Recently I’ve been running into “top financial mistakes” lists in the form of articles, social media posts, news stories, etc. I imagine this has something to do with my internet browsing and cookies, even though I haven’t been purposefully reading up on that exact topic. Maybe the www is trying to tell me something.

Whether it’s that or just a financially reflective time of year, it got me thinking about my own money mistakes… And then categorizing them by things like avoidable, should have known better, didn’t know better, darn capitalism, etc.

Since this is a just a blog post, I tried to narrow it down to my greatest hits, not necessarily in $$ terms, but also in terms of the impact on my future decisions and my financial journey in general.

The Classic: signing up for the CC on the CC  (credit card on the college campus).

I was barely 18 when I stepped into the student center to get a slice and a coke, but instead found a table with smiling people handing out applications for a Sears Card – along with its $250 limit, 24% interest rate, and a free t-shirt! How could I resist? I should be grateful for this bit of history because this is THE moment when my financial train went rogue, and without it I wouldn’t know the experience of having gotten back on track. Until this moment I was still more of the paper boy, wise with my pennies, turning them into dollars. But very soon after getting my t-shirt and filling out the application I had my card, my first credit card. I quickly maxed it out on whatever an 18 year old could buy at Sears in the mid-80s, got used to the comfort of minimum payments, and as Senator Elizabeth Warren described in the documentary Maxed Out, I “developed a taste for credit.”

My parents couldn’t have prepared me because they didn’t know (no one from previous generations knew) that credit cards were being handed out to us 18-year-olds. It was a relatively new thing at the time. Maybe something in my brain should have realized that getting stuff without paying for it up front was probably not good, but again, I was 18.  It’s interesting to note that the CARD Act of 2010 made it illegal for credit cards to be “sold” on college campuses.

The Verdict: I didn’t know better

The Follow-up Flub: getting store credit cards even though I already had a Visa.

After a few years of practice with my Sears card, I graduated to my first real credit card, a nice Visa with a Miami Dolphins logo. The biggest mystery today is wondering how I was ever a Miami Dolphins fan. I could use that card anywhere, and it wasn’t (always) maxed out, so why did I have to get cards from Macy’s, Eddie Bauer, etc.? Oh, this one is pretty much on me. By that time, I had some idea of the impact of paying interest, but I was a consumer peacock, flashing those cards in place of feathers. I bought stuff, and I enjoyed doing so with specific cards for various stores and their 24% interest rates.

The Verdict: should have known better and darn capitalism

U-Haul, You Learn: this one still annoys me.

I was moving from a studio apartment in Connecticut to a one-bedroom in Tennessee, and I decided to rent a small U-Haul truck for the job. The truck wasn’t the only small thing involved as it cost a small fortune for this rental. Where do I begin with how foolish a (financial) move this was? It was 30 years ago, and I am still stinging from the nearly $1,500 I spent including gas. Why was it silly? My belongings at that time were probably worth $500 at most, keepsakes could have fit easily into my Subaru wagon, and I’m sure I could have replaced that crappy desk lamp for a few bucks at Goodwill. I remember clearly that I simply did not analyze the cost or the alternatives. I was single-minded and focused on the move and lost the good sense that had recently led me to stop buying new cars (and to getting the old Subaru which, ironically was a really well spent $1,500). The U-Haul $1,500 was a ton of money for me at that time – too much money to spend so frivolously. How did I do it? Yep, Miami Dolphins Visa.

The Verdict: avoidable, I absolutely should have known better

The One Mistake to Rule All Others: not understanding opportunity cost (a top argument for requiring personal financial education in school).

I can add plenty more mistakes of various financial impact to this list (see this post about cars), and they all matter in some way. But what matters more is what ties them all together – opportunity cost.

My credit card adventures cost me hundreds in interest and thousands in overspending. Buying cars that were out of my reach but nevertheless came to me thanks to creative financing cost me thousands. Unnecessary U-Hauling cost $1,500 for one trip.

So what?

Stage one of “so what” was when I came to grips with the amount of money I recklessly spent over the years, and that was an important stage loaded with critical realizations.

Stage two, however, is where my increasing financial literacy made me begin to connect with not only what I spent, but also, and more importantly, what I could have done with that money.

Stage three, let’s say current day, is when I look at my expected retirement age and lifestyle and realize the impact of those decisions on today’s choices.

stage one + stage two + stage three = understanding opportunity cost.

Yes, that concept which in my first college economics course seemed so boring when presented in the mechanical terms of production possibilities curves, but when applied to personal finance is not boring and drives home the consequences of living beyond our means.

Decades of experience teaching OC in elective courses and clubs tells me that it does sink in, students get it, and it makes a difference.

The Verdict: I really didn’t know better. It’s not natural for humans to think about our future self, especially at 20 years old.

———-

So, come on Maine, how about we take this tool which covers choice, consequence, future self, and financial wellness, and cement it into our school curriculums. I don’t know that it would have protected me 100% from unfortunate financial choices, but even a fraction of that protection would have gone a long way.

If you’ve made or are making these mistakes, no judgement here, just a chance to reflect and/or chart a new course. Despite the costs involved, I can’t say that I regret these decisions as they led to changes and led to me wanting to share and hopefully help others on their financial journey.

Teaching is Sharing and Sharing is Teaching

In the 20 or years that I have taught and talked personal finance, I have found no better tool than sharing my mistakes with students. Is it impactful when a successful or wealthy person shares their tips? Yes. But experience has shown me that it’s even more impactful to talk about what went wrong, what was learned, and what was lost. (I’ve been told that) It feels more like teaching, rather than preaching.

Stories are emotional, emotion prints memory, and those memories can have a profound effect on our students.

What season is it? Ask most folks and of course, they will say fall, but ask high school seniors, their parents, and counselors, and they might just come back with FAFSA season. Once again, it’s time for a critical part of the higher education access process—paying for it.

FAFSA: Free Application for Federal Student Aid 

It’s been quite a year or so for the FAFSA as it underwent a thorough overhaul, a past-due winter release in January, glitches and errors, subsequent months of repair, and even an investigation by the GAO (US Government Accountability Office).

