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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.
Full Transcript
- 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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