Episode #524: Tim Ranzetta, NGPF – Teaching America Personal Finance

Guest: Tim Ranzetta is the Founder of Next Gen Personal Finance, a non-profit organization to connect educators with free resources and equip students with the knowledge and skills to lead financially successful and fulfilling lives since 2014.

Recorded: 1/17/2024  |  Run-Time: 48:27 

Summary:  In today’s episode, Tim updates us on everything going on with Next Gen Personal Finance. You all know I’m a huge proponent of teaching kids personal finance and Tim is as focused on this making this happen as much as anyone. He talks about “Mission 2030,” which is to guarantee every high school student in the US takes at least one semester-long personal finance course by 2030. 

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Transcript:

Meb:

Tim, welcome to the show.

Tim:

Hey, Meb, it’s great to be here.

Meb:

I should say welcome back, because you were on in 2021. First give our listeners who didn’t hear that episode, we’ll post the first one in the show note links, but tell us a little bit about what you guys do. What’s your mission?

Tim:

Yeah, just a quick recap about what NextGen Personal Finance does. So, this is a nonprofit I co-founded in 2014, and came after an experience of being a volunteer teacher at a high school East Side College Prep in East Palo Alto, California. When I saw the impact the course had on students, and started to see the ripple effect of parents reaching out to me, I wanted to do something more. And so that led me several years later to start NGPF, and our mission very simply, again, you can’t unsee it after you’re in a personal finance classroom, and you see the hunger the students have for this information, you can’t help but believe, why aren’t we given this opportunity to every high school in America? So, that’s our North Star. We call it Mission 2030, which is by the year 2030, every high school student, when they cross that graduation stage will have the financial skills they need to thrive in the future.

There’s just a tremendous community of educators who we partner with every day to do three things. First of all, we provide them with a curriculum, and what they tell us, and their students tell us is that we help make finance fun. So, what does that mean? It means we’ve got an arcade of games, but they also have worksheets to make sure the learning is taking place, too. We use simulation. We can’t ask them to manage a bank account without giving them experience, and so our bank sim is one of the most popular resources we have. But then we incorporate videos. We have a weekly current events video that we provide along with a quiz game called Fin Cap Friday, and that’s produced by Yanely Espinal from our team. And then we find good articles, we find videos, and we really ensure that it’s current, and relevant to young people. That’s on the curriculum side, and we have everything from a trimester course to a semester course to a full year course to financial algebra as well as a middle school course.

We want to offer as many options as possible. The second thing we do is provide professional development, because we know the importance of having a highly qualified, and confident teacher in every classroom, and the only way that can happen is through professional development. And so we have a scalable model where just in the past three to four years, we’ve reached 17,000 teachers who’ve invested on average 25 hours with us. And then the third piece of what we do is advocacy. And we recognized about two, and a half years ago that if we were going to really create change at scale, we were going to need to advocate at the state level working with state policy makers.

And I’ll share with you shortly the progress we’ve had there. But just to wrap everything up, again, with our mission, we provide curriculum, we help teachers upskill them with professional development, and then we advocate in order to increase access. Everything we do is at no cost to schools. So, I’ve been very fortunate as an entrepreneur, as well as an investor, and created an endowment which carried us for the first decade. And because of the tremendous growth we see ahead, I’ve been fortunate to bring along some friends of NGPF recently who are also contributing to our mission.

Meb:

That’s awesome. So, you’ve built the template, which probably took a little while, and you guys are probably at the point now where you’re expanding. So, maybe tell us a little bit about the past couple years, walk us forward from where you were in 21, and then where you guys are here in 24.

Tim:

Yeah, so since we last spoke in 2021, there’s been a tremendous movement across the nation in expanding access to financial education. So, what does that mean? It means we’ve gone from the number of states requiring a one semester course in personal finance to increasing from eight to 25. And I think what we figured out is the importance of advocating at the state level. And what we’ve discovered is legislators are listening to their constituents, because every time we poll this in a state, we ask voters, “Is this something you believe is important for a high school education?” They tell us 80 to 85% of the time they’ll say, this is really important. And then they’ll also say, “This is urgent.” And so I think legislators are really just responding to what their constituents want. And I would say there’s three elements to the success that we’ve seen in the advocacy work that we do.