The goals of the overhaul were to make the process much easier and to make sure that federal aid was available to those who need it.

The Latest

Fortunately, FAME’s College Access Team is here, focusing on helping families through the FAFSA process as part of the bigger picture of accessing and affording education after high school. And leading that team is Mila Tappan, who I’ve asked to bring us up to date on FAFSA ’25-’26.

#1. What are some of the biggest FAFSA myths you would like to debunk?

The FAFSA has gotten so much easier to complete. Most people can complete their section of the FAFSA in less than 15 minutes! If people need additional assistance, FAME offers free help via Zoom.

I’d also like to debunk the myth that it isn’t worth the effort to file the FAFSA. The FAFSA is free, and this one application opens access to federal, state, and often institutional financial aid eligibility, including grants and scholarships that don’t have to be repaid. If students need to borrow any loans, federal student loans are best but require borrowers to file the FAFSA. Additionally, the FAFSA is required to access tuition-free community college and is also required for many scholarships.

#2. The money question: Where do things stand with updates to the FAFSA?

There is no doubt that the rollout of the updated FAFSA last year was rough. However, most issues have been resolved and any remaining glitches are being actively worked on. The 2025-2026 FAFSA will be available to everyone by December 1, 2024. From October 1 through December 1, extensive beta testing is being conducted. We are optimistic that when the FAFSA is released to everyone by December 1, it will work as intended, be glitch-free, and fully functioning.

#3. Even though last year’s rollout of the FAFSA updates was clunky, to say the least, were you able to still notice the changes to the FAFSA?  Were there some obvious improvements?

Yes absolutely! Even in the early days of the rollout, many families completed the FAFSA with relative ease. The updated FAFSA has fewer questions and pulls in required information from other sources when possible. For example, most individuals will no longer have to manually enter income information. Assuming people provide consent (a requirement), tax information will automatically be pulled over from the IRS. Those who aren’t required to file taxes are no longer required to report their income. Additionally, most people who received a means-tested benefit, like MaineCare, or who earn less than $60,000 annually will no longer have to provide any asset information. These changes make the FAFSA easier to complete and ensure that the tax information provided is accurate.

#4. If all things FAFSA was not your job, what sources would you use for information and support when looking for FAFSA help or help with financial aid in general?

I would encourage everyone to visit the FAMEmaine.com website. There they will find information on the steps to get ready and file the FAFSA and an extensive list of FAQs. They will also find resources including our PAY: Tip to Afford Higher Education booklet, our Get Ready to File the FAFSA checklists, Federal Student Aid account (FSA ID) tracking worksheets, and more.

I would also love for people to join our texting and/or e-mail list which can be done at FAMEmaine.com/join. We won’t inundate people with communications but will provide timely updates on the FAFSA and the entire financial aid process, including what happens after the FAFSA is filed. We are also active on social media and have a Facebook group for parents and caregivers called Paying for College for ME.

Outside of FAME, a good source for information is Federal Student Aid. Their website is StudentAid.gov, which is where people go to create their Federal Student Aid account and file the FAFSA. They also have good social media content.

#5. Other than filing the FAFSA, what advice do you give students/families on the topic of affording education after high school?

One of the best ways to make higher education more affordable is to include affordability as a criterion when researching and building a list of schools. We want to be sure that students have options and that the schools on the list are a good fit academically, socially, geographically, and size-wise but also consider affordability. A great place to get started is by using the Big Future College Search tool. This site allows students to search for schools based on various criteria including affordability.

It is also important for students and families to talk about expectations related to paying for higher education. Too often students and parents have unrealistic expectations of who is paying for what and the amount of money available for higher education. We have a list of conversation starters that can help ensure that students and families are on the same page. Having this conversation before spring of senior year can help make decisions related to college selection easier.

It’s also helpful if students can remain flexible. There are multiple pathways for most students to accomplish their goals. If students can keep their options open and not get their heart set on a particular school early in the process, this will allow them to make more informed decisions. We encourage students to wait until they’ve received and compared all admission and financial aid offers before making a decision. These decisions can be very emotional, but if people wait until all the information is available, they tend to make decisions they are happier with in the coming years.

There is no quick or definite answer to that question. But there are ways to analyze coverage versus cost and feel you are getting what you need at a price you can stomach.

***

“The car won’t start,” texted my wife early on a recent Sunday morning, while I was 1,000 miles away visiting my mom.

She sent me a video, and I brilliantly concluded that the battery was dead. After a few minutes of trying to determine why the battery died, we turned our attention to figuring out what to do about it. It took me a minute to remember that we had AAA. For seven years living in Spain, AAA was not a part of my life, but as soon as I moved back to Maine and got a car, I reupped as that service had towed me, jumpstarted me, and even pulled a loved one out a ditch.

And while AAA is not necessarily marketed as insurance, for me it is and a darn good-value-insurance at that. That got me thinking…

Issue #1: Why Do We Buy Insurance?

Let’s put aside all things related to legally required insurance and focus on our choices. I cannot help anyone into the insurance happy zone as it lives in the same place in our hearts as taxes. What I hope to do is offer a path to peace of mind, to know you are doing the best you can with your insurance costs and choices.

The purpose of insurance is protection against loss; partially restoring our financial position. Contrary to mass-marketing messages and popular belief, insurance is not designed to make us 100% whole after a loss. So, know that going in – we will pay for insurance protection and still have to pay more when we use the insurance.

And, not only have the upfront premiums gone up, the portion we pay in the form of co-pay, co-insurance, and deductibles, has also ballooned.

There are plenty of factors blamed when discussing why the above is true, and I can’t tackle them here. What I can say is 1) insurance companies are in business to make a profit for their shareholders/owners/policyholders 2) losses from natural disasters have increased, and perhaps more importantly, are expected to increase even more with climate change 3) there are more people living in areas affected by these disasters 4) the costs of home repair, car parts, medical care, and liability activity have gone up as fast or faster than almost everything else in our lives.

