Episode #297: Tim Ranzetta, Next Gen Personal Finance, “Every Student Wants To Learn About Money”

Episode #297: Tim Ranzetta, Next Gen Personal Finance, “Every Student Wants To Learn About Money”

 

Guest: Tim Ranzetta is the co-founder of Next Gen Personal Finance (NGPF), a non-profit organization to partner with teachers by sharing timely and relevant curricular resources, providing effective professional development, and advocating to increase access to financial education.

Date Recorded: 3/3/2021     |     Run-Time: 1:17:21

Summary: In today’s episode, we start the episode with the current state of K-12 personal finance education in the U.S. Then we hear how teaching a personal finance class in a school inspired Tim to start Next Gen Personal Finance in 2014. He shares the curriculum they provide to teachers for free, why the 43,000 teachers that are registered on the Next Gen platform are the champions to get personal finance mandated in schools across America, and how he utilizes arcade games to engage kids ranging from K-12.

As we wind down, we hear about what Tim calls Mission 2030, which is to get every student who graduates high school to complete a one-semester personal finance course.

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Transcript of Episode 297:

Welcome Message: Welcome to the “Meb Faber Show” where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.

Disclaimer: Meb Faber is the co-founder and chief investment officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s Funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.

Meb: What’s up, y’all? Great episode for you today on a topic longtime listeners know I’m incredibly passionate about. Our guest is the co-founder of Next Gen Personal Finance, a nonprofit organization working to increase access to financial education by providing its curriculum and professional development at no cost to schools. In today’s episode, we start with the current state of K-12 personal finance education in the U.S. Then we hear about teaching a personal finance class in a school inspired our guest to start Next Gen Personal Finance in 2014.

He shares the curriculum they provided teachers for free, why the 43,000 teachers that are registered on the platform are the champions to get personal finance mandated in schools across America, and how he utilizes games to engage kids ranging from K-12. As we wind down, we hear about what our guest calls Mission 2030, which is to get every student who graduates high school to complete a one-semester personal finance course. Awesome. Please enjoy this episode with Next Gen Personal Finance’s Tim Ranzetta. Tim, welcome to the show.

Tim: Meb, great to be here.

Meb: Wahoowa.

Tim: Wahoowa Virginia. Where did I just hear that, actually? There was a politician who visited UVA when I was, I think it was third or fourth year, and that came out wahoowa. And I think they didn’t have a UVA grad on the speech team because yeah, didn’t come out quite right.

Meb: That’s how you know someone went to Virginia, they don’t say freshman, sophomore, they say first year, second year, third year, fourth year, a good way to identify the Wahoos. As you and I were talking, the only silver lining of this pandemic has been that UVA gets to remain national champions in basketball for two years in a row, hopefully, three. You were there, exhausting, Minneapolis.

Tim: We’re ready to walk out of the arena on Saturday…when you buy tickets for the Final Four, you have tickets to both the semifinals and the finals. You probably had the same sensation, I got to go hop on a plane. Like, this has been the most exhilarating yet the most disappointing moment. And it took a little bit for us to figure out this is a football stadium where they’re playing this basketball game. So it takes a little while for things to register. And the buzzer sounds and then there’s a commotion. And then my friend and I, we’d gone to school together at UVA, we turn to each other we’re, like, “He was fouled, that was a foul. He’s going to get three free throws, and we got the right guy on the line.” So it almost…like, once that happened it was almost no doubt…I wonder how you felt. There was almost no doubt in my mind when was going to make the shots, right?

Meb: I actually had a friend walking up the stairs booking a ticket trying to get ahead of the crowd. My favorite story was not the actual basketball because basketball is exhausting but, like you mentioned, exhilarating. Listeners to the podcast may have heard this already so I apologize. My favorite part of the story was that I was walking down the street in Minneapolis, just arrived, heading to our Airbnb, which was kind of like a house out of “Saw.” It was, like, horrifying. A turkey just walked past me on the sidewalk. And this is, like, in the middle of a neighborhood, a turkey just walked by, took a look at me, crossed the street, went on its way. Anyway.

Tim: That must be a sign of good luck. I’ve heard of black cats being bad luck so I guess turkeys must be good.

Meb: I’ll fly with my support turkey animal to wherever UVA is playing in the tournament this year. Tim, this is going to be a lot of fun. Longtime listeners and if there are any Twitter followers left after my consistent rants about the topic we’re going to talk about today know that it’s, sort of, like, the hill I’m willing to die on, my white whale, everything combined into one, my biggest frustration and struggle. So why don’t you talk to us about just a quick, sort of, state of the world that we’re living in and the problem. And then we’ll, kind of, rewind and talk about your origin story and background leading into the solution. But give us the overview of how we’re failing right now, big fat F, in the U.S.?

Tim: I’m a glass-half-full kind of guy. That’s what us entrepreneurs are, Meb. So I’m not going to go down to the depths of despair, we’re making progress. So here’s the state of financial education in the United States, and my organization we’ll talk about later is focused on really K12. And so we do bottoms-up research and what we see is about roughly one in five students crosses that graduation stage with a one-semester personal finance course under their belt. So there are currently five states, soon to be six, that require it at the state level. And there are more than 1,300 schools in the country that are outside of those states that mandate it where it is a requirement. And so what gives me hope is that there are 1,300 examples out there of a parent, of a student, of a teacher, of a board member, of a principal saying this ought to be a priority, let’s make it happen.

Meb: I like your half full, at least it’s not zero.

Tim: And then I guess the other thing that we’ve seen…we’re about to publish some research. So one of the ways policymakers and people in leadership positions have been able to prevent this from happening is they say, “You know what, teachers aren’t confident teaching personal finance?” There was a study that came out 11 years ago and the number was 9%. So you can argue with the methodology of the study, they didn’t focus on personal finance teachers. They asked teachers of all subject areas, they said, “Would you be confident teaching a personal finance course?” And the answer was 9%.

The good news is 11 years later, that number is 90%. That’s not a mispronunciation. So what’s changed since then? Well, teachers have access to high-quality professional development because many personal finance teachers have never taken a personal finance course but they’re eager to learn. Boy, what we’ve seen since March of last year…we pivoted in March. In order to reach teachers with professional development, we pivoted to a virtual model. And since that time, a little over a year, 7,000 teachers have earned over 140,000 hours of professional development with us, and so we’ve become a bit of a school.

And what we see day in and day out from these teachers is, frankly, inspiring. There are teachers who were in hospital beds who were taking our courses. There were teachers about to go into labor, who were like, “Oh, by the way, if I miss class today, it means I delivered.” Like, these teachers really want to learn. The eagerness they have, the enthusiasm. This is not your typical high school course, it’s not your typical high school teacher. So that’s what gives me hope that we’re going to continue to make progress.

Meb: And I think part of that is probably from the standpoint of it’s applicable to their lives as well. In many courses, if you’re teaching a high school level curriculum, and I don’t know the courses I took, like, Latin or even the K-12 learning to write in cursive or a lot of things that may not necessarily be as applicable in life. I mean, personal finance, almost all of us if we were to take that course, would learn at least something or buff up on some topics. But let’s start at the beginning, so what was the lead-in for you, how did you come to what you’re doing today?

Tim: So in terms of my fascination with personal finance, I mean, there’s a personal story, but if we just go back a decade, I visited a school in East Palo Alto, California serving first-gen kids. So these are kids trying to be first in their family to go to college. It’s a low-income community, largely Black and brown students. And I visited the campus real inspiring founder there, Chris Bishoff. And after seeing the campus and hearing the story, 100% of their kids go on to 4-year colleges, and more importantly or more impressively, 75% to 80% graduate. Which for that demographic is five-sigma is probably not…I mean, that is extraordinary. The numbers nationally, if you’re a low-income Black or brown student, first in the family to go to college, 11% completion rate. He and his team have managed to do 7x that.

