I think the importance of financial education is pretty underestimated. But just to illustrate, investing $10 a month into an index fund would mean something like $100K saved up for retirement. Even if you’re poor, it is usually possible to find that $10.
The calculation seems off by almost one order of magnitude. Even investing 10$ a month for 50 years (!), and managing to get a net return of 7% for such half a century, will build up only about 50K. Except that, by that time, even a modest inflation rate of 2.5% will make it worth less than 15K in real terms.
Which makes sense, otherwise any childless person in the West with a decent job could save 1k a month and retire with 10M, or a Google SWE5 living with a SWE4 lifestyle could save 10k a month and retire with 100M.
Was about to say that 7% is low, as I got ~13.5% and 15.5% return this year on medium risk profile. But it seems the average over the last 10 years was indeed 7.9%, only 10.22% on high risk profiles. (At my "bank" thing, not worldwide)
The historical average for the S&P 500 is 6% with inflation adjusting. But even with your math, 15K is a big change given the current median retirement savings.
AFAIK, the issue isn't finding that $10/mo; although I'd still definitely agree that financial education is underestimated; I'd certainly love to have had a lot more! But, AFAIK -
The issue is when something goes wrong, and you have to choose between the gas bill and mom's meds. And then you need to choose between saving that $10/mo for retirement, or for emergencies; or taking what's been saved out of the retirement fund (if that's even possible) because, well, an emergency.
Had a colleague have to sell some (most?) of their BTC at $100 to make some student loan payments. As an example.
On the other hand, it has been shown that financial education has very little effect on people living in poverty, but you know what has a big effect? Money, giving poor people money (not even large amounts) has the biggest and longest lasting effect on getting peoe out of poverty.
The notion that poverty is a character flaw and that poor people just need to be better with their money, is just propaganda so that it's more palable to cut welfare programs.
To see how ridiculous it is, you just have to think about the other ned of the spectrum, the most financially irresponsible people one can observe are typically some rich kids, does it have any influence on their financial/economic future?
Ok, lets say you have saved up 10 000 USD in an index fund, and maybe 500 USD in cash in the bank. You car breaks down, you need it to get to work. The heck you going to do?
Education can only help so much when you are poor.
Most poor people are just earning enough to live day by day. Getting financial literacy would help little.