The life skill that will lead to wealth


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Jean: Did anybody ever teach you about money in school or college?

Bartender: Other than the simple economic class that we had, really, not much. I think that’s the problem.

Jean: It’s this life skill that nobody or very few people are being taught these days.

Greg: Yes, financial literacy — it really is — starts at a most basic level. Budgeting, the importance of living within your means, the power of compounding, paying yourself first.

Jean: We’re getting to the point where we have to make the connection between education and behavior change. People know that they should save more, but they actually have to save more. That’s where I think financial literacy is going next.

Greg: In an environment where incomes haven’t been growing, it really puts more of a squeeze on individuals, and they have to really watch where every dollar goes.

Jean: No other generation had to worry about the fact that they had something called a “credit score” and that they actually had to manage it, right? People weren’t responsible for saving for their own retirement; they had pensions and they had health care provided by companies. Now, it’s all on us and so if you don’t learn these things, you are in trouble.

Bartender: My expenses, I feel like most of them are fixed now and tied into my rent: I’m tied into my phone bill; tied into my electric …

Jean: Oh …

Bartender: You don’t think so?

Jean: You are tied into your rent – I’ll give you tied into your rent. But all of those other monthly bills — the cable, the Internet, the phone, the cellphone, the electric bill and the health club — you can negotiate, you can ask for a better deal, you can get a better deal in many cases. Even the interest rates on your credit cards are highly negotiable. I pick up the phone and I call my cellphone provider and I ask, “Is there something better, is there something cheaper, am I using all my minutes?” And most of the time the answer is “no.”

Greg: And shop around. This is an environment where anybody with decent credit can really take advantage of low interest rates. Credit cards have a lot of 0% offers that are out there now that extend for 18 months or even more. So if you carry a balance and you are not making much headway in getting it paid off, get one of those 0% offer cards, transfer the balance over there and then really put the hammer down, so you can get that debt paid off before that introductory rate expires.

Jean: Again, that’s a skill, right? What you are talking about; knowing that you can negotiate, knowing that you can transfer a balance. It’s part of the whole problem that people don’t understand that these are all negotiations and they should be asking for what they feel they can get in order to get the best possible deal for themselves.

Greg: The burden is more on us each day and you spend a little time on the Internet to educate yourself about – get the most basic things. Things like balancing a checkbook. People will spend 5 hours a day on social media, but they won’t take 5 minutes to check their account balance and they are incurring overdrafts at $35 a pop. Avoiding overdrafts is the financial equivalent of being able to walk and chew gum. In an environment where you have 24/7 account access, you need to know that you can take those steps and avoid having that money needlessly drained out of your account.