Happy Financial Literacy Month! On this episode of A Wiser Retirement™, Casey Smith is joined by Missie Beach, CFP®, CDFA®, and Michaela Dowdy to talk about why it's important to be financially literate. At its core, financial literacy empowers and equips individuals with the knowledge and skills needed to make informed financial decisions. How financially literate are you?
Podcast Episodes to Reference:
- Ep 124: Financial Literacy is Vital for... EVERYONE!
YouTube Videos to Reference:
- Georgia Will Now Mandate Personal Finance Education in Schools
Learn More about Wiser Wealth Management:
- Our website
- Schedule a complimentary consultation (learn more about our services)
- Click here to download one of our free guides that covers financial planning topics like retirement, investing, taxes, divorce, and more!
Connect With Wiser Wealth Management:
- YouTube Channel
- Facebook
- LinkedIn
- Instagram
- Twitter
- Casey Smith's Twitter
- Podcast
- Blog
This podcast was produced by Wiser Wealth Management. Thanks for listening!
Happy Financial Literacy Month! On this episode of A Wiser Retirement™, Casey Smith is joined by Missie Beach, CFP®, CDFA®, and Michaela Dowdy to talk about why it's important to be financially literate. At its core, financial literacy empowers and equips individuals with the knowledge and skills needed to make informed financial decisions. How financially literate are you?
Podcast Episodes to Reference:
- Ep 124: Financial Literacy is Vital for... EVERYONE!
YouTube Videos to Reference:
- Georgia Will Now Mandate Personal Finance Education in Schools
Learn More about Wiser Wealth Management:
- Our website
- Schedule a complimentary consultation (learn more about our services)
- Click here to download one of our free guides that covers financial planning topics like retirement, investing, taxes, divorce, and more!
Connect With Wiser Wealth Management:
- YouTube Channel
- Facebook
- LinkedIn
- Instagram
- Twitter
- Casey Smith's Twitter
- Podcast
- Blog
This podcast was produced by Wiser Wealth Management. Thanks for listening!
If 61% of people are living paycheck to paycheck, I don't think that means that they're poor. It just means that they don't. They just spend everything, and so they they don't know how to say no or delay have delayed gratification, so therefore I think it feeds on itself.
Speaker 1:So if all your friends have new cars but they're paying $1,800 a month, you don't see that they don't talk about their payment right? Welcome to a wiser retirement podcast, where we believe the best financial advice should always be conflict free. I'm your host, Casey Smith, guiding you to financial freedom day, or my co-host, Missy Beach and Michaela Dowdy. Hello.
Speaker 2:Hey Casey.
Speaker 1:Welcome back to another week of a wiser retirement podcast, thanks. So I saw an article I'm going to start here. Today I saw an article by RIA Intel that there was a study done by the CFP board that indicates that all Americans, or Americans, believe that all financial advisors are working in their best interest, and I was like what the heck and you know what? Honestly, I expect that because our industry is so hard to understand that you think that a guy at Merrill or Morgan Stanley or Wells Fargo, Edward Jones, all these guys and gals.
Speaker 1:You think that, oh yeah, they're good people, so they just work with these big companies. And my advisor is a nice person. Of course you like the person, or else you wouldn't have done business with a person but it's their toolbox. It's not so much them as the problem, it's the toolbox as the problem, and where they who they're working for yeah, the structure and who are they serving? Are they serving themselves? Are they serving the company? Are they serving you? And the reality is they're serving two people themselves and the company.
Speaker 3:Yes.
Speaker 1:That's the reality, and to the point where 96% of firms are out there selling something, where 4%, like us, are fee only. Only 4% in the entire industry are fee only firms. So it's very interesting that, when polled, that 97% of Americans agree that advisors who provide recommendations about retirement investments should be required to act in the best interest of the client. So everyone agrees that this should be the case. No one says I just want to go to a salesperson and buy this product. Nobody says that. 97% said that they agree advisors should work in their best interest. The same people say that 92% of them 92% of the same people believe that it's the case in their current relationship.
Speaker 1:Yeah, and this is the problem that I have with the CFP board, and I understand. It's a business in the end. Have all the fancy advertisements you see on TV, you have to have revenue to support that. But if you're a certified financial planner, you've basically signed an oath that you're going to work in the best interest of the client. You signed a fiduciary oath, right? Well, then you go to work for the bank or wherever. If the company is not accepting fiduciary duty, that promise has no standing whatsoever, right?
Speaker 3:That's the gap.
