Pam Krueger has one of the kind of stories Sammy Rabbit loves.
Pam, is one of the nation’s and California’s leading advocates for financial literacy. She also created, produced and hosted the PBS series Money Track. Pam started professionally as a stock brocker and today is the founder of the investor advocate website Wealthramp.com
Pam’s story answers a question – is financial education, especially youth financial education important? It’s a story that is at the core of Sammy Rabbit’s, 3H approach to effective financial education – – “head, heart, and hug.” The strategy and idea that feelings inform financial choices is something apparently behavioral economists are just starting to discover.
Pam’s 3H financial literacy story came to my attention, when she was generous enough to share an insight on a blog we posted chronicling retired Major League Baseball player Dennis Powell’s thoughts on kids, parenting, money and education. Dennis had indicated that not being exposed and educated early on to personal finance was a significant barrier to his financial independence and probably is for many others.
Here is what Pam shared:
“I can’t stress how important it is that parents not shy away from sharing all they know and what they don’t know about money with their own kids. Sharing their own experiences including struggles and valuable lessons. Credit cards, bill paying, challenges, victories… all of it! If my dad had not explained the stock market to me when I was in middle school so that by the time I was entering college, I had some idea that I would start investing in stocks as soon as I could. Mom was the bill payer and the one who controlled the purse strings, and dad made sure I had some idea of how people invest it once they were able to save enough.”
Her story and experience is one I can relate to and see, me too. It is why I am passionate about financial education and know it works. Many financial professionals and journalists do a disservice to kids, families and communities by indicating financial education does not work. Undoubtedly we can get better at it and all forms of education. It is not perfect. It is not magic. And, it does not guarantee you will always make the best financial choices. But what it does do, is make you aware of what is available and you can say yes to at any time, even if it is a penny or a dime at a time.
Pam was kind enough to agree to share more of her insightful and Sammyriffic thinking with us. You will find it below. And do not forget what Sammy Rabbit says, “You can do it, now get to it!”
Sam: Pam, you have had the unique opportunity to travel the United States and talk to people about their financial thinking and choices. What are a one or two of the things Americans are doing right when it comes to finances? And, what are one or two of the things Americans should really pay attention to and do a better job when it comes to personal finance?
Pam: Thanks to the internet, people are becoming much, more smarter about how to handle their personal finances. There are hundreds of good websites that address the most commonly asked questions about managing money, investing and credit, such as: how to save and invest for four years of college, how to repay student loans, how to invest without a broker, why you would want to work with only a fiduciary financial advisor. The information available now wasn’t even accessible 30 years ago. People are arming themselves and getting up to speed. So that’s what people are doing that’s smart. What I see people can do better is to feel more empowered and more confident and ask questions. It pains me to hear young people say they don’t know anything about money and can’t understand investing, or worse to hear a parent complain that their 20-something kid isn’t responsible with credit cards! YIKES! Hey Mom or dad, why are you not the one teaching them how credit cards work?
Sam: Please share with us your vision and objectives with Wealthramp.com and as an investor advocate?
Pam: Wealthramp.com is all about helping people connect with vetted, fiduciary financial advisors. It is my priority to screen out salespeople who work at brokerage firms or insurance agents selling their products. Only those investment advisors or financial planners who register with the SEC and bother to operate as true fiduciaries— which just means they are legally required to make your financial well being their top priority. Believe it or not, 90% of advisors in the US do not have to put your best interests first. Wealthramp is the trusted resource where consumers can know that each and every financial advisor on Wealthramp has been vetted and personally interviewed before I make them available to be matched. Everyone deserves great financial advice that’s transparent, without inherent conflicts of interest and at a reasonable fee. In other words, you shouldn’t be intimidated or dreading the idea of hiring an advisor, and it should be a really meaningful and productive long term relationship.
Sam: Why do you think youth financial education in particular is important? Do you have any thoughts on what we are doing right or what we can improve as an industry or a movement?
Pam: While there are so many free resources and tools out there for everyone— including teachers, It’s frustrating to realize that most of our public schools don’t place a high priority on financial literacy. Teachers who want to teach the topics are sometimes, themselves, a little insecure and they worry they don’t have the skills and knowledge. In fact, only 5 states earn an ‘A’ in financial literacy in their public schools. The way I see improving the stats that report high school kids are still failing in terms of their knowledge of finances, is for each state to decide financial literacy is a priority and take a page from one of those ‘A’ states like Utah, Missouri, Tennessee Virginia or Alabama. What do these states have in common? They require students take courses in personal finance. They view money management as a life skill and a priority, not some extra-credit class.
Sam: We like to ask everyone, if you could only teach a child one money habit or personal finance concept, what would it be and why?
Pam: The magic of compound interest. The younger the better to motivate a child to save enough money so he or she can learn to invest it and watch it grow.
Sam: Is there anything else you would like to share?
Pam: The best way to fulfill your dream to help yourself and others is to not spend money that’s not your own. Borrowing money for things that will truly produce value such as your education, or a home will most likely increase your earning power and your level of financial security. Those are investments that will probably pay you back. But making big monthly payments on an expensive car you really can’t afford, using credit cards to buy overpriced clothing, too many expensive dinners, mani-pedi’s— this is where you’re bankrupting yourself because all of that money you just borrowed must be paid back but with the extra heavy penalty of interest on top of it. Borrowing doesn’t make you feel free, and debt is a heavy burden to carry. Just because you can borrow $25k doesn’t mean you should. Instead, find a way to enjoy what you have and invest whatever you can afford— $25 or 50 bucks a month— and watch that little stash grow over a very long time.