Save Or Spend? Dr Jan Libich Interviewed about Personal Finances for Channel 31's Real Series

Welcome back to Real we are sitting here with Doctor Jan Libich who is a senior lecturer of Economics and he's hopefully going to give us some insights into how we can help create a more sustainable feature for ourselves and also look at our spending and splurging and all the things in between so thanks for joining us today Jan Pleasure. Did I say your name wrong? Libich? No, it is all fine I sort of lost it... It's alright, look, you need to practice a little bit more but I am sure in a few years' time you'll be able to pull it off we'll do a few more of these interviews when I'm a real boy! Thanks so much for coming in today... You are welcome We are going to talk about spending, and spending I think for people at the school anyway, for people of our age is a very... is it important? Absolutely. I suppose initially would do you think is the biggest problem that we have in regards to... or the biggest mistakes that people make in regards to how they work their finances policies Look, it seems one of the major problems is that they "put all the eggs in one basket" they don't diversify in the sense that uh... the a you know if it's something they did it happen sirf official kids uh... they they're going to lose their savings as opposed to having it spread in two different type of investments in which case they would make my do something but they would lose all of it rock admissible schooled died as a physician so so one of the examples this if you if u i have a job with a certain company and then all your of savings is actually invested in the stock on that same company if the company goes under not only you lose your income because you lose your job would you also lose your just reading so whereas if you if you have invested in other companies or you know how the type of investments and minnesota so what you're saying is join take all my money and put it on black that well that's exactly right got shot put it on bread for her who well not quite know how i got some really diverse for mobile falling as i hope i roulette and blackjack moves i think have by reggae bowling is also one of those thinks that one of the common mistakes that people make entitlement is gambling the casino but the you know many people try to outsmart the market and and they go and they think they're gonna win in the stock market or they gonna buy some you know in the exchange mcbride markets are going to buy some currency and and and thing is going to go up there gonna make money it's it's exactly the same iska ceo you know you might win as status putting your money on red or you might lose but on average you are expected to lose a little bit because the author against you it's like zero in the casino so here the fact that you paying some kind of uh... transaction cost for this sort of stuff means that on average you gonna you going to be in there you know and kind of you know make a lot of these disasters allegedly uh... does like to see nothing that what that sort of thing so when you say the market you may not stock markets stock market or the ah... uh... doing it in in that area foreign exchange functions and so on is a good thing to do boring town citizens inspecting it stop uh... again no i'm not proud of gambling on the short term gains but as a part of part of your diversification you know if you have different sort of currencies it's it's probably a better thing than having this one currency because the more currency can go up and down whereas if you if you spread it across different currencies you know at my kind of cancel each other out so you the start of diverse education is about minimizing risk yeah and then you can do that even without kasich refined sick refers in some kind of return so you may keep your return but the way you may lower the risk which is something wrong with it rolled out lowering exactly uh... um... what sort of what used to young people that'd just sort of stunning and often regards managing their case drivers of depression would be one thing you know we want them to uh... sprinted across different type of investments but one one one advise i would uh... give is not to you know to leave their bid more of a bonfire many people seem to be kind of optimistic in you know do this kind of wishful thinking and they just did just go you know when they go for a mortgage and they just uh... uh... that too optimistic about the future uh... um... retrain common at is def something donovan unexpected happens to my and i must be very stressful if you just every month you discounting the numbers in the you hoping you will break even so and that that that stresses unnecessary so i would advise people not to go for the dream house but maybe go for the small house or you know that the small car yes just to be on the safe side and and maybe a border lesson this is is just too and you know not to are not to try to fall into this skate keeping up with the johnsons kind of mentality where you always have to have for dual classmate of what your neighbor has something that could be very detrimental to people's well-being to be detained the in the khalifa left on wednesday three their lumen honor not a good thing noticing what should we be spinning and money on uh... world you know i think that you moving joy i mean it's it's very individual some people might be in jordan you know traveling and and bungee jumping and some people might enjoy you know the big tv and staying at home all playing with a pizza you know there's no perfect answers that question but just east of the makes you happy not because it make somebody else who has a social safety net these are noticing threatening event prompting from getting it unadjusted gross of creek on arm imo kato's guest story three book flat screen beat a big is that too many again i mean there's no no there's no clearance for missus keep one of those one of the basic catch here is an economic tells you that you can't compare utility it all kind of well-being or satisfaction across different people you know that there are some basic things that weekend you know if you stopping we know that said that's a really bad thing but once your basic needs accom thing though food and drink and clothing and so on then whatever is in trouble that it's very subjective from insert so by the same tokens very hot to sail objectively that you know for a millionaire that you or to that you know uh... luxury car is is actually needless soul *** you know that they don't need it or they didn't meet three pas martinis uh... you don't know how how happy makes them um... and you know we might have had a deal