Number one, there’s a recognized need. 70% of young people are getting this information from social media today. That’s TikTok, Reddit, YouTube. So, if we’re not providing that foundational course in personal finance, they’re not able to develop those critical thinking skills to determine what’s good advice versus bad. The second is demand, which I’ve already alluded to. This is coming from students. This is coming from parents, and teachers, and school boards, and administrators who are saying, if we’re really serious about preparing young people for the 21st century, this is the language that all students will need to understand the language of money, and how to manage it. And then I think the third piece, which is absolutely critical, is the question of, well, one of the real hallmarks of education in the US is local control. So, how do you manage this requirement while also allowing local districts to make decisions?

And so what we’ve seen is flexibility at the local level on how this gets implemented. And so that ranges from who can teach the course, and obviously, professional development is a key part to ensure that they’re ready to teach the course what curriculum to use, and that has to be aligned with whatever state is in place. And the good news is there’s a standardization around what should be taught in a personal finance class, and the last is where it fits within graduation requirements. We’re not talking about adding a graduation requirement, we’re talking about where it fits best. Maybe it’s taking it out of the elective pool, because there are a lot of choices that young people have, or maybe it’s to count it as a math class, or an additional social studies class. So, there’s all sorts of options, and I think what states have done is really incorporate it into their existing requirements.

Meb:

Where’s our local state Cali Stan?

Tim:

So, again, as I’ve mentioned, we’ve seen this tremendous wave of this movement towards financial education increasing from eight to 25 states just in the last two, and a half years. Unfortunately in the state of California, which considers itself a leader in so many ways has fallen behind, and it’s really a disservice to the students here in California, because in a recent research report from the Center for Financial Literacy, California was one of four states that earned an F. Just to give you some numbers, less than 1% of high school students in California are guaranteed to take a personal finance course versus 53%, nationally. Earlier in 2023, we worked together with assembly member Kevin McCarty on a bill AB984 that would’ve guaranteed this course for all California students. However, prior to it even being heard in the education committee, in the words of the bill sponsor, “The bill got watered down.”

And so we pulled our support. This has been going on for two decades in the California legislature where this issue has been brought up, and as you can tell by the F grade, little to no progress has been made. The good news in California is you have other options for something as popular as financial education, you can go the ballot measure route, or ballot initiative route. And so in the summer of 2023, we did our research, we did some polling, and discovered, yes, as in every other state you see anywhere from three quarters to 80% of folks saying this is a good idea, and should happen. So, that emboldened us to pursue a ballot initiative. Here I am in early February, we’re currently closing in on the number of signatures we’ll need in order to get placed on the ballot. So, I’m highly confident that in November, if you live in California, be sure to check the propositions that are listed, because there’ll be many.

The good news is this one is pretty clear in the language that they use that would require a one semester standalone course in personal finance for all California high schoolers, the impact will be tremendous. There’s a research study just out from Titan Partners showing the lifetime benefit of a personal finance course for California students is $127,000, and that’s the savings they get, because they have higher credit scores, it’s the increased retirement assets they have because they start investing at a younger age, and choose investment vehicles that are appropriate for them. The benefit is enormous. And when you consider California has roughly 450,000 students who every year would be taking this course, this is a step that we needed to take. The impact is too great for individuals, for their families, for their communities, and the California economy, so highly confident that we’ll see this on the ballot in November because the voters have a say in this. And because we’ve seen such strong support for it, I’m confident that moving forward this will also be just an incredible opportunity for all California high schoolers.

Meb:

What are the odds, and what are the prospects, and how do you make it happen? That seems like a pretty big initiative. When you got watered down, was there anything in particular that made you say, “Ah, come on Cali, we can’t do this.”

Tim:

So, the good news is there’s less, and less opposition. As I mentioned earlier, we’ve gone from eight to 25 states in just the last two, and a half years. And so I think there’s a growing recognition among all stakeholders that this is something that’s essential to a high school student. It’s essential to what we should be teaching to prepare young people for their futures. And in each of those states, we’ve worked closely with school groups to discuss what happens post legislation, because ultimately this isn’t about legislation, this is about implementation. So, we’ve worked very closely in order to ensure that this gets implemented well from helping prepare by providing professional development opportunities to these new teachers, to increasing awareness of the free curricular resources that are out there from Next Gen Personal Finance as well as some other providers. And because the evidence continues to grow, and because we now know what the economic benefits of this are, I see the remaining 25 states really following along pretty closely. As I mentioned earlier, this is truly a tipping point.

Meb:

Where do you guys stand as far as we’ve been doing this long enough? Can you start to point to any sort of essentially clinical trials, evidence, or data, whereas these states start to accumulate going through various classes, and vintages of students, can you point to it, and say, “Hey, look, it’s starting to have a meaningful effect.”