So anyway, I visit the campus, I’m inspired. I say, “Chris, how can I help?” He’s like, “You got a business degree, right? We’d love to start a personal finance program for our incoming ninth-graders.” So I’m like, “Sure, yeah, I’ll do it.” And then I started asking some more questions and realized I had to come up with 25 hours of curriculum. And, “Oh, by the way, I’ve never taught before. I’ve been a student but I’ve never taught.” He’s, “Oh, that’s okay.”

So I have about a month to prepare for this, and I need to find 25 hours of curriculum relevant for 9th-graders. I do what everybody else does I go on Google and search. And I didn’t find anything I wanted to teach. It wasn’t relevant. It wasn’t sending kids out to the web to do research. It wasn’t tackling issues that ninth-graders would care about. And so I did what, you know, anybody else would have done in my shoes, you create a course.

What I saw happen in that classroom was every student wants to learn about money. There isn’t a kid who walks out of a class like that and says, “How am I going to use this in my real life?” The questions that they would ask, their fascination with the stock market. And then what was the icing on the cake, which I really didn’t count on, I started getting emails from parents. I got emails from parents saying, “David came home, talked about investing. I think I need to invest for retirement.” And that story culminated after several meetings with David’s father visiting a brokerage account and setting up an IRA with David at his side. And you just say wow, this can truly be transformational. Financial literacy can be a gateway to parents.

When I go out on the road and I meet people, the first thing adults say to me is…one of two things. Either, “That’s a class I wish I had, personal finance.” In fact, we did a documentary and that’s the title, “The Class You Never Had.” They either say it’s a class they wish they had, or they say, “Can you help my adult children because they didn’t have the class.” And so when I had that experience a decade ago…and I’ve taught summer school since then for the last nine summers. I missed last summer because they weren’t in-person. That’s been truly transformational.

And so seven years ago, I decided to get serious and I said, “Okay, you’re so passionate about this, why don’t you start something?” And I was very fortunate early on. So the initial idea was like, there’s a gap in terms of the curriculum that’s being offered today, so let’s go create an organization that helps support teachers with curriculum that’s engaging, hands-on, teaches critical thinking skills, let’s go build something. And every startup has serendipity and I was lucky my co-founder, Jessica English, who brings the educational chops, she signed on, she was employee number one. And so that’s the origin story.

Meb: What were you doing at the time? Were you working? Were you retired? Were you, kind of, thinking about hey, this is my one do-good thing to do once a year, I see the impact? And then, kind of, how did you make the next step, the cannonball into the pool, the jump to start this whole initiative?

Tim: I had a series of startups that I was involved in over a 20-year period. So co-founded a shredding company where we did a roll-up or consolidation of the document destruction business.

Meb: You can say mafia, you can just say you were in the mob.

Tim: You know, with an Italian last name, you got to be careful. Actually, as one of our board members called us, we were white-collar trash haulers. The one-story I have there, like, this is really roll up the sleeves type stuff for an MBA to do. We’re having our holiday party…I ran our facility in Salt Lake City, that’s how, kind of, I got my feet wet. And one of our largest accounts was a large financial institution in downtown Salt Lake City where we would literally go desk to desk to pull their confidential materials. Like, it was a big account, they paid us a lot of money, we did what they told us. Turned out the evening of our Christmas party, we discovered the person who did that account was not available that night. So I grabbed one of our drivers, David, and I said, “Let’s go, we’re doing this.” So pretty much we went from the holiday party, I’m still dressed up for the event. We spent that evening, I think it was 9 p.m. to 3 a.m., going desk to desk. My back…yeah, that is truly back-breaking work.

So anyway, went from shredding to a company called Equilar, which is, kind of, one of the leading players today in compensation governance. Really enjoyed that experience with the founder, David Chun, who’s another Wahoo. Then went off and wanted to start my own thing focused on financial aid, helping…I’m the fifth of six children. So my older siblings were sending their kids to college, and they had all gone to college, our parents hadn’t, but they had. And they were struggling with understanding financial aid. So I was, like, ah. I didn’t really have a great business idea for this other than I want to help families navigate the financial aid process. And so that was a for-profit that should have been a nonprofit.

But what I learned through that experience is how little education was happening about this incredibly important decision about going to college, and how we’re going to pay for it. And I had my phone number listed…The name of the company was Student Lending Analytics. I’m not even sure there’s a website still up. But I would get calls from parents and kids in tears. “I’m a junior at a university and I have $80,000 in debt.” And they would often think…they’d get me confused. They think I was a loan provider when I was somebody who analyzed loans. And you’d hear their stories and it just ripped me apart.

Day in, day out it was clear nobody had an incentive to educate these young people about these big decisions. That, by the way, the tail on these decisions isn’t one week, one month, one year, it can be decades. And so that was the other thought percolating in the back of my head was boy, if we can really expand the amount of time that students…okay, so here’s another statistic for you. Everyone is like, “Well, no guidance counselors take care of that, right?” The ratio is 800 students to 1 here in the State of California when it comes to guidance counselors, so good luck getting advice from them. So let’s use personal finance as a way to…let’s incorporate an entire unit about how to pay for college. So that’s, kind of, what I was up to.

Leading up to this, I had pretty much spent about five years, we had two young ones at home, trying to figure out how to plug into this education reform movement. How could I have an impact on improving public schools? And so joined I think a dozen boards, advised executives. And was really trying to understand how do we make a difference in the United States when we know the tremendous opportunities available to, kind of, continue to make schools better and better? And I think through that experience I realized, wow, this is a big problem. And as I started percolating around this idea of personal finance, like, this can really be…it’s not going to change the public school system, but it’s going to make school more engaging for so many kids. And it can make a difference in their financial futures.

Meb: You went from, sort of, incubation idea to what’s the actual birth story for Next Gen Personal Finance. What was the final decision to actually make this initiative, and how did you go about it? What was the date, by the way, when did you guys get started?

Tim: It was early May 2014. Yeah, and it was funny because Jessica showed up the first day and I think we had an hour-long conversation. And I was like, I needed somebody with an educational background. Jessica, a little background on her, kind of, math teacher, assistant principal, one of the youngest principals, that was, kind of, her career advancement in the New York City public school system. So one of the youngest principals out there. So when I needed somebody to write curriculum starting out, like, she had the lens of both I’ve written curriculum, I’ve developed lesson plans as a math teacher, but I also know what’s good from the perspective of an administrator. And so that was, like, a real talent.

So prior to Jessica showing up, I would create lessons and I go back and look at them now…And as an educator, when you put together a 40-minute lesson, if you can get across 2 or 3 takeaways for kids, like, that’s really good. Well, I go back and look at my lessons, there’s, like, nine things embedded in there. And Jessica would be like, “Oh, hold on a sec, Tim, like, let’s break this thing up into multiple lessons.” So she laid down the tracks in terms of how do we write curriculum?

So for me, it was, like, let’s do an experiment for two years. I’ve seen too many companies really push on the marketing end before they have anything. So let’s quietly build stuff, let’s do a monthly newsletter we’ll send out to a list of teachers, and hopefully, that will grow. And it’s happened with every startup I’ve ever been involved in, those early adopters who reach out to you, “I love what you’re doing.” And now you have that relationship to figure out, okay, what do you want us to build? We have this idea of what we want to build, but boy, it works a lot better when you actually build something that people tell you they want.

And I can tell you, kind of, we want it to be a one-stop-shop, that was the phrase we had, one-stop-shop for teachers. Because the problem they had is there were thousands of websites out there with financial resources, financial education resources vary in quality. Some are developed by financial institutions, some built by universities, some built by textbook companies. So really wide variety, but there wasn’t that comprehensive one-stop, like, where, oh, I’m looking for an entire curriculum, that’s great. Oh, I already have a curriculum now I just need some lessons or activities. Or maybe I’m just looking for some entertaining games. Or maybe I want to listen to some podcasts to hear from subject matter experts like you, Meb. So we were like, let’s build that supermarket. Let’s build the one place that teachers can go to and find high-quality and free stuff.