Speaker 1:So really, you can be a CFP and that's great and you can introduce people. This is my certified financial planner and there's all these assumptions that therefore that person has gone through basic training, understands finances. In the meantime, you could have a person who doesn't have a CFP at an independent firm like ours, who is a real fiduciary, not a pretend fiduciary.
Speaker 3:Yeah, the word is meaningless.
Speaker 1:I mean, at the bottom.
Speaker 3:The fiduciary words meaningless or the designation. No, well, I would say the word. Let's still give a little credit to CFP. You have to do some education A lot of education.
Speaker 1:It's a legit process to get the designation.
Speaker 3:But the word I mean, I would say, is meaningless.
Speaker 1:To the general public.
Speaker 3:Yeah, but it's amazing how many people come in for their consultation. Number one question Are you a fiduciary? Yeah, they do ask that and you know, I think I should be more direct in that and say, well, yes, but you know, anyone can really say that.
Speaker 2:Yeah.
Speaker 3:The bottom line is that we are fee only and we're going to sell you nothing.
Speaker 1:Right, yeah, that's very true. The fee only portion does kind of trump everything else, I guess.
Speaker 3:But it's great to be a four percenter.
Speaker 1:That's that. Yeah, the only four percenter. That's very true. Yeah, I just I don't you know, another thing, too, is like if most of these relationships are getting paid by the product. So, for example, let's say that you're working. You're still working your mid career, you change jobs. Is it the best idea to move the old 401k into an IRA?
Speaker 3:Maybe yes, maybe no.
Speaker 1:You know, but we, we look at the maybe yes, maybe no, but a but a person who's at a brokerage firm, only they're making money. That means, if you're moving that, that roll over over, oh yeah, oh, how about?
Speaker 3:for example, a government employee with the first savings plan the TSP so low cost. But yet you'll find an occasional client who they're like. Well, well, my old guy said, roll that into my IRA.
Speaker 1:Right.
Speaker 3:And you're like, oh my God, that was so low cost. Why would you have done that?
Speaker 1:Especially those firms that prey on the military in the government like first is it first command.
Speaker 3:Yes.
Speaker 1:And that's an Edward Jones version of of people who just tailored to people in the military, who don't know the difference. Yeah.
Speaker 2:Yeah.
Speaker 1:So, anyway, I just I just saw that and it's like wow, I mean. But I get it because it's so complicated and we've done, we've done so many podcasts and articles about this, especially, you know, 10, 15 years ago in our blogging Bye. The reality is you have your traditional business model where you're you're, you're buying product, so you're paying 4.25% commission to buy a mutual fund, and then the advisor gets a trailing fee and every, every time you make a trade, there's another 4.25% potentially, and that's how they that's.
Speaker 1:And then you wonder five years later why you didn't make any money and the market was up and that's because you you're losing 4.25% every time they make a trade for you, and but typically in those situations they don't have discretion, so that means that they have to get your permission to move something. They're not just doing it, turning it by themselves. Now that does happen. And then you have the other business model where they're charging you a flat fee. The fee, the rat fee, is kind of high, but they're still getting trailing fees on the back end of that. So your total cost is over 2% per year and and you don't even really understand that.
Speaker 3:Well, that's the thing. You can't really see it on a statement, and that's where people think oh well, I don't pay my advisor anything. And I'm like but you do. So we'll try to pull up the ticker symbol of the mutual fund to show a client like oh, you did pay a lot for this fund. They're like oh, I didn't realize, I paid 4.25% when I bought it. Yeah, I'm like sorry, they're still paying 0.9% Hold it Trailing, yeah, which is crazy.
Speaker 1:And then there's there's this fee based model, which people get confused with fee only, but the fee whole fee based models. These people leave these big brokerage houses. They create independent, independent firms that looks a lot like ours, but they're still selling the insurance, so you still have or the annuities, or yeah, or the annuity.
Speaker 1:So you have the fiduciary standard, but then you stop at some point in the relationship and you put on your sales hat and you're selling a product and you're collecting a commission. Now there is a. There is a rapid increase in products that don't pay commission, so fee only advisors can participate. But honestly, all the ones I've seen are kind of junky. Yeah, they are, it's just somebody else keeping the money.
Speaker 3:It's the same cost, you know, for the most part we now.
Speaker 1:We have a rescue annuity rescue program through nationwide. So if we needed to, if a client came in with annuity and they're paying a ridiculous fees, we can get that transferred into a product that is not a product. That's not a product. That's that's charging $25 a month as opposed to 3.5%, right. So we can, we can get these, we can get annuities saved, but we would never recommend it as a. If you had cash, we would never be running to that product.
