Part 1 of 3: A Fool And His Money Are Soon Parted*
Financial ignorance makes no distinctions. Perhaps you were raised by doting, professional parents in a luxury home with a generous parental allowance that shielded you from ever having to think about money. Or conversely, like Jeremy at Go Curry Cracker, your single parent household was in sink or swim mode financially and your community role models ranged from spendthrifts to subsistence earners living on minimum wage. Either upbringing can render you totally unprepared to manage your finances on reaching adulthood.
Consequently, the moment you begin to earn money, an invisible bull’s eye appears on your forehead identifying you as a mark for the financial service industry, which depends on your insecurity for their livelihood. I have worn this bull's eye for most of my adult life.
My parents, who emigrated to the U.S. as teens from Cuba and Mexico, were cultural shielders - they felt it their parental duty to protect their kids from life’s unpleasantries, financial or otherwise. They were also savers - where my friends blew their birthday money on video games for their Commodore 64s, my parents invested mine in a college fund and matched every deposit. Consequently, I graduated from college without debt and grew up to be a saver. What follows is my financial origin story.
The Financial Newbie
At age 18, I am living away from home for the first time, have never made a budget or used a bank account, and have no clue how to manage money. Like many self-motivated nerds who are readers, I turn to books to find my answers. I read Beth Kobliner’s Get a Financial Life: Personal Finance in Your Twenties and Thirties. It turns out I am habitually following many of her recommendations by virtue of having grown up a saver. I learn to use an ATM card, pay bills by check, make a financial file system and go to H&R Block once a year to file taxes on my earnings as a Sunday School teacher. Minimal complexity. I have nothing to invest (all earnings go to offset college expenses), so investment never appears on my radar. The faint outlines of a bull's eye appear on my forehead.
Too Busy To Learn About Finance
In medical school, I have less time and no income. During internship, I ask my dad what to do with my retirement account contributions, and he advises me to invest in an S&P 500 index fund. I do, the year is 1999, and I proceed to watch my retirement account tank during the dot com bust. Trusting dad, I ignore the sinking feeling in my gut and keep contributing maximally anyway. In residency and then fellowship, I contribute to comparable funds despite my continuing negative return rate. Professional commitment becomes my excuse for ignorance: If I have to choose between learning to save lives or save money, I’ll choose the former at the expense of the latter.
Too Happy To Learn About Finance
During fellowship, I fall goofy in love, flee academia, move into an apartment with my then girlfriend (now wife) and take a great community job. For the first time, life is too good for either of us to waste on pondering financial matters. In 2005, a physician in my group recommends her financial advisor, so I set up a meeting. He seems affable, ethical, appropriately “businessy” with a fancy suit (in contrast, I continue to dress like an adolescent). I like his candor and hire him on the spot.
The bull's eye is now drawn over my forehead in thick marker, visible for all to see, with an option for permanent tattoo ink like the eyebrow lines of Eastern European women. Ironically, I derive comfort from seeing that I share this bull's eye with most of my affluent adult friends. I mistake my bull's eye for a mark of success rather than a shared pathology.
In November of 2010, an article in the New York Times profiles Gordon Murray, who has been diagnosed with terminal brain cancer and given a predicted six months to live. After a quarter century selling bonds for Goldman Sachs, Lehman Brothers, and similar institutions, he’d had an end-of-life epiphany that he’d been serving his employers at the expense of his investors, and decided to author a book to empower investors to break free from their dependence on the financial services industry. On reading his obituary in the Times in January 2011, I purchase his book, The Investment Answer. It’s thin, conceptually easy to grasp, and sets some wheels in motion that I relegate to the mental back-burner while my kids are still both in diapers.
*English proverb dating to the 1500s.