Learning to manage our money can be as easy as going to the movies.
Over the decades, the ups and downs of the financial world have made for great cinema. But art can also be instructive.
Despite their focus on larger-than-life characters and their propensity to glamorize excess, many Hollywood blockbusters offer invaluable insight into personal finance that we can all incorporate into our daily lives.
Here are five money lessons from movies.
1. Wall Street
Greed is good, says Gordon Gekko of Michael Douglas in Wall Street, because it is the motor of the evolution of humanity. Oliver Stone’s 1987 Oscar-winning story of a young stockbroker lured into the world of corporate espionage resonates just as strongly 35 years after its release.
The film provides an introduction to how financial markets work and how investors can benefit from calculated risk. It illustrates the role of demand and supply, how news (and insider information) drives up valuations, and highlights the role of market regulators.
Through a gold trade in Hong Kong, we learn how money never sleeps in a diverse global market of many asset classes.
On a deeper level, the seminal history of excess in the 1980s forces us to question our approach to money.
Is greed really good? Even at someone else’s expense? Our uncertainty about whether Gekko should be a hero or a public enemy speaks to a lingering irony at the heart of capitalism, writes John Paul Rollert, professor of behavioral science at the University of Chicago Booth School of Business, “a moral ambivalence which sees us not knowing if we should erase the smile from Gekko’s face or reflect it”.
These questions remain relevant at a time when global inequalities are higher than ever. the World inequality report in December revealed that the richest 10% of the world’s population currently earn 52% of global income, while the poorest half, on the other hand, earn only 8% of the total pie.
Course: how to make money work for you, but not at someone’s expense.
2. The silver pit
Travel back to 1986 for a lesson in what happens when you fall for bloody stories and don’t do your due diligence.
Sound familiar? Stories of people who cannot pay their debts regularly make the headlines, proving the continued relevance of The silver pit.
Tom Hanks and Shelley Long play a couple who buy a house under pressure and in a hurry. Purchase made, they realize that the building is in worse condition than they thought and needs a succession of costly repairs – for which they do not have the funds.
They learn not to trust slick sellers and that buying a home doesn’t end with closing the deal. Ultimately, they are victims of their own lack of financial planning.
Debt remains a major problem in the Middle East region. According to the 2021 Arab Youth Survey, around 71% of young people in the region are concerned about personal debt. Last November, 4,511 Emirati citizens had financial debt of more than 1.1 billion dirhams canceled as part of a nationwide relief initiative.
Making purchases without a financial plan to pay for them can lead to the accumulation of a high volume of debt over time. Whether it’s a house, car, vacation, or even fancy shoes on your credit card, consider making a list of every potential expense and any unexpected extras ahead of time.
Next, identify a source of funds and try to budget a few months of additional payments before making the purchase.
Course: plan your purchases in advance and always have a financial plan.
3. the wolf of Wall Street
With total box office receipts of $392 million, the 2013 story of the rise and fall of stockbroker Jordan Belfort, played by Leonardo DiCaprio, touched millions across the world. world.
the wolf of Wall Street can be deconstructed for its lessons in poverty, ambition, ethics, and addictive behavior – not to mention how it seems to glorify Belfort’s immoral choices.
But perhaps the biggest financial theme that ripples through Martin Scorsese’s film is the role of unregulated financial advisers. Right away we see how Belfort and his team of brokers drive pump and dump rallies on penny stocks by cold calling potential investors.
Not only is it worth checking their credentials – using sites such as whichfinancialadvisor.com and also asking about commissionable investments – but it is also beneficial to research investments beforehand and to learn to identify their potential.
A February 2019 study by Insight Discovery found that 37% of UAE residents want stronger action from regulators against unregulated businesses and fraudsters.
Those looking to invest their money should either do their own research – another big theme of the film – or invest in passively managed index funds. As the film points out, if an investment seems too good to be true, it probably is.
Course: beware of financial sellers.
4. At the top
In the 2009 animated film At the top, Carl and Ellie start saving for a trip to their dream vacation destination, Paradise Falls, but constantly have to use their savings to fund more pressing needs. When Carl is finally able to arrange the trip as a surprise for his wife, she falls ill and is admitted to the hospital, dying soon after.
The 3D fantasy comedy offers a poignant look at human character, but it contains an important lesson in the motivations behind personal financial planning.
Money is the way to get what we want, but only if we have a strategy on how to use it. Carl and Ellie constantly dip into their emergency fund because they don’t identify separate savings compartments.
It’s worth considering having separate funds for medical emergencies, expenses over a period of job loss, unplanned travel, and family emergencies. Most banks now offer the option of opening additional savings accounts online; setting up regular direct debits is usually a quick process within your banking app.
UAE residents have finally realized the importance of an emergency fund, with 29% of respondents to a December 2021 survey by online financial aggregator Policybazaar.ae saying they now grant more attention to the reduction of discretionary spending and the creation of an emergency fund after the onset of the Coronavirus pandemic.
The next step is to identify and save for different goals, including a dream vacation, so an emergency doesn’t cause you to miss out.
The other lesson of At the top is that with medical coverage and home insurance, you won’t have to dip into emergency funds to the same extent. Although you will still have to pay the regular premiums, you will not pay 100% of the damages.
Course: save for the future, but don’t dip into your vacation fund.
5. Willy Wonka and the chocolate factory
Nobody likes to read the fine print, but it’s there for a reason. This message is reinforced by a series of events featured in the 1971 film Willy Wonka and the chocolate factory, as well as the 2005 version with Johnny Depp.
The musical fantasy follows young Charlie Bucket and four other children as they win a golden ticket to visit a chocolate factory, teaching us about good and bad along the way. However, before they – and the adults accompanying them – can enter the factory, they must sign a waiver surrounded by legal terms.
When the children are injured, factory owner Wonka denies responsibility. He even tells Charlie that he is no longer entitled to his prize, a lifetime supply of chocolate, because he broke the contract he signed in the first place.
Whether it’s an app or a credit card, we’re all Charlie when we sign legal contracts in real life. The fine print is often the only place many financial institutions explain what they are responsible for, the incentives they receive, and the investment and management fees they charge.
On a credit card, for example, 10% cash back on every purchase might sound great, but reading the fine print will reveal any caps on the maximum refund available, writes Carol Glynn, founder of Conscious Finance Coaching, in a column for The National.
A contract may say that you receive 10% or 25 Dhs, whichever is less, which means that you receive 25 Dhs in cashback, and not 100 Dhs, on a transaction of 1000 Dhs.
Sometimes the fine print makes it hard to understand what you’re actually signing up for. In such cases, it is best to make a list of questions and ask the representative of the institution before registering to avoid missing out on that lifetime supply of chocolate when it is too late.
Course: always read the fine print.
Updated: March 18, 2022, 5:00 a.m.