Tag Archives: financial literacy

Aug 5 2023

RICH VS. POOR MONEY HABITS

Successful money management can result from simple actions.  A major difference between the rich and the poor is their habits and attitudes toward money. Increased financial literacy and changed behaviors can result in increased prosperity. A transformed financial future can result from these actions:

  • Believe you can control many aspects of your life rather than viewing yourself as a victim of circumstances.
  • Create goals to clearly maintain your focus and an action plan to build wealth.
  • Focus on opportunities looking for new ways to create value and grow wealth rather than being preoccupied with problems and barriers.
  • Avoid jealousy; learn from those who have already achieved wealth.
  • Emphasize cash-flow assets; acquire investments that generate income to build lasting wealth.
  • Commit to an increasing net worth and a positive cash flow.
  • Continue to learn since knowledge is power; seek to expand an understanding of finances, investments, and business.

In addition, people who are successful in managing their finances avoid spending money on these things:

  • bank fees
  • credit card interest
  • lottery tickets and other gambling
  • late fees
  • extended warranties
  • designer label clothing
  • impulse purchases
  • video games, televisions 
  • prepaid cash cards with various fees

For additional information on the money habits of rich and poor people, go to:

Link #1

Link #2

Teaching Suggestions

  • Have students interview a family member or another person to determine recommended actions for successful money management.
  • Have students create a visual proposal (poster, slide presentation, or video) with actions a person might take for reduced spending and for an improved financial situation.

Discussion Questions 

  1. Which attitude or behavior discussed in the article do you believe could make a difference in the financial life of most people?
  2. Describe actions a person might take to change attitudes and behaviors that could result in an improved financial situation.
Jul 8 2023

CHAT GPT FOR MONEY MANAGEMENT

You may ask if artificial intelligence (AI), such as ChatGPT, can be beneficial to guide your money management activities and financial decisions. AI is assisting students and others with everything from identifying research topics and preparing reading summaries to creating recipes and translating foreign languages.

ChatGPT and similar platforms are designed to understand and respond to questions and creative inquiries. When asked a question or given a prompt, a reply is generated based on the previous learning of the AI program.

Using ChatGPT for personal finance can provide a person with easy-to-understand information as well as suggested money actions related to budgeting, saving, and investing.  However, beware not to depend completely on AI advice since:

  • responses may contain fictionalized information or a biased point of view.
  • results can produce grammatically correct text but with flawed logic or facts.
  • up-to-date tax information and current financial data may be lacking.
  • citations may not be correct and may include made-up sources.
  • calculations may lack accuracy due to limited math algorithms.

ChatGPT and similar AI programs can be useful in your personal financial planning with:

  1. Understanding basic financial concepts.  As a starting point, ask how to improve financial literacy and inquire about fundamental personal finance topics related to budgeting, debt, insurance, and investing.  If a response is too complex for your current level of understanding, ask for a simplified explanation. Or, if a response is too general, resubmit your inquiry with more specific parameters.
    Sample ChatGPT prompt: What advice from financial planners might be the basis of wise money management?

2. Tracking spending and budgeting. Controlling your finances and knowing where your money is going are the foundation of financial success. Creating a budget (spending plan) allows you to tell your money where it needs to go. ChatGPT can suggest appropriate budget categories and amounts as well as possible adjustments when needed. Other AI uses may include use of the 50/30/20 budget rule and guidelines for using the envelope method or budgeting apps.
Sample ChatGPT prompt: What budget categories and allocated amounts are recommended for a household of four people with an income of $67,000?

    One person’s experience with creating a budget using Chat GPT may be viewed at:  https://www.youtube.com/watch?v=hl6pOtaSMR4

    3. Monitoring and improving your credit score.  Your credit score can influence many aspects of your financial life. ChatGPT is available to suggest actions for improving a credit score. Also of value would be information on how to dispute errors in a credit report.
    Sample ChatGPT prompt: Propose a plan to pay off $6,400 of credit card debt.

    4. Achieving savings goals. Long-term financial success is dependent on saving money.  ChatGPT can recommend financial goals based on your life situation and finances. In addition, ask for an explanation of compound interest and how it applies to your savings plan.
    Sample ChatGPT prompt: Recommend a step-by-step action plan to create an emergency fund of $8,000 within the next two years.

    5. Investment advice and retirement planning.  The array of investment vehicles overwhelms most people. ChatGPT can explain stocks, bonds, exchange-traded funds, cryptocurrencies, derivatives, and others in simple terms.  For long-term investing, retirement planning options and estimated future living needs can be the basis for suggested savings amounts.
    Sample ChatGPT prompt: Propose a diversified investment portfolio for a 30-year-old person with plans to retire in 35 years.

    6. Preparing for filing your taxes. To overcome the intimidation associated with taxes, ChatGPT is available to remind you of deductions, tax credits, and needed documents for your financial situation. AI can also guide you with the best sources for filing your taxes. 
    Sample ChatGPT prompt: What is the difference between tax-deferred income and tax-exempt income?

    7. Wise spending and shopping suggestions. Guidance for buying can range from meal planning and shopping location to coupon sources and travel schedules. The suggestions offered can prevent overspending through carefully planned buying.
    Sample ChatGPT prompt: Create a one-week grocery shopping list of nutritious foods for three people with a weekly food budget of $160.