Speaker 1:So, but anyway, but those are called fee based models, where they they're fiduciaries during the planning process, but then they sell you something on the other end. And then then there's the fee only model, which were fiduciaries through asset management and the financial planning process, both. And if we need life insurance. So we have great people we trust in the Dave Ramsey network to to help us and they're they're great people. So really there's no need for that. But I don't know how. I don't know how you get on top of this, because the problem, part of the problem, is the marketing from the big firms make it look like they're just like the 4% and they're not there. They're the 96%.
Speaker 3:Yeah.
Speaker 1:And so I just unfortunately, I came back to well, I feel like there needs to be more regulation. You know, I mean some of these people like their whole tagline is we make sense of investing? Like, how can you make sense of investing when your disclosure pages are 30, 30 pages long? That's not making sense of investing, it's just confusing the customer. But again, again, you know they're. They're the trillion dollar market that people flock to because they think that it's safe and they're leaving so much money on the table. But anyway, the government can fix us. It's called a fiduciary standard for all, but what they're doing is they're watering down. What fiduciary means, to your point of view, is that every time there's a fiduciary standard that comes out, there's lobbyists that fight it. They're mostly insurance companies, because they can't sell their crappy products anymore.
Speaker 3:And they've got the big lobbying books, so they're going to be the loudest voice in the room.
Speaker 1:You got to remember that if we decided to sell products, some of the commissions on these things are like 10% commission. You know we can make millions of dollars overnight in fees if we decided to use these products. Yeah, but then like I tell our clients we would, we would violate our fiduciary standard, and we couldn't sleep at night. And we couldn't sleep at night. Yeah, that's what I tell all of our clients.
Speaker 3:Mikael and I get to sleep well at night because we don't sell stuff that clients don't need.
Speaker 1:Okay, this happened very often, but if a client gets upset about something, I mean you know, we had. We had a situation a few weeks ago and after I kind of hung up the phone I thought man, you know what I knew, exactly where I was coming from and exactly where I was standing, and it was in this person's court.
Speaker 1:I was in their court advocating for them this whole time. The problem is there's probably some emotional things going on with this person. I didn't think it was a whole, entirely irrational conversation, but but the bottom line is like what do people do? What do advisors do? They're selling stuff. Yeah, like how do you defend yourself when you know for a fact that there is a cheaper product, when you know for a fact there was a better process? Hey, how do you? How do you do that? I just, I don't, I don't.
Speaker 4:I feel like it's almost like they have the perspective of like I'm owed this fee because I'm giving this fee to, or this product to you and I'm the one that's brought it forth to your attention, so then I should be making money off of that, which is just so conflicting to the overall fiduciary duty.
Speaker 1:Yeah, I don't know. I just knew that I'd done everything for this person, above and beyond what of what the standard is, and in the end they realized that and the conversation did very, very nicely but, it, but it's, but it's can imagine how people defend themselves. Who, who don't do that? But this is financial literacy month and you think, oh, big deal. And then you can read some stats about financial literacy.
Speaker 3:Oh, it's scary.
Speaker 1:You know we have 10, we have 10 stats we found, done our research on this, all kind of sad really. Number one 56% of adults are financially anxious.
Speaker 4:This seems so low to me. You think it's?
Speaker 1:higher. I think it has to be so much higher.
Speaker 4:I think a lot of people did not answer correctly. Or maybe 2022 wasn't too awful of a year. The market was up that year, right.
Speaker 1:Well, it's interesting that you say that, Michaela, because you're the youngest person here and they did note in the study that the younger Americans are feeling the greatest burden.
Speaker 2:There you go.
Speaker 1:So that that that that would say, we know peer group.
Speaker 3:Oh yes, Okay, Younger. The younger's are feeling the most anxious.
Speaker 1:So the percentages are higher for younger people, yeah, and actually those between ages 18 and 34, 69% say that they're they're financially stressed.
Speaker 4:That makes a lot more sense in my head. I was thinking like 75%. I feel like I don't have any. Yeah, yeah.
Speaker 3:Cause the whole, I'll never buy a home and kind of thing.
Speaker 1:Yeah, no, it's a. We have more conversations with our clients now about you know. We graduated college, we put 5,000 down on a starter home and we bought our house and that same starter home is going to be $5,200,000 down now. So, yeah, I could see that. And then you're having to live in apartments with people around you more, which you know creates some anxiety too, I would think, seeing where you live. Yeah, number two. 22% of us adults lack an emergency fund.
Speaker 3:That's frightening.
Speaker 1:That's a bankratecom study.
Speaker 3:Yeah, live in paycheck to paycheck.
