Please welcome J.D. from Money Boss as our guest for today’s Financial Literacy Chronicles. This is Day 24 of 30 in the Financial Literacy Month interview series here on Enwealthen.
Please tell me a little bit about yourself and your blog.
My name is J.D. Roth, and I consider myself an accidental personal-finance expert.
In 2006, I started a site called Get Rich Slowly to document my quest to dig out of debt and learn about money. As I read everything I could about smart money management, I shared my new knowledge at the site. For whatever reason, Get Rich Slowly grew quickly. This allowed me to get out of debt as planned, but then achieve even greater financial goals.
I sold Get Rich Slowly in 2009 but stuck around to manage the site for another three years. In 2012, I “retired”.
But I kept a column with Entrepreneur magazine, created the Get Rich Slowly course, and remained active in the community.
Then, in 2015 I started my current site, Money Boss.
Money Boss is my attempt to espouse a coherent philosophy for success with money and all aspects of life. It distills everything I’ve learned in a decade of reading and writing about personal finance on a daily basis.
You can be frugal as hell, but if you don’t make smart choices on the big stuff, you’ll never find financial success.
I try to take a holistic approach, covering all sorts of topics related to self-improvement. Because I truly believe everything is connected.
If you learn to take charge of your financial situation, you can transfer those skills to fitness, relationships, and more.
Can you share your most impactful money memory from your childhood?
When I was a kid, my parents fought about money all of the time. No matter how much my father earned – he was the bread-winner in the family – mom and dad spent it all.
Dad blamed mom for managing the household poorly. She blamed him for wasting money on big things like stereos and computers and airplanes and boats.
In retrospect, she was more right than he was.
In any event, their constant bickering had a profound impact on my life. As an adult, I’m conflict-averse. I don’t like to argue or fight. I avoid confrontation. I look for middle ground.
More than that, their poor skills with money got passed along to me and my two brothers. All three of us entered adulthood with lousy money blueprints.
It took me a long time to correct things (and I still struggle with some aspects of money management.) My brothers have both made some degree of progress, but the faulty money blueprints are still there.
We all receive financial advice from people in our lives. What’s the most interesting or useful financial advice you’ve received from your community?
Worry about your own self. Stop comparing yourself to others.
This applies on so many levels.
We’ve all heard that we ought not try to keep up with the Joneses, and that’s certainly one aspect. You shouldn’t try to base your decisions on what your friends and neighbors are doing.
But it goes beyond that.
If you’re doing well, you shouldn’t flaunt it. Don’t force others to compare themselves to you.
If you think you have things figure out, don’t lecture those around you. Don’t engage in financial one-upmanship. Be available as a resource, but don’t be a know-it-all.
Bottom line: Ignore everyone and instead focus your time and energy on being the best person you can be, financially and otherwise.
I have several personal finance books I regularly give to friends and family. What are your 3 favorite fundamental personal finance books you often gift to others?
But the book I share most often isn’t actually a personal-finance book. It’s a book about taking charge of your own life: How I Found Freedom in an Unfree World by Harry Browne.
Browne’s message of personal responsibility changed my life. (Note however that when I gift the book, I include a caveat: I don’t subscribe to Browne’s political philosophy, which is prevalent in the second half of the book. But the first half is a brilliant look at how we give up personal freedom on a daily basis – and how we can avoid doing so in the future.)
What financial literacy education did you receive in school? If you had a magic wand, what would you change to improve that?
A lot of people say they didn’t get any financial literacy education in school.
All seniors at my high school were required to take a personal finance class.
But it sucked.
It took the standard approach to financial literacy, which is to teach about compounding, the Federal Reserve, and how to write checks. In other words, it focused on facts and mechanics, and I believe that’s the wrong approach.
That’s not actual financial literacy. (Or if it is financial literacy, then it’s not what people need.)
I think what people actually need is a solid grounding in behavioral finance.
The math of money is simple: to build wealth, you must spend less than you earn. It’s not the math that’s hard; it’s the mindset. People need to be taught the importance of purpose. They need to be shown how to align their decisions with this purpose. They need to be taught skills like mindful spending. They need to learn that everything is a trade-off: If you buy one thing, you’re forgoing another.
This is the stuff of actual financial literacy, and it’s sadly missing.
There are so many blogs on the internet, what are 3 of your favorite blogs that instill financial literacy, either by word or action?
Like many folks, I love Mr. Money Mustache, who has profoundly altered the discussion of money, both online and off. He’s done amazing work to get readers to understand that they can purchase the future they want – if they’re willing to work hard and give up minor pleasures today for major rewards to morrow.
Finally, I think Derek Olsen is doing great work at How Do I Money? He takes a lighter approach to personal-finance, but his message is sound.
The math of money is simple: to build wealth, you must spend less than you earn.
I like to keep inspirational quotes around the house to remind me of what’s important. Do you have a favorite money quote you use to inspire your financial life?
Hm. Not really.
But there are a couple of quotes I disagree with. Perhaps you’ve heard that “if you take care of the pennies, the pounds will take care of themselves”. I think this advice, while well-intentioned, is misguided and leads people to focus on the wrong thing.
You can be frugal as hell, but if you don’t make smart choices on the big stuff, you’ll never find financial success. (In fact, you’ll be miserable because you pinch pennies on the little things that don’t matter.) This is the origin of the saying, “Penny wise and pound foolish.”
Instead, I think it’s far more important to pay attention to the big stuff.
Take your housing expenses, for instance. The average American household spends one-third of its budget on housing. That’s average. Many spend more. This is crazy! If you get wrapped up in a huge mortgage, you’re basically dooming yourself to financial failure. No amount of clipping coupons can compensate. Transportation is the second-largest expense for most Americans.
Together, housing and transportation make up half of the typical household’s spending.
If people would focus their efforts on fixing these two expenses, trimming them by (say) 20% each, they’d free up huge wads of cash without ever having to economize on groceries or entertainment. But people don’t do it. They come up with all sorts of irrational reasons that they need a gas-guzzling new car and/or a large house.
That’s fine, but they need to realize these choices prevent them from achieving the life they actually desire.
Thanks for contributing to Financial Literacy Month here on Enwealthen, J.D.!
J.D. Roth is a professional nerd and accidental personal-finance expert. Dog lover. Whiskey drinker. He shares everything he knows about money at Money Boss. To learn more, check out The Money Boss Manifesto, a completely free – no email address required! – guide to achieving financial freedom.
Readers, please share your thoughts on J.D.’s experiences, any additional questions you have, and suggestions for who else you’d like to see interviewed in the comments below. And please do share this with your friends on Facebook, Twitter, and Pinterest. Thanks!