like this.

The first four men - the poorest - would pay nothing, the fifth would pay $1, the sixth would pay $3, the seventh $7, the eighth $12, the ninth $18, and the tenth man - the richest - would pay $59.

That’s what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement - until one day, the owner threw them a curve (in tax language, a tax cut).

“Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily meal by $20.” So now dinner for the ten only cost $80.00.

The group still wanted to pay their bill the way we pay taxes. So the first four men were unaffected. They would still eat for free. But what about the other six - the paying customers? How could they divvy up the $20 windfall so that everyone would get his “fair share?”

The six men realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would end up being paid to eat their meal. So the restaurant owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so the fifth man paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of his earlier $59. Each of the six was better off than before. And the first four continued to eat for free.

But once outside the restaurant, the men began to compare their savings. “Hey, out of the $20 savings, I only got a dollar, but he got $7!” declared the sixth man as he pointed to the tenth.

“Yeah, that’s right,” exclaimed the fifth man, “I only saved a dollar, too… It’s unfair that he got seven times more than me!”

“That’s true!” shouted the seventh man. “Why should he get $7 back when I got only $2? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison who have never paid for anything, “We didn’t get anything at all. The system exploits the poor!”

The nine men surrounded the tenth and beat him up. The next night he didn’t show up for dinner, so the nine sat down and ate without him. When it came time to pay the bill, they discovered a little late something that was very important. They were fifty-two dollars short of paying the bill!

Imagine that!

And that, boys and girls, journalists and college instructors, is how the tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore.

Where would that leave the rest? Unfortunately, most taxing authorities anywhere cannot seem to grasp this rather straight-forward logic!

T. Davies
Professor of Accounting & Chair,
Division of Accounting and Business Law The University of South Dakota

(from ihatedemocrats.com)

This is fun – using cows to explain different economic systems (or those of different countries/states):

Explaining Economics with Cows


  • You have two cows.
  • Your neighbor has none.
  • You feel guilty for being successful.
  • Instead of giving your neighbor one of your cows, you write to your congressman, demanding that he pass legislation for more government programs to help your neighbor get a cow.
  • You hold a concert to raise awareness for the cow-lessness.
  • Barbara Streisand sings for the cow-less, who couldn’t attend because ticket prices are so expensive that only people with 3 or 4 cows can afford to attend.
  • You wear a ribbon that signifies that you care about cowless people, even though you really haven’t done anything to help them at all.


  • You have two cows.
  • Your neighbor has none.
  • So?


  • You have two cows.
  • The government takes one and gives it to your neighbor.
  • You form a cooperative to tell him how to manage his cow.


  • You have two cows.
  • The government seizes both and provides you with milk.
  • You wait in line for hours to get it.
  • It is expensive and sour.


  • You have two cows.
  • You sell one, buy a bull, and build a herd of cows.


  • You have two cows.
  • The government taxes you to the point you have to sell both to support a man in a foreign country who has only one cow, which was a gift from your government.


  • You have two cows.
  • The government takes them both, shoots one, milks the other, pays you for the milk, and then pours the milk down the drain.


  • You have two cows.
  • You sell one, lease it back to yourself and do an IPO on the 2nd one.
  • You force the two cows to produce the milk of four cows.
  • You are surprised when one cow drops dead.
  • You spin an announcement to the analysts stating you have down sized and are reducing expenses.
  • Your stock goes up.


  • You have two cows.
  • You go on strike because you want three cows.
  • You go to lunch and drink wine.
  • Life is good.


  • You have two cows.
  • You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk.
  • They learn to travel on unbelievably crowded trains.
  • Most are at the top of their class at cow school.


  • You have two cows.
  • You engineer them so they are all blond, drink lots of beer, give excellent quality milk, and run a hundred miles an hour.
  • Unfortunately they also demand 13 weeks of vacation per year.


  • You have two cows but you don’t know where they are.
  • While ambling around, you see a beautiful woman.
  • You break for lunch.
  • Life is good.


  • You have two cows.
  • You have some vodka.
  • You count them and learn you have four cows.
  • You have some more vodka.
  • You count them again and learn you have eight cows.
  • The Mafia shows up and takes over however many cows you really have.


  • You have all the cows in Afghanistan, which are two.
  • You don’t milk them because you cannot touch any creature’s private parts.
  • Then you kill them and claim a US bomb blew them up while they were in the hospital.


  • You have two cows.
  • They go into hiding.
  • They send radio tapes of their mooing.


  • You have two bulls.
  • Employees are regularly maimed and killed attempting to milk them.


  • You have a cow and a bull.
  • The bull is depressed.
  • It has spent its life living a lie.
  • It goes away for two weeks.
  • It comes back after a taxpayer-paid sex-change operation.
  • You now have two cows.
  • One makes milk; the other doesn’t.
  • You try to sell the transgender cow.
  • Its lawyer sues you for discrimination.
  • You lose in court.
  • You sell the milk-generating cow to pay the damages.
  • You now have one rich, transgender, non-milk-producing cow.
  • You change your business to beef.
  • PETA pickets your farm.
  • Jesse Jackson makes a speech in your driveway.
  • Cruz Bustamante calls for higher farm taxes to help “working cows.”
  • Hillary Clinton calls for the nationalization of 1/7 of your farm “for the children.”
  • Gray Davis signs a law giving your farm to Mexico.
  • The L.A. Times quotes five anonymous cows claiming you groped their teats.
  • You declare bankruptcy and shut down all operations.
  • The cow starves to death.
  • The L.A.Times’ analysis shows your business failure is Bush’s fault.

(from ihatedemocrats.com)

I deal with this kind of person in my work and personal life all the time. Another major factor in their minds is the degree of corruption in the countries they came from.

For example, more than once, people from Third World or communist countries (same thing) have asked me what to do when their employers said it was time for them to enroll in the company’s retirement investment plan. The questions always go like this:

1. What if I lose all my money?
It’s almost impossible for you to lose all your money, if you diversify your investments, as the program forces you to do.

2. But I’ll lose all that money if I quit my job.
No you won’t. As soon as you contribute to the plan, the money goes into an independent fund that you own and that you manage through a separate financial company.

3. But my employer can steal all my money.
No, he can’t. He doesn’t have any way to touch your money, because it’s all in an account in your name at the financial company, under your control.

4. But the financial company can steal all my money.
They won’t.

5. But if I change jobs, I’ll lose it all.
I’ve already told you that the money follows you from job to job. It’s YOUR account.

6. But what if I lose all the money?
I’ve told you that the plan forces you to diversify, and there’s almost no chance you’ll lose it all.

Then they just repeat the same questions over and over.