Hi, I’m Rick and I’m on a mission to teach personal finance and how to invest. There are some simple, but essential, concepts about money that I think everyone should learn. Ideally, we should teach these in schools and around kitchen tables, but this doesn’t happen.
I consider this common sense investing, but it is not common knowledge.
I took on this mission about ten years ago. I have enough money to meet my goals, so I volunteer my time to this project as a public service. Everyone knows that some of our dreams need a little money, but it is not obvious that there is a smart way to go about this. Smart investing is different than speculation; it is not gambling; and it certainly is not expensive. I’ll teach you how to do this. I find joy helping you to finance your dreams.
I’ve always felt confident about financing my future. An early influence was author Andrew Tobias who has a book chapter titled A Penny Saved is Two Pennies Earned. Seeing this as a choice, being frugal has always appealed to me more than working harder. I have always saved money towards my own goals.
But now, with a lot of years behind me, I see that most people don’t talk about money in a healthy way. There is too much unsaid, both within families and between friends—perhaps not to expose naivete? I’ve come to see that few do any planning about the future and too few have good answers to questions like:
- Am I saving enough to fulfill my goals?
- How would I handle various emergencies?
- Will I eventually be able to retire comfortably?
- What changes would I need to make to finance my dreams?
It pains me to see that people could achieve better lives—achieve their bigger dreams—by simply understanding some basics about financing life. And so I choose to contribute in this way, as a public service.
I’ll help you get organized and achieve your bigger goals. I like to know how things work, and I like to explain complicated things in plain English, and these are some of the reasons that pulled me to this FinancingLife.org educational project. With just a little help from me, almost everybody can also understand and then make good choices.
I’m qualified to teach you how to take control of your finances, but I won’t give you specific advice or manage your money. Instead, I’ll help you become comfortable and learn how to do this yourself. It’s not complicated to understand—but not always easy to do.
My job is to “teach you to fish”. I won’t sell you anything other than education. I’ll teach that you need to look at the whole of your situation to make your best decisions, and nobody knows that as well as you.
You can do this!
You’re in the right place to learn how to become a smart investor. You are the best person to be the guide because you know what is most important for you. I’ll teach you how.
I’m a good instructor for you because:
- I’m analytical (with a BS in electrical engineering from Cornell University)
- I have finance expertise (with an MBA in Finance from New York University)
- I explain things in plain English.
- I’m not biased and will not sell you any financial products or services.
I also have first-hand experience in some common ways people fail.
Learn from my Dad’s mistakes
He didn’t make any serious financial mistakes—but he’d want you to learn from them.
I had a very smart Dad, so I assumed his finances were ship-shape. As he got older I lent him a hand—only then to discover he had missed a required IRA distribution one year—which resulted in a big tax penalty—which then caused him to sell most of his 401k (because he didn’t understand why it was beneficial)—which created a spike in his taxes. He was no longer the organized Dad that had raised me. I found dozens of accounts at an ever-growing collection of companies—with no plan behind the investment funds he owned. “Choose a little of each” seemed like a good strategy to him.
What I could see, that he couldn’t, was that his investments hadn’t earned a return commensurate with his investment risk. His investments could have been less risky. He would have been tens of thousands of dollars richer. And his life would have been simpler.
Take Control of Your Finances
It’s never too early to take control of your finances and reap the benefits:
- Less stress (by choosing the appropriate investment risk)
- Greater return for your chosen level of risk (by driving out costs)
- Simpler life, giving you more time for things you value most.
If you are not organized with a simple plan that your spouse or other family members can understand, then you’ll need to hire help (and that’s usually expensive) or just miss out, often blissfully ignorant of what could have been.
As I reflect back now, my Dad had a two sayings that he would repeat that reflect his approach to financial planning, or lack of it.
- “How can I plan when I don’t know how long I am going to live?
- “I want my last check to be the one to cover my funeral expenses.
Sigh. These are not good excuses not to create a personal financial plan that will help you reach your goals and not create headaches for the ones you love.
Realistic Plans Are Easy
True, you cannot predict your future! But, relax. You can make some assumptions and be prepared for common scenarios. Use helpful rules-of-thumb, make a plan, put it in writing, update it annually, and you’ll have an incredible force of nature working on your behalf.
The recession of 2001 came at the height of my 26 year career at Hewlett-Packard Company. I got “downsized” out of my job. I hadn’t planned this, but it was the end of my income producing years at the ripe old age of 47.
That scared the hell out of me! Neither of my kids were in college yet–and I had planned to pay for their college like my father had paid for mine.
Does that mean I retired at age 47?
Yes and no.
No, because my wife worked–and it is misleading to consider one spouse retired while the other is working hard and creating income! To me, retiring is when your household income moves from the accumulation phase to that next phase of living off your investments, social security, and pensions.
But yes, because I never found another job that I wanted to take. [Caveat: I actually did accept a Vice President of Marketing job for two years. It was interesting, but the commute was horrible!]
My good fortune is that I had saved and invested enough during my career—and avoided costly changes like moving and divorces—that I actually could spend my days as I pleased plus fully pay for my children’s college educations.
I was fortunate, and I like to remind people that you may not control when you retire. I didn’t. People get downsized, have accidents and misfortunes. Just recognizing that there are multiple plausible scenarios for your future is valuable! And the clearer you can be about a future you’d prefer, the greater motivation you’ll have about making wise decisions.
A clear vision for your future is often a catalyst for making wise decisions. Because here’s what wise people do. Wise people understand that life is connected, that all dots are connected, and that decisions you make now will impact the likeliness of your hopes and dreams for tomorrow. (ref: Andy Stanley)
How FinancingLife.org came about
It was always my dreams to wake up every day and spend my time as I pleased. Vicki Robin showed me how this is possible. It was life-changing for me.
One day my daughter was home from college and she told me about how much she enjoyed and appreciated a brown-bag lunch series by Professor Randall Bartlett, Smith College in Northhampton, MA.
I was surprised and interested that the Financing Life lunch series resonated with my daughter, Rowan. I was retired and was looking for a way to contribute, so I initiated my own version of such a program as brown-bag lunch seminars at both Seattle University and the University of Washington. I adopted a not-for-profit educational mission believing that there are essential concepts about financing life that everyone should be taught in high school, college, or around kitchen tables, but aren’t. A compelling post by Mahnaz Mahdavi showed me that this is especially important for women!
After a year of those Powerpoint seminars, I decided that I could have a much bigger impact by making online videos. The initial focus of FinancingLife.org was common sense investing, which is grounded in the philosophy of diversifying broadly and at the lowest possible cost (i.e. index funds). Today, I’ve had over a million views of these video tutorials.
It is with great pleasure that I can announce that Professor Randy Bartlett has made videos of his Financing Life series about personal finance and they are now available free at our Financing Life Academy.
I regularly turn-down sponsors, advertisers and guest bloggers on this website so that I can remain unbiased and control the messaging. With pride, I don’t sell anything other than education – which is mostly free, but includes some optional fee courses just so that I can break even—which is important to make this financial literacy project sustainable.
I volunteer my time but there are still direct costs. I also cover these costs with royalties from books I’ve published. I wrote Why Bother With Bonds to address the common confusion about investing in bonds and bond funds. I also get some coins from Amazon.com for readers that use my links to purchase books—at zero extra cost to them.
Finally I emphasize: I am not a financial adviser, planner or consultant. I provide financial education, not personal financial advice. Let me know if you don’t find the topics you are interested in. Helping you will probably help many others as well.
Share what you learn with friends and family!