Speaker 1:Yeah, and that that was the next one Number three lending reports. 61% of adults live on paycheck to paycheck. That's that's a lot of people.
Speaker 4:I feel like that's so much of an issue because we have, like credit cards so readily available. Now I feel like having that has made it to where not having an emergency fund. You don't feel it as much because it's like oh, oh, you know, I need a new Unit or something. It's like well, we'll just put it on the credit card and then I'll pay it off later.
Speaker 3:Well, you that is their emergency. Fine, yes, exactly.
Speaker 1:If 61% of people are living paycheck, paycheck, I don't think that's a means that they're poor. It just means that they don't. They just spend everything and so they they don't know how to say no or delay have delayed gratification, so therefore I think it feeds on itself. So if all your friends have new cars but they're paying $1,800 a month, you don't see that they don't talk about their payment, right? You just see new car, new furniture, new house.
Speaker 4:There has been a trend lately on Tiktok where it talks about these people that got their cars like really young they're like, oh you know, got a $1,800 car payment because I had to have leather seats and a backup camera and all these things and they're like regret it so much.
Speaker 3:And now they're stuck like my car's pretty Well, you know, we even have clients. A couple could earn half a million dollars and still live paycheck to paycheck. Yeah you know, keeping up with the Joneses, and they just don't have that discipline to save.
Speaker 1:Yeah, I actually get energized in this meetings because I get very animated and I'm like aren't you tired of living like this? Yeah, because you don't have what would you like to roll over every morning knowing that you're financially secure and you don't have to go Slay dragons today In order to, in order to make all make, make your minimum payments? Yeah, there's usually ways, always ways out of those situations. You just have to buckle down. Are you curious?
Speaker 4:why annuities keep coming up as a potential investment option. People are often told that annuities can effectively mitigate investment risks and help secure their financial future. However, annuities often benefit the salesperson. It might not be the best choice for you as a consumer to learn more about the various types of annuities, the negatives of owning them and better investment options. We have a free e-book on our website just for you to download our e-book fire beware. Why do they keep trying to sell you that annuity? Simply click the link in the episode notes or visit wiser investor comm slash guides.
Speaker 1:Now let's get back to the episode Number four almost three quarters of Americans budget on a monthly basis. That seems high. Okay. 75 percent Americans say they have a budget and follow it to keep track of spending. That's, they're lying. I don't think 75, but only 16 percent revealed.
Speaker 3:Well, 16 percent revealed.
Speaker 1:They actually spend more than what's their monthly budget. I feel like a monthly basis is a lot to be even reviewing it. Yeah, I don't even have a monthly budget.
Speaker 4:I don't either. I don't have a monthly budget.
Speaker 1:I don't have a monthly budget. I don't either. I mean, I kind of know when things are starting to go awry, but I don't, I don't. I don't budget on a Like through a spreadsheet. I think I was younger because you had to.
Speaker 4:And it's also just like the pay yourself first kind of method that we talk about, where it's like if you're saving first and that's coming out of Like an automatic withdrawal to those accounts, then you kind of are just really spending the money that you have in your account and you know that like that's okay, because I've already built up my emergency fund, I've already built up my 401k and like those kinds of investments. So it is interesting to have a monthly review for 75 percent of americans.
Speaker 1:This is a problem for young people. Over half of the use in the country, age 15 to 18. Filed a Failed a financial literacy quiz. Did you look at that quiz?
Speaker 3:Okay, yeah, so for fun, I looked up like a basic financial literacy quiz and it's scary if that many people are failing a basic quiz, because Questions are like what's the difference between a debit and a credit card, or what's the main purpose of a budget? Here's one you earn 2000 a month and your monthly expenses are 1500. What's your monthly surplus? So I mean we're not asking, we're not asking for any rocket science here, I mean, these are like basic math.
Speaker 1:I thought they would be like what's api versus api, or no, we're not even going that deep.
Speaker 3:You know like how much should you have an emergency fund?
Speaker 1:You know, and we're failing one month or a year.
Speaker 3:Yeah.
Speaker 1:So some states have high school Literacy classes, financial literacy classes with georgia just started when I think is this year or maybe next year, but it's, it's soon, it hasn't started yet Um.
Speaker 4:I did one in high school.
Speaker 1:You did a farm it. I love that Go tennessee 35 states scored a cd or f for high school financial literacy.
Speaker 3:Wow, I'm sure George is one of them.
Speaker 1:Um yeah, so 25 states which would and DC require a high school personal finance course to be offered, 21 states require high school course to be taken, and then nine states are required standardized testing related to financial literacy. Only nine.
