While age 11 has been traditionally the marker of the passage into adulthood in eras past, age 14 is typically the first age at which you can officially have a job, earn income and potentially even pay taxes.  So 14 can also be the age at which you should begin learning about money and how capitalism works, as it’s the system you have been born into and you are going to live in it for life.  Wherever you are in life, it’s always a good idea to understand the economic systems of the world and understand the things you can do to make life easier for yourself.

         First, you need to know one very important thing.  Money does not equal happiness and you cannot buy happiness, but money problems can cause you stress and anxiety.  When monthly expenses are paid, there is some money in savings and some saved for retirement, more money doesn’t correlate to happiness, you have to create that on your own.  But getting to the stage in life where the bills are paid and there is some money in savings is hard. 

Only 29% of Americans have 6 months of savings and 55% of Americans don’t have any type of emergency fund.  These numbers, along with growing amounts of student loan and credit card debt, are not surprising, because two thirds of American adults can’t pass a financial literacy test.

This is worth repeating:  2 out of 3 adults cannot pass a financial literacy test and only 1 out of 3 adults has savings. 

Without diving completely into the statistics we can easily infer that the people with the savings accounts are likely to also be the same people able to pass a financial literacy test.

Because 2 out of 3 adults don’t’ know very much about money, they don’t like talking about it.  One of the lessons I received from working with people on their tax returns is that most people are not comfortable talking about money.  If you’re not comfortable talking about it, then it’s unlikely you are going to expand your learning and it is more likely that you will not take advantage of opportunities to keep more of your money.

Take two identical twin sisters, Emma and Danielle.  Identical in every way except one, Emma pays her bills on time and understands the credit system, and Danielle pays things when she gets around to it and doesn’t worry about her credit score.  Both sisters receive an inheritance of $60,000 from their grandmother and they decide to build houses next to one another in the same new development.  The houses are different in style, but identical in price, $260,000 each.  Each sister uses her inheritance for the down payment on the home.  Each sister takes out a loan of $200,000, but the terms of each loan are not the same. 

Because Emma has learned about credit and has taken care to increase her credit score to 775, she is approved for an interest rate of 4.38%.  Danielle’s lack of concern for her credit score, 635, is approved at the higher rate of 5.97%.  This seems like a small difference, but when each has made all of the payments over 30 years, Emma will pay $359,867 and Daniele will pay $430,427, a difference of over $70,000 for the SAME HOUSE. 

If you are the person with poor credit, what it really means is that everything for you comes with a “special price”, just for you, and that price is 20% higher.

Imagine you walk into Fatburger with your friend.  She orders the same thing you do but they charge you 20% more, are you going to say something?  And if your response is to just shop somewhere else, imagine the price increase is the same, everywhere you go you get to pay more. 

That’s the game.  You can learn the rules and how to make it work for you so in the future you can get them to give you offers for free flights and free hotel rooms, or it can work against you and charge 20% or more extra on every major purchase.

For the rest of your life, there will be companies and people trying to get you to buy what they are selling.  These include addictive things like the nicotine in Juul or cigarettes, alcohol and drugs – prescription drugs like Adderall, opiates, anti-depressants and alarmingly anti-psychotic drugs.  There are street drugs and the most addictive of all, sugar.  Social media, porn, video games— the list goes on: anything you want to buy they want to sell you, but more than that, companies are employing psychologists to develop marketing and to help design products so that they make you want to buy them – they figure out how to make your drug factory in your brain tell you that what they are selling will make you happy.

So you need to know this, and that doesn’t mean you don’t spend your money, but I want you to spend you money on what really does make you happy.  I’m not the finance guy that tells you to spend as little as possible at all times.  The notion of saving for rainy day is true, but there are also days where the sun is shining and you want to go do the things you enjoy and I’m all for that type of spending; I do it too.

Popular right now is Marie Kondo and her book The Life Changing Magic of Tidying Up.  This financial series will hopefully help you with tidying up of your financial life.  Identifying the things that are important to you and the things that are not and focusing on not spending money on the things that do not spark joy.  Recognizing someone is trying to sell you things all the time, you need a set of skills to avoid wasting your money on things like convenience, when just a little bit of planning can help you save money on things you don’t care about.

If you have done your planning and understand your finances, then, when it is time to spend money on the things you really enjoy, you can do it guilt free because you’ve cut out the things that are not important to you and made space for the things that are important.

Convenience is a place where people give away a lot of money, whether its in big chunks because you don’t want to move even though the apartment down the street is cheaper, or the ease of shopping at 7-11.  The proliferation of convenience stores just tells you how much people are willing to give away for convenience.

But I can’t convince you that you should learn about money, only you can do that, and reading any further, listening to my podcasts and learning more is a waste of time unless you care about it and have a reason.  This reason can be as simple as, “I don’t want money to prevent me from being happy” or, “I don’t want the stress of being worried about bills every month” or, “I want to start my own business”.  Your will need this reason in the future. 

So if you want to learn I’m here to help you, to share what I wish I had known growing up and other lessons I’ve learned along the way.

To start, please go through the Financial Basics podcast series, learn about money, the history of money, and the concept of money. 

Homework Assignment:

What’s your reason to learn about money?  Write this down somewhere where you can see it every day, like a piece of paper taped to your mirror or an index card on your dresser.  It’s good to remind yourself why.

First Task:  go ask 10 people you know – 5 adults and 5 people your age:  “What do you think I should know about money?”  Write down the responses and note people’s attitudes when talking about money.  

Remember, money is only real  because we believe in it, collectively, and I believe that if you give me money for my labor, that same money will be accepted at the grocery store so I can eat.  But in the same token, money makes the world go around and it behooves you to learn about it and understand it so you can use it to your advantage and become a master of it, instead of the other way around.