Recently I had an exchange with a friend about finances. We were talking about investing for the future …
IRA’s, 401K’s, etc. Do you invest for yourself or have someone do it for you? Stocks seem risky but I don’t want my money sitting there doing nothing.
It can feel paralyzing. However, it’s easier than you think and you’ll never know everything that there is to know about financial markets. First off, if you want to learn the simple in’s and out’s of saving for the future, I recommend JL Collins Website and his book, The Simple Path to Wealth. He makes a fairly intimidating topic very approachable. Understand, you’ll probably need to read this book 1-2x/year to develop your understanding but you’ll definitely be able to start taking control of what you do with your savings if you haven’t already. With time, your goals will change and you’ll be able to make better informed adjustments as you continue to learn. I’ve read it at least twice and I’ve read (and re-read) several other books on personal finance.
Now, this post isn’t so much about the mechanics of money as much as it is about the mentality. One of the things that came up in conversation with my friend is the frustration with the fact that our parents generation hadn’t taught us much about building wealth. This is a frustration that comes up often with my millennial peers. I had the same frustration at one point. In particular, after leaving college only to get a job that made me miserable, “I did everything that I was supposed to do and all I get for it is depression and debt?! Why didn’t my teachers and parents teach me about money or ask me to think about what I would like to do on a daily basis to make money?” You know the story: I left college with an Engineering Degree, got a ‘good’ job right after graduation, and I was utterly miserable (mildly suicidal at one point). I had student loan debt and I made the mistake of getting a new car loan months after starting the job. I was running on an adopted story about life: Get a degree, get the job, get a house, and you’ll have the American Dream and Life long happiness. Let me say, to you brave souls that go to the same location, at the same time, 4-5 days per week, thank you. Many of the employment roles in our society that are structured in this way, help us to enjoy modern life. I can’t do it. One of the things that I have learned about myself and work, is that I need variety. I do a lot: Speaking, Writing, Trading, and Fighting. On top of those things I work a security job to pay bills. No one ever told me that this was okay when I was growing up. Quality of life was primarily anchored around material possessions and level of income. Basically, a good life is one where you progressively have the ability to spend more money on more things. Growing up, our parents and teachers pass on the road maps they have: College Education and a High- Paying Job is the route to success. I have come to understand that this story of success is one variation of many stories of success as defined by each one of us as individuals. Of course, the challenge here is to ask ourselves, “What is success to me?” Then, once you ask yourself that, the next question to ask is, “Am I okay if my version of success doesn’t look like anyone else’s?”
Part of the answer to the first question lies in asking, “What is financial success to me?” Not being motivated by money and not caring about money are two different things in my book. I’m not motivated by money. If I was, I’d still be an engineer, or I’d still be in the military, or I’d be a Firefighter (A starting Firefighter makes $70K here in Pierce County. That’s more money than I’ve ever made in any one year to include engineering and I am well qualified to do that job). I deeply care about money and, as a younger man, my lack of knowledge about money left me in a bad spot financially that I never want to experience again. Going into debt so deeply and suddenly made me want to learn. The first part of understanding the answer to the question, “What is financial success to me?”, is understanding personal finance. This means taking the responsibility upon one’s self to get educated.
We have to be grateful that we live in a time where knowledge is so accessible. As a Trader in Stocks and Options, I regularly hear those I learn from talk about how, until the last decade mostly, Wall Street has been the only place where real knowledge of financial markets existed. Today, with the internet, that has all changed. Today you can be like Curtis “Wall Street” Carroll, who became proficient in stocks and personal finance from prison in San Quentin. If I recall correctly from his TED Talk, he started by reading the news paper (Not even the internet) and oh, by the way, he didn’t know how to read when he started. Now he has created his own financial literacy program (from prison). The knowledge is out there, but are we going to do the work to go get it? One of the problems with the traditional education model is the fact that in some cases (like my own) it can lead to a resentment of learning. For me, I hated school the entire time I was there. Elementary all the way through College, I hated it. Ironically, I studied hard and did really well academically. I earned partial scholarships to college and I graduated with honors with a Degree in Electrical Engineering. Then I crashed and burned. As I quit the good job and gave up my new car for repossession, I watched my situation crumbling, thinking to myself, “I don’t have the skills that I really need to live life on my own terms.” I realized pretty quickly that I needed some financial savvy. While in the military I started to read for my own enrichment. It was difficult. I never liked reading in school because it was always forced and was never anything of my own choosing (It was the same way with writing). Today, I’m still relatively slow but I enjoy reading, especially about empowering topics that I choose. Getting to this point was a process. I had to rewrite over old software.
You see, the Baby-Boomers (many of our parent’s generation) had certain constructs drilled into their heads about life: Stick with the same company for 20+ years, pension/social security are the safety nets of retirement, a college degree is a golden ticket to success, etc. To add to that, public education had (and continues to have) a certain construct of success: Do what you are told, get good grades, do extracurricular activities, apply to many colleges, do well on standardized tests etc. I can’t recall a single adult ever saying anything about financial literacy or living on your own terms. I never heard anyone talk of what it might be like to own your own business. Through reading and self-education, I got exposed to these ideas later in life. On my own journey I have struggled with wanting to run back to the old story. Particularly when life gets scary. “Maybe I should go back to college? Or freshen up my knowledge and go back into Engineering?” I said this to a friend once and she promptly replied, “Yeah, but that made you miserable. Why would you go back to it?” It’s simple to stay the course when I’m comfortably paying bills but when I’m walking the razor’s edge financially, the fear can be blinding. This is a large part of why military training involves heavy stress indoctrination. If, in a difficult and stressful training environment, a soldier can learn to make good decisions, then in real life scenarios they are more likely to repeat that pattern. This in opposition to having encountered little stress in training and then suddenly having to deal with combat. I am certain that much of my success in the military can be attributed from learning how to deal with and endure sustained high-stress scenarios during childhood/college. Through repeated exposure to stress, I eventually got good at stress. I believe the same is true when we are trying to rewrite old narratives around finance and success. You my not make any sense out of a personal finance book when you first read it. READ IT AGAIN!! When I first started learning about this stuff I went and consulted with a financial adviser for free at my bank. He drew pictures, used analogies, and told stories and I still didn’t fully understand Roth IRA’s and 401-k’s. But I kept going to see him and I kept reading through material and I gained more understanding. My financial literacy has helped me stay the course for the last 8 years in working to be my own boss. I understand that every dollar I keep, extends the amount of time I have on making my business profitable. Is it stressful? Do I struggle? Hell Yeah! But part of my ability to persist has much to do with the people I surround myself with, and the fact that I continually define what success is for me and I have the courage to push towards that, even though it makes me look different.
I’m pretty positive I’ve written this before but I think it’s helpful again here: For newly freed slaves, life was not suddenly a magical utopia. If you and all your family members had been enslaved your whole life, how would you handle sudden freedom? You can’t read. You’ve been traumatized sense childhood. Racism is everywhere in your country that you were born in. You’ve had little interaction with money. Etc. But you are free… some slaves would have probably preferred the burdens of their old existence. At least those were familiar hell’s. Some slaves were determined to battle all the hardships that came with freedom and making their own way… I’m grateful for them.
Whether you stay the same, or change, life will never be void of struggle. Have you given meaning to that struggle? Caring about money enough to learn about how it works, helped me to free myself from the oppressive ideals of work that my parents generation has (oppressive to me anyway – one man’s trash…). It hasn’t meant a life of ‘ease’ but it has meant a life of my choosing. I can live with that. Can I invite you to choose yours?