Deal or No Deal?

It is tricky to determine if your insurance is a fair deal. I say fair because Economists Rule #7 (yes, a nod to my favorite writer, the late Robert Parker) states that you can’t really expect a good deal out of any transaction. If someone is getting a good deal, that means someone else is getting a bad deal. Generally speaking, insurance companies, with their legions of actuaries and analysts, are probably not getting a bad deal when they do business with you, so better to think in terms of fair.

It comes down to premium (cost) versus potential benefit. Potential because we hope to never use our insurance. A few notes:

• This is subjective. We don’t all value the same things in the same way. This is affected by our habits, experiences, and cultural values. Ultimately, insurance decisions are personal.
• These are generic examples, aiming at what would be realistic for most folks.
• Circumstances that affect insurance costs are sometimes out of our control.
• It’s a moving target. Stay informed, review, and evaluate often.

I’ll offer analysis on a few common types of insurance with ballpark cost/benefit numbers. Thinking about insurance in this way is transferrable to other kinds of insurance and can be a great tool in your personal finance toolbox.

Term Life Insurance: $250/year for 20 years of a $200,000 death benefit for a relatively healthy 40-year-old. Peace of mind. A financial cushion for those who depend on you. A bargain.

Term Life Insurance: A $10,000 “burial” policy for someone over 70, at a cost of $600/year. While coming up with burial costs is a significant financial and emotional burden, $600/year to protect $10,000 is not a strong financial move. In this case it might be better to self-insure, put that $600/year into an investment, and try to save extra for when it’s needed. This is a case of one size does not fit all, and you have to do what feels right.

Mobile Phone Insurance: $200/year premium plus a $100 deductible in case of loss, all to protect a $750 phone. This is a bad deal for the consumer. It’s very little potential coverage for the cost. Put that $200 you would pay for the insurance plus the $100 deductible in your emergency fund and treat your phone like it’s worth $1000.

Homeowner’s Insurance: $1,200/year to insure a $500,000 home, plus $300,000 in liability protection, all with a $1,000 deductible. Sign me up every day. Yes, prices are going up, but the ratio of cost/potential benefit is good for the insured. This is what insurance is meant to do. If you paid these rates for 25 years, it would cost $30,000 plus lost investment opportunities. A lot, yes, but nothing compared to the cost of replacing, repairing, or rebuilding a home, or paying legal fees when a clumsy neighbor trips over your tulips. 

Product Insurance: I recently purchased a $30 fan at a big retailer. They offered additional insurance/warranty for $9.99 for two years of coverage. Hmmm… How do I say this clearly? It’s awful! The insurance costs a full 30% of the price of the product! And many credit cards offer an additional warranty automatically on purchases made with that card. Maybe you are saying, “Yeah, there is NO way I would buy that.” But keep in mind, they do not continue to offer it because no one is buying. A lot of folks are, and it’s incredibly profitable for the company, and the way it’s sold at checkout makes it easy to “include it in the cart” without really thinking about it. Buyer beware.

AAA Roadside Assistance: It’s how this conversation started, so I’ll finish here. My AAA plan is about $100/year. I hope it’s $100 wasted. However, chances are I will use it, just like I had to last week. There are specific benefits that can be measured against the annual AAA fee, and they can be substantial (calling for assistance, towing, jumpstart, etc.) but with this insurance it’s also about the uncountable costs incurred when you or a loved one is stuck on the side of the road in the middle of two things – the night and nowhere.

You can get affordable roadside coverage through your auto insurance as well but be careful to get the full details on what is covered. In my experience, some of those car insurance add-ons are not comprehensive.

Other Insurances: I apply the same process to all my insurance decisions. Cost analysis first, then add the uncountable.

Cost/potential benefit + intangibles = is it worth it?

Still Not Sure?

If you are facing a big increase in your insurance premiums or trying to decide whether to buy a certain insurance, shopping around and evaluating coverages and deductibles are the first steps to take. I also recommend finding a local agent to help sort through the details and shop for the best coverage/price combination.

Insurance is a necessary piece of our overall financial wellness. It’s not going away, and it’s not going to get cheaper or easier to manage. While I can’t tell anyone what kind or how much insurance they need, I can help (and I am happy to, just send me an email) with the analysis and how to evaluate the options.

Once upon a time, in a high school far enough away, I taught a full-year economics course. And in that course, I often referred to classic schools of thought and, of course, to Adam Smith, philosopher, economist, and the fellow generally considered to be the Father of Capitalism. I enjoyed playing devil’s advocate and provoking students to analyze U.S. economic policy by asking “What would Adam Smith say?” I find his invisible hand theory fascinating to look at through the lens of 21^st century economic realities and the evolution of global markets.

Fast forward to the end of one school year, final exam time, and I was excited to see a student’s (let’s call him, JT) analysis of whether our economy was truly a free market system. As he dove into his argument he referenced the Father of Capitalism, Atom Smith. Atom. Not Adam. I assumed it was a typo, it gave me a chuckle, and I moved on…on to see all references to AS were Atom-ic.

It was a good essay, and I did not take off a single point for the Adam/Atom issue. But I had to ask, and I had to wonder if or how many times I had referred to AS in writing during the year. I certainly wrote his name on the board, didn’t I?

So, I asked, “Atom Smith?”

“Well, I honestly didn’t think about it much,” JT replied. “It’s just that all year long I had this image of Smith as sort of an economics superhero, and from that I drew Atom as his name, rather than Adam.”

Did not see that coming. I remember thinking and wondering how many concepts, terms, or people might have been slightly and/or humorously misinterpreted by my students when I got on an economics roll. Which brings me to a favorite line from a favorite character from The Princess Bride.

“I Do Not Think That Means What You Think It Means”

That’s what Inigo Montoya says to Vizzini after he keeps taking liberties with the word, “inconceivable”.

I heard it used the other day to (hyperbolically) describe potential economic policy moves by The Fed, and it made me think about the many financial terms and concepts that are often misunderstood or misused. Here are just a few:

Principal and Principle

In school we learn to respect the top authority, the principal. In finance, our principal is the initial amount of money borrowed or invested. And principle is the foundation of a concept, truth, or argument.

