April 2, 2019

Keeping A Financial House In Order - Can We Help?


If HGTV had a show like Flip or Flop or Fixer Upper that dealt with keeping your financial house in order, maybe many of us would be better off. Watching craftsmen and decorating experts transform an OK house into a showcase home has lots of appeal. We realize the process isn't quite as seamless as a 60 minute TV show makes it look. Anyone who has been been through a house remodeling knows it is messy, expensive, and frustrating.

Even so, millions of us watch the dream unfold before our eyes, wishing Chip and Joanna would pay us a house call. So, I wonder what would happen if there was a Financial Flip version. A household with decent income but marginal planning skills and the inability to resist the lure of of consumer society finds itself deeply in debt, just when college costs loom, retirement beckons, and the credit cards are bending under the weight of excessive debt.

In fly the experts, who in 60 minutes, right the sinking financial ship, find painless ways to fund important needs and erase all that nasty credit card debt. To celebrate their new-found financial wellness, the family takes a 7 day Caribbean cruise while the TV hosts way goodbye!

OK, that last bit is a little snarky. Celebrating financial fitness by taking a $10,000 cruise would be stupid. But, in the wonderful world of television fantasy, it would make perfect sense.

In the real world, not the one visited by TV stars putting everything back where it belongs with little pain or sacrifice, financial wellness actually takes work. It requires someone to adopt a long term mindset, one that doesn't mesh well with an instant gratification culture. It is built on a solid understanding of consequences, of the impact on tomorrow of decisions made today. 

To be able to retire and live a decently comfortable life doesn't require rich parents, a six figure income from a prestigious career, or living a deprived life beforehand. It does require at least a dollop of luck and fortuitous timing. What happens in the world's economies, the political climate at the time, even the state of one's own health at that moment, can play an outsized role.

Finally getting to my central thesis, your financial house must be constructed on a solid foundation. This is where I suggest retired folks can help. We have a lifetime of experience: mistakes, successes, missed opportunities, and decisions that turned out well. It should be our job to be the Financial Flip resource for younger generations. 

I teach Junior Achievement classes to 4th and 5th graders in a lower middle income neighborhood not far from my home. The kids are intelligent, street-smart, welcoming, and grossly unaware of how the monetary system that controls their lives really works.


As I explain the basics of our economics, I can see eyes open wide. When we talk about saving for the future, using education to help them achieve their goals, the importance of STEM knowledge, it is a new world for them.  They sense this awareness gives them more of control if, and that is a big "if," they understand how much of what they do today affects tomorrow.

They know how to navigate the Internet much better than I. The online world is where they live. But, that world places value on everything being instant and available now. That world does not teach knowledge, it teaches reaction.

I would venture to guess too many of those in the 20's and 30's, raised in that world, also lack a real understanding of how the way they treat money and their resources today will impact their 50s', 60's, and beyond. Most understand that Social Security will probably be a crippled version of itself by the time they require some assistance. Even so, saving for retirement is not on their horizon. Working forever, assuming "things will work out," I'm not sure what they are thinking. Obviously, there are financially smart younger people around. I contend they are more likely to be the exception rather than the rule.

But, it is not too early for those school kids, nor is it too late to help our children's generation. I suggest we have the responsibility, the time, and the life-experience to make a difference in the financial wellbeing of the generations that will follow us.

How? Well, Junior Achievement volunteering is one path. So is talking to your grandkids about money, how credit works, and what siren calls of society they should tune out (get the parent's permission first !). Offer to present a Basics Financial Literacy class to a Boy or Girl Scout Troop near you. Most churches offer financial counseling and seminars. Can you help? Since it is never too late to make some sort of course correction, look for a chance to mentor or counsel at a Senior Center.

For those of us with some wear on our tires, it is common to bemoan the lack of financial education younger folks seem to possess. More beneficial and certainly more productive is to share what you know.

You may think you are not financially savvy enough to help in this way. I disagree. If you are retired, relatively comfortable in whatever income and living standard you have chosen, then you are a winner in the world of financial decision-making. Don't downplay what you know and what you can pass on to others.


