Money Explained on Netflix (Series Review)
The 2021 Netflix series Money Explained dives into topics related to personal and national finances. Although it is based in the US, you can view the five 20-minute episodes in many European countries.
But what exactly do they cover, and are they useful to investors outside the US? Let’s have a closer look.
KEY TAKEAWAYS
- The five topics explored are “Get rich quick”-schemes, credit cards, student loans, gambling, and retirement.
- There is a strong US focus, but many of these issues are applicable to people around the world, so the series could be worth watching regardless.
- It focuses on explaining the issues and the history behind them as well as demonstrating what researchers and policymakers are doing to counteract them.
- However, there is little focus on personal responsibility and individual solutions.
- I found the content interesting and informative but didn’t come away with much new knowledge about how to handle my finances.
Here is the full analysis
Money, Explained - Official Trailer
Get Rich Quick
The first episode explains how people keep falling for “Get Rich Quick” schemes, which promise great wealth for a small fee.
The presenters go into detail about past scams.
For instance, a 19th Century Scottish adventurer named Gregor MacGregor invented a country in Central America, called Poyais, and sold people land in it.
But unfortunately, the country never existed, and MacGregor fled with the investors’ money.
While this may sound like an extreme example, plenty of people are still falling for similar tricks.
There are a number of different scams currently out there:
- Advance fee schemes ask you to pay some money now for a lot more money later, but the reward never materializes.
- Pump and dump schemes are initiated by investors, who buy up a large amount of an individual stock. Other people then believe that it is valuable and also start to purchase it, driving up the price. Once it’s high, the initial investors sell, thereby driving the price back down.
- A Ponzi scheme uses new investors’ money to pay older investors while claiming to make a profit.
- Coaching schemes sell you a course that is supposed to make you more money, but it doesn’t work. The scammers get rich selling the course, not implementing the methods illustrated in it.
The experts in this episode warn that everyone can fall for these tricks, and we should be exceedingly cautious.
They state that “if it sounds too good to be true, it probably is” and advise listeners to report fraud because that’s how scammers eventually get caught.
Credit Cards
The first universal credit cards were invented in the 1950s.
Before, people used loans from banks when they needed extra money.
They were judged on their ability to pay the money back, their available collateral, and their character.
Nowadays, credit cards are ubiquitous, with almost everyone using at least one, and your credit score determines the type of offers you receive from financial institutions.
Some of us use our cards as transactors, which means that we pay them off in full every month.
The credit card company doesn’t make money off these users, except for transaction fees charged to the merchant.
Others are revolvers, and they have long-term debt and pay high fees.
A few people are credit card hackers. They spend a lot of time maximizing the signup and bonus rewards they receive from various cards.
The experts on the show recommend that you pick your card carefully, choosing the lowest interest possible.
You should always try to pay off your balance in full. If you already have debt, figure out how much you should be paying each month or week to get rid of it quickly.
Automate these payments, so you only have to make the decision to pay once.
Student Loans
The third episode of the Money Explained series discusses student loans.
It goes into detail about the history of this type of debt and how devastating it can be for people who don’t immediately go into high-paying careers.
The relevance of this section depends on how higher education works in your country.
All the examples are American, but some of the info might apply to people in England or other countries with high university costs.
The series discusses how the US government is moving more and more of the cost of university on the individual, making it hard for graduates to afford a life that used to be within the reach of most people.
Defaulting is a big problem, affecting around 10% of borrowers, and it can cause the whole balance to become due immediately.
People who can’t afford their student loan payments might have their wages or assets garnished, and their credit score will tank.
Fortunately, there are some programs that can help, so anyone struggling with student loans should contact their lender or independent advice sites.
In the future, new policies might be developed to take pressure off the system. In the meantime, students will need to choose carefully what degree and loan they choose.
Gambling
In the fourth episode, the problem of gambling is explored.
Since the gambling industry needs to make a profit, the average person loses hundreds of dollars a year, and people addicted to betting can lose everything, including their home and savings.
Gambling isn’t only about the money but about the high we experience between the time we place the bet and we receive the outcome.
What’s more, we engage in magical thinking and create patterns where there aren’t any, which makes the activity more appealing.
Towards the end of the episode, trading apps like Robin Hood are mentioned.
In some way, they act like casinos and mislead young or new investors, who lose a lot of money trying to time the market.
Unfortunately, the episode doesn’t present any concrete strategies to help people break their gambling addiction or avoid losing money.
Retirement
Retirement is the topic of the final episode.
Studies have found that we don’t psychologically identify with our future selves, so we don’t make good decisions for our future selves.
92% of Americans aren’t meeting their target, which might be around $1 million if they are looking to sustain an average lifestyle.
The series compares retirement to a stool with three legs: the first is your pension, the second is social security or the state pension, the third is your personal savings.
A fourth leg, your social network and family support, is also mentioned.
In many countries, defined benefit plans, which give workers a set amount of money in retirement, have been replaced with defined contributions.
Under this plan, your retirement money depends on how much you put in while working and the performance of your investments. For many people, the current system is confusing, so they don’t save as much as they should.
The experts advise saving regularly and automating payments to your retirement accounts.
Some researchers have also tried to bridge the psychological gap between our current and our future selves through animations.
However, this isn’t currently a widespread strategy, and retirement continues to be a problem.
SHOULD YOU WATCH THIS SERIES?
How we rated this Series
Our overall rating comprises five key considerations, including suitability for beginners and European and UK investors.
1. Beginner-Friendly
2. Investing Concepts
3. Investing How-to (Europe)
4. Financial Freedom Principles
5. Personal Finance Know-how
1. Beginner-Friendly
2. Investing Concepts
3.Investing How-to (Europe)
4. Financial Freedom Principles
5. Personal Finance Know-how
Rating justification
The Netflix series Money Explained addresses five problems that affect people around the US and the world.
It is designed to be understandable for everyone and is therefore very beginner-friendly. For people who don’t like reading books, it could be a great starting point.
However, the focus is very much on the problems and not on the solutions. Some episodes offer basic strategies, while others only discuss the national solutions that are being worked on. In some cases, the tone is defeatist.
Regardless, I enjoyed watching the series and found the sections about the psychology behind our decisions and the history of our financial system especially interesting.
If you are interested in learning more about finances, especially “Get rich quick”-schemes, credit cards, student loans, gambling, and retirement, this could be an enjoyable series for you.
Good Luck and Keep’em* Rolling!
(* Wheels & Dividends)
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