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Personal Finance 101 Part 2: Money Can't Buy Happiness 640 Views


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Transcript

00:01

We speak student!

00:05

Personal Finance 101

00:08

Money Can't Buy Happiness

00:11

a la Shmoop

00:13

So we're talking about money and happiness.

00:16

The name of the lesson is "Money Can't Buy Happiness."

00:18

But finding 20 dollars in your sweatpants never hurts.

00:21

So my question for you is

00:22

can money buy happiness?

00:25

Boy, you know, it depends on your personality.

00:27

It's a great question.

00:28

The Beatles sang a lot about this stuff

00:31

and it was easy for them to say money can't buy you happiness,

00:34

because they had hundreds of millions of dollars.

00:36

So it's easy for rich people to tell you,

00:39

"Money can't buy you happiness."

00:40

The reality is

00:42

there's a lot of people in this country who are poor.

00:44

They go to bed hungry.

00:46

It's the people where money's always an issue.

00:49

[ whoop ]

00:49

They can't afford adequate medical care for their kids.

00:53

They have to worry about where they go shopping for clothes.

00:56

They have to wait for sales

00:58

until they can buy the important things they need for their families.

01:02

That's normal Americans. That's probably a third...

01:04

You know, something like that. A big percentage of people.

01:08

And so I'd rather have money and be happy.

01:12

So at least I can control where I'm gonna live

01:16

and what I'm gonna eat and how I'm gonna clothe my kids

01:18

and take care of the people I love,

01:20

because without it, you're kind of a projectile

01:23

in today's society anyway.

01:25

Okay, great. So another part of this lesson is talking about basically

01:31

what money is worth, what it means.

01:33

So why can the amount that a dollar is worth change?

01:38

Got it. Well, you bring up two issues. One is inflation,

01:41

historical inflation.

01:44

And the other is what the dollar buys here

01:47

relative to what it buys in Europe or somewhere else.

01:51

So let me start with the first one.

01:55

In 1960,

01:58

an average home in California sold for about 12,000 dollars.

02:02

And that was about the same home that today sells for about a million dollars.

02:07

But it's the same home.

02:08

[ say what?! ]

02:09

And all that's happened is that wages change.

02:12

There's been inflation of three, four percent, something like that, over the years.

02:16

And there's this handy-dandy calculator called the "Rule of 72,"

02:20

where you take the rate of change each year,

02:23

divide it into 72, and that's the number of years it takes to double.

02:28

So if you think about what a dollar buys today versus, say, 50 years ago,

02:33

it's a fraction because we've had so much inflation.

02:36

A carton of milk when I was a kid was ten cents.

02:38

A carton of milk today is a couple dollars and change.

02:41

So it's the same carton of milk, it's the same cow,

02:45

it's the same grass, same air and everything else.

02:48

But it just -- We print more money as a country.

02:51

Which leads me to the second point.

02:53

So Americans print

02:55

money to pay our bills.

02:57

We have all this federal and state and so on debt.

03:00

And by printing a lot of money,

03:02

it lets us pay off those debts easier.

03:04

And while we print a lot of money, compared to Brazil,

03:09

we print very little.

03:11

So the rate of inflation

03:13

of U.S. money that's out there in various forms

03:17

simply accretes, or increases

03:19

at a lower rate versus that of Brazil or other areas.

03:24

And there are all kinds of other factors

03:26

that affect this.

03:28

Natural resources like oil, gold,

03:32

Other things that a country might have that are desirable,

03:35

including a government that people trust.

03:38

So when there are wars

03:40

and things that break out,

03:41

people "retreat" to the U.S. dollar,

03:44

and so the U.S. dollar, just because of the laws of supply and demand,

03:46

where there's a lot of demand for a limited supply,

03:49

the price of the dollar goes up.

03:51

Very complicated stuff you probably don't have to know in high school

03:54

other than the general concept.

03:57

[ whoop ]

03:58

Can money buy happiness?

04:01

Why can the amount a dollar is worth change?

04:07

[ crowd vocalizing ]

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