They discuss state-mandated financial education courses and the success rates for students in these states. Billy also shares his take on the mandates and how YOU can get involved if your state does not yet have this requirement.
Billy also details how parents can get involved and bring this education into their children’s schools, where this is so desperately needed.
This shortened episode of BiggerPockets Money is especially important for parents who are trying to teach their children how to handle money.
Mindy: Welcome to the BiggerPockets Money Podcast FinCon Bonus Edition with Billy from The National Endowment for Financial Education.
Billy: As an organization that’s a foundation, that’s adjacent to being a think tank, we want to help lead that level of dialogue. And it’s not just about providing curriculum and teachers, to use in the classroom, or have quality information directly to the consumer, it’s about how do we change our dialogue in this space, so that we help everyone move ahead?
Speaker 3: It’s time for a new American dream, one that doesn’t involve working in a cubicle for 40 years, barely scraping by. Whether you’re looking to get your financial house in order, invest the money you already have, or discover new paths for wealth creation, you’re in the right place. This show is for anyone who has money or wants more, this is the BiggerPockets Money Podcast.
Mindy: How’s it going everybody? We are recording live from the NEFE podcasting stage. Huge thanks to NEFE, The National Endowment for Financial Education, for sponsoring live podcasting at FinCon19. And as you can tell from this intro, this is yet another Scottless episode. Scott wasn’t able to make it to FinCon this year, but when the opportunity to interview Billy popped up, I jumped all over it. Billy is the CEO of The National Endowment for Financial Education, or NEFE for short. It’s a not-for-profit national foundation dedicated to the inspiring, empowered, financial decision making for individuals and families, through every stage of life. As we say so frequently on this show, financial education in America is severely lacking, and NEFE is spearheading the efforts to change this. Billy, welcome to the BiggerPockets Money Podcast. How are you today?
Billy: I’m great. This is my first FinCon. It’s not NEFE’s first FinCon. We’ve been coming since the beginning.
Mindy: I know. I’ve been talking to you guys forever.
Billy: Yes, but it’s my first time, and the energy is phenomenal.
Mindy: Well, welcome.
Billy: Thank you.
Mindy: I really consider this my conference, because I’ve been coming for seven out of the nine years, and it’s just really amazing. I learn so much every time I’m here. Yes. So here on the money podcast, we interview people who are in various stages of their journey towards financial independence. And the overwhelming majority of people we talked to had to figure it out on their own. They had no financial education from their parents, their school, or anyone else. So of course they mess things up. Schools are tasked with teaching more in less time, and parents are busier and busier. And I love your mission statement, it says, “We envision a world where people make informed, thoughtful and beneficial financial decisions, that are aligned with their values, so that they can enjoy better, more secure and more satisfying lives.” And I just cannot agree with this enough. So, how can we start? Where do we start? When do we start?
Billy: The earlier the better. Kids can understand concepts about exchange, and understand the difference in needs versus wants at a very early age, probably as early as three. But they understand things like money and so forth at five. Why not start there?
Mindy: Yeah, why not? I have been trying to teach my children since birth, really. I’m a mom, my children 12 and 9, and how can I help introduce financial education into their elementary and middle school curriculums? How do I approach the administrators? I don’t want to come across as that mom that’s crazy, “Oh, she’s always demanding, and she’s asking all these things.” But I really want them to know that I think this is really important. I’ve been blogging about money for seven years. It’s a passion.
Billy: Yes, of course. Well, the thing about education is we know that teachers have a lot to do. There’s a lot on their plate within that very narrow timeframe that they have. And so, we don’t want to approach this from the point of view that we’re saying, “Hey, take off something else.” But how do we incorporate this into the broader curriculum? And I think it’s a very simple answer to your question, but ask the teachers the best way that they can see, where do they see the opportunities for improving this? Because we know, based on research that we have funded, that teachers think this is highly important. 90% of teachers think that this topic should be required for kids to graduate from high school. And so, how do we find opportunities to build on what’s already mandated, or if there’s a separate mandate, how do we incorporate that, and draw, and build on other topics that are already being taught?
Mindy: So you think that we should go directly to the teachers, as opposed to the administrators themselves?
Billy: I don’t think it has to be either or. I think you understand the nuances of your local school. And is your school a bottom-up school needing grassroots, where a group of parents will go into a PTA meeting, and talk about the importance of money management and the financial life and practical skills that they can learn? Or is it the kind of school district where if the superintendent says, “Hey, this is important,” most folks jump in, and say, “Okay, let’s do it.” Understand the local nuance.
