As part of Financial Literacy Month (#FLM2018) I am featuring interviews with fellow bloggers to get their take on the subject. Please join me in welcoming Erik, from The Mastermind Within.
Please tell me a little bit about yourself and your blog.
The Mastermind Within: Hi! I’m Erik, a 25-year-old who is passionate about self-improvement, personal finance, and looking for ways to improve my odds of reaching financial freedom at a young age. For a day job, I work as a statistician and web developer, and I have a number of side hustles.
I blog and podcast at The Mastermind Within, where the content is mainly around my passions of personal finance and self-improvement, but also where I talk about some of the tips and tricks I’m learning in my career and business endeavors. At the end of the day, I’m looking to help others reach their full potential so that they can become more successful.
What type of financial literacy education did you receive in school? If none what do you believe could be done to change or improve that today?
The Mastermind Within: I didn’t receive much if any, financial literacy education in school.
I would require all students to take a money management course in high school which would focus on tracking money, budgeting, and compound interest. If you understand compounding, you can become successful in anything you do!
Who’s responsible for teaching financial literacy, parents or schools?
The Mastermind Within: 7 out of 10 Americans do not have $1,000 in the bank. Honestly, I don’t know who is more qualified to do so (when statistically, both are probably unqualified to do so).
Really, it should start at home. It’s going to take some effort from the parents, but getting their financial situation in place, and then sharing their tips and tricks with their kids will do much more than any school education could do.
My parents started reading books to me at a very young age and by the time I was 5 and in Kindergarten, I was able to read at a solid level. Without this non-school education, I would’ve been behind the curve – it’s the same thing with finances, it’s important to start it at home, and then supplement it more with theory at school.
We all receive financial advice from people in our lives. What’s the most interesting or useful financial advice you’ve received?
The Mastermind Within: It’s incredibly important to start saving at a young age.
I started learning about money with I was a young boy. My parents and grandparent instilled a saver’s mindset into me, and I learned about the habits of budgeting, running cash flow analyses, and tracking expenses.
Most of what I learned was the basics – writing a check, balancing a checkbook, making a budget, etc. As I grew older, I was already frugal and careful with my money – but it all started with understanding the importance of saving for the future!
I have several personal finance books I regularly gift. What are your 3-favorite personal finance books you often gift or recommend to others to others?
My favorite book of all time is The Slight Edge. It’s not solely a personal finance book, but you can apply it to personal finance. The Slight Edge is a book which looks to alter your life’s philosophy – essentially, drilling home that simple daily disciplines performed over time will result in great success. It’s the compound effect and applied to personal finance, it’s the same concept of saving $10k a year for 30 years – you’ll be a millionaire!
Second, The Richest Man in Babylon is a great story and has some great real-world lessons. One of the main principles discussed in the book is to save at least 10% of your income. Coupled with consistent savings, 10% savings over many years will bring you wealth!
How to Think about Money is a book more on the “personal” side of personal finance. It’s a short read with actionable content: spend money on things which will bring you happiness, it is important to change our mindset to a saver mindset because we have a long investment horizon, and many years to live and potentially enjoy our investments and contributions.
April is Financial Literacy Month, what are you doing to help promote financial literacy?
The Mastermind Within: This April, on The Mastermind Within, I’m focusing on personal finance and financial literacy. In December of 2017, I did a personal finance series inspired by the 12 days of Christmas called the 12 Days of Personal Finance.
I ended up writing 12 posts all about personal finance and produced a 100 page eBook for my site, but these posts were more fun and less technical in nature.
This month, I’m diving into the basics and details around those basics. Starting with how to actually track your income and expenses, to strategies to pay down your debt, and finally some advanced tips for investing, this series will hopefully be able to take someone from financial novice to financial expert!
What financial advice would you offer to a teenager?
The Mastermind Within: Start saving early and often, and never stop saving. Understand that debt is not your friend, and look to stay away from spending more than you earn.
Both sets of grandparents of mine have hammered this concept home. My mom’s parents travel to multiple countries a year and were able to retire in their early 60’s. My dad’s parents probably never made more than $40,000 in a year, but live comfortably in the Midwest and are still saving some of their Social Security checks to this day!
What resources, app, blog, tool, etc. would you recommend as a starting point for someone wanting to organize their money for the first time? Why?
The Mastermind Within: I use Mint to aggregate all of my transactions into one spot, and then I use my own personal finance income statement spreadsheet to categorize and identify strengths and weaknesses on a month to month basis.
I use this method because I’ve been using it for a number of years and it works. I’m able to customize the categories and get exactly the view I want.
I know a lot of other people like Personal Capital, and I haven’t checked in on that in a while (maybe I should since Mint has grown a little stale)
What financial advice would you give to someone who is struggling with money and doesn’t know where to start?
The Mastermind Within: Start simple: track your income and expense.
What gets measured gets managed – this quote exemplifies exactly what this is all about.
Knowing where you are financially is so important to financial success.
Consider the following example: person A tracks their income and expenses every month, and person B doesn’t track their income and expenses. Person A wants to retire in 15 years and has identified that by saving $500 a month, they will reach their goal with average market gains.
Person B also wants to retire in 15 years but doesn’t know they need to save $500 a month, and as a result, are only putting $250 into their retirement account each month.
Person A saves $400 a month right now but has identified that they can cut $100 out of their food spending each month and put that towards retirement. Person B spends $300 a month on random shopping expenses (which they don’t know the dollar amount), and doesn’t realize that they don’t need these random shopping expenses.
Who do you think will be successful? Person A, who tracks their financial situation? Or, Person B, who doesn’t track their financial situation? I’m going to guess Person B will be disappointed at the end of the 15 year period.
Like I said, track your income and expense, and you’ll be able to figure out the rest.