Compare And Contrast Traditional And Behavioral Finance

Finance: “The study of applying specific value to things that we own, the services we use, and the decisions we make.” (Cornett, Adair, & Nofsinger, 2016, p. 5).

On the other hand behavioural finance defines the market dynamics and movement in terms of psychology of the participants in the trading process. Behavioural finance proposes that the amount of information available in the market regarding the factors that determine the output or profitability of a particular investment actually serve to determine the movement and output of the market itself (Fama, E.F., 1998).

So often we hear about teaching the whole child. Today, more than ever, personal finance knowledge and awareness are a critical part of what it means to teach the whole child.

A Financial Industry Regulatory Authority (FINRA) study found that 76% of Americans believe they hold a “high” amount of financial knowledge, yet when given a basic

Certain financial literacy skills are required to responsibly deal with the aspects of managing or acquiring a loan. Researchers cite

Financial decisions are something everyone faces like buying a car to figuring out how to pay for students loans or debts. We are not taught about these types of financial decisions and how to go about them from a young age. In the news article Working Financial Literacy in With the Three R’s by Tara Siegel Bernard, she talks about how more states are beginning to require a personal finance instructions class. In the article Finance Course Prompts Debate by Gina Davis, she suggests incorporating financial elements into already required classes.

Future initiatives with financial education can change the landscape of an individual’s life and the economy in which we live. If there is limited focus on learning about personal finances we continue to set our economy up for constant failure. There is a substantial amounts of education provided to school age children that does not directly impact their financial education for their future. In high school individuals learn

The Great Recession revealed the financial vulnerability of millions of US households. In its aftermath, researchers and policymakers have turned their attention to improving the next generation’s knowledge of personal finance and its access to secure financial offerings (US Department of the Treasury 2014) (Margaret 2015). While current economic conditions appear to be showing signs of improvement, 83% of American workers continue to be impacted by personal financial issues (“2013 Research Report on Employee Financial Stress,” Financial Finesse, June 2013) (Shele 2015 p. 67). The main reason so many people have personal financial issues is because of the lack of knowledge that people have about the meaning of financial terms. If you lack knowledge or don’t fully understand financial terms there is no way that you want have personal financial issues.

Challenges are presented to people on the daily basis. What to eat, drink, where they have to go, who they need to see, and etc... These things all impact the decision making process and the decisions made. In financial decision making, highly successful people do not make investment decisions based on past sunk outcomes, rather by examining choices with no regard for past experiences; this approach conflicts with what one may expect. In addition to past experiences, there are several cognitive biases that influence decision making.

Even with these changes some may still doubt why these classes are important, but here are a few statistics about the financial literacy of today’s adults. According to Caitlin Blake of Concordia University, “Only 39% of adults make budgets and track their spending.” and “32% of adults do not save a portion of their annual income.” (Blake) These statistics show that a growing number of adults either don’t use, or haven’t acquired the skills needed to be financially wise. Even with these numbers still being a minority at the moment, a possible outcome in the future could be a majority of adults struggling to manage personal finances. Though many schools still do offer courses to teach these types of skills, many do not require them past middle school. With these classes still being electives, they are still highly susceptible to being eliminated from schools course offerings and, students opting not to take them. Now off the topic of financial literally or; therefore, the lack of, we now move on the topic of

Many believe that financial literacy classes are helpful and a good tool for you in the future. Finance is a waste of time and the classes do not help you in any case. The material taught in these classes are not used in everyday life and the methods used in the class are not helpful in any way.

It’s no secret that a majority Americans struggle with all things finances. The jargon alone is enough to leave many confused, and with the complexities of modern economy becoming an ever increasing tangled mess, Americans are looking to do something about it. One popular suggestion is financial literacy classes for high school students. While the idea sounds promising, the reality of these classes is rather farfetched. People praise the thought of implementing financial literacy into our school system in order to help kids in their future. This praise is filled with good intentions, but the sad fact is that this is not in a student's best interest.

Life of an immigrant is not easy, let alone navigating through a plethora of obscure banking concepts and products. It is even more overwhelming for an older generation, in a foreign language. Working in the financial services I realized that I could make newcomers’ lives easier by sharing my expertise and knowledge of the industry. For over a year, I delivered financial literacy seminars, in a simple, jargon-free language, to the members of the Russian speaking community. The topics included basics of banking, importance of saving, and understanding credit history. Not only did I feel proud of my contribution to the community, my workshops helped the newcomers avoid some of the common pitfalls; it taught them to be responsible with money and

A little over a decade ago, Ms. Lamb realized that there was an enormous void in children’s financial education--it was this that began her lifelong mission. She feels that without proper financial learning, the young people of our society will grow up in a world of naïveté, thus causing them to fall victim to financial scams. Additionally, without this education, emotional health, quality of life, and college and career attainment levels can be negatively affected. Consequently, Sabrina Lamb created the World of Money to fulfill her life mission of exposing

This statement is rather shocking but proves why high school students should be taught financial literacy. Financial literacy is the ability of learning how to manage money. Financial literacy should be taught because, more people have been going bankrupt at a younger age, they have more debt options, and lastly are unable to manage money because they have never been taught. This is not just a problem for an individual, but potentially a huge problem in this country’s future.