Mindy: Okay, that’s a good tip. Okay, thanks. You released an article called Mandates Matter When it Comes to Borrowing for College, which basically says that students in states where there is a financial education requirement to graduate from high school, make smarter financial aid decisions in college. So clearly these financial mandates don’t work, right? These mandates are only currently in 19 or 20 of 50 states, right? Is my research [crosstalk 00:05:06]?
Billy: Yes, that is correct. Yes.
Mindy: Okay. So how do we get them in all 50 states? Do we want them in all 50 states? NEFE is pro-mandate, right?
Billy: Yeah, we are pro-mandate, and I will say, with a couple of caveats. So not all mandates are created equal. So you may have a state mandate that says, “You should teach personal finance, or it should be part of another class,” but the teachers aren’t given the resources or the training they need, to be able to learn a new topic area to cover in the classroom. They don’t have access to high quality materials that they can use in the classroom. So sometimes a mandate can actually worsen the problem if it’s not clearly defined by what should be covered, how long things should be covered. A one-week unit on money management for teens is not enough. So that may build confidence without the competence necessary to do well. And so, we want well thought out mandates, where teachers are given the professional development they need, to be able to cover this topic.
Just because we all have money and checking accounts, does not mean we’re money experts. So teachers also need the professional development to do well. So with the caveat, that they’re well designed, thoughtful mandates, where teachers were included in the development of those, then we support those.
Mindy: Okay. So how do we get those into all 50 states? And I’m assuming I can just Google if my state has the mandate?
Billy: Yes, The Council for Economic Education, and the Jump$tart Coalition for Personal Financial Literacy are both youth-facing financial education organizations that have data about what states require. And is it a requirement to graduate, or is it required to offer …? Those are all the different nuances level. But if you want to think about this at your local level, start by going to PTA meetings, start by talking to teachers. Every state has a council for economic and financial education. There are Jump$tart Coalitions in all but one state. So work with those groups to say, “How can we help? How can we do this well?” And the states that have incorporated effective, high quality financial education mandates, it has taken them years to do that.
They have to build coalitions, it’s not just one or two advocates who are saying this. It’s working with the government and the state legislature, working with teachers, teachers unions in some states needs to be at the table, and superintendents. And in some places, even business should be considered as an ally in this regard, because we all benefit from financially informed consumers, who can make the best choices for them, and being able to move forward in that. So, it takes a lot of people, and every state’s a little bit different. Every department of education in each state has a different nuance. But locally, you need to understand. But it does take time, and it does take a coalition working together.
Mindy: And NEFE is also working to get these mandates in all 50 states?
Billy: Well, we’re not advocating directly in each state, but what we are doing is providing information that each of those groups need. So, data on effectiveness like the better borrowing. What we hear constantly in the news when it comes to borrowing a bit for young adults, is student debt. And we have funded a study that looks at that, and shows that high quality financial education, people make better borrowing decisions when it comes to financing college. So, providing data like that, and helping people have the talking points and the resources that they need. But NEFE doesn’t directly go knocking on the doors of the state legislators, but we empower those who do that with quality information.
Mindy: Okay. Is there anything else you would like to share about NEFE, or your message, or your mission, before we move on to our famous four?
Billy: Sure. There’s a lot of misconceptions when it comes to financial education. There are people out there … probably none of them are listening to your podcast, but there are people out there who say, “Financial education doesn’t work,” “People aren’t smart enough,” or, “The landscape is too complicated.” And when you put 100% of the burden on financial wellbeing on a class you took as a junior in high school, or as a seventh grader, yeah, you’re probably not going to be as effective as you thought. So we’re trying to define this ecosystem within which we all exist. Part of that is financial information, financial education, helping people make better behavioral choices. But it is a complicated landscape that we live in, and we’re trying to provide clarity for the effectiveness of each aspect of this. So in the aggregate, in the collective, we’re able to make change, so that we can make collective impact as a community.
So people like you who are talking this every week, talking this every day, living this life, so that others can learn, and get the high quality information they need. And working with groups like us, who are financial educators, who are working with schools and colleges, working with people who are helping us design better products, so people have access to high quality financial products, that help them achieve their financial goals. All of that together, is what it takes to create financial wellbeing. And we’re trying to shed light on that landscape, to shed light on the effectiveness of each of those, so that collectively, we can make great change. And as an organization, that’s a foundation, that’s adjacent to being a think tank, we want to help lead that level of dialogue.
