Sunday, June 28, 2015

The English Challenge of Finance for Dummies

As you probably know the For Dummies series of is known for simplifying complicated topics into easy to follow steps and concepts. Nowadays, we can find a lot of this kind of friendly advice on short videos available on YouTube. So for today’s post, we will focus on one featuring financial advice for those who are not experts in the field finance.

But of course, “dummies” is just a marketing name. The material requires a great deal of thought and careful consideration. It is also expressed in a level of English that requires paying very close attention. In other words, it is a challenge.

So here is a LISTENING ACTIVITY we recommend you do with this VIDEO. You will need a solid intermediate level to achieve it.

First review the following questions:

Who is Eric Tyson?
How does he recommend we put financial advice in perspective?
What does it mean to look at your level of consumer debt?
How does Tyson recommend people direct savings into retirement accounts?
Why should we obtain proper insurance coverage?
How can someone reduce their taxes with a Health Savings Account?
How many of these tips are useful outside of the United States?

Next, WATCH the video once and answer the QUESTIONS.

Finally, WATCH the video again, using the transcript and correct your answers. Be sure to GOOGLE words and phrases you are not familiar with. You can also find any finance or business term in

Extra Activity: Prepare a short presentation about one of Eric Tyson’s suggestions and present to your class, study group or record for future assessment.


I'm Eric Tyson, author of Personal Finance for Dummies and Investing for Dummies. I'm also a former financial counselor and a syndicated columnist

Pretty much everyone goes through tough times at some point in their life financially or they’re part of the general difficult environment with the economy. And it's important to keep perspective. One of the ways to do that is the look at the diet of financial advice and information you're exposing yourself to. You want to be very careful not to expose yourself to too much information especially if it’s conflicting or it's causing you to be ridden with anxiety or stress and you should look at that.

There are a number I've are useful measures for your financial health. You know, one one thing I think is really important for people to look at is the level consumer debt for example on credit cards and auto loans that they have a relative to their income. Ideally that should be 0 but if it gets up to be more than say 20 or 25 percent, that's a significant cause for concern.

To secure financial future, several things you should think about doing first. You need to live within your means. In other words, spend less than you earn. Secondly direct that savings into retirement accounts so you can get tax benefits from doing that. Types of accounts we're talking about here are like 401K plans and 403B plans. If you're self-employed, it might be a Keough plan. Retirement accounts are still a terrific guy vehicle to take advantage of. And I think they're kind of misnamed. If they were called tax reduction accounts which is what they were really are, more people, especially younger people would be attracted to take advantage of them. For every thousand dollars that you put in your retirement account you may get safe three hundred fifty dollars in federal and state income tax breaks. everyone gets the federal tax break. And in most states, you can take a state tax break as well. And once the money is in the account, in addition to those up front tax breaks, the money can compound and grow over time without taxation.

And finally, make sure you have proper insurance coverage. If anyone's depending on your income, you need to have life insurance. You want to have long term disability coverage and you also want to have proper coverage of your assets, whether it's your home or car and and things like that.

Psychologically it's difficult for people to the stick with an investment after its decline in value. And during the 2000's we've had two brutal bear markets in the stock market. Bear markets where the market's broad market averages had fallen more than 40 percent. The worst thing that you can do in an environment like that are to sell the stocks that you own after they've already collapsed and drop significantly in value because then you're not going to participate in the inevitable rebound that will will eventually happen.

If you're finding it difficult to stick to your stock market investments one simple thing to do was to go into so-called value mutual funds, value stock funds. These are funds that invest in the safest and most conservative stocks. Stocks that tend to pay good dividends, and invest in companies that tended not be cyclical companies that tend to do well during good times as well as bad. So psychologically that enables you to stay with your your stock market investments. That might be a vehicle to check out.

A number of different ways to reduce your taxes: you know, the first thing that -you know- every year you do your tax return, don't stick it into a file folder after April 15. Actually get it out, take a look at it, cause that can provide a lot of clues for how you can reduce your taxes in the year ahead. Health savings accounts are a vehicle a lot of people should consider if you have a high deductible health plan. Money that goes into the HSA can be deductible on both your federal and in most cases, your state tax returns. Even if you're looking at spending that money immediately on health care expenses, if you pass it through the HSA, so you get the tax break. And finally, look at buying a home. Homes have always been a terrific tax shelter and with prices depressed in many communities are after the real estate market slide in the early 2000's, you can get much better buys than what we've seen in quite some time.