And so two years in, we started to have the momentum and I said, “Let’s turn on the juice here, and let’s build this team out.” So since, we’ve expanded beyond curriculum. I talked about professional development earlier. I guess three parts to our business. It’s curriculum, again, the most comprehensive set of resources available that are relevant, engaging, hands-on for students. And then there’s professional development because we know teachers tell us time and time again they want to learn more. So you have to, kind of, give them…both increase the depth of knowledge when it comes to content, but also discuss instructional strategies. How do you teach this? And that has been a real help, I think.

As more and more schools have moved virtual, teachers who come to our professional development say, “Thank you for the personal finance knowledge and the activities, but also thank you for helping us teach virtually.” Because that change in March last year happened so quickly it caught many districts flat-footed. And so, again, we’re small, we’re nimble, we had expertise in how to teach virtually. So I often say, and I think I can say this authoritatively, personal finance teachers in this country are as good as anybody when it comes to teaching kids virtually.

Meb: I want to talk about the content and go deep there. But how did you guys, kind of, nuzzle your way in? How did you wedge yourself? Because in my mind, this is the big question to me and I don’t know how it works. So please give us some understanding here. Is it something you have to legislate at the state or county level? Is it something that you have to simply say, look, we just going to reach out to principals and say, let’s start this out as maybe a seminar or something? Who are the champions? Like, is it the teachers? Like, how do you get this to be taught in all the schools in the country? Like, what was the initial, and then what needs to be done today?

Tim: So people who are listening are like, you know what, this is a no-brainer, like, we should be doing this, kids need this. Maybe you have young people in your home and you’re like, yeah, I think they would really benefit. Or maybe you yourself are, like, boy, I wish I had a course like that. I think there are two approaches to this and we’ve chosen the grassroots, which is, as I was discussing, we have three parts to our business.

If we can create curriculum that teachers love and delight students, and we can give them professional development so they feel both confident as well as highly qualified to teach, it is a natural third step. Because we’ve seen it, we’ve been around long enough to have heard from teachers like, “I discovered your stuff four years ago. I started with one section of kids. I attended your professional development, I’m feeling better and better, more and more confident. And I stood in front of the board last week and got their approval to require that all students get a personal finance course.”

Meb: And so I mean, it’s really driven by, sort of, local schools and boards of those local schools, is that the big driving factor?

Tim: I mean, there are 1,300 school boards who’ve approved it. Now, there are also five states that have mandated it. You can get a change done really quickly.

Meb: And where is that at the state level? Does that sit…it’s, sort of, like, the state representatives?

Tim: Yeah, it’s going to go through the House, it’s going to go through the Senate, the state. And then obviously, the state education is involved to some extent too. So it’s a patchwork, it isn’t consistent across states, which makes it challenging if you’re somebody who wants to bring that top-down.

Meb: I mean, it just seems like, you know, I love the grassroots and I love that it’s, sort of, bubbling up just from having so many conversations. I don’t think I’ve ever met anyone who’s like, “You’re wrong, we shouldn’t be teaching this.” Like, literally never has anyone said that ever. You may hear people say, “Well, it doesn’t work that great. You see we teach, like, physical education, but everyone still eats crappy and is overweight.” There’s the naysayers about, “It doesn’t work,” but no one ever has said, “We shouldn’t teach it at all.”

Tim: And the naysayers…let me just jump in there because the naysayers haven’t read the recent research. If you look at research over the last three to four years, it’s becoming more and more evident that it works. And the research that was done a decade ago, am I surprised they said it didn’t work? No, because the curriculum wasn’t great and nobody was investing in teachers to teach it. So guess what, it all comes down to implementation.

Meb: That was, kind of, my argument. I said 100% if you think that education doesn’t work, it’s a failure of either the teacher or the curriculum. Because the only personal finance module I remember having in any K-12 was, like, the stock-picking game. Who can pick the best stock to go up the next three weeks? So just total nonsensical idea I mean, like…

Tim: Be careful, Meb, that is the most popular activity in high schools across America.

Meb: 100%. I think it teaches all the wrong lessons. But I think if it was part of a rest of a curriculum, okay, gets people interested, there are a few parts of it. But it’s actual, like, on the list of 100 things people should learn, it’s probably 99. But we can get more into the content in a second. I’m more just thinking of is there a haymaker way that we simply, like, can through brute force, money, effort, really put pressure on all the representatives around the country to say, “Look, you need to implement this in your school system, or you’re going to fall behind?” I don’t know how they say no, it’s crazy to me.

And so to me, that’s like, it should hopefully, over the course of this decade, go from being in a minority of schools to the vast majority. And it seems like it’s just, like, so much has driven our world by inertia. Why are things this way? Well, that’s just the way they always were. And so hopefully, you have some silver linings of the pandemic, not just Virginia sports, but that you have this catalyst for change on education and the way people think about it.

Tim: There are over 43,000 teachers in the NGPF community, and I wouldn’t bet against them. So people who are listening are like, “I want to create change.” You can fight the battle in the legislature, it takes a really long time and you don’t want to know how the sausage gets made. And I can give you three examples just recently of bills that started out with the best of intentions that ended up…the unintended consequences were worse than what was in place before.

And so if folks want to advocate…especially the folks who are listening, Meb, are financial professionals, go attend a board meeting and say this is really important. Because the financial industry has a vested interest in more people getting financial education. Half the people in America invest in the stock market. You want to talk about growth opportunities, income is an issue for folks in terms of how much they have available to invest in the market, but so much of it is knowledge-based. And if we can get more people to be first in their family to invest, everybody wins.

Meb: It just seems like Fidelity, Schwab, Vanguard, if you’re listening to this, that one of these massive trillion-dollar organizations could champion this issue and say, you know, what we’re going to educate…make sure K-12, we educate an entire generation of people on these topics.

Tim: Schwab is very active. Schwab Foundation, Fidelity does some work in this space, too. I’ve tried to talk more…I mean, Vanguard has a classroom economy game that’s in the middle school. But financial institutions have trillion-dollar balance sheets. I’m a nonprofit with 15 people. And are we creating change in this industry? Yes. But banks collect about $30 billion a year in overdraft fees. If they invested 1% of that, it raises the question, like, do they benefit from folks not being able to manage bank accounts?

Meb: Yeah, let’s not go dark, let’s stay light, Tim. We can go down the rabbit hole. I was getting on my high horse about all the brokerages yesterday, and how most of the financial world is not your friend, and you got to protect yourself. And there are plenty of good players, but you need to know. And so the big part is the needing to know. And many of us, when we’re 17, or 16, or 18, and we’re thinking about things as massive as college, or just being an adult, or having children haven’t been prepared. And on top of that, in many cases, our parents haven’t prepared. I was getting in a fight with a famous politician yesterday and I stir up the pot a little bit about this. But I said, you know, “If you’re wondering why your politicians often are saying things that are so uneducated about personal finance,” I said, “it’s because they didn’t learn in school either.” And that’s a little harsh, but I think it’s partially true.

All right, so let’s keep this positive. So talk to me about content. I think a lot of people say, “Yeah, we should have it in high school.” But a friend who’s also championing this, Tyrone Ross and others say, “No, we need to start as early as the K in the K-12, talking about this early.” Talk to me about what sort of resources you guys have, and then what sort of content you focus on. Like, what are the main muscle movements of, like, rank order on, like, what’s really important? And I think a lot of the framing, and I’ll shut up in a second, is moving away from what we call this, sort of, personal finance, like, blog, who wants to talk about that? That sounds like a doctor procedure to just say like, let’s talk about money and in a way that relates to people. So all right, the mic is yours.

Tim: I would agree with Tyrone Ross, the sooner the better, the more dosage the better. And so actually I just did a podcast with somebody who basically has weaved financial literacy into overall literacy. So he wrote a book called “Danny Dollar Millionaire Extraordinaire,” and with that book comes eight lessons for teachers to use at the elementary level. So absolutely, let’s incorporate…let’s think about the books that young people read, and let’s find those that have a money topic. So we started with high school because, for me, it was the most urgent problem where we were sending young people off and to really learn via the school of hard knocks. And we’ve since also added a middle school curriculum.