And it’s not just about providing curriculum for teachers to use in the classroom, or high quality information directly to the consumer, it’s about, “How do we change our dialogue in this space so that we help everyone move ahead?” And that’s what we think about a lot lately. And how do we help change the system, and advocate so that everyone benefits from being financially literate?
Mindy: Everybody does benefit from being financially literate. So, thank you for doing what you do, because I’m over here trying, but I’m hitting adults who have maybe just discovered financial independence, and are on the beginning of their path, or in their middle of their path. And getting them earlier is so powerful.
Billy: Yes. And thank you for demystifying this topic for so many people. People won’t approach money, because it’s one of those taboo topics. And being able to have access to good information that’s understandable is so important. So thank you, for doing that.
Mindy: It is so important. And I just really love the feeling that I get of knowing that I know something. I don’t know everything, this isn’t the BiggerPockets Brain Surgery Podcast, but I know about money, and I want to help other people too. So that is the whole reason we have this show. So, okay. Well, we are now to the famous four questions that we always ask of all of our guests. These are the same four questions and one command, that we ask. Are you ready?
Billy: I’m ready.
Mindy: What is your favorite finance book?
Billy: My favorite finance books, plural, are books that give authenticity to the topic. Where people talk about their story, and they overcame by not knowing. And we shed light on the information, and they were able to come out of that. So, books that come from a personal point of view, and share a story of how information empowered them. Those are the books, that to me, always resonant.
Mindy: I really agree. You can learn so much more through storytelling than just, “You should do this. You should do that.” When you start talking about it like that, people feel attacked, and they stop. But when you share, “Hey, when I was little, I was a big mess up, and now I’m really awesome, and here’s how I got there.” Like, “Oh, I was a big mess up too, and I see how you did your thing, and you got to the place that I want to be.” That’s a good answer. Normally, Scott will ask the next one, but I will, because he’s not here. What was your biggest money mistake?
Billy: My biggest money mistakes, plural again, mostly happened in my 20s. But I would say that it’s tied. Taking a credit card out when I was 19 in college. I’m a Gen X, and it was so easy to get credit cards on college campus when I was in college. Doing that with no job, $1,000 credit limit, and I went immediately and used that. That immediate ability to spend was a mistake. And then leaving money on the table, my first couple of jobs in my 20s. And I think about what that few hundred dollars would be worth to me when I’m 70 years old or whenever I retire. That is a huge mistake.
Mindy: I was talking earlier today with Kevin, and he said that his biggest money mistake was buying a car. He spent … I want to say $29,000. And he said … this conference is really fun, because you talk to other money nerds. He said, “That $29,000 is going to cost me $600,000 in retirement. I did the math.”
Billy: Yes. Oh, my. Yes. Oh, that gives me heartburn.
Mindy: Yes. So you’re leaving money on the table, just a couple of hundred bucks. You’re better than Kevin. Sorry, Kevin.
Billy: Yeah. Sorry, Kevin.
Mindy: What is your best piece of advice for people who are just starting out? And this is an ambiguous question, because wherever you think they’re starting out on their financial journey, on their journey to becoming educated on finance. So there you are.
Billy: I know this is hard to do, because we live in an instant gratification world, but do not spend what you don’t have. Meaning, if you can’t pay it off, don’t start. Because it turns into a black hole. I did it in my 20s, I know what that feels like. You spend, and you spend, and you get this short-term … it’s like junk food, tastes good in the short term, but then your pants don’t fit anymore. It’s the same thing that happens to you financially. You spend and spend, and then the next thing you know, you owe thousands of dollars, and you’re showing at $83 a month toward that. And that turns into a black hole, and that’s it.
Mindy: I could not agree with that more. We don’t have a video of this, this time, but I was going to be like, “Preach, preach.” You’re so right. Yeah. Don’t spend what you don’t have. It’s one thing to buy a new tire when you get a flat, and you don’t really have the money to afford that, but pay that off as soon as possible. It’s another thing to buy like, “Oh, this is a cute shirt.” I really appreciate my parents giving me a credit card when I was 17. I had just graduated from high school, and they said, “Here’s your credit cards. You can put anything you want on this card, but every month, you have to pay it off, or I will take it away from you until it’s all paid off.” And it was supposed to be for the flat tire in the middle of the night, because this was before cell phones. I’m a Gen Xer too.