    For the Personal Finance classroom, consider using ChatGPT to:

    • Obtain creative in-class activities and field research projects.
    • Generate discussion prompts and questions.
    • Develop rubrics to evaluate assignments.
    • Create assessments and quizzes.
    • Implement state and national curriculum standards.
    • Construct trivia questions and classroom games.
    • Suggest ideas for skits or role-play scenarios.
    • Create personalized writing prompts based on student interests and abilities.
    • Use as a personal tutor to explain complex concepts or calculations

    Will AI create wiser consumers and more effective money managers?  Yes, but only if a person follows the advice offered after carefully considering the validity of the suggestions.

    For additional information on ChatGPT for money management, go to:

    Link #1

    Link #2

    Teaching Suggestions

    • Have students talk to others about how they might use ChatGPT and other AI platforms to increase their financial literacy.
    • Have students research alternatives to ChatGPT and obtain reviews to determine other AI platforms they might consider.

    Discussion Questions 

    1. What benefits and concerns are associated with ChatGPT and other AI platforms?
    2. Describe actions that might be taken to verify the responses received when using AI.
    Jun 24 2017

    Financial Literacy Survey

    Based on an online survey of personal finance knowledge, 40 percent of Americans earn a grade of C or worse. Financially literate people possess a fundamental understanding of money management activities, and are able to apply them for their financial well being.

    The Wallet Literacy survey is available to assess your financial literacy. This test covers a wide range of topics, including credit scores, paycheck deductions, emergency funds, car insurance, home buying, inflation, and investment risk. Respondents are encouraged to use a calculator and other resources when taking the survey.

    For additional information on the financial literacy survey, click here.

    Teaching Suggestions

    • Have students take the financial literacy survey to determine the areas where additional learning is needed.
    • Have students encourage others to take the survey, and then have students talk with them about their results.

    Discussion Questions 

    1. What items on the survey are topic areas for which most people need additional learning?
    2. How might people be encouraged to learning more about various personal finance topics?
    Apr 29 2017

    Fraud Victims Vulnerable to Severe Stress, Anxiety and Depression

    The FINRA Investor Education Foundation issued a new research report, Non-Traditional Costs of Financial Fraud, which found that nearly two thirds of self-reported financial fraud victims experienced at least one non-financial cost of fraud to a serious degree—including severe stress, anxiety, difficulty sleeping and depression. While the Stanford Financial Fraud Research Center estimates that $50 billion is lost to financial fraud every year, the FINRA Foundation’s innovative research examines the broader psychological and emotional impact of financial fraud.

    “Fraud’s effects linger and cause distress well after the scam is over. For the first time, we have data on the deep toll that fraud exerts on its victims, and the results are sobering. This new research underscores the importance of the FINRA Foundation’s work with an array of national, state and local partners to help Americans avoid fraud, and assist consumers who have been defrauded,” said FINRA Foundation President Gerri Walsh.

    The research report found that:

    • nearly two thirds (65 percent) reported experiencing at least one type of non-financial cost to a serious degree; and
    • most commonly cited non-financial costs of fraud are severe stress (50 percent), anxiety (44 percent), difficulty sleeping (38 percent) and depression (35 percent).
    •  Beyond the psychological and emotional costs, nearly half of fraud victims reported incurring indirect financial costs associated with the fraud, such as late fees, legal fees and bounced checks. Twenty-nine percent of respondents reported incurring more than $1,000 in indirect costs, and 9 percent declared bankruptcy as a result of the fraud.

    Additionally, nearly half of victims blame themselves for the fraud—an indication of the far-reaching effects of financial fraud on the lives of its victims.

    For more information, click here.

    Teaching Suggestions

    • Ask students to list a few suggestions to protect themselves from financial fraud.
    • Explain how FINRA can assist consumers who have been the victims of financial fraud.

    Discussion Questions

    1. What are a few indirect financial costs associated with funds?
    2. Why nearly half of victims blame themselves for being victims of financial fraud?
    3. How and where should you report financial fraud?
    Apr 15 2017

    FINRA’s National Financial Capability Study (NFCS)

    According to a recent FINRA study, the financial circumstances of Americans have improved over the last several years—driven in large part by an improving economy and job market.  For example, the percentage of survey respondents reporting no difficulty in covering their monthly expenses increased from 36 percent to 48 percent.  This is very significant and 12 percentage point improvement.

    However, some groups are still struggling, particularly blacks and Hispanics, those without a high school education, and women.  Here are some sobering statistic: About half of respondents with only a high school diploma or no diploma could not come up with $2,000 in an emergency compared to 18 percent for those with a college degree.

    Debt continues to be a problem for many Americans.  More than one-in-five Americans have unpaid medical debt.  Similarly, more than one-in-five Americans with credit cards have been contacted by a debt collection agency in the last year.

    In terms of financial literacy, absolute levels are low; only 37 percent of respondents are considered highly financial literate—meaning they could answer four or five basic questions correctly on a five-question financial literacy quiz.  And, financial literacy is down slightly since 2009.

    For more information,click here.

    Teaching Suggestions

    You may want to use the information in this article to

    • Help students understand that many minority groups are still struggling even though economy and job markets have improved.
    • Explain how people can improve their financial lives by saving even a tiny portion of their income for emergencies.

    Discussion Questions

    1. What can be done to improve the financial circumstances of minorities?
    2. What might be some reasons that debt continues to be a problem for many Americans?
    3. Since financial literacy levels are so low, what can individuals, local, state and Federal governments can to improve financial literacy of all Americans?