Tim:

So, we wanted to get to the answer of what is the economic impact? Let’s put some dollars, and cents behind why this is such an important course for young people to take in high schools. So, there’s a third party, Titan Partners, which is a consulting firm that’s going to be out with a report in early February showing on a state by state basis what the economic impact is. And they got this information by really studying the existing research out there that shows the positive impacts of financial education. And the rough numbers are, and this again is a benefit over a student’s adult lifetime is over $100,000, which, I frankly think is pretty conservative, but if you look at the numbers, one of the greatest impacts comes on the credit side because taking a course in personal finance has an impact on increasing credit scores.

When you extend that over a lifetime, what’s the impact of 30 more points on your credit score for the lifetime of auto loans, and mortgages that you might take out as well as the avoidance of credit card debt? It’s extreme. And then to a lesser extent is this idea that students are more likely to plan for the future, and that’s where starting to invest at a young age, there’s just a real compounding effect there.

Meb:

Yeah, 24% debt. That alone is something being mindful about, you talk to so many kids, and they’re often just unaware how so much of this works, but we talked about this a little bit on the last podcast, which is there’s a non-trivial benefit to where these kids bring home this information, but it percolates to their siblings, and parents, too, because plenty of parents that are pretty awful with money, and to be able to have that conversation at the dinner table when the kids start to learn, and say, “Hey, mom, do you have a IRA?” Or “Hey, mom, do we do X, Y, Z?” It’s, I think, a pretty useful branching sort of benefit as well that might not even get measured by a study like this.

Tim:

Yeah, so actually there was a study out of Peru that showed the ripple effect was real. It turned out young women tended to be better communicators than young men, so they tended to bring it home, and they were more reliable at sharing this information. And we find teachers are really thoughtful about ways to engage family members also, whether it’s hosting a family night where their children are in effect educating them because they have poster boards up around different topics around financial literacy, or they send newsletters home to parents just highlighting what’s being taught in the classroom, or they’re creating activities, asking those exact questions in a very sensitive way so that we can have those conversations, because this is something that’s still, for the most part, taboo in terms of folks talking about money in the family.

Meb:

Almost every time that I bring up a topic like this, you get a handful of people in my Twitter comments that say, “No, can’t teach people personal finance, or investing in high school kids doesn’t stick. They don’t learn anything.” How do you respond to those comments? I mean, that’s got to be the number one comment I get. It’s a waste of time, and I’m always like, you think it was a good use of time to teach kids cursive, or I don’t know Latin, or all the crazy things I learned in high school that went nowhere? Anyway, what’s the response you say to people like that?

Tim:

Go visit a classroom. That would be the number one go visit to see how this is being taught today in class. I think the second is that many of us are far removed from our high school years, and don’t realize all the decisions that are smacking kids in the head as they prepare to leave school. So, let’s talk about the most important one. What are you going to do after school? How are you going to pay for college, or trade school, or jump into the workforce, or more immediately you just got to a part-time job. How do you read a pay stub? How do you determine whether, or not to pay taxes, or whether you’re eligible for a refund, or stepping back even further? How do you apply for a job? There’s so many soft skills, and maybe they’re getting hit with credit card solicitations if they’re close to the age of 18, and maybe they have an opportunity if their parents have good credit to sign on as an authorized user.

Let’s talk about buy now, pay later, which anytime you purchase anything online, it’s right in front of you. Or let’s talk about crypto, because that’s captured a lot of young people’s imagination, and they’re getting into adult Robinhood accounts, and starting to trade that. They’re going to social media to learn this. And when you spend time on social media, and you see what the most popular videos are, millions of views, things like option trading, foreign exchange, day trading, that’s not a long-term path to wealth, but it’s a pathway into a young person’s get rich quick dreams, and so we absolutely need to cover this before they go out in the real world, and learn through the school of hard knocks.

Meb:

As you guys do the course, and as you think about talking to the detractors, talk to us a little bit about how you actually teach it. Are there some particular topics you guys think are important to cover? Is it a case study method, or is it a traditional high school curriculum? How do you go about teaching it that you think has the most impact, and what, you got to cram it into one semester, what, and how?

Tim:

Number one, it’s got to be relevant, so it’s got to be current in terms of we’re talking about buy now, pay later, or we’re talking about how to complete a job application. You want to reach students where they are today in decisions that they’re going to make. Two is I think kids are no different than adults. They learn by doing. And so it’s really a curriculum that is heavy on activities. So, you can imagine let’s create a budget for your life after high school, or after college, and there’s a spreadsheet, and students have to make 30 different decisions, and then they can see, “Okay, is my career dream going to satisfy the standard of living that I’m hoping for?” One of our most popular games is called Stacks, and we wanted to create a game that gives students the adrenaline rush of day trading stocks as well as commodities, and bonds, and all of this stuff gets thrown at them.