that i i i i certainly don't know what i a t_v_ like that in their own way might them i'm not sure it is always laugh at me because my aunt my i only get a new mobile home when the old one breaks down and you know i have learned his i was happy for you old cars and stuff like that but that's not you know that's my personal preference and i think it'll be wrong to impose it pawns in a on on someone else uh... of the same thing wofford on some prepaid if you believe that kids are good include financial ever best hitler got one for thirty-odd yet that there is no combat everyone who tells me to get off on plant wickets it's everybody's thing you know they they kinda worker with best for them and we shouldn't run algis sedonis on social stuff agreed not going to trust the government but i trust the government magnet and have to be you know it was fine even offer those affected more friend should together he was really excellent and that he put it aside but in having a fan of of uh... a grace i needed antarctica unlike the who say that is really sort of such a little plaintiffs really just a little while then they saw it on to your phone number to all that looks like the old hot-button educators pink thing or another car they add i don't get it but you know maybe i'm old-fashioned of world's repeated calls for hearing on airline have no problem with people you know this is one of those things if you you see people doing all sorts of things that uh... viewpoint crazy you know you see people balls writing in doing that very dangerous stuff for you know climbing mountains and and i think i believe in to add a space and then john and free falling exactly and and you know how you say the fact that they do it in the risk their life reveals that it must have a at very high value to them you know men and two other people it may have no value at all so again that this is just implies that it would be wrong to just say well having three cost three luxury causes is just is just wrong and you know it's it's everybody's everybody's difference that everybody's everybody's descon compare how how much happiness that additional prob brings to that person as opposed to somebody else you know getting an and normal kat to be able to commute to work region we just can't make objectively we can make that comparison venture lebow's assault is one thing that mumbai listeners absolutely or resin hated me gobble up hey he's lost on us but he says what your doing it watching uh... probably not probe he doesn't know what you hear someone intimate and is in a reality check so it's which is called for religious maybe as much an edge and no there were none real memorial on real because you know really could use social existential crosses that we've been iso haircut well that horrible lead what my license like uh... especially when i wilkins in from our efforts to students but success in rio of not read enough may choose to be having some session and uh... well i can give you some books for yet their paradox with because they are uh... actually aspect serafin struck police headquarters for you know soon approach should start reading it before subtle kehna the books are in that i've not read now that's the best thing to talk about things that you have no idea about realize that's what the criminalists with all the time hotel around lol that's exactly what kinds of so much bad information because i was looking in and they started on the internet has caught your buttocks and linux an illegal acts are just totally shattered off from those who died as a cat we put more savings so what we were talking a little bit than a minute phone it's it's okay uh... hao importing is it too instill what good saving habits into children lost her story on the children are very important as it is a raging debate uh... in biology and many other disciplines about you know that nature versus nurture distinction you know what what's the effect there isn't more the jeans is that more than a kind of are bringing in more than will be education you know my my reading of the literature is that you're both are important but the uh... the early childhood uh... influences uh... are really crucial and especially before seven the city exactly i mean a mark from the age of fire general basically anything from once it is good come that's that's in chains are because the people that are uh... in selling these values on the children come from a distance hall sorry you know that no difference hormuz imo without his into *** xa sensual crossed for you they come from the you know the name of from an older generations of things of college hangs a little bit well i think i think everyone you know when they grow up taken off stuck with a certain basis and then they might go in different directions you know depending on that personal influences and that's that's what we would think that i can give you some uh... and there are some interesting examples of how how the early childhood uh... uh... you know how important is that this didn't do there's been a this uh... stanford marshmallow experiment and have you heard about it in the early nineteen seventies and ghostbusters and compose known around them and not a no-no bruce willis either uh... but uh... the uh... the bottom line is that they took for your old kits yes and they need a day of the them and much more and they said uh... look you committed all if u uh... wait another twenty minutes year without eating it willing to do another national and lazy do what they were testing is is this theory of delayed gratification and whether you are able to reno would division of of some future of what will you able to resist the temptation you know where you patient enough to to to sing about the future as opposed to the just the present and and he did yes and than they were looking at the same cues over time and what they were finding is that what you know the decision whether they were able to resist or not was that was a great predictor of success later on including things like in a high school rights here so it seems like you know if you have small kids this is one of the things you should try to teach them you know not to want everything now but also to thing about you know you might have you might have something left foot tomorrow and that sort of thing ambitious and the reason is important because uh... to be successful in life we really have to thing about the future we need to accumulate education human capital we need to we need to save to be a will to invest you know that sort of thing and if if we if if people don't have it than dating gauging very that behaviors or in sub-optimal behavior just interesting basilica think that the