Let’s give this a try:

The principal, while covering a class for an absent economics teacher, instructed the class that the principle of safe investing is to protect your principal.

APR and APY

APR = Annual Percentage Rate, the declared or stated rate of interest for an investment or a loan, can also include fees.

APY = Annual Percentage Yield, the actual amount of interest earned (or paid) when including the effect of compounding.

You might see a CD with an APR of 4%, but it also lists an APY of 4.07%. Interest compounded (monthly in this case) attaches to and grows the principal, so at the end of a year, you’ve earned more than 4%. See the link at the end of the post for a great APR to APY calculator.

The Federal Reserve Bank and The U.S. Treasury

The Fed is the nation’s bank and the bank of banks. It was created by Congress in 1913, and its principal function is to manage the nation’s money supply to maintain stable inflation and employment. Jerome Powell is the current Chairman.

The Treasury was created by Congress in 1789 to manage the nation’s money and pay its bills. The Treasury prints money through its Bureau of Engraving and Printing and produces coins through the U.S. Mint. Janet Yellen is the current Secretary.

Although it’s not easy to define exactly what the Fed is or isn’t, it is easy to clarify this common misconception – the Fed does not print money, the Treasury does (it is true that the Fed’s actions can directly lead to the Treasury printing money, but the Fed itself does not print money).

401(k) and 403(b)

While both are tax-advantaged employee retirement accounts, they differ when it comes to participation and investment options. Eligibility is straightforward: 401(k)s are for employees of for-profit companies while 403(b)s are for employees of non-profit institutions. As for the investing part, 403(b)s can invest in annuities and mutual funds while 401(k)s can offer additional opportunities such as bonds, individual stocks, company stock, and ETFs (What’s an ETF? Read on…).

Mutual Funds and ETFs (Exchange Traded Funds)

These are both widely used options for investors to diversify their stock market holdings. The main differences lie in the details of how they are managed and traded.

Mutual Funds are actively managed, and trades can be made only at the end of each day. There can be a performance benefit from active management, but there are fees that come along with that.

ETFs are often passively managed and shares in the funds can be traded like stocks. ETFs often track an index or an investment sector. ETF investors like the flexibility of being able to trade shares during the day, just as they can with individual stocks.

The differences between the two are not as distinct as they once were, but each still has its niche in the world of stock market investing.

ATM Cards and Debit Cards

ATM cards allow access to an account only through ATM machines.

Debit cards allow access to accounts through ATM machines and through point-of-sale transactions, just like a credit card. Debit cards with the Visa and/or Mastercard logo are processing your purchases on the same digital money highway where all the credit cards drive. So, stay in your lane!

And, yes, ATM cards still exist. Some banks have done away with them, but they are around at most banks if you ask.

***

English is tough enough on its own, with an endless number of confusing words, homonyms, idioms, Adams, and atoms. When combined with the huge and ever-expanding glossary from the financial world, it can seem impossible to keep up. So, let’s keep learning little by little, word by word. To not do so would be… Inconceivable!

I don’t currently have a TV, and I am spending a few minutes of these TV-less days thinking about whether I want to have one again. However, I’m thinking back to when I still had a TV, and a conspicuous ad caught my ear. Yes, my ear. I was cooking, not really watching the screen, cutting veggies, and listening to Captain Picard bark out commands when I heard (paraphrasing), “I just got a new car … and I know I can afford it because it fits my monthly budget.”

Ahhhhhhh! I had to look up from my work, nearly causing an unfortunate carrot-knife-finger-slicing incident.

The ad in question was from a certain car company with a cute animal mascot and is just one in an endless line of examples showing the American marketing machine at work, making (excess) spending so easy—too easy.

We are conditioned from a young age to see costs based on monthly payments. Paying for things monthly has a place in our society and is not always a bad thing. It makes sense for mortgages, utilities, and other expenses that are incurred monthly. However, thinking we can afford something because it fits a monthly budget is at least a contributor to long-term financial stress and at most an absolute drain on our ability to build wealth and maintain financial stability.

Oh, I’ve Been There, Spent That

I have “owned” new cars; I loved them. Got my first one when I was 20, financed by my 30-hour/week grocery store job and my parents’ (co)signatures. It was a four-year loan on a Plymouth, but after just three years I saw a sporty Dodge Shadow and just had to have it. Of course, thanks to my low down payment and depreciation, I was upside down on the Plymouth—owing more than the value of the car.

“We can work with that,” the sales rep told me as he leaned on the soon-to-be mine Shadow and adjusted my sunroof. “What kind of monthly payment can you afford?”

Ah, there it is. They “rolled” my unresolved debt from Car #1 right into the loan for Car #2, added another year to the term at a slightly lower interest rate, and … it fit my monthly budget. The reality was, however, that it was a financial mistake. I couldn’t afford the car—the total cost of the car. Yet I did the same thing not three years later with new Car #3, which was a little more expensive and the loan included a little more debt “rolled” in from the last car.

I found my financial footing a full decade after Car #3, and a big part of getting things together was facing and understanding the cost of those car loan decisions. How bad? Let’s just say it was thousands in interest and depreciation. The worst part was learning that I had paid interest on the debt from Car #1 rolled into my payments on Car #2, and so on. The other worst part was when I came to understand the opportunity cost; the 5-digit actual costs in dollars could have been invested or used for education or saved to buy a future car—IN CASH!

Would a basic personal finance course in high school have helped me avoid this misstep? Who knows for sure, but I know I would have liked the chance to find out.

The Inevitable One-Hand/Other-Hand Analysis

The car payment is likely the biggest-ticket depreciating asset that we tend to cram into our monthly budget rather than looking at whether we can afford the total cost. But there are others like furniture, appliances, electronics, etc.

On one hand: Buying things based on payments gives us the ability to have things now that we can’t afford now.

On the other hand: Buying things based on payments gives us the ability to have things now that we can’t afford now.