Speaker 3:That's okay, at least. I mean it's getting there.
Speaker 1:What do you think about it? Colleges I don't necessarily do it better, but of all the people not going to college now, I mean that that's a high percentage of people that just have to go figure it out. I hope their parents taught them something.
Speaker 3:True, you know well, I think back to my school growing up, like we used to go to home back to learn how to cook, and so Right, and we went to shop class to learn how to use tools for real, and now, so things like this are taking the car or is that that's not shop? No, that'd be like I don't know Mechanics, I didn't do that no shop classes.
Speaker 4:Like you are drilling two pieces of wood together.
Speaker 1:Yeah, oh yeah, I made it. I missed that. I didn't get that class.
Speaker 3:Yeah, I was in the Midwest. We have stuff Well, I'm older than that, but now okay. So schools are replacing those antiquated things with things like financial literacy. So I think the trend is shifting shifting away from the 50s and the 60s 70s Right. So now we just can't fix anything, but we can Right, we just hire people to do all those things and send food to us, but yeah, this one makes me sad.
Speaker 1:90. This is number seven. 90% of millennials are in debt. So student loan debt has reached $1.75 trillion. $1.75 trillion that's crazy. That's just a. That's just the student loan debt. Then you have to add the credit card debt on top of that. But the average see the top 25% of them have student loan debt. The average is $56,000. We met someone recently that had, I think it was, close to $400,000 in student loan debt, which is crazy.
Speaker 3:A doctor.
Speaker 1:Yeah, and you see the neurologist, I can spit that out this early morning. But yeah, she'll make that back, but it takes some discipline to get through that. Number eight 60% of adults had credit card debt in the past year, so it kind of piggybacks on number seven in that. You know, there's just so $1 trillion in credit card debt right now.
Speaker 2:according, to the.
Speaker 1:Federal Reserve Bank and it's young people that have most of it. So that's crazy. Sometimes it's hard to come back from, so you have to be careful with that Number nine 50% of adults experience barrier to homeownership. We've been talking about this for a while. When you have rising home prices, you have all the student loan debt and credit card debt, which reduces your ability to qualify for the loan. You know they don't have savings, and then the cities are getting more expensive, right? Of course, you know you have poor credit in history or score, and I think that's fine. If you have poor credit history and score, you shouldn't be buying houses. That created the financial crisis to begin with was the start of it, but the rest of it is just a situation. I mean we could have a whole debate on college right now, but I think a debt-free college education for most of us is going to be the way to go. We don't want to exit college with debt.
Speaker 4:Oh gosh no, yes, I think that's huge because just knowing from peers of mine that have student loan debt for whatever reason, it is definitely demoralizing for them and just being able to you're having to pay that off and they're trying to pay it down aggressively, as you would want to.
Speaker 4:And then it's also just, you know, you see your other friends that don't have the debt, that are getting to do more fun things, and it's just very heartbreaking for them and it can feel like, oh my gosh, you're trapped and it's like, no, well, we're still in our 20s, it's okay, yeah, but it is something it's so hard to get out of, because then it's like you're having to make those payments and then say, something happens and you need new tires on your car, and then that's like detrimental at that point, oh yeah, because you're not having this influx of savings.
Speaker 4:That's extra, and especially like at the time that a lot of us got out of college, then inflation started rising aggressively and so it's been to the point where it's like, maybe what you're making on the starting salary, if your job hasn't been great, to increase your cost or your salary, then you haven't cut up with the cost of living and now what you thought you could save. You can't, and your rent's going up by $1,000 or whatever it can be, and so it just becomes so quick of a slippery slope, sadly. Which makes sense to all of this being able to go into debt as the younger people are, but definitely a different shift, I guess, and you know, oh sorry.
Speaker 1:No, I just I'll insert my opinion here at a recent board meeting at a college I'm on the board of, I brought up this topic and it wasn't exact right form, you know, to getting legs. But just through this idea out there that if students are taking student loans, there should be a process. Government will have to create this because you have to make it equal for everybody, but there should be a process to you go. Okay, I'm a history major. I'm not going to go get a master's or anything else, I'm just going to be a history major, and history majors across my region of where I live have an average income of X. So if that's $50,000 a year for life, then you probably shouldn't be going to do can be a history major.