So terms of what we offer, we have a nine-week course, we have a semester-long course, we have a full-year course. And those courses…the way to think about our course because it’s entirely digital is think of our lessons as playlists. And really heavy emphasis on teacher as facilitator and students engaging in their own learning. So let’s start with a question. We do questions of the day, we’ll take a current event, we’ll ask it…like today, I think the question of the day we used was, what percent of jobs are not advertised? And the answer is about 70% to 80%. So that leads to if I’m teaching careers, it’s getting young people to think about oh, like, there’s this thing called networking. Let’s get kids talking about how they got their first job.

In terms of the structure of a lesson, we’ll have a question to get students talking because we also know it’s really important for students to learn from others based on their own experience. And then we’ll curate a video, we’ll find a video online or we’ll create our own that helps explain the concept. And then there might be an article. It’s a multimedia approach, students read, students watch, students engage with simulations, and there’s always a chunky activity in there to really give them the opportunity to apply what they’ve learned. So that’s our lessons.

And then we have a lot of supplementary items. I would say the most popular part of our website is our arcade games. So think of these as 5 to 15-minute games that really the intent is they’re going to teach 1 or at most 2 really important lessons. So for example, our most popular game right now is a game called STAX. So the tagline is, “20 years of investing in 20 minutes.” So imagine a game that unfolds where every minute, every 30 seconds, you’re getting fresh money to invest. Think of that as the 10% of your paycheck that you’re saving.

So every 30 seconds, you have new money to invest. As the game unfolds, you’re given different assets to invest in. Let’s start simple with a savings account, then a CD, then an index fund, then five individual stocks, then gold, then commodities. And the markets are going up and down, they’re following this on their dashboard. They’re making all these investments, they’re competing against their classmates. And the teacher’s creating this heightened sense of excitement. And they’re competing, both against their classmates as well as the computer. And then the game ends and our data shows, and I think we have 2 million people who played the game since it was launched, and 70%, 80% of the time the computer wins.

Meb: Because why?

Tim: Kids wonder, like, what is the computer’s strategy? Can you guess, Meb?

Meb: Index stock funds, probably.

Tim: That’s a dollar-cost average in index funds because I want every student to know…Now, you can argue that’s too simplistic. You’re not teaching kids enough about how the stock market works, you’re not teaching them how to analyze individual stocks. Guess what, the kids who are really eager to learn that are going to go do that on their own. But we need to reach every kid. And there is a strategy out there, as simplistic as it is, to get young people confident that I can play this game too.

And the person who’s day trading stocks over here because that’s the way they play STAX because, again, you get to decide how to allocate the money coming in. I want every kid to walk out of there saying, guess what, like, there’s this strategy called dollar-cost averaging in index funds. Are you going to shoot the lights out, are you going to be the best investor of all time? No. Are you going to beat 75% of most people? If you can deal with the psychology of it, too, and not trading in and out and trying to beat the market, yes. Because the issue I had with the stock market game you said earlier is we lionize the winners, and we tell them that they have a skill.

When you go Google how to win the stock market game, invest in high beta stocks just before earnings releases, you’re looking for maximum volatility. And the problem with that game is we lionize the winners and the people who don’t do well think investing is not for them. They walk away discouraged. We always talk about the winners, oh, look at how excited everybody is. Not everybody, some people lose interest. Some people think that’s investing, buying and selling individual stocks rapidly, too much time, too much effort, not a game I want to play so we want to provide an alternative. So each of these games has a discussion worksheet that goes along with it. So it’s not just this fun game but it also ensures that young people get the lessons. And so we both have those worksheets, as well as hey, you should also follow up with this activity afterwards.

And one of our favorite investing activities…I don’t know if you’re familiar with a website called Finviz. You can tell students the S&P 500 and you say it really fast, they don’t know what the hell you’re talking about. Or you can send them to Finviz and they have a great visualization, which is that’s the S&P 500. Oh, and the size of the company boxes, the amount of area they occupy, that’s market cap. Now they’re a little curious, what is market cap? We can get that explanation. And we can talk about the structure of the economy because it’s beautifully laid out in terms of by industry sector, you get to see what companies seem to be dominating the picture here. Technology companies. Like, just leads to a really rich discussion that is not me standing up in front of the classroom explaining market capitalization, S&P 500. When I think about the tools that teachers love to teach investing, it’s STAX and it’s Finviz.

Meb: How does this get unlocked? Can a student just go to your website? Does it have to be a teacher-driven…if I want to download the game?

Tim: We are all about access. Our mission is by 2030 every kid who crosses that graduation stage will take a one-semester personal finance class. So we’re a bit unusual in that our main distribution is through teachers but you go to our website, you can play any of our games in the arcade. There’s no signup. I didn’t want to collect student information. I didn’t want to make it a hassle for people, like let’s make this as frictionless as possible. So, absolutely.

Meb: If I’m talking to a niece or a nephew, and they’re somewhere in the K-12, maybe in the later stages, can I say go take this year-long course?

Tim: It doesn’t work as well there. And I will tell you, kind of, having been in this space for a little while now is there are a lot of people who’ve approached it as we will put stuff out there, and kids will do it on their own. A lot of people…Like, I’m going to create an app, a financial education app, and all these kids are going to flock to it, and it just doesn’t happen. I wanted to shoot for a captive audience. They’re already being taught in high school versus let’s worry about this whole customer acquisition game, how are we going to get them to show up? No, let’s just give teachers better stuff. And every teacher we reach…I think what really is great when you think about the leverage you get…you know, we have 43,000 teachers who have teacher accounts with us, which means we have verified that they are actually a teacher because when you sign up for an account, you also get access to answer keys. Kids are pretty good about trying to figure out ways to get in there. So we actually have to verify that these are teachers.

I’ll tell you about the games. So we partner with a digital ad agency out of Durham, North Carolina, and they’ve created eight of our games, and just a phenomenal collaboration. They’re just a really creative bunch and they’re not EdTech, they don’t create EdTech games, they create engaging games. We have a game called Payback, where it’s basically Oregon Trail on how you navigate to and through college. Because young people don’t know what they don’t know when it comes to college. So imagine a game where we’re keeping track of your student debt and a lot of that is determined by the college you choose to go to. So every decision you make impacts your college debt, but more importantly, it impacts your connections, your focus, your happiness. So you understand that, you know, eating ramen noodles every night may be a way to keep your student debt low, but there’s tradeoffs. And again, the power of these games is in the plane the students are in control, but it’s the facilitated conversation that comes afterwards too.

Meb: Of all the topics…I got two, kind of, quick questions. First one, who’s most receptive? K-12, is there an area that people are actually, like, more sponge-like, they really are excited and engaged?

Tim: I think as you get closer to folks leaving high school, these decisions, like, I get the car keys at 16. Well, that’s probably a good time to learn about auto insurance because the high percentage of people who get into accidents, you better figure out how to file a claim. You’re starting to think about careers, whether you’re going to go off to college, or whether you’re going to choose to jump into a career. So you’re very receptive to that. You probably got a paycheck if you have a job in high school. So now you’re wondering, well, wait a minute, I thought I was getting 15 bucks an hour, but I’m not netting that amount, what’s going on here? So you’re going to be curious about learning about taxes.

I think GameStop and Bitcoin have brought investing into high school classrooms. And that’s probably more so, again, juniors and seniors. So for me, like, you want to give some doses, you got to meet kids where they are. So ninth-graders, one of the first conversations I want to have with ninth-graders is they start to map out their high school…especially kids who are first in their family to go to college, is what is the difference between sticker price and net price when it comes to college? Because there’s a lot of myths out there that college is not affordable when you see $70,000, $80,000 price tags. And yet, you know, I had Ron Lieber on the podcast recently, the average discount for private school is 52%. They don’t call it discounts, they call it merit scholarships. And I also want talented young people who are lower-income to see the chart that says, “The less your family earns, the more aid that is available to you.”