The American Monthly Payment Mindset (AMPM—can I trademark that?) extends to mobile phones, insurance, and streaming services, just to name a few. True affordability requires looking beyond the 30-day view.

Tips and Disclaimer(s)

• Count smaller monthly items as annual expenses. For example, the average American has 4.3 streaming services at an average cost of $17 each. It’s far too easy to say, “Oh, I can sign up for QuickFlix, it’s only $17/month.” Maybe the question should be, “Hmmm…I am spending about $800/year on streaming services. Can I afford that? Can I afford thousands of dollars over five years? What else could I do with part or all of that money?”
• Analyze a car purchase based on the total cost of various options over a period of years, say seven, which is now the average term for car loans in the US. Compare new and used cars looking at that total number including expected repairs, interest, taxes, and insurance. Send me an email, please. I am happy to help with that process. I’ve crunched the numbers to dust, and I can say that buying a good used car and borrowing as little as possible always wins when it comes to the Best Financial Decision. For me, eliminating car payments from my life has been one of if not the biggest factor in turning my finances in the right direction.
• Turn the monthly payment mindset into something good—use it for savings. Cut a streaming service and start putting $17/month into an IRA or into a 529 education savings account. Try this savings calculator, watch the money grow.
• Determine what can be paid annually. My auto and home insurances are discounted by about $75 by paying in full for the year (or six months for auto). That is $75 to pay for something else or to save.
• If you are a millionaire, buy any car you want, and while you are at it, buy one for a friend.
• Business tries to make it easier for us to buy, putting the unaffordable within reach. That’s their job, maximizing stockholder wealth and all that. I get it. But our job is to spend less than we make today in order to have a better financial tomorrow.

I am not preaching; I have no right to. I’ve made the mistakes listed in this post—some more than once. I was fortunate to realize that the path I was on was draining my financial stability and my ability to build wealth. I was robbing my future self, the me of today, who has found solid ground but who has also become an expert in the “If I’d only known then…” phenomenon. I’d like to see a TV ad leave us with this thought, “I can afford this car because I sacrificed, saved my money, paid cash, and have no monthly payments.”

Last time I outlined my experience learning and then learning to love economics. Now it’s time for detail and ideas for economics-related discussions in personal finance classes.

Maybe Starting by…

Refreshing yourself on or learning anew these core principals and passing them on to your students and community (another mention here of FAME’s YouTube channel and the webinar I did last fall on the economics-personal finance connection).

I offer each of these along with teaching nuggets and/or “Steveisms” in italics.

This also seems like a good time to mention that as part of my work at FAME, I visit classrooms and organizations (in-person and/or virtually), and I’d love to talk about visiting yours to talk economics and/or personal finance. Email me!

Trade-off and Opportunity Cost: A foundation of economic thought and really the cornerstone of personal finance. Every decision is a choice; every choice has a cost. Accept the cost or make a different decision. Opportunity costs are often not measurable in dollars but still have financial implications, the great example being the cost(s) of our time.

“Who bought something today? You made a trade-off. What was the opportunity cost? What were the non-financial opportunity costs? Who chose to come to school rather than sleep in? What are the costs of education? What are the opportunity costs of not having an education?”

Scarcity: It means that, simply put, there isn’t enough of anything, and that forces us into decisions or trade-offs. Welcome to the basic problem of economics.

A terrific exercise for the classroom is to challenge students to think about resources that they assume are unlimited, then work through situations that prove otherwise, get into what happens to prices, etc. Grains of sand are endless, right? There could never be a shortage, right? Look at this article.

TANSTAAFL: There Ain’t No Such Thing As A Free Lunch. The key is to challenge students to identify and understand costs associated with decisions and think about, “Is free always free? Is free always a deal?” This is a daily challenge for all of us, isn’t it? When a business offers a “FREE” TV with a purchase… Come on, is that TV really FREE? Did that restaurant really give me a “FREE MEAL” or did that coupon actually cost me $50?

I always advised my students to be wary of “FREE”, typically saying something like, “Hold onto your wallet, back away slowly, eye contact optional.” The more serious message being that, once again, everything has a cost. The key is to root out that cost and decide if it’s worth it.

The Circular Flow of the Economy: I admit, this one sounds BORING, but it’s actually very interesting and is perhaps the glue of our economic system. To summarize, everything is connected. The CF (with its lovely diagram for visual learners) shows the relationships between working, earning, and spending, between spending and business vitality, and between business vitality and working, earning, and spending. It matters because it shows us how our role as consumer conflicts with our role as financially responsible citizen/family member/cog in the economic wheel.

Core discussion: Is savings is a withdrawal or an injection? Is savings good or bad for the economy? Take a look for more on injections and withdrawals connected to the CF of the economy.

Inflation and Prices: I don’t like paying $50 to fill my gas tank.  However, economics (with some help from math) shows me that adjusted for inflation, a gallon of gas is hovering right around the cheapest it’s ever been. Economics, and the perspective it provides, reminds me that it’s not a politician or an evil oil company causing me pain when I fill my tank. I’ll use my energy to focus on expenses I can control, on larger environmental concerns, or on the costs (and opportunity costs) of converting to the next major source of energy.

Have some fun with the class and explore prices as they compare to the “Good Old Days” with this inflation calculator. For example, 40 years ago a gallon of gas cost $1.21.  Adjusted for standard inflation it should cost $3.65/gallon today. The average price/gallon in the US now according to AAA?  $3.60. Wow. The overwhelming political/message is that gas is outrageously expensive and it’s <insert name>’s fault. Gas prices are in line with inflation. What’s not? A pound of ground beef cost $1.30 in 1984. Adjusted for inflation it should cost around $3.92 today, but no, it does not. The average price/pound in the US is around $5.20.  Where’s the society-wide, media fueled and politically charged cry for change?!?

Politics and Economics: Economics is my filter. It helps me decide if a policy is good or bad for me or for my community. It can be hard to distinguish between economics and politics but remember this – economics doesn’t benefit from being elected; it is what it is, an honest and objective analytical tool.