They’re making 20 years of decisions in 20 minutes, and they’re competing against the computer in the background. And the computer has a very simple strategy, which is called dollar cost averaging into index funds, and that’s hard to teach index funds, because they’re not all that exciting, but unfortunately some of the best investing advice is the lax excitement. And so that’s a game that really resonates with young people. When we got into this about 10 years ago, I would always ask a room full of teachers how many were teaching young people about index funds, because I think individual stocks capture young people’s imagination, and it can be a good on-ramp to get people excited about investing, but I think without index funds, it makes it feel like it’s a game where you have to have in-depth knowledge to understand balance sheets, and income statements versus invest in an index of well diversified low cost index doesn’t require you to be a financial whiz.

And so there’s a little bit of a history lesson, too, just to show historically what those returns have looked like. The last point I’ll make is you have to include psychology in it because it’s this issue of we can’t teach people this because they may know it, but they still can’t act upon it. And I’m not as defeatist as that because I believe there’s an element of creating awareness. So, you understand when you go to social media, and everybody seems to be making money over the last increase in Bitcoin, you understand, okay, this is fomo. Let’s call it what it is, and let’s step back for a minute, and think, okay, is this the best strategy for me? What am I feeling right now? Or loss aversion is another one. Why do I make an investment that wants to jump immediately when the price goes down 10%?

It’s because we’re wired that way. This cognitive bias, or mental shortcut we have that leads us to want it. So, we have to learn how to fight against the psychology, and I’m just such a believer, I’ll give all the credit to our curriculum team, and all the credit to teachers out there teaching the subject, because we hear from them almost on a daily basis about the impact they’re seeing, and hearing every day.

Meb:

I imagine there’s so many hours in the day, and you have your mission, you’re very focused. Is there any sort of follow up, or do you track them post high school, or are there any tools as you just usher them out to the world, or they graduate, and you’re like, “All right, this is all we can do for you. See you later. Hopefully you learn a lot, and can apply it”, but anything that happens post graduation?

Tim:

You’re right. We are laser focused on high school, and we actually have a middle school curriculum also. It has to be developmentally appropriate, but the sooner you can introduce some of these topics to young people, we started with high school just because for me it was the urgency, it’s the last mile, and I had just seen what happens when students lack this knowledge. Regarding college, I think it’s great to see number one, we’ve never marketed to that group, but I want to say we have over two, or 3000 professors, instructors who are taking our content, and teaching it there. Stanford University just recently set up, basically, a financial literacy organization within the university, and one of their goals is really bringing together colleges, and universities to say, the more opportunity people have to grapple with these topics, because there’s different challenges when you get into college than you might have had in high school.

And so my hope is now it’s a little bit more difficult in terms of when you set state policy for high schools, it’s a little bit easier to say, “Okay, this will be an integral part of everybody’s high school curriculum.” It’s a little bit more challenging at the college level, but I have confidence that parents, and students are going to demand this also at that level.

Meb:

Tell me a little bit about the middle school angle. I don’t know that I heard you mention this before. Is that something you’re just trying to move upstream, and expand it? Man, I would love to see it starting at K, in elementary school.

Tim:

We will get there. It should absolutely be K to 12, and I think we again, started with high school, migrated down to middle, and then elementary, absolutely. There’s a ton of opportunity there. You can just imagine, right? As a young person’s learning how to read the choices of books, and the money angle, there’s a national organization called Jumpstart Coalition for Financial Literacy, and they started at Teach-in last year, which I think is a brilliant idea, which is taking high school students in a personal finance course, and bringing them to the elementary school to read books, and discuss money. And I just love peers teaching at the elementary school. It makes both groups, I think, feel really empowered to change financial outcomes.

Meb:

Yeah, I think that would be awesome. What do you guys think about sort of the point in time argument, and then how do we think about it? We educate students, we get them interested, we start to give them the base level of knowledge. How do we then think about, all right, they’re actually out in the real world making these decisions. Any sort of thoughts on support at that point? I know it’s a little bit downstream from where you guys are. I’m just a little curious about how we can improve, particularly some of the predatory behavior by a lot of that world. Because I imagine as you develop the curriculum, as you talk to legislators, you’re like, “Look, there’s these five things we should also be doing if I had 48 hours in the day, that seem obvious”, but is there anything on top of mind you think about there?