Meb: So as far as topics, when you say things like money and personal finance, there’s a lot, and you guys have about a dozen little modules on your site, everything from saving, and student loans, and banks, and investing, and credit scores. What would you put as, sort of, the pedestal top three that really make a big difference and resonate and have impact on the young folks?

Tim: It’s funny, you know, I reached out to some financial institutions to ask about this. There’s no simulation available to teach kids how to manage a bank account. Again, we’re, kind of, caught in a world where there’s still some people teaching how to write checks. And I think part of the reason they do that is because there was not a simulation out there to say what does it look like to manage an online account? When you say you’re going to pay a bill, does it get paid today or does it get delayed? What’s the difference between what my balance is, but then I also have to account for all these checks, and understanding how float works and how that stuff works. I think managing a bank account is important because we know over a billion dollars in overdraft fees is spent by people who are new to bank accounts. So let’s, kind of, immediately save them money right off the bat.

This idea of what you’re going to do after high school is incredibly important. The stakes are so high not only you know, the downside of student debt, but understanding the relationship between education and long-term earnings. So we have a great budgeting simulation where students, kind of, choose a career, they get a salary, and then they pick a city they want to live in, the apartment costs. They go through all these cost items. And then, you know, the only requirement in that budget is it has to balance. And so getting young people to understand, okay, if that is a career you want to pursue because you want to have that standard of living, well, what’s the education required to get there? So you, kind of, have to connect the dots a little bit if that’s the life you want. And you have to understand what it takes to get there.

For me, investing is so important. You know, we hear teachers…a great teacher out of Wisconsin, Patrick Khubani, who has a chart in his classroom where every student signs up for a Roth IRA puts his name up there. Because boy, they have a gift of what I don’t have, which is many, many years and the power of compounding. Like, there’s an aha moment for young people, it’s seeing that compounding interest chart. And seeing is not linear, it’s exponential, and look how steep it gets. You want to get to the steep part of that curve as young as possible. So I think that’s another key piece of it.

Credit scores, it’s an escalator on the way up, it’s an elevator on the way down. Understanding there are things for parents who are listening. If you have a good credit score, you can give your children a real head start by making them an authorized user on your credit card. Because certain credit card companies allow your good credit score…allow your child’s credit history to start when you make them an authorized user. Again, if you have a high credit score and if your credit card company reports that information to the credit bureau so they can start establishing that. Because we know credit scores are not…they’ve become ubiquitous across society, it’s not just a matter now of I’ll be able to get a credit card or I’ll get a lower cost auto loan if I have a good credit score. We know employers are looking at it now.

So I would say it’s hard for me to come with the top three. But I think the basics of how do you manage a bank account the, ins and outs. I think investing is a second. And then I think credit scores because I think credit scores is a real blind spot for young people. And they don’t understand, like, mistakes you make there can again have really…similar to student debt, they can have really long tails in terms of their impact. You don’t have to be rich to have a good credit score, right, there’s just basic behaviors. Get a credit card, spend $5 at your local cafe, pay that off every month, now you’ve got a check box. You know, there are myths out there that you have to have a balance on a credit card in order to get a credit score. So you have to dispel these myths at a young age.

Meb: Obviously, for many kids, their parents play a very real fundamental role in how they think about finances forever as a role model or an anti-role model in many ways. You know, adults can be horrible with money. But you know, money is also a pretty taboo subject where people don’t like talking about it, there’s a lot of shame. What’s the role that parents play in this, sort of, whole ecosystem? Is it something where you guys try to draw them in? I watched some of the videos and there are some, kind of, interesting takeaways and conclusions from the kids as advocates actually taking the curriculum home. Talk a little bit about that whole, sort of, interaction between the kids and the parents.

Tim: We’re clearly shaped by our parents, and I am no different than that. One of the reasons I’m doing what I’m doing is to honor my parents who are no longer here because the lessons they taught me…you know, my dad was a banker, we talked about money at the dinner table. I had a dog walking job when I was 7. I don’t know why my older siblings made me do it but it was the best thing they ever did. Because every Friday afternoon, Mrs. Madison gave me a $5 bill and I walked two-thirds of a mile to the United Jersey Bank, and they stamped my passbook and I brought it home. And my dad asked to see it at the dinner table, he patted my head, and savings habit was there.

He was also very smart because he knew he didn’t have enough money to send six kids to college. And that was a good way to instill in us, like, if you wanted to go to college, you were going to have to earn your way there. And you grew up thinking, like, that’s, kind of, the way maybe other people would grow up. So when I discovered that no, this is taboo and nobody talks about it and it’s really an enormous deficit for young people like, this is a way for me to give back because of this tremendous gift that I got.

So what’s the role of parents? I think the way to reduce it as a taboo subject is it’s a conversation, it’s not the talk, it’s a conversation starting when you’re young. And I was the weird guy who was taking my son to the supermarket and we talked about unit pricing, generic versus brand name, and why do they have chocolate? Why do you keep telling me you want chocolate when we’re checking out? Well, guess what? They designed it this way. I go to the ATM machine, again, I’m the crazy dad and my son would ask me, “Why are you covering that up?” Well, you don’t want anybody discovering what your pin is. So make it a part of conversation.

And then I think the second piece is use milestones. So hey, before my child gets keys to drive the car, like, we’re going to go look at an auto insurance policy. When you open the bank account, you’re going to come with me to the bank and you’re going to be the one leading the conversation, or you’re going to go online and set up the account. I’m going to be right by your side, but I want you to ask the question. I want you to say no when they say, “Hey, do you want overdraft protection for your account?” I want to empower young people to make those decisions.

When the college discussion is a really hard one and all the advice says, “You know what, you want to tell your children as young as possible, how much you are going to support them in college.” We kind of had the conversation, but we kind of didn’t and it was a painful one that I still regret with my father. But the sooner everybody is on the same page, so there isn’t the disappointment of I thought I was going to be able to go to this college, but we never talked about how much you’re going to be able to contribute. Again, it is a really tough conversation because we all want what’s best for our kids. But the sooner you can have that the more time and the more planning that can take place.

So yeah, I actually did a blog post at one point, 10 money milestones for parents who want to teach their kids before you give them the credit card. We have a product called the Fine Print because we always tell people, read the fine print, then we never teach them how to do it. So we actually take a credit card fine print. Fortunately, the Schumer box makes it a little bit simpler so it’s a two-page disclosure. Let’s go through and what do kids notice? You know, my ninth-graders, when they look at a credit card disclosure, they’re, like, “There’s a lot of fees here.” Yeah, we need to look at that. So make it a conversation, don’t feel like you have to have “the talk.” And take natural…the milestones in your child’s development to have the conversation.

Meb: I was tweeting about this as I was driving around the country last summer. There’s a brick-and-mortar brokerage house that’s seemingly in every small town in the country, and I was trying to find their fees online. I don’t want to throw him under the bus but yeah, you’re probably right, and found their fee disclosure and it was, like, 60 pages of fees. Not, like, one bullet point on…It was, like, 60 pages, and it would have taken you 2 hours to read this. And so we talk a lot about trying to find partners in the financial world that are aligned and have a philosophy of wanting to be on the same side as the client is really important.

Send us over the 10 milestones, I’d love to read it we’ll link to it in the show notes. I’ve only got a 3-year-old but he’s already starting to grasp some of the concepts, particularly with the chocolate that you mentioned. I found half a Reese’s peanut butter in my jeans today so it’s a little too close to home. Okay, so if you’re a parent, if you’re a financial advisor listening to this, what are the actionable takeaway steps to either partner with you guys or to get involved? They put their headphones down, they finish their dog walk, going to the gym, the drive, what should they do tomorrow? What should they do next week to try to make this grassroots, sort of, initiative a tidal wave?

