Meir Statman is a Professor of Finance at Santa Clara University. He has gained increasing acclaim in the financial world for his work in the field of Behavioral Finance. What is behavioral finance? It studies the intersection of our behaviors (which are driven by our thoughts and feelings) and our money.
As I type this post, Bitcoin is trading at $6,279. We wrote about Bitcoin here on the blog on January 31 of this year. At that time, Bitcoin had traded down from a peak of nearly $19,200 down to about $11,000.
Should you hire a financial advisor? To find out the answer, a great question to ask is whether your financial life today is meaningfully improved from where it was 3 years ago.
It’s not uncommon for people to talk of getting “wiped out” in a past stock market crash. Is that even possible? And if it is possible, how?
What does “normal” look like in today’s culture? More specifically, what does normal look like in the area of personal finance and the decisions that surround this area of our lives? For most people they think of “normal” as a new car every few years, a bigger house every so often, various exotic vacations, and many more “things” or “experiences” to live a fulfilling lifestyle. One thing that has become a foundational component of today’s “normal” culture is the idea of instant gratification…whether the finances are there to back up the gratification or not.
A part of the Give.Save.Spend. teaching philosophy we mentioned before, involves SPEND. That is often the most exciting one of the three for kids (and most adults). It certainly can be with my children…and me to be honest. Side-note: It is fun to spend money, especially when you know it is a part of your overall financial plan. No excuses. No regrets. No questions. No shame. No blame. Good, clean spending. Okay, back on point…
The Wall Street Journal published an article last year that outlined the number of bank overdraft transactions in 2016. The total tally? 1.12 BILLION. That is billion with a B. To be clear, that is the amount of just the transactions NOT the associated fees. Assuming the average overdraft fee is $40, that equals $44.8 billion in overdraft fees.
On any given day, you can turn on your television and see a variety of commercials that ultimately ask you, “What is your NUMBER?” The commercials are referencing the number you need saved for retirement, or financial freedom, or some other finishing point. To arrive at that is actually quite a complex set of formulas, Monte Carlo simulations and a whole bunch of assumptions about what you want your future life to look like.
The credit card industry in the United States is massive. In 2015, there was $3 trillion worth of processed credit card transactions. The percentage of GDP that the credit card industry represents has risen from 10% in 2000 to 15% in 2016. American households are carrying over $1 trillion dollars’ worth of credit card debt.
Here are three quick ways to help teach your children the value of money: 1. Working hard equals earning money. One potential problem is that children never grasp the concept that you have to earn money, and instead just rely on others to provide it to them. Set tasks for young children to do which earns them a paycheck. The older they get, the more formal the job can be until they are working regularly outside of the house by the time they are in high school. This will teach time management skills as well as show them how working equals money.
If you liked Bitcoin at $19,000, you must love it at $11,000. Bitcoin peaked at a price of $19,198 on December 16, 2017. In the 40 days since then, its price has plummeted more than 40%.
FOMO is an acronym for “fear of missing out”. Urban Dictionary defines FOMO as “the fear that if you miss a party or event you will miss out on something great.” I’m not too proud to admit that I wrestled with some FOMO as a youngster. In the world of social interaction, FOMO is not a helpful trait to possess. But in the world of personal finance, the FOMO term could take on a new and helpful meaning.