Find a way to pay it all forward (without using a credit card!).


Note:after spending over a month trying to get Wordpress to do what I want, I have shelved the move away from Blogger for now. I don't want to add a bunch of features, places for advertisements, and interactive options...something WP excels at. So, for now, I'll leave things be.

20 comments:

  1. I am glad you are helping with the financial literacy of the young, Bob; it is something that I have been thinking about for awhile myself. While I have always helped others who want such advice, those tend to be one on one situations; I would prefer to touch a # of people at the same time as you are doing. I'll have to look more seriously into what avenues to approach and make a conscious decision to do so.

    Young people can sometimes give the impression that they aren't listening or absorbing what you are saying, but many are. When she was growing up I would give financial advice to our daughter whenever possible, but I never knew if it was sinking in. Lo and behold it was since she practices many of the tactics I preached to her advantage.

    You are doing yeoman's work, Bob!

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    1. I want to be sure I am not painting too broad a stroke when I refer to younger people. There are plenty of financially savvy folks who are setting themselves up for a solid financial future. But, regardless of age, because this is a subject not really taught unless someone is pursuing an advanced degree in a related field, those of us with some experience really should pass it along to anyone who needs it, from 9 to 90.. From a purely selfish point of view, the more financially aware people are, the less negative impacts on the economy overall.

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  2. Hi Bob! Yes, wouldn't a show on TV like Financial Flip or Financial Rehab be a great concept. I suppose Suzie Orman does some of this....although I haven't watched it so don't even know if she is still on TV. Still, educating others about financial matters is really important. Good or you for teaching it to young kids. We don't have children of our own but have done our best to share ideas with all of our nieces and nephews. It's always rewarding when we see some of our words put into action in their lives. ~Kathy

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    1. There are so many opportunities help teach the basics to others, regardless of age. The process doesn't even have to be longer than a few minutes to tell someone why you pay off your credit card every month, or how an IRA can work with a 401 (k). Basic financial literacy is a lifelong process.

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  3. Excellent ideas Bob. Many of us would have a wealth of financial experience and common sense to share with younger folks, even if we aren't "experts" in the field.

    And we do have a show like that in Canada. It's called 'Til Debt Do Us Part". The host visits mostly young couples whose spending and debt are getting out of control, analyzes their spending habits, puts them on a budget and (hopefully) sets them on the right path forward.

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    1. I like the show title!

      Someones we can help the most just by living a financially-smart life and answering questions when others ask what we do.

      Recently, my grandson decided to become a bank of sorts for his two sisters. He got them to agree to give him a small sum of money ($5). In return he'd pay them a certain interest rate every month. When he described his plan to me I asked him how he was going to make any money if all he was doing was pay his sisters interest each month.

      It was a great teaching moment (supported by his dad). He quickly realized how interest works, and doesn't work!

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    2. I was going to mention Til Debt Do Us Part, too. For several years, this Canadian show aired on CNBC on Saturday nights, after Suze Orman. It was at least as addictive as the home renovation shows.

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  4. Sitting with your own adult children and going over your budget can be a huge eye opener for some. We are too private about money! I ended up teaching a small group of young (30-35 yr old) spouses a budget class after I showed my daughter my budget. I told them I did not need to see their numbers. They did some evaluation of goals, and budgeting for their current lives and futures. Just that much information and rational set four of them up on their personal strategies to get out of debt and move forward. It was fun to see them grow!
    You have inspired me Bob. I think I will wander over to the base and volunteer!

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    1. Great! And, I appreciate your real life example of how we can make a powerful impact just by sharing some of our time and experience.

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  5. I have to throw my two cents in here. If anyone is paying $10,000 for a seven day Caribbean cruise then they have not done their homework. That area is one of the cheapest cruise markets around as it's quite saturated and incredible deals abound. We've been travel hacking for twenty years and just couldn't not comment on this. :D

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    1. That was an off-the-wall example of inappropriate celebrating of financial well=-being, not a real price quote.

      Yes, Caribbean cruising is a relative bargain at the moment, as are 7 day cruise from L.A. down the Mexican coast.