Tim: I’ll give you a link to the advocacy part of our website because what they can do is they can actually click on their state and they can find what is happening at their local school. We have over 11,000 high schools listed. We’ve actually gone into the course catalogues to identify how is personal finance being taught? Is it a class that every student is taking? Is it an elective course or is it embedded in another course? Like, economics is, kind of, where you often find the standard.

So go find out what’s happening at your school, and then schedule a meeting with the principal, schedule a meeting with the superintendent. They listen to the business community, and you will also find allies. Often what they need is a spark. They need somebody to galvanize them. Most school districts across the country have business people. When you bring this up, similar to your reaction Meb is, like, yeah, this is a no-brainer, we should absolutely have this. And sometimes it takes somebody coming from the outside to say, okay. Because the first set of resistance you’ll have is, well, it’s going to cost us a ton of money.

And so I said earlier, everything we do is free. My business model for an MBA, I’m embarrassed to say we don’t have a business model. It’s, I want every student to have access. And so we provide curriculum that’s used, 43,000 teachers in the NGPF community, we provide free professional development. So if a teacher wants to dig deeper content, we’ve got 10-hour certification courses. We also do 15 live virtual PD events every week. And then we have on-demand if you’re like, hey, I want to learn about Bitcoin, there’s a one-hour self-paced guide for you too. So let’s eliminate cost as an issue.

All we need is a will. Where there’s a will, there’s a way. And so I would encourage them to go advocate at the local level. And the cool thing is right now if they do it soon, we’re providing $10,000 grants. We got to spur this movement and so we’re providing $10,000 grants for schools that commit to. All we needed to see is the board minutes that say within the next 18 to 24 months, we’re going to ensure that every student who graduates gets a personal finance course.

Meb: This seems, like, an obvious partner…I’m thinking of some of these massive organizations. I’m thinking of, like, CFA, CFP where, you know, their entire business is educating on the post-college, sort of, credentials on CFA more of the, sort of, analyst, CIO, about being an operator, and CFP is the personal planner. There’s, like, 10 others. But those organizations are so flush with so much cash and massive amount of membership. It seems obvious that they would want to partner with someone like y’all and say, look, let’s get our hundreds of thousands of members involved in a very real way with the young community. Have you had any conversations with other groups, like that or in any, sort of, initiatives that they’re working on? Is that something that they even think about?

Tim: We’ve heard from individual RIAs who’ve said, “You know what, my clients are asking about this, so can we white label, or can we use…?” And like, folks, there’s no pride of ownership here, find stuff on our website and use it, that’s the most important. But it’s an interesting idea of, kind of, yeah, looking at this more broadly because…and we’ve had large financial institutions reach out to us, they do financial literacy in schools, and they want to know can we use your resources in the classroom? And again, for me, it’s all about access and giving them access to the most relevant, engaging curriculum that’s out there. But I do like the idea, I’m going to write that down, in terms of looking at a larger scale partnership like that.

Meb: Typically, the CFA, my God, it’s global, but they have so much resources and moolah, like, you can look it up online, good for them. But it seems like they could go downstream into the younger crowd to incentivize their members to help. This is awesome, all these grants. So let’s say that Meb specifically…we’ll just walk through a case study. Let’s say I want to go adopt a school or get involved in a school. And again, I haven’t been through this because my kids are pre-K.

Tim: You’ll be ready. You’ll be ready, Meb.

Meb: Yeah, but let’s say I want to get started now, what do I do? Do I just ring up the principal? How do I go about it?

Tim: Figure out what the school is doing, first of all. And then you discover, oh, it’s embedded in an economics course. Most schools have directories. I would shoot high, I would say, I’m an interested community member. And if you have kids in the school district, boy, that makes it even more likely that they’re going to meet with you. And I have this interest in financial education. And you have to come in ready with solutions. They’re great at shooting down, “That’s a great idea, Meb, we’ll get back to you.” It’s, like, “No, like, let me show you, we’ve created a deck.”

So if folks are, like, you know what, I want to take this to the next level and meet with the board. But frankly, the deck would work for high school too. And it’s basically financial education works, here’s why it works, here’s what’s happening. It’s interesting, we put up this map and I think we’re starting to already see…a researcher mentioned to me, she’s already starting to see that there are some viral effects here. So the way to think about if you get involved, Meb, in changing your school, guess what, that shows up in the local newspaper, and somebody reads that in the neighboring town, and suddenly, this ripple effect. So my theory on change is it’s going to be slow, and then incredibly rapid because who wants to be left out?

Meb: So let’s say I want to do this again, I see that my school is doing nothing, or on the tiers, where’s bronze?

Tim: It’s embedded in an economic course. And so the research there is about two-thirds of the time when it’s embedded, it’s never taught.

Meb: And what’s silver?

Tim: Silver is an elective.

Meb: And gold is they’re teaching it required.

Tim: All kids.

Meb: Well, I see my closest school is bronze, I want to reach out.

Tim: I would do first is I would look at the board. I’d go look at the board of the school district and find somebody who’s a business person because then it’s business to business, or if it’s a finance person, that’s even better.

Meb: So it’s the board of the whole school…and how many schools are typically in a school district?

Tim: America is a wonderful place. You have New York City with a million students and then you have districts that are just one high school. It’s easier if there are only two or three high schools. Let’s say there are 10 high schools, let’s start a pilot project.

Meb: So let’s say they’re not doing anything and I reach out to a business person on the school district board and say, “Look, here’s who I am. Here’s the issue. Here’s why I want to do.” What’s typically, like, the next resulting step? Do you have to go present to them? Are they debating it in committee? Does it have to go to some, sort of, what?

Tim: It’s going to vary. So I’ll give you an example. I’m talking to a board member in Wisconsin who reached out to us and said, “I want this to happen, how can you help me do this?” We knew that there were teachers in the district who were using our curriculum, I said that seems like a natural place to go. So that was, kind of, the beginning of his conversation, then he met with the superintendent, and the superintendent seemed, kind of, receptive. There’s always the issue of okay, how much it’s going to cost, how are we going to implement it? And that’s why this idea of no-cost curriculum and no-cost PD means we just need an FTE, we need a teacher. And can you find one teacher who can take one class period to get this thing started? Because our theory of change here is you just got to get your toe in the door, you got to get your foot in the door.

People love teaching this subject, and it shows, and students react to it, and then the buzz starts. Most people don’t have the patience to recognize like, this is a five, six, seven-year process to go from an elective to a requirement. But it’ll be much more successful that way versus okay, every school…Like, California is one of the worst when it comes to financial education because we have an economics course…I want to say, like, less than 1% of high school students in California get a one-semester personal finance course, largest state in the union. And the reason being, everybody sees economics in the same light as personal finance.

And so what you discover…and I think this is, kind of, the bottoms-up strategy here, what you discover is a lot of econ teachers say, “Yeah, the course catalogue says economics, but I teach personal finance.” Because if it’s low stakes…I shouldn’t be saying this. If it’s no stakes where there’s no testing requirement, like, teachers have a lot more latitude once they close the door to teach what they feel is going to be most valuable for their students.

Meb: I was getting distracted while you were talking and I was searching the advocacy map and who of the various tiers. I don’t see a single gold standard in L.A. or in Southern California.

Tim: Antelope Valley seems to be a cluster, you see a cluster in California.

Meb: That’s probably because of what you talk about. It’s like this network effect of you get one advocate, and then a bunch of kids that took it home, then all of a sudden, the parents are stoked, and then the kids are doing well, and then it continues on. And then again, it goes back to inertia, once it’s embedded, it’s there, no one is going to start teaching personal finance and then stop. And so there’s, like, a whole cluster in Sacto (Sacramento) of gold, and then up near…randomly up in NorCal…

Tim: We have some great teachers.

Meb: Cannabis cultivation and personal finance, see, they need to learn because they’re probably going to make a ton of money and they need earn their personal finance. L.A. is just embarrassing, it’s all either nothing…there’s a few silvers in, kind of, East L.A. Okay, so I get the super on board, the board is interested. I say I want to partner with this nonprofit, they have curriculum. What’s the next step, you need to find a single teacher to champion this as either a part of their curriculum, or to be a standalone course, does it have to get some sort of approval or next level?

