8 TEENFINCA®: Teenage Financial Capability

Ex-nba star reveals how pro athletes lose it allMany teenagers aspire to be great sports stars, earning massive salaries.

It is easy to believe that being a well-paid sports star guarantees a comfortable lifestyle into the future. Sometimes it doesn't happen that way.

In the news from the USA is this story about some young athletes who signed multimillion-dollar contracts and then 'wind up dead broke, if not bankrupt and homeless, by the time [they] turned 40'. The article refers to a book, Winning the Money Game: Lessons Learned from the Financial Fouls of Pro Athletes, by ex-NBA Player Adonal Foyle.

Foyle says pro athletes go broke because of constant bad fi nancial advice and decisions.

It doesn't matter how much wealth a person has, that wealth can disappear very quickly if thoughtful decision-making isn't in place.

This is another reason why you should consider seeking lessons and experiences about fi nancial decision-making.

The more fi nancial knowledge and wealth-management skill you have, the better you will be able to manage your money, your assets and levels of debt.

Find out more:• We sign contracts with no knowledge ...

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In the news

Pawnbrokers profiting from miseryThere are several shows on pay television that re�lect an interest in pawn broking. Pawn shops are legitimate businesses that provide a service in our community by lending money against the security of property such as jewellery, watches, tools, guitars, drum kits and other household items. The item pawned may be retrieved on payment of the amount of the loan plus fees and interest. Recently, however, their role in our society has been increasingly called into question by the fi nancial services industry and social welfare groups.

This article claims that the pawn broking industry is not regulated by responsible lending legislation, which means that pawn brokers are able to determine their own fees and charges. The author, Clare Rawlinson, says 'low income earners and those on government benefi ts are charged 420 percent interest per annum on loans they are unlikely to [be able to] repay'.

The article provides several examples of people who have fallen victim to the exorbitant fees and charges of pawn brokers.

Financial knowledge is imperative if anyone is to use a pawn broker. You must clearly know how their credit system works and the consequences of your actions.

Financial decision-making is once again central to this consideration. The more fi nancial knowledge and wealth-management skill you have, the better you will be able to manage your money.

Find out more:• Pawnbrokers charging 410% interest ... www.abc.

net.au/news/2015-07-16/pawnbrokers-profi ting-from-desperation/6622310

Big banks support ethics classesThis article is interesting because its topic is central to the conduct of the professional fi nancial services industry. People have to trust the fi nancial planners, bankers, brokers etc. who give them advice on their investments; ethics is the key to this trust. [A defi nition of business ethics is, 'the set of moral rules that govern how businesses operate, how business decisions are made, and how people are treated'.] Consumers want and expect fi nance professionals to act ethically.

It is interesting that the Australian Banking Association believes that ethics classes are needed. There is evidence that some fi nance professionals who, while employees of banks within the ABA, did not act ethically, obviously to the detriment of their clients. This is a concern.

Any online research will reveal many examples of class actions brought by unhappy investors against fi nancial institutions, and investigations by the Australian Securities and Investment Commission (ASIC) of fi nance 'professionals' who are deemed to have acted unethically.

As a future consumer of fi nancial products and services, you should keep aware of these discussions. It is in your best interests to follow the ‘ethics in fi nancial services’ debate.

As students you learn about ethics within the curriculum, and you will see examples of ethical and unethical behaviour in your studies. These discussions are important to you because you will be able to apply that learning to future negotiations with fi nancial services providers.

Find out more:• Big banks support ethics classes... www.abc.net.au/

news/2015-05-07/big-banks-back-extra-education-for-fi nancial-planners/6453936

Electronic pickpocketing an increasing threatAlmost every adult in Australia has a credit card. It is likely you will too, in the near future. If you do, you will almost certainly have a tap-and-go or contactless card, for which you don't need to know the personal identifi cation number (PIN) when using the card to make purchases costing less than $100.

The key points from this article are:

• identity the�t has doubled from 2012 to 2013

• credit application fraud is at its highest level since 2009

• identity thieves may exploit contactless credit card technology in order to wirelessly pick people's pockets

• contactless credit cards are one of the main drivers behind the rise in crime rates.

If the police are worried about these cards, so should you be. Being an educated fi nancial consumer means knowing the pluses and minuses of the fi nancial products you are using.

Take some time to learn about these cards before applying for and using them.

Find out more:• 'Electronic pickpocketing' looms as next threat...

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'Learning never exhausts the mind.'Leonardo da Vinci

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