savings monkeys ones with 'em predawn like much most of the disease so but the name of them i have here c may have been able to get the same kind of outcome yet in fact some animals of formally more forward-looking and more patient then dismisses any human skin to see that we've progressed from stunning monkeys known to humans with same tests stiletto marty some results soldiers and that's as he just the this thing is really links to arab it has uh... big impact on the from the society or as a whole i mean if you think about crime crime is very much about whether people can you know delay gratification because if if iffy using you know should i commit that crime and should i get that money and spend it all or or will i get in jail later on if if people operations and and on this kind of future day they will not commit crime because they'll be deterred by by the sentence yeah but if if if people are not like that then they're more likely to do all these kind of things you know these impulsive things uh... to have a short term payoff but uh... over the long term let me give you a very interesting statistic in the chest thing about the united states and look at the um... that was more guns well there's also a red affect her probably but and look at the the group of uh... i'm uh... s for american males uh... who dropped out of high school now how without whatever proportion of these people do you think will have to end up in jail by the mid thirties here probably the number knock me pretty yahoo throats two-thirds two out of freedom hall in the medical in in that group would have been in jail by the mid thirties and you know obviously the the social cost is huge not only does it cost a lot to keep them in jail and i think the estimates in australia alike dole is a day uh... for four person the but in all these indirect costs of for basically you know these people not working and not contributing to the society so and that that they will be linked to be early childhood to intervention if they have been more patient and that they had were able to uh... better delay gratification they would've probably not committed these these crimes uh... sustain school or you going to jail that's the message right yet when i wish you had stuck to the merciful and arsons with a mess it up known i was good i was just making a joke about you having been in jail but mission to say how do you know well then you look more attractive for that below that i thought it was a kid the ice on the trip to the new back as the others from the tro president kitamura there but let's not let's let's not go there because someone's gonna get sheehan uh... real actually run its own complete those bilkul correlational utah gayle potter ca uh... although this one couple questions just in regards to needless panic that sourav that says i mean spending um... how much misleading statements in the depends on for u comparing yourself to them and if you if you're comparing ourself to even you know a few hundred years ago even better in a few decades ago their basically all of the disney lets them in a few decades ago we didn't have more well forms and wouldn't have dared to do some and wouldn't have you know a lot of the things we would take for granted now or were you know most of it would be needless and and that sort of sense but if you compare yourself with your old classmate of your friends then it seems like everything is is totally dresses sorry especially if you're a teenager and then you just have to have to his thinks that those in the sort of spending blockbusters nielsen discretionary spending in a way sort of you'll ever call me uh... anonymous it is true that the more people spent uh... that kind of generates the the demand so the the firms respond to the name they produce more in the the official economic statistics like the gross domestic product that they were once connor focusing on the a they tend to grow that's that's true uh... you know if we did had less uh... spending uh... then obviously you'd be saving more money and and that if you have more savings you could invest that so maybe you'd be investing and your examination or you know so that just uh... depends on that's just the composition of of of the things you know whether we buying uh... with the real buying new mall kozol plasma tv so whether we you know getting smaller through investing knows who's to spending more time in in education and so on yet but it's causing looked a bit is the best thing for whale connie is to when you get money spent on something that you conduct i really need to look at a day what was the short term that still short term curls review and that's that's the view that the politicians cut-off portion yes and it is true if you if you could see a stop doing that you know if these people stop spending and and and you know safe more that is going to have a chiltern negative effect on the economy effect this is the sense that they called the paradox of the three ft ambitions also paragraph but also their you're only eight states sometimes wrongly attributed to hurricanes but it was actually you know it's much older than him and what did they read the story is that suppose you you were not increase your saving prob and but i said no one doubts that there because it has a negative effect on the economy from see no one's buying our products we have to fire people will have to reduce wages then in fact you might end up actually wind-whipped would lower level of savings than than at the beginning and that's probably happening parent really uh... you know in in europe and uh... and then the united states where people kind of realize oh we need to say more uh... it's this g leveraging and uh... had an israeli homilies down and then the appearance of this year it's very interesting side we could be here for tags forty minutes on opening night usually if russia lost about twenty minutes and say garuda's erroneous ownage head of how to keep ten her thick agar just invite you to one of my lectures with the colors are dropping i'll be the homeless often going back there's more than present with the prison pat that's fair thanks so much for comments a surfing source of astonishing knowledge in all it was and helpless because a lot of people thing embolism opposition universally that's kaunas needs to sort of loss and if you get a daily expenses but is heavily so you can do about the future thanks so much i think all of the list that will grade that you've certainly given us a lot to think about so effective joins your thank you spamfighter yeah thanks uh... packages from the pulpit junior legislator of the ellen says jesus pasta sudah proof tomorrow thanks so much again