Tim:

My hope is that we’re giving students critical thinking skills that work far beyond them taking this one semester course. So, understanding a base question, which is who’s on the other side of this transaction, and what’s their incentives? They understand that when a financial advisor says, “Hey, there’s no cost for my services.” They dig a little bit deeper, and ask further questions there. Or when they see buy now pay later, they dig a little bit, and discover, oh my gosh, 40% of people who use buy now pay later pay late. So, maybe there is this overoptimism, overconfidence that I have that of course if you break that payment into four, I’m going to be able to handle it. The second skill that’s really developed here is media literacy.

So, when they go off, we’re showing them sources of information that they can trust. I don’t know how you learned in your twenties, but there’s this element of curiosity that I’m hoping to instill in folks, and confidence that they can go out, and find this golden age, so to speak, of financial advice that’s available. Let’s go out, and find great sources like the Meb Faber Podcast. Let’s feel more confident in teaching ourselves. And so this is really just wetting their appetite, so to speak, and from there they’re going to feel confident to teach themselves.

Meb:

All right, here we are. You’ve made a massive amount of progress. What do the next couple years look like for you guys?

Tim:

Our focus going forward, number one, let’s make sure we continue to be the industry leading curriculum. So, we have to continue to have that focus on updating it, taking teacher feedback, and continuing to iterate. And the great news is we have a team that’s really focused on how do we get better every day? I think professional development’s going to have to scale, because we’re going from a point in time where 24% of high school students are required to take the course. And because implementation in these new states takes place over a couple of years, we can see in three to four years the market’s going to double if not triple. And so we want to be prepared for that. And then the third piece is what we call implementation, which is really partnering with state leaders as well as district folks to make sure that the rollout of this change to the high school curriculum to make sure it goes smoothly, and is done well.

We’re really bulking up the team on the implementation side. And the good news is I think states don’t often change high school graduation requirements. And so I think they’re very open to a partnership with us because the more time that elapses, the more experience we have had. And we’ve already seen situations where we’ve helped, for example, develop professional development plans. How do we prepare every teacher in the state to ensure that when it’s a requirement that students are getting the best that teacher can offer? We solved the curriculum puzzle, the professional development, and now it’s really getting implementation right. As I said earlier, quality is paramount. Legislation is not worth anything if it’s not done well.

Meb:

So, I’m sure a lot of people are listening to this nodding their head saying, “Yes, this is obvious. I support this.” Other than voting on the California ballot, how do people get involved? Is there a way that either citizens, or financial advisors, or if there’s some senators, and congressmen listening to even Joe Biden, what’s the main way people could help this mission if they wanted to?

Tim:

Yeah, there’s a lot of great examples that we’ve seen with folks in the financial industry. I think there’s a spectrum in terms of level of involvement. If you have children in the local school district, I’ll give you a link to a map so parents can see what’s happening in the local community. I think volunteering to teach in your children’s classroom, teach a lesson about money, just know you better come in with an activity. I think I learned within the first 10 minutes of teaching that lecture don’t work with young people, so going to our website, ngpf.org, doesn’t take anything to access our curriculum. Everything’s free. Go find an activity that’s particularly popular. Your children’s teacher is probably the easiest on-ramp that can be elementary, middle, or high school. And then I think if you want to step it up a notch, it’s to advocate for this at the local school board level, because often members of the community come forward, and say, “This should happen.”

And so maybe you find a teacher through your volunteer work, you find a teacher that’s really passionate about it, and maybe they bring a student leader along, too, because student surveys can be really powerful. So, I think you can advocate at that level. If you want to go to the extreme, there’s an example of a financial advisor in Minnesota in Minneapolis, a guy named Steve Lear who went out, and raised money. They could go out, and hire a lobbyist, so they could hire an advocate who could work with the state legislature. And last year Minnesota passed a law that’s going to require a personal finance course. So, I think there’s a lot of ways to get involved, and I think volunteering is probably the easiest. I will tell you, personal finance teachers are eager to bring in classroom guests who can talk about investing, and really bring it down to the student’s level. So, there’s definitely a role for folks to play.

Meb:

Do you guys have any sort of cheat sheets on your website, or anywhere else? Because you guys are still self-funded, right?

Tim:

Yes.

Meb:

So, if someone’s like, “All right, I want to do something”, do you have any, go to your website, get the cheat sheet, and be like, “All right, this is a flow of what you should do, or what you should think about”, anything like that?

