Who is Financially Smarter: A Business Executive or A Student?
A mutual funds manager recently told me not to waste time trying to educate people about finance. He said “you’re not going to help them be successful because they will not take action”. I was offended at first, but upon reflection had to admit his statement had merit.
A few years ago, I spoke to a classroom of foster children about to be released from the county foster system. Around the same time I also presented to a seminar sponsored by Verizon and attended by executives and business owners. Neither group was particularly happy to be hearing about financial planning. People of all ages just don’t like to learn about finance.
After doing a poll of the Verizon audience, I scrapped the high level, sophisticated strategy that I had planned to share and pulled out the same slides that I did for the kids. Why? Because all these people who made over $100,000 in income had about the same level of personal finance awareness as did the foster kids–which meant almost none.
By the way, in that group of 35 executives, only ONE person had participated in their 401K and none of them had an IRA.
Taking the first step
At the end of the session, both groups were energized and committed to one task: in one year they would get back to me about whether that had opened either an IRA or a 401k. Almost half of the foster kids, 45%, stayed in touch and sent me their statements to prove that they had opened a retirement account. NONE of the executives followed through. In fact eight business people still stayed in touch over the next 3 years but never got around to opening a retirement account.
Why is it that some people are successful no matter what they do and others can’t seem to get ahead. It doesn’t matter at what level of economic status or level of education you have, the struggles are the same. The difference comes down to action. There are those who act and those who ponder but never execute.
The most important thing you can do to make your financial plan a success is to take the first step. So remember, don’t be an executive–be a student.
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