Speaker 1:Did you ever come out with $100,000 in credit card debt? Maybe you should go to your local school and be a history major, right? Exactly Now, if you go to the business school and you say marketing versus accounting or finance, then you know there's a wide range of things that happen, but you can still come up with an average for each. And so the bottom line is, before you sign this piece of paper saying I'm going to borrow $25,000, $100,000, $500,000, whatever it is you're borrowing, that you understand your ability to repay barring you being lazy, disability, whatever right, and so there should just be an awareness. But when you're 18, 19, 20 years old, you have no idea what you're signing. You just know you want to go to school and you've been told you need to go to school and no one's really talked to you about the consequences of that, of that loan. And that would that would solve it.
Speaker 4:It would, I think the other thing, too that I know has been floated around as ideas at different universities is like actually assigning the tuition based on what the average income is for the future of like their business career.
Speaker 1:Business school should cost more than the art school.
Speaker 4:Exactly.
Speaker 3:I like that idea.
Speaker 4:Especially for what your average person is coming out of that school, Like I mean, I know.
Speaker 1:I have the same comment, for where does the school put all its resources?
Speaker 2:Yes.
Speaker 1:Because liberal arts schools are really good about kind of spreading it. All equal, we're all equal and I'm like well, I don't see anyone on your board that was an art major, an agriculture major or an education major Everyone who was business major. So it seems to me you should be pumping more dollars to the business side, so that you have a higher RRIs in the institution is better off. You know 50 years from now.
Speaker 3:Who's given the money? Who's given the money Exactly?
Speaker 1:So it's kind of like you know if you're going to put your cards down and you're going to bet on the horse, you're not going to bet on the horse, it's been in the backyard for 20 years, you're going to bet on the horse that's been trained and has a chance. So there's obviously a lot of business people that never make over $100,000 a year, but statistically that doesn't seem right across all business schools. So yeah, but anyway, I digress on this. I think financial literacy should include students understanding the loans that they're going to be responsible for, and even parents. The parents, the parents, should understand.
Speaker 1:At that point they just may have to say no, but you know, we've had, we've seen this in the past. If you're going to, if you're going to go into the ministry and be a pastor, you don't need to go get, pay, pay a full ride at Duke when you can go to UGA, because if you got into Duke that's one percent acceptance rate. I think you could probably get into UGA, right. So so go there, go on the Zell and and have almost a free education, versus paying private because you're going to the industry that's not known for making people wealthy, right?
Speaker 1:That's not the not here not not here on earth anyway. So anyway, yeah, I just want to open this with those stats. I think we we tend to all of us live in the world that's within the four blocks of our house and don't really always see the big picture. But that you know. Teaching people about money is very important. If you're a parent listening to this podcast, teaching your kids about money and how the stuff works is very important.
Speaker 3:Yeah, I think, if you have teenagers especially, have them do a basic financial literacy quiz. I mean, just Google it.
Speaker 1:I mean I've talked, I've talked before on this podcast. It's been a little while. But my daughter's in a question horse rider and when she needed some expensive saddle I was like this is ridiculous and but I made her take the day of Ramsey course. I really didn't understand that it was so long. It took her like six months.
Speaker 3:Oh, just take the course.
Speaker 1:It was two full semesters of that and she still complains about it to this day. But if you see her talk to other adults who knew that she took it, she says things that you just like. Oh that's good that you know that, but yeah, so let's, let's talk about you know what is financial literacy, what are the basics that that cover, that should be covered when you, when you talk about financial literacy. If you were designing a course, makayla, how would you design a course?
Speaker 4:I feel like first you really have to talk about your cash inflows and outflows and understanding. I know we're talking about we don't really necessarily have budgets in our households, but like having at least a ground floor of like this is what should be anticipated as expenses, whether that be your fixed expenses or your fun expenses, discretionary spending, those kinds of things, just to go ahead and have that basic knowledge and then further, you know, going into okay, what is debt? And like going into those different topics and really getting into. I saw a video the other day of this girl who's probably like 16 and she had no idea fully understanding what the credit card was.
Speaker 4:It was like her parents giving her a credit card and they were like talking about it and they were like, okay, wait, so explain to us again what you just said. And she was like, well, there's $600. I have $600 to spend. And they're like, yes, and you're gonna have to pay that back because you've now put $600 on this credit card. And she's like why they gave me $600. It's like a gift card. I got $600. And I was like, oh my gosh. Like so definitely, like going through just even the basics of the basics. I mean, I know, even someone who majored in finance literally Missy, and I laughed about this the other day that with my own credit card I was under the impression on that due date it had to be fully like there had to be a zero or I was gonna get charged to be which?
Speaker 4:is not true. It's like the balance of your statement from earlier, like which is such a giggle, but it's like, honestly, that's where having that information of, just like even the basic knowledge of how to pay these things, exactly what the nuances are, but definitely, starting first with the budget, I saw this video, this guy recording his wife.