Tim:

I think when you look at our lessons, the way they’re structured, there’s usually a sequence, in terms of the flow of that individual lesson. You could also look at our arcade, although technology sometimes can be a challenge if you’re going to volunteer, but if I had to just rattle off three activities off the top of my head that seem to work extremely well, one is the bean game. So, it’s a situation where students are given a pile of beans, or a pile of something, but 20 of them, and then they’re given two game cards, and they have to allocate those 20 beans among various wants, and needs. So, they make their choices, they analyze it, they say, “Okay, does this really match?” They’re learning about resource constraints, and they’re also learning about wants versus needs. And then the surprise is their income drops by a third, and they’ve got to take seven beans off the board.

That gives them a really quick lesson in, okay, whatever’s left on the board is probably a need. And then there’s other fun adaptations we have for that where they can pick names out of a hat, students can, and there’s a specific situation where they add, or lose one bean. That works for all age levels from middle up through high school. So, that’s a really popular one. There’s one about credit scores, which I think is a real eye-opener, and again, I’ll give you links to all of these, and it’s this idea that two individuals buying the same car can pay very different amounts for it just based on their credit score. And I think that’s eye-opening for folks to make the link between, okay, higher credit score is good because I pay less credit scores. When you say we can’t teach this to kids, because even if they have this knowledge, they don’t know what to do.

I think credit scores are the perfect example of what they don’t know that every student should know. That’s a knowledge gap, and I always use the analogy with my students. So, the metaphor is that your credit score is like an escalator on the way up. It’s slow, methodical, and your score grows over time, make a mistake, and it’s an elevator, and it’s a very fast elevator on the way down. And because, again, when I talked about the economic impact, the biggest, in terms of dollars, and cents, the biggest impact of a personal finance course is getting higher credit scores, which reduces borrowing costs over a lifetime. So, I think that’s another one where just a really short activity, I don’t believe it requires tech. I always started my credit score lesson by telling students this class specifically could have a six figure impact on your life.

Meb:

I remember signing up once at a Colorado Buffalo game for a free T-shirt credit card, and put in a slightly wrong piece of information, and it jacked up my credit for two years. I couldn’t fix it. It was just the worst problem. And I was like, “Man, this is the most expensive I’ve ever had in my life. Never signing up for another one of these again.”

Tim:

And that’s another great habit is just looking at your credit report on a frequent basis, because the percentage of errors don’t get me started, and the difficulty of fixing those errors, they have a real impact.

Meb:

When you guys talk to high school level kids, or their parents, whatnot, the teachers, are there any books that you think really stand out when people are always like, hey, what book should I read about personal finance, or investing that a high school level, or any that you think do a particularly great job talking with all the curriculum, and ideas that you guys promote?

Tim:

I think the key to a good personal finance book is telling stories. So, I’ll just name a few. Morgan Housel’s, Psychology of Money. I’ve actually taught a course, probably over a thousand teachers at this point where we use his book as the text, and then extend it from there. And then what I didn’t count on is teachers going out, and buying book sets for their students, and saying, “This is really a great way to engage folks.” I think another great storyteller is Yanely Espinal, who actually is an education outreach leader at NextGen Personal Finance, she tells the story of her upbringing. She was one of eight children to Dominican immigrants, and how she learned about money, and what motivated her to learn more, and now she plays a real integral role in the work we do. That’s a book called Mind Your Money.

There’s a book written by a high school teacher, Jake Cousineau. He is from Southern California, and I’ve heard great things from educators. His book is called Adulting 101 I believe. And then there’s a book written by a Gen Z-er Ella Gupta, and I think it’s called Gen Z Money Sense. And I’ll tell you, she’s an incredibly impressive woman. She’s currently at Wharton School of Business. She wrote this when she was in high school, and really well researched. Those would be four off the top of my head.

Meb:

You just named a couple. I’m always excited when I hear some personal finance books that I’ve never heard of, so I’m going to purchase those after this show. We’ll put the links in the show note, listeners. Is there anything in front of mind for you that is a part of this effort as you look back and say, “Man, this was going to be easier, harder than I thought I should have done this, not that.” What are some lessons learned over the past handful of years for an entrepreneur turned public policy guy?

Tim:

It’s been awesome because I love the opportunity to continually learn. We started out with a curriculum, and then we heard teachers say, we don’t feel confident teaching the course. And so then we built out a whole variety of professional workshops, and then we looked at, and said, okay, we have great market share, but the market is too small, so let’s go solve the advocacy piece. It’s just been one challenge after the other. I have a background in strategy consulting, so this is probably not something that’s too popular in that field, but we do very little long-term strategy, and we spent a lot of time just figuring things out. I think the team has done a really good job of not being afraid of failure, and just learning from it. Another thing I’ve learned organizationally is we still have people, and we’re a team of 17, people who wear a lot of different hats, and so we let them bring their best skills to work.