Have the class look at almost any political ad from any era, ask the students to identify the economic concepts and discuss whether the message of the ad is rooted in economic truth or political persuasion.

Honorable Mentions:

• The Federal Reserve, monetary policy, interest rates, and they affect consumers.
• The Paradox of Thrift (I predict that there will be a post dedicated to this gem).
• The theory of wage-price spiral and inflation in general.

Quick Quiz

Economics:

A) is a great tool for supporting our personal financial decisions.

B) is a great tool for understanding political conversations.

C) doesn’t have to be boring – you can make it sizzle.

Yep, all of the above.

In our economic system – let’s call it Mostly Capitalism – there is no escaping the incredible weight of decision making when it comes to managing our personal finances. We need every possible intellectual asset at our disposal.  I recommend using economics as a key tool for you and your students on your personal financial journey.

We’ve been through a lot, econ and me, and although we are in a good place now, it hasn’t always been easy. The stages of my relationship with economics, starting with the most recent:

• Love it, need it, teach it, preach it.
• The “Ah ha-I get it now-this is fascinating” stage. A major turning point thanks to my experience in the Peace Corps and to a graduate refresher course.
• In my 20s there was no econ or personal finance, just credit cards, car loans, and consumption.
• Junior and senior years of college, one professor planted an idea or two.
• Freshman and sophomore years in college…Read on.

Lecture Halls, Production Possibility Curves, and Yawns.

Just a few years ago (hahaha, define … “few”) I majored in economics at Southern Connecticut State University. I chose economics because it was the best way to get a business-related degree without taking a lot of math. Ah, the rationale of a 17-year-old. So, in the fall of that year, I fired up my old orange Subaru and headed off to class, but the start of my economics education was inauspicious at best.

You are probably familiar with this scene: a lecture hall with 150 students for Day One of Econ 101 – Principles of Macroeconomics. Yuck. What followed was 100 weeks (ok, it was only about 12) of sleepy lectures filled with aggregate output curves and the impact of public goods.

The only thing worse than those classes was the textbook – 4.5 pounds of graphs and chapter titles like, Factors of Production and Aggregate Supply & Demand. Absolutely no knock on SCSU or the teachers – it was a function of large classes, a tired yet established way of teaching economics, my age, and the absence of meaning in the abstract theories, numbers, and charts.

Econ 102 followed, which focused on microeconomics and rocked our intellect with production possibilities curves and the price elasticity of widgets. Then came the 200-level courses which were slightly deeper dives delivered in smaller classes.

Halfway through the degree, I was considering a switch to sociology.

But in my junior year I was able to take econ electives, and everything changed. Professor Crakes gets full credit for sparking what would become a foundational topic both in school and in my pursuit of personal financial righteousness.

A Few Years and a Few Credit Cards Later

In post #2 of this blog, I mentioned that during college I stumbled and fumbled with money. Credit cards were easy to get, with monthly minimum payments fooling me into thinking I could afford yet another thing that I didn’t need. It was a time when I wasn’t connected to my personal finances or to economics. Eventually, and fortunately, these two pillars of financial life came together and ever since I’ve included econ in my personal finance classes and in my personal financial life.

In fact, it was while I was teaching economics at a high school in Richmond, Virginia, that everything gelled thanks to a “Macroeconomics Refresher” course at the University of Richmond and another influential teacher. I enrolled to brush up on concepts that I never felt connected with back at the start of college. The instructor was Dr. Gerry Swanson from the University of Arizona.

You might not have heard of Dr. Swanson, but some of you will recognize this name – Ross Perot – the one-time independent presidential candidate (1992) and his 30-minute prime-time infomercials where he lectured American voters on economics. Remember the charts? He used a lot of them, and 16 million people tuned in for the first installment. Well, it turns out that Dr. Swanson was the guy who made those charts. Politics aside, it was fascinating to hear details from that campaign.

But not as fascinating as what he showed us about the economy and how it affected every one of us.

TANSTAAFL, Trade-Off, and Opportunity Cost

Dr. Swanson came in one day wearing a t-shirt with TANSTAAFL printed across the front. We finally asked and he answered by turning around and showing us the full phrase on the back, “There Ain’t No Such Thing As A Free Lunch”. He then led us through an exercise in trade-off and opportunity cost, showing the costs associated with “free” things. The bottom line was that nothing is free, and at the core of every economic choice should be a consideration of opportunity cost (the cost of making a choice).

Around that time and in the years since I realized (and continue to remind myself almost every day) that the key to personal financial behavior lies in this core economics concept.

As we went on to study economic policy, The Federal Reserve Bank, and the national debt, it became clearer than ever that although our government (regardless of party) does not adhere to Econ 101, 102, 202, or 502, individuals should be using econ basics to inform our decisions about money. That pushed me to double down on my efforts to manage my personal economy regardless of the state of our national monetary or fiscal policy.

Sharing the Love

Understanding economics is integral to personal finance and, therefore, to personal finance education. It helps by holding up a mirror to our behavior and by helping us understand the economy, how it swirls around us and affects us, and how we affect it.

Yes, this is about economics. It’s also about the impact and power of good teaching.

We learn in our own ways, and I am sure that since the time of Adam Smith many have learned and enjoyed economics taught the old-fashioned way. However, for me, and maybe for entire generations, those heavy textbooks and even heavier graph-centric lectures did not do the topic justice.

Economics came alive when I was lucky enough to have teachers who made it relevant. They didn’t just explain the nuts and bolts of elasticity of demand, they illuminated the connections to everyday experiences, especially when it came to decision-making and money. Those teachers inspired me to do the same for my students.

To survive and thrive in our system takes more than just managing money and resources. It also takes an understanding of how everything is being managed around us. We might not always like what we see or hear, but being armed with the skills to interpret it is vital.

Next time, I’ll share my thoughts on what I think are some critical economics topics that fit perfectly with personal finance. In the meantime, you can check out this webinar on FAME’s YouTube channel  I recorded a few months ago. According to at least one friend it was, “a good listen while driving”.