And it turned into, “Oh, these are cute shoes, but I have to pay this credit card off before I get to the next month.” And that was really, really helpful in shaping my financial mindset towards credit cards. And I didn’t get into the massive credit card debt because they’d have just taken it away.
Billy: Mm-hmm (affirmative). Right.
Mindy: Okay. This is the most difficult question of all. What is your favorite joke to tell at parties?
Billy: Well, I’ll tell you my favorite money joke.
Mindy: Oh, I love money jokes.
Billy: Well, it’s not ha-ha joke. It’s a joke about our field. And this goes back to your question about mandates, is that all state legislators think they’re experts in money because they have checking accounts. So they write financial policy. But the real problem is we forgot about the education side of financial education. And then it’s this complicated landscape where people learn. But all state legislators all think that they’re experts in education because they went to school. And they write these financial education mandates, and don’t consult teachers. So that’s my running joke within the community, and people roll their eyes at … because I always talk about this, but it is the truth. And that’s why some of the state mandates are bad. So, we make fun of it, and then we disempower it, and then hopefully, shed light on.
Mindy: So, hopefully. Now, I will tell you that is the hardest I have ever laughed at any joke on this show, Scott.
Billy: That makes me sad.
Mindy: Well, if you listen to the jokes, you would understand. Scott loves a good dad joke. He just turned 29. He’s 29 years old, loves the dad jokes. He’s not a dad, but I think they’re terrible. So, he loves the good pun, and I don’t. Okay. So, we have come to the last … it is a command. Tell me where people can find out more about you, and about NEFE.
Billy: Sure. The website, nefe.org, National Endowment for Financial Education. That’s where you’re going to find data and talking points, to make the case for … you’re going to go to your teachers, and your kid’s school, and say, “Look what’s going on here? How can we help, and our kids learn?” You’re going to get data there, you’re going to learn about our websites. We have teacher resources, we have adult learner resources, so people can learn about the topic. And we also do polls in national … the fingerprint on things, and looking at, “Are you cheating on your spouse with money?” And things like that. If you want to learn about those topics, go to nefe.org. And that’s a good episode, just so you know that.
Mindy: No, I just made a face, I’m like, “Oh.” I can’t believe somebody would … this is my bias, but I believe in being completely honest with my husband, and he’d better be completely honest with me. And just cheating on your spouse, I actually read a book once, where the woman said, “Yeah, I would hide receipts from my husband. I would hide things from my husband.”
Billy: That is very common, and we have data on this. The national poll, we do it every other year, and it’s getting worse.
Mindy: Oh my goodness.
Billy: The numbers are …
Mindy: Don’t do that.
Mindy: If you’re listening, don’t lie to your spouse about money. A, they always find out, and they always find out in the worst way, and the worst times. So don’t lie to your spouse. Why are you lying to your spouse about money? Oh my goodness. Yeah, I could go on and on about that, but I will not.
Billy: So, yes. Go to our website. You’ll find those kind of things, those talking points. And just about me, I’m not terribly interesting. I just happen to work at NEFE, but my whole career’s been in education, and advocating for high quality education, whether that being helping low income kids get to college, or whether having access to high quality financial education. And that’s because I was a first generation college student, whose family didn’t talk about money. And I made a lot of mistakes, and look where I am now. And hopefully, I can be an example to those kids and those parents out there, to how do you broach this topic. And that’s what we’re interested in at NEFE, is being authentic in the space, being honest about … everyone makes these mistakes, but we want to have a system that works for everyone, and that includes high quality financial education.
Mindy: That’s fantastic. It sounds like we’re going to need to bring you back with Scott too …
Billy: Oh, sure. I’d love it.
Mindy: … and have a full-length episode, because the FinCon episodes are a little shorter. Okay. So we will include links to all of the things that you mentioned, and all of the things that I mentioned like that article about the mandates. I thought that was fascinating information.
Billy: It is.
Mindy: We will include all of those in our show notes, which can be found at www.biggerpockets.com/fincon2, because this is our second FinCon bonus episode. Billy from NEFE, from The National Endowment for Financial Education. Thank you so much for being a guest today on the show. I really appreciate having you on.
Billy: Thank you. This was a lot of fun.