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Our oldest grandchild is off to college this September. Needless to say he is a bit anxious. I gave him some simple advice I learned many years ago in basic training. “Anticipate, be aware and plan ahead.”
In basic training they do their best to break you down, to keep you on edge and then they build you up. The fear of what’s happening next is worse than the reality.
I remember the live fire training when they told us the machine gun was three feet above the highest point on the range. Naturally most of us assumed that meant three feet over our heads as we crawled the course. However, if you were aware, you would have noticed that there was a pole six feet above the deck where the machine guns were, hence the highest point on the range.
Getting caught short, not being aware, not being prepared, not planning or anticipating can create unnecessary stress and perhaps unnecessary work or even financial problems.
I saw this every day working with employees and their employee benefits especially when it came to heath and retirement programs. Many employees simply ignored all of our communications, never read their benefit books, didn’t attend meetings, didn’t pay attention to deadlines – and they suffered the consequences.
Here is what all too often happened:
I could go on forever with my examples, but the point is that very often people create their own problems and financial difficulties simply by not paying attention especially when information is readily available even though a bit of effort is required.
Definitely preaching to the choir if you’re talking to most people perusing this site.
However I do think it is unfair to blame the victims for not making the most of information that is available. The personal finance industry is complex and somewhat opaque and people are swamped with all sorts of documentation which is provided because of regulatory requirement and CYA reasons without being remotely intelligible to the lay reader.
An example – I looked at the 30+ page annual reports generated by my parent’s investment manager while handling my father’s estate. While I could flip to the annual performance and extract the fees info easily (and have a sharp intake of breath at the excessive fees for non-performance) my mother really had zero clue and while my father conscientiously saved everything I know he wouldn’t have really understood everything (or had the stamina to read 30+ pages) while I could recognise so much as useless boilerplate and caveating most of which was to protect the investment manager from being sued rather than being of utility to the customer.
I also think employers fail to pick up sufficiently on the education piece. At least for the regular joe. My own employer has switched and swapped providers for its DC pension schemes multiple times (for its own convenience) with the process usually being an upfront communication something will the happening, then it failing to happen at the indicated date then finally a communication with a decision to be made based on insufficient detail (or insufficient time to find and engage a financial advisor) with an unfairly tight timeframe. Almost always any literature provided fails to address important technical questions and then the helpline is staffed by generic HR call centres rather than pension specialists.
If they spent a fraction of the effort they spent on people surveys and celebration of our worldwide diversity etc on pension/PF education for the staff it would be enormously beneficial IMO.
The real crux of the issue and maybe worthy of an article in itself is that there are maybe a dozen (+/-) generic personal finance strategies that are applicable to an individual which get narrowed by circumstances, age etc. To get concrete advice usually involves paying a financial adviser but most people could get a solid grounding through a generic education or walkthrough of case studies around these core models. It’s pointless single adults being sold life insurance for instance but might be absolutely No 1 priority for young families after food and lodging. An employer that invested in education on this (or indeed a charity or union or whatever) could do a lot of good.*
*I should say that I suspect for a good many employers it is not strictly in their interests to have employees too financially empowered. They might stop slavishly chasing those payrises or considering earlier retirement if the mystique is lifted, or even just put their own financial wellbeing ahead of dealing with those emails out of hours.
I think you are reading too much into this.
I am talking about a minimal effort by the individual to learn and be aware of things in their best interest, not the employers or governments for that matter.
Certainly there are documents, insurance policies proxies, etc, that few people, including me, are going to read, but the key info, the warnings are usually displayed and summarized in simpler form.
We can rationalize and make all sorts of excuses, but in the end, it is the individual and their family that gets hurt. If individuals are not responsible, how can anyone else be?
When I was working, the several union were as frustrated as I was because they worked to get the benefits and many of their members paid little attention or even lost out.
Are we to the point that we actually need HOT printed on a coffee cup?
I can understand your frustration given the efforts you would be making and no doubt the repeated and easily avoidable mistakes people made, probably most often through inertia.
We’re all prone to a certain amount of this. I only today got round to rolling over a deposit bond that had matured last week because I needed some time and space to research candidates, log in to multiple accounts etc etc.
For someone who is less confident that process might take weeks or never because it’s hard for them.
I think what I’m really advocating for is a) formal personal financial education in the workplace ( high school or college is probably too early because you really need to be earning before it matters) backed up by b) peer group coaching and reinforcement. It’s easier asking questions of and indeed list