Speaker 1:I'm sure that it was all staged so we would talk about it, but she was going shopping and she was returning something. Shopping math, yeah, shopping math.
Speaker 4:Oh, the girl math.
Speaker 2:Yeah, is returning something.
Speaker 1:So she's returning something for $50 and she bought something for $100, but she said well, it's half off, because I returned.
Speaker 4:Exactly Something for $50.
Speaker 1:She's like yeah but she paid $50 for it already, so you spend $150. No, no, I only spent $50.
Speaker 3:Yeah, but I think in real life there are women that think that way.
Speaker 1:Because it's already spent and paid for and therefore, yeah, that's hilarious A fixed cost. Probably guys too, just at a different store.
Speaker 3:But other things financial literacy encompasses are like a good understanding of credit score and how that works, like one thing I was teaching my oldest son on. When he got his first credit card that was not one of ours, it was in his name just to establish his credit more. I said, okay, this is not like our card. So if you make a bigger purchase, realize your credit line is only $1,000. Right, you never want to use more than 30% of your available credit line, right? So if you make a purchase, you want to pay that off during the cycle Cycle, don't wait for the due date because you don't want to get that utilization ratio up. He's like oh, how would you know that?
Speaker 3:I'm like, because I just told you.
Speaker 1:That's how you now know this Exactly.
Speaker 3:But a lot of our clients don't realize that. Because, they think, oh, I'm just going to put it all on this one card instead of all these other cards.
Speaker 1:I'm like, actually don't do that 30% of your max credit limit is what you should be topping out.
Speaker 4:Yeah, yeah, yeah.
Speaker 1:I just yeah, I'm just working to the point where I don't need credit, so who cares?
Speaker 1:But yeah as a business owner. That would be a little careless. So you do have to watch. You do have to watch that. I think. I would just add understanding how to build wealth to that. You have to understand that you have to live below your means and access money has to go. It starts off in brokerage accounts and 401ks or wherever, but eventually you have enough going there and then other money can go other places and that's how you end up with second homes. That's how you these people are clients end up with hunting properties and all this other stuff is because they live below their means. Otherwise and they're they're just putting a lot of cash away. They're not spending every single dollar unnecessarily.
Speaker 3:Yeah, and that's only after, like you just said, let's concentrate on the word after you've secured your retirement. Yeah, yeah.
Speaker 1:And reserve emergency reserves and all that, yes. So again, I think, officially, four pillars debt budgeting, saving and investing those are all things that should be under understood in a financial literacy course. I have this quote from Warren Buffett the best investment you can make is an investment in yourself. The more you learn, the more you'll earn, which is great, true. What are the benefits of financial literacy? Honestly, you know it's it's. We had this whole thing with, like, black Lives Matters a few years ago. We had all these riots and people were upset about social things and I sat and watched all that and I was like, okay, they're upset about these things, but no one, no one, nobody, no platform talked about the most suppressing thing, and that's just debt. Yeah, yeah.
Speaker 1:No one talked about that. That you know you. This is the USA. You can go earn money almost anywhere. You just you got to have the ability to go do it. But the opportunities are out there. You just have to go knocking on doors. There's stories of people who um had to knock on you know 50 bank doors where they ever got the first loan to start their company. And so it's possible.
Speaker 1:You just got to have, you just have to have that grit and that and that, that that persistence, um, but for people who have lots and lots of payments, or they lose his opportunity. So you can't change the job, you can't change your domestic situation, you can't change anything because you got to go make those payments. Well, you're going to default, and if you default, you get a bad credit score and they're going to get anything after that.
Speaker 3:Right.
Speaker 1:And now you're buying your furniture at a store that's selling you for 20 times what it's actually worth.
Speaker 3:You're renting your furniture.
Speaker 1:You're renting your furniture right, and so it creates this cycle that it's almost, it's almost impossible to get out of um, because if you, if you did even win the lottery, you're going to blow that. Most major lottery winners end up in bankruptcy. I think it's like 90 something percent. It's stupid number. It's like right, you had $300 million, like how did you?
Speaker 4:how did you?
Speaker 1:possibly run out of money.
Speaker 4:That's what all me and my friends are talking about. This weekend was like. If we won the lottery, what would we do? And it was like that's the ultimate question to ask someone, because then you know like where their heart of hearts is. It's like okay you're going to spend it on travel? Are you going to go buy that new Ferrari? Are you going to go like do what are you going to do?
Speaker 1:I'm going to change my phone number.
Speaker 2:I don't even know what I would do.
Speaker 3:I have no plans.