And it might be that the person who’s doing professional development is also doing advocacy work, is also creating our annual report. And I think it’s the old analogy, and I’m going to go way back here. The Dallas Cowboys used to talk about drafting the best athlete. They may be a cornerback, but what we think they’re a great athlete, and they could end up being a wide receiver, too. I’ve been very fortunate to be surrounded by a team. And then my co-founder, Jessica. The serendipity that plays into starting businesses, and this is about my fourth, or fifth, and serendipity plays a part in every one of them. And she was employee number one, and she had made the move from New York where she was one of the youngest principals in the New York City public school system, and she was looking for work prior to going back into the classroom.

And I think she’s the one who gets all of the credit of what we’ve become as an organization, because I think we have complimentary skills in that she is fixated on creating a great organization that creates a great product that meets, and exceeds teachers’ expectations. And I tend to be more of the idea generator, and spend more time on the outside doing things like advocacy. After a decade together, it’s been a great partnership, and just realizing the importance of that. So, I think that’s some of the lessons that I’ve learned. And I think going free, a lot of people have said, I remember actually being a legislator, I was in a committee hearing just recently last year, and the senator looked at me, and said, “You can make a lot of money doing this.” And I think it comes down to what’s my objective? My objective with this is truly how do we create a society that’s more financially capable through education, because we say free, and always will be.

And people always wonder, well, at some point you’re going to have to. And it’s like, no. As somebody who’s funded this organization, we will probably seek outside capital at some point, but as somebody who’s self-funded this for the first 10 years, this has been the best investment I could ever make, because I just think of all the young people who feel more confident, more qualified, making better decisions, and the teachers who teach them. The number who’ve said this has rejuvenated their teaching career, because now they have a curriculum, and now they have a team at NGPF who’s got their back so that if they need to have a meeting with an administrator, we’re going to be there to support them. So, this is the most gratifying work that I’ve done in a 34-year career.

Meb:

There’s an idea that hedge fund manager, Brad from Altimeter has been floating around this Invest America, which is sort of a riff on, it’s not universal basic income, but it’s universal investment where he is trying to promote this idea of seeding any child born in the country with a thousand dollars brokerage account, which I assume gets funneled into either a few choices, or one choice, I don’t even know, but hopefully not something they can just trade on their own. But interesting idea, not interesting idea if you could talk to Brad, what input would you give?

Tim:

Oh, I’d love to talk to him, because seeing more estates, some of them call it baby bonds, and this idea that let’s let compounding work, and even if it’s just a small amount, there’s data that shows people who set up college savings accounts are more likely to go to college. They’re thinking about the future, and having that future orientation. I’ve seen various iterations of this baby bonds where there’s a fixed amount that goes in, and then there’s different decision points. And I think the simpler the better is just in terms of how it gets organized. And then when they turn 18, they can use it to start a business, or go to college, or put a down payment on a house. I mean, I think there’s different prescribed ways that they can do it, but I think just the fact they have a brokerage account, it’s going to get people interested in the stock market, and trying to understand it.

In an ideal world, it would be an account that isn’t managed, so to speak, it’s just pure vanilla, maybe it’s an index fund, because let’s let the power of compounding work. If they don’t touch that money at 18, and they decide to let it roll, there’s very few 18 to 20 year periods where that a thousand dollars wouldn’t be 2000. It wouldn’t be a multiple of what it is. And so now we can talk about how you create wealth through stock market investing, or we can give them an example.

Meb:

Yeah, I like the idea. I think there’s a bunch of fun thought experiment permutations you could even try with it. I think the intent is good as usual, you got to watch Wall Street from getting its tentacles into a pot like this. But in general, I had a very unpopular post many years ago where I talked about the government offering broad-based index funds for free, and man, people did not like that idea. And I said, “Well, the good news is Vanguard already does it for five basis points”, but just the thought of it made people just irate for some reason.