Tim: Varies by district. It probably has to do with the size of the district in terms of their flexibility about yeah, we can…you know, so right now…The point you made about L.A. is true about most urban cores in the U.S., they are financial education deserts. What I didn’t tell you earlier is one in five students nationwide graduates having taken a personal finance course. If you’re talking about a district that’s majority Black and brown students, 1 in 25.

Meb: That’s so frustrating. It’s just hard not to get, on one hand, like, really depressed about it, and the other hand, get really angry about it because it creates cycles. It creates these loops that have…you mentioned this in the beginning of the podcast. It’s not just repercussions that last in your lifetime of decades, but it has repercussions on all of your children and relatives as well. These decisions that compound is the best way of saying it. Like, the beauty of wealth compounding, but the opposite is true. Typically, you get under a massive debt burden and income troubles, like that has long-lasting effects.

Tim: Here’s something else your listeners could do. So we want to solve this problem so we looked around and we said if we knocked on the door of 20 of the largest districts in America and said, “Who’s your financial literacy specialist?” There’d be maybe three that we’re aware of. And so we said we’re going to do something about this. We’re going to provide a three-year grant program to cover an FTE who’s going to be the financial literacy champion in your district. And Miami-Dade and Milwaukee…Miami Dade, one of the top, I think it’s two or three districts in the country, hats off to them for partnering with us.

Meb: That means a teacher or administrator?

Tim: It’s an administrator whose job is to provide curriculum support and professional development to teachers in the district. If you don’t have somebody championing it, as well as providing that technical expertise, it’s not going to happen. Three-year grants, so this is not we’re going to create magic in one year, like, this is going to take time. So if any of your listeners have connections into large districts, we’d love to talk to them because we need to show that this can happen. And we also want to create a little bit of scarcity. So we’re providing these grants which could be up to half a million dollars over three years. We’re going to provide it to five to seven districts. And so we’ve got two signed up today, they recently…they’re in the process of making hiring decisions. I’d love to look at New York. I mean, I’m sure there’s a ton of listeners in New York, anybody who’s got good connections into the New York School District because we have to solve this problem. If we’re going to go Mission 2030 we can’t not tackle this issue of what’s happening in the largest districts in America.

Meb: Yeah, I mentioned that because it’s on your website, but I don’t know if you’ve actually stated it. Tell us what the Mission 2030 means.

Tim: It’s this idea…I read a book, the title might have been “Moon Shot,” you know, it was about NASA and about JFK, his legacy, and pushing the NASA effort forward. You know, surprising facts, like, 5% of the U.S. GDP was invested in space during the ’60s. Like, 5% boy, that was a tremendous effort. Anyway, when he made the claim that by the end of the decade we will get to the moon, I was like…I looked at the timeline it was, like, eight years. And I said, okay, so this was a year ago. I said, “If we can get to the moon in eight years, we ought to be able to make sure every kid gets a finance education in the next decade.” And so the goal is every student who crosses the graduation stage by the year 2030 will have a one-semester personal finance course to help them thrive in their financial lives.

We’re going to set an intermediate goal, actually, and we’re going to announce this in April, next month, and we’re calling it Mission 2025, which is let’s get access first. Let’s get every high school to offer a personal finance elective. Because right now, a personal finance course is being withheld from 30% of students in the U.S., we got to be able to solve for that. So that’s, kind of, our intermediate goal and then our long-term goal.

Meb: For the people who are listening, I mean, it’s almost universal how to get involved. You can get involved through very direct effort, like you mentioned. You could get involved from the standpoint of getting your legislators and administrators at the schools, but government legislators getting their ear, or if you’re a lawmaker listening. How do you guys fund all this? Is this something that is simply by donors, partnerships? Is there a way that you could increase that, accelerate what’s happening by having some more dinero (money) around?

Tim: I’ve chosen to go the endowment route. So I had some success in some of the earlier ventures that we were talking about. And so I can’t imagine making a better investment from my own perspective and helping the next generation be more financially savvy. So I’ve created an endowment and the operations of the organization. And what that enables us to do…I’ve been involved with nonprofits both on the inside as well as a board member, and it enables us to stay focused on the mission.

One of the real challenges, and I really feel this for all nonprofit executives, is so much of your time and effort is focused on raising money, and let’s face it, there are strings attached. And we could go in a lot of different directions if we opened up in terms of accepting…which is great that people are passionate enough to be able to donate their funding. But the other thing that happens in financial education is it’s largely funded by financial institutions if you look at kind of where the funding comes from. And anybody who says there aren’t strings attached, well, let’s face it, they may not tell you what they want you to do, but they can withhold the funding that they give you if you do something that they don’t want to see. So it enables us a level of independence.

Meb: I can’t send you money even if I wanted to.

Tim: No, sorry. I don’t know, at some point…like literally, I continue to increase my investment. We’ve now reached the point where…like, this organization doesn’t go to 50 or 100 people, we can get a lot done with 15 people, maybe we get to 20, maybe we get to 25. But my numbers suggest in order for us to reach Mission 2030, we’re talking about 30,000 to 35,000 teachers nationwide. And the beautiful thing about online curriculum that we have that teachers can access is it’s beautifully scalable. So you know, we’re at 43,000 teachers today in the NGPF community, and we could double or triple that. They’re going to go to pick out our curriculum, there’s no additional cost. Now we have to continue to maintain it, we have to continue to update it. But that’s on the curriculum side.

And then on professional development, we used to do all of our professional development in-person. We would travel all over the country. You talked about, kind of, how do you create buzz? How do you build a business? We call them Fin Camps, it’s a one-day event. We did 50 Fin Camps in 50 states, like, we hit every state in one year. And we’d see 50, 75 teachers at each event. And it was pretty high cost but it was worth it because we’re investing in teachers, we’re investing in relationships. Well, now our cost per teacher hour of PD, because we can do everything virtually is, I don’t know, 10 bucks an hour. We’ve worked with 7,000 teachers who’ve attended our professional development the last year, I think we can double or triple that. Double or triple that number without significant increase in headcount. It’s just attracting more teachers to the events we’re already putting on.

Meb: Where does the private area, kind of, fit in? Are there solutions that you think are doing a really good job of bridging this gap of education and implementation thinking, you’re in the heart of, sort of, startup world? Are there any that you think say, you know, look, we’re doing what you’re doing on the Next Gen side where it’s this nonprofit endowment model. Are there solutions that you say aren’t a good fit for you guys, but maybe workout as a, sort of, startup that you say, hey, that’s doing something really cool? Any ones you’ve seen or any, sort of, companies that you think get a gold star for their idea or implementation?

Tim: I spoke to folks at Public earlier this week. I don’t know a ton about them but they showed me some of their financial literacy stuff that they have up on their website, which I thought was pretty good. I think UI really matters when it comes to financial products for young people. This idea of gamifying investing. Boy, do I love the numbers. I was on a call with Schwab, highlighted some research they’d done on Black investors, and significant increase in access to financial markets. And their survey focuses on incomes over $50,000 a year. But significant increase in interest in the stock market, significant interest in access, significant interest in it’s being discussed at the dinner table, that’s great news.

But is the UI encouraging them to trade often, to trade on margin accounts, to trade options? Access is great but if we don’t combine it with responsible UI and education, then I really worry about what the outcomes are. Like, do we lose people to the market because their vision of what the market is what the app that they’re using, the behaviors that they’re encouraging? Because yeah, let’s face it, the best engineers in the world are spent figuring out how to capture Meb’s attention, how to capture Tim’s attention, and get us to do stuff that is good for our business.