Speaker 1:We guys play the lottery first, Missy.
Speaker 3:Oh true.
Speaker 1:Uh. So, yeah, I think it gives you empowerment, financial independence, um. When you understand these basics, uh, you obviously get better financial outcomes. You have less stress, or at least less financial stress, um, and also you have the ability to lift up your whole family. It's not that you're giving them handouts, but if you look at the older generation, if you know, if, if they weren't able to fight for themselves, can you provide for them and make them at least comfortable through their, through their lives, and that that's the benefit of understanding money and and and the power of making good financial decisions.
Speaker 3:You're modeling that for the next generation.
Speaker 1:Correct, Correct, Um, so how can you improve your financial literacy, you know? So, yeah, those. I think the the bottom line is for young people. I think Dave Ramsey does a really good job. I've even thought about maybe we should do our own version. I don't know how you really top his. We can make our shorter.
Speaker 1:Yeah, we could have a three hour course instead of a, instead of a you know two semester course two semester course but, um, you know, sign up for for Dave, he has one at three different levels, like really young kids, teenagers and then college age. Um, or three different patterns. I think it's $25 is something super cheap and you can watch it on your iPad or or laptop or whatever. Um, you could subscribe to financial newsletters. You just have to be careful of what you're subscribing to, cause typically newsletters have called to actions and they're trying to sell something, so just I would just be careful of that. Uh, reading books is important. Um, you know random walk down wall streets when my favorites for any new hire here or any intern, I should say I really understand wall street Um and how what actually happens rich dad, poor dad I thought was another book that seemed to really motivate people about how money works. Um, but there's I'm sure there's lots of other books out there that um are just not coming to my mind right this second millionaire.
Speaker 3:Next door, next door, that's right, that's a really good one.
Speaker 1:Yeah, that's a good one. Um, you know, I think we just established that we're not keeping monthly budgets here, but we do subscribe to pay yourself. First, we know what we have to say for our future. Uh, we know what we have to have in reserves, and then anything else is kind of extra at that point. But, um, you need to understand where your money's going. So if you don't know where your money is going, you need to take your credit card statement you're checking to account and then re categorize everything.
Speaker 1:And there's different apps that can help you do that.
Speaker 4:And a lot of banks do that now for you too, and a lot of credit card companies will already go ahead and pre categorize it, so you're not having to actually go through and do the manual labor. Um, there will be a few that will probably be wrong, but for the most part they do a great job of fully outlining that.
Speaker 1:You know, honestly, we we work with, uh, a lot of young people had a Georgia tech guy last night reach out and we did a little 30 minute session just on the basics of getting started with money, and that's what he was looking for and, um, you know, he just booked a 30 minute session with us. So we're always happy to help, um, educate people about things, but we shouldn't be your primary source, um, because typically, if you're trying to figure this stuff out, you're probably not. We're probably not managing wealth or developing a financial plan for you.
Speaker 1:Yet it's a little too soon, uh, but there are some great resources out there, um, like the day Ramsey program, to be able to do that. Um, anything else you guys want to add?
Speaker 4:I would say just don't fall prey to all of the videos that are online or Instagram accounts that are online, that are just like preying on the get rich quick method, or hey, if you invest in these things and subscribe to this newsletter, like we're talking about, then we'll give you the best things to invest in and take you through all of this stuff, especially the ones that like go after like a specific demographic I know that's what their niche is but like, just be careful with those Um, cause sometimes they do have great advice, but you just really have to be careful and discern those really well. Um, and I just know there are a few that pop up on my page that I'm like they're really going after, like women investing, and I'm like you're talking about investing in an individual stock, timing the market of it and saying that that's how people are going to get rich quick and it's like sure, if you kick, if you pick it at the right time with the right stock, and everything. But by the time you're producing this newsletter, yeah, it's already old news, it's all new
Speaker 3:on.
Speaker 4:Yeah, so definitely something to just keep an eye out, for they do have good tidbits. I love Ms Dow Jones on Instagram. She's phenomenal Little plug.
Speaker 1:All right. Well, thanks for listening to today's episode. If you're starting learning more about why is the wealth management, I want to schedule a consultation, meet with one of our fiduciary financial advisors. You can do so by going to wiserinvestorcom or you can click on the link in the episode. Episode notes, don't forget, we have you can watch all this if you want to see us. You can watch all this on a wiser retirement on YouTube, where we also have some other bonus episodes episode 124. Financial literacy is vital for everyone, and then we have lots of individual videos out there as well. All right, have a good week everybody. We'll see you next time.
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Speaker 4:This episode was produced by Edward Versandes.
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