Tim:

I think it also makes that personal finance course, your junior, or senior year that much more relevant. You’re going to listen to the investing unit where you’ve got an account with a balance to it, and you’re going to have to make a decision. Coming up, it’s interesting, actually, the military academies in the US provide when they’re juniors in the military academy, they give them a $30,000 loan with no strings attached. Young people say, “No, I don’t want it.” Others decide because I think they’re starting to think about their deployment after the academy. It forces them to have to make decisions. And so there’s a class taught because on my podcast, I interviewed one of the instructors there, and boy, that makes his class that much more relevant when they know that they have this opportunity. And again, some people say yes, some say no, and they make a lot of different decisions, but they’re doing it in the context of a class where they can have discussions about pros, and cons of various decisions people are making.

Meb:

Well, if you succeed, and all 50 implement this, what’s next? What’s Tim going to do next? Is there an offshoot of this, or derivation that you want to pursue? Or are you just going to say, “All right, I’ve had enough. I’m going biking.”

Tim:

Yeah, I’m head down for the next seven years. So, this is a big challenge, and I think we can’t lose sight of the fact implementation’s going to be challenging work, too. So, this will keep me very occupied. I’ll tell you, maybe post 2030 after we hit, a lot of folks will ask, “Hey, does NGPF go away at that point after you succeed?” And absolutely not. We want this to continue to succeed. But there is another interest I have that I’m going to spend some time, a very little amount of time before 2030, but it’s the issue of the reduction in… Young people are not participating in sports to the extent they once did, and it’s, I think there’s fewer opportunities for them. I think the recreational leagues that we may have played in have been subsumed by club sports. There’s a lot of talent out there, I think that never gets the opportunity.

In my mind, that’s one of the next big problems, because I think you were an athlete also. I played up through college. There were just so many life lessons that I learned. It really pains me to know that a much smaller percentage, particularly, in lower income communities, they just don’t have those opportunities. So, if you have any ideas around that, or if any of your listeners do, I’m all ears, because there’s so much hidden talent that I think never gets that opportunity because I had so many great coaches as a young kid who really believed in me more than I believed in myself. And I think just thinking about the impact it has on young people when they have an adult, and in many cases it’s a teacher, but it can be a coach, too, who gives them confidence in a way that they wouldn’t experience otherwise.

Meb:

Awesome. Tim, you’re doing God’s work. This is exciting to watch. Where do people go if they want more information, they want to get involved in their local community, preach the good message, what’s the best place?

Tim:

Sure. So, if you are in California, and you’re interested, and you go to a grocery store, or a department store, or a discount store, sometime soon you may see somebody with a table set up outside to collect signatures, so please sign that petition. We also have a website if you want to learn more about the California campaign, and that’s financial ed, the number four ca.com, and that will have all the details. In terms of folks who want to advocate at the local level, or folks who want to find lessons that they can use in classrooms. Our website for the nonprofit is ngpf.org. And so you can find information there both about all the activities that are available. And again, you don’t need to sign up for an account. It’s all freely available for you. And then we also have some advocacy tools, presentations you can give to the board, how to overcome common objections.

I’d close with, for those of you who have children at any age, just encourage you to find ways to engage with them to talk about money. If you’ve got a middle schooler, or maybe a little bit younger, there’s a podcast that we helped get off the ground called Million Bazillion, and I was hooked on this when they sent me the first episode, and I played it in the car, and suddenly my 11-year-old is perking up asking me questions. And I thought, “Okay, this is exactly what’s needed.” Or if you’ve got a high school student, I mentioned Yanely Espinal earlier, the author of Mind Your Money. Well, she partnered with Marketplace, and so she’s the host of a podcast called Financially Inclined. So, you can either talk to your young people directly. I’ve also got a blog post, because I think we often forget, there’s different milestones in your children’s life that are just natural on-ramps to have conversations. Before you give the keys to the car for them to drive the family car, let’s talk about an auto insurance policy.

Or before they start to put a college list together, let’s talk about the difference between sticker, and net price. Before you open a savings account with them, let them do the talking at the bank. Let them understand what overdraft fees are. Let’s let them put them in a position to make decisions while they’re still under your roof. And I think about allowance, and I know there’s a lot of controversy. Should it be tied to chores, or should it not? And I’m not going to wade into that because it’s a personal decision, but it’s practice. So, when I give out allowance, I do it on a monthly basis, and there’s no strings attached except if they save, I’ll match whatever they decide to save.

And so I think the less restrictions, the more opportunity children have to make decisions on their own, and just find those touch points. Because whether you know it, or not, you’re modeling behavior every day that your children will remember. So, you have to be really careful about the messages you’re giving to them, and the actions you’re taking, because whether they say it, or not, they are hyper attuned to your behavior.

Meb:

Love it. Tim, thanks so much for joining us today.

Tim:

Meb, thanks for the opportunity.

 

 

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