How To Think About Your Money Story

In a special VettaFi financial literacy video, VettaFi CMO Jon Fee and Financial Futurist Dave Nadig introduce principles of financial planning and several other different aspects of financial education.

Jon Fee: Dave Nadig, financial futurist for VettaFi, I’ve got a question for you and it’s all about the future; specifically, financial literacy. What’s your current take on financial literacy?

Dave Nadig: Couple takes there. First of all, literacy is a very charged word, and so some people don’t even like to use that word because it implies that there’s this baseline that everybody knows is common knowledge. I think that by itself is one of the problems. I don’t think that we culturally have a common knowledge around what finance and money are in people’s lives anymore. So that’s a big first step. I think people’s money stories are wildly different from one person to the next. When you talk to an average financial advisor, they’re going to tell you that some people walk in and they’ve really got it all figured out. Some people have it all figured out completely wrong. Navigating those poles that people come in with is a big part of being a financial advisor.

I think the big shift we’re seeing though is that interest rates really do change everything, and they actually change the way the average person’s thinking about money.

Money now costs something in a way it didn’t before. You think about a 7% or 8% mortgage a lot differently than you did about a 2% or 3% mortgage. It really just changes the game. I think the change in interest rates is going to put more focus on those critical money decisions, which often have to do with borrowing, whether it’s credit cards, whether it’s your mortgage, whether it’s taking out a car loan, whether it’s taking out a college loan, because those conversations now have so much more valence, so much more intensity. That’s good for financial literacy. I certainly talk to young folks and they’re paying a lot more attention.

Jon Fee: Love that. I knew you’d be the right guy to talk to about this. I want to go back to something you said about advisors, but before I do, you mentioned interest rates. That is yet another thing I’ve been communicating about with my kids. I have three kids. We talk about total cost of ownership, whether it’s about buying a home or buying a car, or frankly buying something on Amazon. They see the price that it’s for sale and think, oh, that’s it. I always have to remind them, “No, there’s the total cost.” Don’t forget there’s tax on that. They’re shipping on top of that, and there could be other costs along the way. So I’m always leaning in on that with my kids.

But Dave, back to what you said, something about advisors, and then you mentioned the baseline. I’ve been talking to a lot of advisors lately as we’re building content for the Exchange Conference, which I know you’re well aware of, and I’ve got questions for you on that too. Advisors always say, “Jon, if you and Team VettaFi could help lift the knowledge around finance with the masses, it makes my job easier,” because they spend day in and day out, as you mentioned, talking to their clients usually about the same concepts. But something you said about baseline really rings true with me. There is no baseline financial literacy, because everyone’s at a different step of the journey.

But what do you think is step one if there was a baseline? Or what is it that you have taught your kids? I know you’ve got kids a little bit older than mine. Where did you start them on the journey?

Dave Nadig: Maybe because I’m a nerd, I started at a really weird place, but I really start with “money is power.” The point of money is to move power around society. As an individual, your actual only thing that you have to work with is your attention, your time. That trade-off between time and money is the fundamental financial advice, financial planning, financial literacy access that everything works on. It’s not status, and culture tells us money is status. So I try to start with the baseline and say, “Look, if you had lots of money, that meant you could spend your time doing everything. If you have lots of time, you can spend all of that time and attention trying to get money, but neither one of them by themself has the value. The value is between that system.”

Thinking about that, thinking about what money gives you and what you do for it, I think is step one.

Jon Fee: I like that. I got to pull up a quote, because I know you and I both have an affinity in our hearts for skateboarding and the culture of community that surrounds it. We’ve gotten to meet some skateboarding legends together. Stacy Peralta, I got to meet him last week, of Powell-Peralta, the first professional skateboarder.

I was listening to him give a talk, and back to your comments around the connectivity of money and time, he said … I don’t know if it’s actually his quote or if he was paraphrasing someone else, but he was like, “Listen, if you want to be a kid your whole life, you got to grow up fast.” What he was talking about was, if you want to choose what you do, you’ve got to grow up quickly to figure out how you can afford to do just that.

That little snap of wisdom from Stacy really resonated with me. And it really speaks to what you just said. It’s, hey, if you want to spend your time doing whatever you want to do, it’s going to cost you a lot of money to do so. So factor that into your thinking. You don’t get to do it just because. As you and I both know, Stacy became a professional skateboarder early on in his career and never really stopped working. Frankly, he hasn’t stopped working now, and is probably one of the biggest kids I’ve ever met. God, what a heart of gold.

OK, so I love a call to action for our audience, Dave. I know you read a ton and you listen to a ton. For folks that are looking to stay on a financial literacy journey or take that first step or accelerate where they’re at, are there particular blogs or podcasts you recommend for folks?

Dave Nadig: Oh, gosh. If you’re just interested in general economics and markets and what’s going on, it’s hard not to recommend Odd Lots. I think it’s probably the most popular finance podcast in the world. I think that’s a great place to start. But what I actually would tell people, if you really want to start this journey, I take a page out of our friend Brian Portnoy from Shaping Wealth’s book here, and just start writing down your money story.

Take that little tiny, slightly weird step of actually grabbing a pencil and a piece of paper and write down sentences about money: “When I think about money, I feel ____.” “I worry about money.” “I’m worried about X.” “When I have extra money, I think about Y.” Most people can’t do that off the top of their head. They have to actually really think about that. That’s the step: Start really thinking about it.

Jon Fee: I like that. Defining that personal connection that you have with money is step one. Dave, always great to connect with you. Thanks so much for making the time.

Dave Nadig: Anytime.

For more news, information, and strategy, visit the Financial Literacy Channel.