Tag Archives: savings vs. investing

Saving vs. Spending & Getting Financial Advice

Who do you want your kids or grandkids to get financial information from?

Breaking news: Your kids or grandkids will not listen to you – sorry. It’s wrong, it’s sad, but it’s true – and you already know that. So it’ll be from an advertisement or something they find online. Both of those are from companies who have a vested interest in selling your kids or grandkids. If that sounds true, go to Mosaic or Amazon and get them a copy of the Money Tools book. Mosaic has a bunch of signed copies and at least you have some assurance the content isn’t selling anyone anything! You’re also welcome to go to my website (yourmoneybook.com) and click on the radio stories to send them the link to our grad stories, or print something out for them.

Let me give you an example: Mike Riley is the former quarterback of the Edmonton Eskimos – he’s now with the BC Lions, but still well respected in Edmonton. So a local investment firm has signed him to promote their investment seminars. In their radio ad Mike Riley says he’ll be “sharing my secret financial strategies…” WHAT? He may be a great football player, but who on earth would listen to him on investments? Would your dentist then fix your car or your hairdresser renovate your house? Besides, there is no such thing as a ‘secret investment strategy’ – honestly.

Investing, or saving versus spending, is an even harder concept for 20 somethings to believe. For most anyone under age 30 is rather like our view on climate change. There’s a need, we understand that, but there isn’t the urgency, and we certainly aren’t moved enough to pay much of a price for doing anything.

Why? Because the payoff seems too far down the road. Ask anyone in their 50s or 60s how important retirement savings are. You’ll get a far different answer than from someone in their 20s facing the decision of the Vancouver concert versus putting the money away into investments. For both climate change, not growing your savings, or a host of other issues, there isn’t enough of a motivation to do much this week, this month, or this year.

Intellectually, every 20 something can be taught that 100 bucks saved today turns into more than $10,000 in retirement. But the opportunity cost (fancy economics term of losing the potential) isn’t painful enough today. Oh, it sure will be down the road, but it’s not a choice 90% of us make or made in our 20s. The big problem is that a 20 year old needs to save for 47 years and 12 months a year. That’s 1,128 paydays where they’ll be tested on spending vs. savings and I guarantee that 90% of them will fail that test month after month and for years!

If nothing else, make anyone in your family that’s between 16 and 25 read the two page chapter in the Money Tools book on page 167 on how to become a teenage millionaire. Yes, it really is two pages. Understanding how car loans, credit cards, student loans, etc. work is a bonus – but those two pages can change their entire life if they just knew what to do – and how to do it.

George Boelcke – Money Tools & Rules book – yourmoneybook.com