Meb: The thing was Public, and I don’t know them well, but with what’s happened at the beginning of this year, you know, to me…and this is an unpopular take so if you’re still listening, be prepared to be triggered. But to me, there’s an unbelievable opportunity for someone, meaning a brokerage, to come out of this as the good guy white Knight. And look, there’s the Vanguards of the world have been doing this forever. But meaning the younger generation and to say, you know what, here’s what we’re going to do, we’re going to charge a fee whether it’s subscription fee or not, or we’re just going to take a percentage of the revenue we get from these various streams, but we’ll share it with you.

And so if you look at the three main ways these guys make money now, so commissions are done, it’s interest balance. And so at some places like Schwab, it’s, like, half. At some places, I imagine like Public and others, it’s less. They make money from the payment of order flow, which Public did away with, which I think is illegal in Europe, and with the short lending revenue, which most people don’t understand and don’t even know they’re doing. And if I was a brokerage…and Public instituted tipping which makes no sense to me, but who knows. If I was a brokerage and everything that just went down, went down beginning this year, I’d say, you know what, we’re going to design our business so that we’re on the same side as the customer every possible step. If we’re going to sell your orders, you know what, we’ll give you half. If we’re going to do short lending and lend out your securities, you know what, we’re going to give you half. And you know what we’re not going to do is we’re not going to opt you into a margin account. We’re not going to encourage you to trade options. We’re not going to default to market order in these securities that you shouldn’t be in, and we’ll design it in a way that encourages long-term behavior, not rapid-fire trading.

And none of the brokerages were able to capitalize on this very real moment to where they could have added, in my opinion, billions, if not tens of billions to market capitalization by saying, you know what, we’re just going to be a fiduciary. At every possible option and choice we have, we’re going to say what is in the client’s best interest? And some, like Betterment, I think do a really good job. Like, when you’re trying to make a decision to change strategies, they’ll do a pop-up behavioral nudge that will say, “Hey, sure you want to do this? Because this will probably generate some taxes?” But it was really frustrating, a lot of them you know, either, like Robinhood, kind of put their head in the sand, ostrich style, kind of ignored everything, others went a different way. Anyway, if you’re listening, I think it’s a billion-dollar idea to be able to build a brokerage and a business that’s open and transparent, but also, the incentives are aligned rather than opposed. End of soapbox.

Tim: You got a long history in regulation. How did it get to be you could trade options so easily? Like, when I saw I think was a “New York Times” article about how the options book for Robinhood’s 20x their nearest competitor.

Meb: It’s because they encourage it. And the simple user interface, the way they design it is they are intentionally guiding you down that path. I mean, there was a comment, and he got absolutely destroyed for it. A good friend, Jason Zweig, I think had written about the app. And I pick on Robinhood specifically because of some of their bad behavior, but also because literally, it’s in their name, Robinhood, they purport to be acting in your best interest. There was, like, a feature where if you tap a certain button, like, 1,000 times, literally, like the rat in a cage cocaine they’ll give you a bonus feature or something. And so it’s this modern world of social, like, Facebook, and many of these Instagram apps, you know, they’re designed to keep you on there as long as possible and spend money. They tap into your behavioral wiring.

And so a thing like Robinhood is encouraging you to trade and encouraging you to trade options, market orders, and have securities that have higher short interest, like, GameStop that they can lend for 50% per year. Companies like ours, we return all of our short lending to shareholders, not a fraction, all of it, which is very material by the way. GameStop was our number one short lending revenue for customers. I think it did six figures that we ended up giving back. Anyway. So you have people like Vanguard that have been doing it forever, the problem with Vanguard is their user interface looks like it was built in 1970.

Tim: Which I love, Meb.

Meb: Right, like, which is a feature maybe, maybe it’s not a bug. But if someone like a Vanguard could develop a beautiful app that actually spoke to this younger generation, God bless them.

Tim: They have not seemed that interested in the market, though, right, they still have high minimums. Like, you look at their mutual funds, yeah, you could buy ETFs but…

Meb: Their brokerage, I thought it was zero and I think their digital visor is zero. So you could buy their new digital visor, I think is the cheapest one, they cap it at 15 basis point, including fund fees. I could be wrong, look it up. And I think plenty are fine. It’s really frustrating because it got lost in the whole narrative in the media of, you know, hey, Robinhood’s a good guy in the story. And I will say no, they’re the sheriff Nottingham. But didn’t mean for this to take a turn on me just trying to dunk on Robinhood.

Tim: I think I triggered that. I was the trigger so just blame me.

Meb: It’s a little too raw and recent. And they’ll pay a fine, let’s be honest. But if you look at their stock has probably doubled or tripled on the private markets, this has been very good for them, it’s not been a negative. I saw it at one point trading at $60 billion in the private market so we’ll see how much they get fined.

Tim: There was, like, a million new accounts, right, on that Friday when all this was going on.

Meb: Anyway, listeners, lesson is find yourself, in every aspect of life, this is when you’re buying a house, a car, every single financial interaction, either a required fiduciary…So in my case, it’s a registered investment advisor that has to be, like, a doctor in your own best interest. Or at least if you’re not, find them to have common incentives to where you’re on the same side of a deal as opposed to opposite sides like Robinhood.

Tim: I’m glad you mentioned that too because we actually incorporate…we spend a lot of time talking about incentives. So actually, one of our activities is a role-play where you’re in a bank, because again, I’ve talked about this several times now, but overdraft protection is a multi-billion-dollar business for large banks. And by law, they are required to get you to opt into that. And the opt into that usually goes something, like, this, “Meb, you don’t want to overdraw your account, do you?” “No, I don’t.” “Okay, we’ll sign you up for overdraft protection,” boom. So now you’re new to a bank account, you make that mistake, you overdraw your account. Well, if you do multiple transactions in a day, that can be up to six…in many cases, up to six in a day. Six times $35 is over $200 in fees because you didn’t know what overdraft protection is when they sold you on signing up for it.

Meb: So many of the businesses, and this legacy Wall Street as well as a lot of the modern Fintech’s, a lot of the modern FinTech’s we see, “No, we’re disrupting, we’re democratizing investing.” And you look at what they’re actually doing, you say, wow, that’s an actual amazing business, horrible for end consumers. I mean, there was a savings app that I love to pick on that really upsets their consumers. But I say look, you know, they have a $200 average balance and you’re charging them $6 to $12 a year, you’re going to eventually earn all of their balance. So unless you help them grow this to $2,000 or $20,000, like, it’s predatory from a different name. Anyway, all of this relies on trying to get people to be educated. Tim, you’re doing God’s work. Where can they find out what you guys are up to? If they want to follow along, they want to get involved how do they find out more?

Tim: Yeah, come to our website, www.ngpf.org, sign up for our blog. Every day we’re putting out a couple of posts, you can kind of…gives you the ability to keep up on personal finance also. And then go to the advocacy page. You can create change in your community. We’ve seen it, right? I mentioned 1,300-plus schools. It started with one individual saying I really care. And the impact you can have is not only on the students in the classroom in your community, but we’ve talked about the ripple effect and how this can change families. So go out there and make it happen and share your stories with us. Because there’s nothing that inspires us more on the team than hearing about all the great advocates out there that believe in Mission 2030.

Meb: Good. I’m going to follow up with you later. I’m going to do my best to adopt L.A., which seems to be at the bottom of the barrel of municipalities. We’ll talk more about it. We should also do a yearly checkup. I want to make sure we get to 2025, 2030, hit these goals because I think it’s a crisis and you’re one of the leaders making this happen. Tim, thanks so much for joining us today.

Tim: Thanks for giving me a platform because I consistently…like I said, I reached out to you because people don’t think anything is happening in the space and we’re relatively new. And we’re very well known within the space but we haven’t broken out.

Meb: This is fun, really appreciate it, Tim. Thanks so much for joining us today.

Tim: Thanks, Meb.

Meb: Podcast listeners, we’ll post show notes to today’s conversation at mebfaber.com/podcast. If you love the show, if you hate it, shoot us feedback at feedback@themebfabershow.com. We love to read the reviews please review us on iTunes and subscribe to the show anywhere good podcasts are found. Thanks for listening, friends, and good investing.

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