Survey: Parents Discuss Money More Than Sex and Drugs
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What headlines open this Money Briefing and who is the host?
With your money briefing, I'm J.R. Whalen at The Wall Street Journal in New York. Young people ages 16 to 25 have an alarming lack of knowledge about saving money and debt management. Are their parents any help? We'll go into detail in a moment. First, these money and market stories you need to know. More good news for the U.S. economy. Durable goods orders rose 0.2 percent in July. The strong demand has been a shot in the arm to U.S. manufacturers, driven by higher oil prices that spurred energy sector investment and solid growth in some foreign markets. Plus, the Trump administration's late 2017 tax overhaul encouraged broader business investment. Only piece of bad news in the durable goods report was a steeper than expected drop in transportation equipment orders and specifically non-defense aircraft and parts orders.
It was led for the most part by Boeing, which saw several canceled orders in July. Wall Street Journal intelligent investor columnist Jason Zweig writes that behavioral economists have a message for investors. That cocky voice in your head is wrong. A main hallmark of behavioral economies is that people are overconfident. That is, they believe they know more than they do, or they assume their knowledge is more precise than it is. Plus, people often fall into a trap known as confirmation bias, which leads most people to seek out evidence supporting what they already believe or to ignore data that might disprove their beliefs. Jason Zweig also details other behavioral findings, such as short-term losses or costs often blind investors to the pursuit of longer-term rewards, and the so-called sunk cost fallacy, which leads many people to keep trying to justify a past decision even after it's become obvious that it was a mistake.
What recent durable-goods data and manufacturing trends were reported?
And the Wall Street Journal real estate desk reports that billionaire investor Warren Buffett is slashing the price of his California beach house to $7.9 million after putting it on the market for $11 million in February 2017. Don't feel too bad, though, for Buffett. If the property sells for its new asking price, he'll still make an impressive return, having paid just $150,000 for the home in the early 1970s.
For some people, the financial scars left by the Great Recession of a decade ago are still fresh and instilled a new set of lessons. For many young people who saw firsthand the impact of the recession on their families, their financial outlook remains upbeat. Charles Schwab Senior Vice President Cary Schwab-Pomerantz is here with the results of a recent survey of young people about their financial outlook. So, Carrie, young adults age 16 to 25 were surveyed, and not only are they upbeat about their financial future, but they see it as being brighter than their parents.
Yeah, it's really interesting. This study, well, first of all, we wanted to conduct the study because these are young adults on the cusp of independence. And like you mentioned, these young people grew up in the midst of this great recession. And we do talk so much about older adults, you know, have they recovered from a job or from increases in their salaries and so forth. But we never talk about how it affected our youth at the time. And so these 16 to 25 year olds were as young as first grade. So imagine how impressionable and how much it can really affect how they think about money and behave. There's definitely some great outcomes from the lessons that they've learned. There's some optimism, perhaps a little unrealistic, and also some of their behaviors that show that they could use a little more education.
You know, there was something very troubling from the survey. More than one third of the respondents said they skipped a meal because they didn't have enough money. And that seems to translate to a lack of knowledge about debt and money management.
There was definitely some different outcomes or behaviors that we learned about these youth, and definitely the whole notion that they are skipping a meal tells us that they're not really understanding how to budget and prioritize their money.
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Chapters
4 chapters
1
What headlines open this Money Briefing and who is the host?
0:05–1:44
2
What recent durable-goods data and manufacturing trends were reported?
1:44–4:14
3
How did transportation equipment and Boeing affect the durable-goods report?
4:14–5:26
4
What behavioral finance lessons does Jason Zweig highlight for investors?
5:26–7:48
Speakers
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