The following sounds like one big, loud, and proud advertisement for Maine Jump$tart and the educators who are bringing personal finance education to Maine students.

It is.

They are among Maine’s many financial education champions and heroes, and they are making a difference.

Way Back to May 7, 2010 – Augusta Civic Center

This day marked THE turning point for me as a personal finance teacher. It was also a big day for The Maine Jump$tart Coalition for Personal Financial Literacy.

It was the group’s first Annual Fostering Financial Education in Maine Schools Conference, and it inspired and empowered me to take my efforts in teaching personal finance to another level. Fast forward 15 years to May 17, 2024, and Maine Jump$tart will be putting on the 15^th iteration of this annual event. Along the way, these trainings have reached hundreds of Maine teachers and community educators who have taught and influenced thousands of Maine students.

Jump$tart Me Up

Prior to this event, I had already converted two math electives at my school into a fall offering called, “Business and Finance”, and a spring course, “Personal Finance”. I covered key economics topics and banking in the fall; balancing checkbooks, insurance, credit score, etc. in the spring. Somewhere around eight to ten seniors (out of a class of 60) were taking the elective. (Enrollment would triple in just a few years.)

Then, at the May 7^th event in 2010, this happened:

• I heard former Governor Angus King speak about the importance of financial education.
• I learned about SIFMA’s Stock Market Game.
• I met folks from The Federal Reserve Bank of Boston.
• I learned about and eventually attended a unique teacher training event at The New York Stock Exchange.
• I spoke with other educators from around Maine and heard about what they were doing in the classroom.

I drank from the fire hose, and it was wonderfully overwhelming!

I went back to the classroom and for the rest of the summer, I chipped away at revamping my courses. Here is just a sample of what I added for the following school year:

• The Stock Market Game
• A several-week-long budgeting spreadsheet exercise
• A unit on credit score
• Increased focus on how the Federal Reserve’s role in the banking system affects consumers
• Games, web tools, and lesson plans
• I worked with students to start a Finance Club and to form a team for the Boston Federal

And that was all just from the first year of attending the conference. I’ve attended almost every conference since, helped to plan and deliver a few, and along the way, I learned about FAME. And yes, that has turned out to be a big deal for me.

The Maine Jump$tart Coalition for Personal Financial Literacy was founded in 2008 as an affiliate of the National Jump$tart Coalition, with a mission “to improve the financial knowledge of Maine citizens, with a special focus on pre-K through college-aged students, including adult learners.”

Since its founding, Maine Jump$tart has delivered more than 20 training events for teachers and other professionals working in areas connected to community financial well-being including guidance counselors, social workers, financial aid officers, and school administrators. Another key initiative from Maine Jump$tart has been the Financial Educator of the Year Award, first awarded in 2012. Thanks to many sponsors and volunteers, all these events have been provided at no cost for Maine teachers.

Last month I introduced this blog with the fact that Maine students are not required to take a personal finance course to graduate high school. I also mentioned that despite that truth, personal finance education is happening in Maine, and a significant amount of it has been influenced, inspired, and even created thanks to the outreach of Maine Jump$tart and every conference attendee since 2009.

They are doing this even when the state doesn’t require it, even when it’s hard for schools to find time in the curriculum. They are doing this mostly because they believe in it and because their students and their families tell them it matters.

Maine Jump$tart permanently and positively changed my personal finance teaching at one event in 2010, and in the years since I have tried to pass on that gift by serving on the board, delivering presentations, and listening to what others are doing in their classrooms.

It is indeed a coalition — one made of financial education heroes. Join us for this year’s event and take your program or your vision for a program to the next level.

P.S. Maine Jump$tart was awarded State Coalition of the Year by National Jump$tart for 2023. It is the SECOND time Maine has earned the honor with the other coming in 2013. Not too shabby.

My name is Steve Kautz, and I am a Financial Education Programs Specialist at the Finance Authority of Maine (FAME). I visit schools and businesses, deliver webinars, attend events, write, and try just about anything else I (or my boss and colleagues) can think of to promote financial wellness in Maine. Before starting with FAME in July 2023, I taught math, economics, and personal finance for 20 plus years, worked as a training coordinator for the Maine Jump$tart Coalition for Personal Financial Education, and served as a U.S. Peace Corps Volunteer in the Czech Republic ’95-’97.

Joining FAME has been a legitimate career milestone, not simply because it’s a great place to work, with a mission I share, but because it has allowed me the opportunity to join a committed agency and scale my efforts in financial education statewide. FAME’s myriad of resources and programs designed to improve the economic lives of Mainers through business growth and stability, education, and financial capability, enable me to do something I love and believe in every day.

Welcome to my blog and to Financial Literacy Month (yes, it’s a thing, every April).

On December 13, 2023, Pennsylvania became the 25^th state to require a standalone personal finance course for high school students. One organization leading the charge is Next Gen Personal Finance (NGPF), and they use the phrase, “guarantees a standalone personal finance course” for high school students. Maine is not one of the 25 states to require or guarantee a standalone personal finance course for high school students. Recent attempts (in the form of LD 1284) at the Legislature to achieve this for Maine high school students have not been successful. 

So, for at least another legislative session or another year (likely more), FAME will keep advocating for Maine’s high school students to have guaranteed access to personal finance education in some form before graduation. 

Randomly selected, but not randomly focused statistics:

• 88% of American adults surveyed say that personal finance should be a high school graduation requirement (NEFE – National Endowment for Financial Education study, 2022)
• 60% of US adults are living paycheck to paycheck (Lending Club Corporation, 2023)
• $152,000 = the total cost of a four-year degree at a public university (Educationdata.org findings, which include lost income opportunity and interest on loans)
• 18 = the official age when we ask someone to take on the above-mentioned financial decision
• Credit score… yuck. We all know what it is, and the simple fact it exists and stays with us, like that old pair of shoes you just can’t get yourself to toss, should be enough to make financial education as integral a part of schooling as US history.

So, am I here to convince you that Maine needs to find a way to ensure equal access to financial education? Not really, because I know that, statistically speaking, I am preaching to the choir. 

