Everywhere you turn these days, some bigwig policymaker is talking about the importance of financial literacy education. Here’s Ben Bernanke doing it. And there’s Tim Geithner and Arne Duncan. Even the President. It’s easy to understand why we feel like we need this, what with all the bad financial decision-making of recent years. The only problem is, there’s a fair amount of evidence that a lot of what we do to teach better financial habits, like courses in high school, doesn’t work. Some research has shown that financial education is more likely to stick if it’s focused on one topic and comes right before a person makes a related decision—learning about mortgages as you’re house shopping, say, or getting a lesson in compounding interest along with your credit card.
But maybe there’s a simpler approach. Maybe we should ignore real-world complexity altogether and just teach people financial rules of thumb.
A presentation at that microfinance conference last week got me going on this train of thought (although I’m by no means the first to ride it). In this experiment, researchers taught one group of small-time entrepreneurs in the Dominican Republic formal accounting, including double-entry bookkeeping, cash and working capital management and investment decision-making. Another group was taught simple rules of thumb, like “keep personal and business accounts separate” and “write everything down.” The results:
People who were offered rule-of-thumb based training showed significant improvements in the way they managed their finances as a result of the training relative to the control group which was not offered training. They were more likely to keep accounting records, calculate monthly revenues and separate their books for the business and the home. Improvements along these dimensions are on the order of a 10% increase. In contrast, we did not find any significant changes for the people in the basic accounting training. It appears that in this context, the rule-of-thumb training is more likely to be implemented by the clients than the basic accounting training.
When I caught up with Greg Fischer to ask what the U.S. consumer-class take-away might be, he was appropriately modest about his findings and hesitated to draw any universal conclusions. I lack such compunction, so let me say that I think this result contains a very important piece of wisdom. People live complicated, busy lives and the learning they are most likely to put to use is that which is simple to remember and implement. In Fischer’s study, some microentrepreneurs received follow-up training at their place of business: an educator stopped by to reinforce concepts and to answer questions. Once this happened, the group that received the formal accounting training applied what they had learned. But unless we want to set up a system in which your high school consumer finance teacher pops back up just in time for your first mortgage, rules of thumb might be the way to go.
And, actually, we already have many them. We just need to dig them out of the dustbin we tossed them into during the free-money euphoria. For example, don’t spend more than 2 1/2 times your annual salary on a house. And don’t take out more student loan debt than you expect to earn in your first year on the job (assuming you have the option). As Jack Bogle once said: ”Your bond position should equal your age. I won’t tell you this is the best investment advice you’ll ever get, but the number of pieces of advice that are worse is infinite.” It’s not terribly complicated to figure out what we need to teach. We just need to jump to it.
Are you an entrepreneur, solo business owner or freelancer? Are you keen to get regular business advice but don’t have the time to work out which blogs to subscribe to? Well, we’ve done the research for you.
Here’s a collection of business blogs aimed at entrepreneurs and small businesses. These have been chosen for their insights, advice, presentation and overall appeal to business people. Hopefully you’ll find these blogs cover all the business management advice and business trends analysis for your needs.
1. Harvard Business Review
Harvard Business Review is a staple in any entrepreneur blog collection. The blog delivers timely business analysis and professional management advice.
2. Young Entrepreneur
When you’re just starting our with your business venture, things can be a little tough. Young Entrepreneur focuses on the things you’ll need to know – financing, bootstrapping, identifying opportunities and making sales.
3. 64 Notes
64 Notes gets straight to the nuggets of gold by bypassing straightforward management tips and filling each post with those eye-opening things that change your business from alright to amazing. They also write a lot about how to avoid being the start-up that failed.
4. The Personal MBA
The Personal MBA is a blog dedicated to teaching all the tips and tricks you would have learned if you had done a degree in business. It recommends books, summarises books and draws on advice given freely by great minds in business. If you follow this blog you will learn a great deal about managing your business.
5. Instigator Blog
Instigator Blog is a very insightful blog, mainly discussing thoughts relevant to small business and entrepreneurs, written by an entrepreneur as he works on his business.
6. Fast Company
Fast Company is a major business blog, covering business news and trends. It’s vital information if you want to know where business is heading.
7. Entrepreneur Blog
Entrepreneur Blog is a site dedicated to providing business insights to entrepreneurs. It will analyse business failures, successes and trends, while offering sensible advice for any business owner.
8. The Entrepreneurial Mind
The Entrepreneurial Mind is a business blog written by a Belmont University professor of Entrepreneurship. His academic insight into the world of the entrepreneur is a great balance to the news and trends offered by other blogs.
9. Creative Web Biz
Creative Web Biz is a great blog for all the artistic entrepreneurs out there. This is a place for those people who are entrepreneurs, but don’t much care for all the business management advice and trends. This blog is entirely focused on how to get that art out there and sold. Highly recommended for musicians, artists, and makers of other crafts.
10. Work Happy
Work Happy is a blog offering advice for anyone in business for themselves. It’s useful for freelancers, small business owners and entrepreneurs alike. It features a lot of video presentations from entrepreneurs to keep things interesting.
Bonus: Entrepreneurship Interviews
Entrepreneurship Interviews added itself on to the list by being a wealth of information in the form of interviews with entrepreneurs. It’s not much to look at, but there is a lot to be gained by listening to what other entrepreneurs say candidly about their own business ventures.
More Blogs
If you’re keen to see some more great blog lists from MakeUseOf, read on:
- Four Best Inspiring Blogs Every Life Hacker Should Subscribe To
- 3 Personal Finance Blogs That Will Get You Out Of Debt
- The 10 Most Stunning Photo Blogs
- 6 Best Web Design Blogs To Follow
- The 6 Best Blogs For Architectural & Interior Design Ideas
If you know of other great blogs for business people, let us know in the comments!
Image Credit: Shutterstock
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