This post is part of our celebration of Financial Literacy Month this April.
In the spirit of celebrating Financial Literacy Month at CooperKatz (#CKFinLit), I began reflecting on the financial advice that’s made a difference in my life.
I know, I know…how boring, right? What can I add to the millions of words already dedicated to this topic?
Yet the feeling of “I wish I’d know this earlier” (or, “I wish I’d listened...”) is very real when it comes to the personal aspects of one’s finances. That’s because all the talking heads or HuffPo articles in the world won’t change a simple fact: people don’t generally like to talk about money, at least not in ways that matter.
Most families don’t have conversations about the basics – much less the money fears, anxieties, failures or hard choices everyone faces in the course of their lives. As my colleague Abby Trexler noted in an earlier post, financial literacy is not taught in school (or anywhere, really). And while friends may compare money notes in the first years after high school or college, it won’t be long before those conversations become increasingly uncomfortable – and the financial wall of silence descends.
Given this, I think there’s value in sharing real, lived experiences – including topics that can be difficult to address. And there’s also value in calling out those pieces of advice that make you look back and think, “I’m so glad I listened.”
Here are four from me:
Consider your 401(k) a gift, not a burden:
I’m right smack in the middle of Gen X. I feel my generation was the first to grasp that by the time we retire, Social Security might be at best a joke and at worst insolvent. As flawed as the 401(k) may be as “the” platform for supporting a nation’s retirement, it’s still a privilege to have access to this type of plan.
To not take advantage of this opportunity to build something for the future (particularly if the plan includes a company match) is a tremendous loss. JoanAnn at Element Financial already shared more in-depth insights on this topic. But starting with the recognition of this kind of program as a privilege and a gift you give yourself for tomorrow (rather then just a financial sacrifice today) will go a long way toward fueling your will to participate.
Recognize the importance of long-term disability insurance:
My mother and father (and my mom in particular) are among the most fiscally-responsible people I know. I spoke above about the concept of a “gift.” Their rigor regarding money, their deliberateness in speaking about good financial habits and their willingness to “tell it like it is” (whether or not I wanted to hear it) has made a profound impact on me.
Early in my adulthood, my mother spoke with me – more than once – about the importance of investing in long-term disability insurance as soon as I was financially able. She saw that as a single woman building her career in an expensive city, I was highly vulnerable financially if something happened that would prevent me from working.
This topic is a casebook example of something no one wants to talk about – especially when you’re a strong, healthy 20-something. But her words sunk in and stayed with me. I’ve always been committed to caring for myself and making my own way. So it felt very good in my late 20s to finally take this step and invest in a safety net that still protects me to this day.
Don’t allow credit cards to kill your momentum:
Could any financial advice be more expected? And yet, this remains a bedrock truth. I admit this one took me a while to achieve. Like most young professionals in NYC, needs (or wants) often exceeded funds in my early 20s. It only took a few years to rack up an uncomfortable amount credit card debt. My mother’s voice on the matter echoed in my head on a constant loop in those days.
It took intention and some clear choices to get those balances to $0 (including an apartment move for lower rent and a dedication to funneling a decent chunk of money each month to chop it down). But looking back, the impact was clear. The moment I got to zero and never carried a credit card balance again, was also the moment I was able to start gaining actual financial momentum.
Talk openly and consistently about money with those you love:
There’s no shortage of research documenting the stress money places on relationships. And I’m not going to say it’s easy to talk about financial matters with a significant other, or a parent, or a child, or a friend – especially when there are challenges. One of the biggest of those challenges is that money incites intense emotion (from pleasure to fear, from pride to self-recrimination – and everything in between). I’ve learned to spot my own emotional patterns when it comes to confronting big expenses or tough financial questions.
Recognizing the emotion and working to separate it from the facts can help. But perhaps the most productive step is simply being willing to talk about it openly. For all those times I was defensive in response to my parents pushing me about a financial choice I was making, I now look back in gratitude (well, mostly...). Those conversations could be tense. But they were willing to go there, and I was willing (enough) to listen – even if it might have taken me a while to admit “you’re right.”
Are personal perspectives like this helpful? Are the things that have resonated for me relevant to others? It’s hard to know. Yet I do feel simply sharing our own money stories more openly and honestly will contribute to making us all a bit more financially “literate.”
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