However, there is a connection.

Right now, in Maine, there are already bunches of teachers teaching personal finance to even bigger bunches of students. This is happening through required classes, electives, seminars, clubs, and competitions. This is happening even though the state doesn’t require it. And behind these teachers there are more teachers and organizations providing training and curriculum support. This is happening because the adults in the room care about giving our kids – our state – a fighting chance out there in the American economic wilderness. 

This blog/newsletter/semi-organized-words-on-your-screen is about personal finance, money, and the need to talk about money. It’s just another small way of promoting financial education in any way I can, one person at a time if necessary, until Maine becomes the 26^th state (and even then, I’ll still be fighting to deliver what we promise). 

Let’s Chat

I’m not an expert on building wealth, financial markets, or bond prices. What I am is someone who spent many years making financial mistakes and many more years working to overcome them. Along the way, I started telling my stories and teaching personal finance fundamentals – sometimes teaching what I was still learning myself. I am – I have become – an expert in taking my love for numbers, an understanding gained from my own money mistakes, and my keen eye for economics and turning them into a way to engage my community to navigate the opportunity-filled yet hazard-laden American financial system. 

I’m not here to deliver or teach the details, although I will provide resources to that end. I’m here to push the conversation about personal finance so that Maine’s youth, and ultimately all Mainers, benefit. I want to do this as if we were sitting around a table, coffee in hand, learning from each other.

I’ll tell my stories and offer thoughts on everything from interest to banking to credit cards and more. I’ll ask former students for their stories and how having had personal finance in high school has affected them. I’ll ask you to search for your experiences and get in touch with your own money story.

Join me for a few minutes a month?

When I was in high school, the closest thing we had to a personal finance course was home economics. While I don’t fully trust my memory, I can safely say that some aspects of what we now call personal finance were a part of that course – opening a bank account, balancing a checkbook, tracking expenses, food shopping and meal planning, etc. But in my school (anecdotally speaking in most schools I’ve heard about), it was a course that the girls took while most of the boys took “shop”.  That and the fact that these courses gradually disappeared from many schools are topics for another day.

Whether its home economics or personal finance, it is, ultimately, personal. Our unique experiences are what separate the topic from the bigger world of finance – the one with international trade, currency fluctuations, PE ratios for stocks, bond markets, and other dizzying concepts. 

Our story is the one that matters.

So, I’ll tell you mine (well, just part one for now) if you’ll promise to at least think about yours. It would be even better if you would write yours. I found the experience enlightening, liberating, emotional, and satisfying.

It was 1974, and I was the youngest paper boy in the state. Every morning, I hit the streets of Derby, Connecticut, sometimes in the dark, sometimes on my bike, sometimes in the car with mom, but most often alone. I made my rounds, placing the rolled up New Haven Register papers inside screen doors or dropping them in mailboxes. I delivered to houses, pizza places, and law offices in brick buildings with huge wooden doors. Once every two weeks, in the afternoons, I made my collections, took home the 20 or 30 envelopes, and laid them on the kitchen table. I reconciled my receipts, calculated what I owed the company, counted my profits, and figured how much I could put into my savings account. I was nine years old. When I was 12, I would turn much of those savings into my first major purchase – a Radio Shack stereo, along with a few of the best rock albums of 1977 including Point of No Return, Book of Dreams, and The Grand Illusion. What a system: work, earn, save, spend, repeat.

On the mornings when mom drove me – either because of weather or because I was nine – we somehow found time to stop at Dunkin’ Donuts. Mom got a black coffee and we both got double chocolate donuts. I remember one morning, after I’d had the paper route for a few months, when I paid. I couldn’t get the money out of my little change pocket fast enough. I still choose the double chocolate donut when I go to The Dunkin’, and I think of those mornings with mom. 

I got my first credit card at 20, and by the time I was 25, I had at least seven or eight, each carrying balances of several hundred dollars or more. The system had changed. Work, earn, spend more than you earn, pay interest, work even more to pay for it all, repeat. By 27, I was caught in a dismal cycle. My job paid well, but I hated it. I needed that job because my obligations had grown along with – no, grown faster than – my income, and I couldn’t match it doing something I wanted to do. I was on a treadmill that was outrunning me, and with each day I saw that my job was sometimes contributing to others’ treadmills. I soon found myself looking beyond that misery and reaching for the philosophical. What happened to the paper boy? What kind of system is this? How do I get out?

Edge of your seat, I know. Spoiler alert – I did climb out of that mess and have gradually found firmer financial ground. However, that rough start was expensive, and I’m still paying in terms of opportunity cost. Let’s just say that my expected retirement age went up while my lifestyle options while retired…yep, they’ve gone the other direction.

Not only do our stories matter, but they are also incredibly effective when teaching personal finance. In my experience, students are more likely to listen to and put into practice financial education when the messages have a face and feel real. It’s no different than that history teacher (I think most of us had one) who used stories to make past events and people relatable and interesting. This is the core reason why someone like Dave Ramsey has built a “money-talk” empire – he teaches from vulnerability, failure, and rebuilding.

We want our students to remember our lessons and messages. Stories and humor are emotional. Emotion prints memory. You can use your personal lessons and/or help students connect with and tell their own stories about money. This can highlight their experience so far or can help them explore what they want their personal finance story to be. I used to add an alternative project or supplement to writing a personal finance story – a personal finance road map – where students could make a poster-like project showing stages of their life and where and how money fits into their life experiences, goals, and dreams.

I know a few people who seem to have never made mistakes with money. I know a few more who have enough wiggle room to make mistakes with a capital $ on the end. However, most people I know (and, statistically speaking, the vast majority of Americans), have tripped and fallen and continue to stumble on their personal financial journey.

This former financially savvy paper boy turned wallet-full-of-plastic guy got to work on getting it right when I faced up to the reality of where my money behavior was taking me. The biggest steps I made along the way came when I dug into and learned from my mistakes, when I understood my story. 

I hope you’ll dig into yours.