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  6. Bob, your post really struck a chord with me. I don't even know where to begin. I have long been a proponent of a Personal Finance course being a requirement for a high school diploma. It frightens me to see college students bombarded with credit card offers when many of them don't truly understand the benefits or drawbacks of "borrowing" from the credit card companies. Businesses (legal or otherwise) strive to separate us from our dollars, and promote living beyond our means and keeping up with the Joneses in their efforts to be successful at it. Often we're not even sure what questions we should be asking about a financial transaction, making us susceptible to bad deals and (even worse) to unethical business people and scammers.

    To all this, education is the key and I love your idea to volunteer in the area of financial literacy. I can imagine how helpful this could be to others and, based on Janette's example alone, how rewarding it might be to a volunteer. After being a dedicated PTA member and officer for about 18 years, I took a break from volunteering when our younger child graduated from high school a couple of years ago. But, lately, I've been thinking about how I might give back to the community. Your suggestions just might have provided a good way to do that. Thank you!

    On a personal note, our son enrolled in his company's 401K program at age 20, and rolled his 401K over to his new employer's plan when he left the firm four years later. Plus, he's 24 years old and proud of his credit score. I can't tell you how heartwarming that is to me. I wish money wasn't such a taboo subject and more parents talked with their children about it. I'd guess that we all want to make good financial decisions throughout our lives, and we would be much more successful with a solid foundation of financial knowledge to support us. So glad you raised this point - it's an excellent one.

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    1. If I inspired even one person to help in this area, I'd be very happy. If that person is you, Mary, even better since you are a regular here and always make worthwhile additions to our discussions.

      For everyone, if this area intrigues you, start small. As Mary suggests, discuss the "taboo" subject of money with your grown children or grandkids (with the parents' permission). Show them your budget. Discuss your investment strategy - that alone can teach someone so much.

      I help my youngest (almost 39 year old) daughter review her Turbotax tax filing each year. Normally, that raises at least a few financial questions we discuss. She is in the market for her first home, so that opens up all sorts of things to talk about: affordability, emergency funds, HOA pitfalls, changes in tax laws, and so on.

      Schools don't teach this, TV commercials are misleading, and too many of us older folks were taught it isn't a proper subject to discuss. I very much disagree.

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    2. That was sweet of you to share those kind words, Bob - thank you!

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  7. Money Magazine used to do a feature kind of like that .. but of course on TV it would be much more entertaining. Yes, I agree the kids need to spend more time learning money and economics, and less time playing games on the smartphone -- and good for you for helping!

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    1. Does anyone know of a smartphone app that teaches some of the basics of finances? So much time is spent on these devices, maybe that is one of the better ways to get younger people involved.

      If such an app doesn't exist, invent one!

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  8. I spent a lot of time teaching both my daughters about finances as they were growing up, both are now in their mid 30s. One took to it and has been financially successful (so far). the other figured I was only trying to stop her from having fun and ignored anything I was trying to teach her about finances. She is coming around now, so never give up, but some are just more receptive than others.

    Perhaps it's as the great Mark Twain observed: "When I was a boy of fourteen, my father was so ignorant I could hardly stand to have the old man around. But when I got to be twenty-one, I was astonished at how much he had learned in seven years."

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    1. You are right: each person you interact with on any subject will have a unique reaction. They may not appear to understand the importance, but keep planting seeds. You never know when something will sprout.

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  9. Bob, you’re right, many young people are not taught financial literacy. Fortunately, the Internet has great resources to learn about it if people want to educate themselves. For example, there is a huge blogging community focused on personal finances (with FIRE bloggers being a subset). Even the website of the bank I use (in Canada) has educational resources on everything from understanding mortgages, to planning for retirement, to getting out of debt, to investment topics like the relationship between stocks and bonds. These resources don’t push their product, and I believe they are really very well done in terms of teaching basic financial literacy.

    Jude

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    1. Absolutely. Though the Internet does contain a lot of questionable material, if one does his or her research and verifies the source of the information, the computer can be invaluable in learning about financial issues. I use the various calculators on a regular basis for savings withdrawals, RMD calculations, and retirement fund growth.

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