The Agenda with Steve Paikin (Audio) - On A Mission to Teach Financial Literacy

Episode Date: September 27, 2024

Author Karen Cumming was poised to be an astronaut. Turns out, she didn't go to Mars, but the potential of leaving Earth forced her to take a better look at her personal finances. She shares those learnings with The Agenda.See omnystudio.com/listener for privacy information.

Karen Cumming was poised to become an astronaut. And while the teacher, writer, and journalist hasn't been to Mars, she does have some financial advice for any Martians she might encounter and a few Earthlings as well. It's all told in her new book, The Wealthy Martian, An Out-of-This-World Guide to Financial Literacy for Parents, Teens, and Other Earthlings. Hi, Karen. It's nice to meet you. Hi, Nam. It's great to be here. I said before we started that

I am a parent, an adult, but this book was very very helpful to me. You wrote that this book, because you wanted young people to understand the power of money, what would you say is the most important thing that you've learned about money while you've been writing this book? Well, I mean that's a great question because I wrote this book for other people, but I found that in the process of doing so, I was teaching myself things that I needed to learn, too. I came up with something called the Wealthy Martian Seven. Seven basics that I think we all need to learn, we all need to master in our own lives, no matter how old we are.

One, live beneath your means. Two, pay yourself first. Three, write down your goals, so important. Four, build your budget. Five, get off the debt go round. Six, buy insurance when you're young. And seven, write a will. So easy, so simple, but do we do it?

No, because school doesn't teach us to do it. What would you say is the most important of those seven? Honestly, I think in the world we live in today, living beneath our means is the most important thing. Because if we live beneath our means, we're ensuring that there will always be enough money left at the end of the month to pay ourselves and the bills and to feed ourselves.

We live in a society that encourages us to overspend. Credit cards, debit cards, we've lost our connection with our money. And I truly believe that this is something that we need to teach young people. I think that's really important for people to live beneath their means, but we live at a time when a lot of people are struggling

where every dollar that comes in goes out because everything is so expensive. You write that, quote, it's not about how much money you make, it's about how much money you keep. How does that work when people are struggling to make ends meet or if you're a student with limited means? Well, my mother and father grew up during the Great Depression and they lived part of their lives during World War II. These were times of great economic scarcity. And my mom in particular ingrained in me the idea

that we needed to waste not, want not. And I believe so strongly that this is a concept that we need to introduce to not only young people in school, but remind all of us the importance of making use of absolutely everything, whether it's in the kitchen, whether it's not buying new clothes but mending the ones you have, not buying new shoes but repairing the ones you have, not buying new appliances but taking them to a repair cafe where someone can help you fix them instead of buying new.

It's one of the greatest battles I think we all face is this world that tries to convince us that we must be a consumer, we must buy things, and it's just not true. There are things that we can do to help ourselves during these hard times, because these tough times are very similar to the times of the Great Depression and World War II. Simple things that we can all do to help stretch our dollars, and that really is something that we need to drive home to young people. There's a way to stretch your dollar. You don't have to go into debt. You don't have to struggle. What it all comes down to is creating new habits and making those new habits solid so that they you don't even have to think twice you just this is the life this is what you do you waste not want not you know that i could talk forever about how

important this is well you also say that money can make money how's that i've spent a lot of time in schools talking to students and asking them a simple question. What has school taught you about money? And the answer that I have regularly gotten is nothing. School in my view has always been designed to train good employees. It has taught us how to work for our money instead of how we can make our money, make money. I have never been taught in any of the classes I ever had in elementary school or in secondary school or even

university, how to invest my money, how to make that money, make money. I think people who are fortunate to grow up in wealthy households, just grow up knowing this because they're taught by their parents or their families, what you do in order to make your money make money. If that's something you've never been taught, you have no clue. How could you know? Of course you think the best thing to do

is to get a job and to work hard. But the trouble is that getting a job and working hard doesn't always create enough money for us to be able to live the kinds of lives that we dream of for ourselves. I'm glad you brought up that point, because there are people who are working multiple jobs just trying to meet their basic needs.

And when you think about investing, that's something that maybe is not something that's a priority for them. Is that fair to say? It breaks my heart when I look around me and I see the people, especially today in today's economy, single mothers who are working two and three minimum wage jobs just to support their families.

It makes me angry. As a journalist, it makes me angry to see that. And I think the anger stems from the fact that I know that there's a better way. And if only all of those people had learned in school that there are very simple things that you can do with your money, chief among them being pay yourself first and pay yourself regularly. So many people are in the habit of paying the bills first and paying themselves last. And guess what?

Sometimes there's nothing left if you do it that way. But if you live beneath your means, you make yourself the priority to pay yourself first. Living beneath your means means there's always going to be enough money at the end of the month to go around But you've made you the priority you've ensured that you are investing the money you've earned into your future So that someday when you retire There you have a prayer of there being enough. I think a lot of people who haven't retired yet When you're not on the other side of it, you don't have a concept of exactly how much you're going to need.

And sometimes you don't have it. And you know why? On the point too of students are not being taught about money in school, I just wanted to put it on the record that the Ontario government introduced financial literacy in elementary schools this school year, and it's expected in high schools in 2025.

When we talk about having this lack of knowledge around how to manage money, how does that make you vulnerable? Well, if you don't understand money and how money can multiply, you're setting yourself up for a life that you may not be able to sustain yourself and your family financially I mean nobody wants that everybody dreams of the best possible life for themselves But the thing is that money money isn't the be-all and end-all I think we all understand that but money is a tool and it's a tool that can buy you freedom You know being rich means having money, but being truly wealthy means having time.

If you've learned how to invest your money successfully at a young age, and that's so key, is starting young, because time is on your side if you start young. If you learn how to do that, you're setting yourself up for success. And I look around me and I see a world where society seems to want to set us up for failure. Why?

Because when we fail, in other words, when we go into debt, we owe credit card companies, we owe on loans, we owe on lines of credit. Other institutions stand to make billions of dollars in profits. The banks every quarter issue their earnings statements and they declare their profits. And every quarter, the big five banks declare billions of dollars in profits. Where does that money come from? It comes from the interest that we pay on the debts that we owe to them. I think if people could only open their eyes and see how they're being used inside this system, it might motivate them to want to take control

of their financial future and to truly become financially literate in advance of the government, instituting financial literacy education in the secondary schools, for example, in the fall of next year. That's next year. That's a year that people are losing, that they could be learning and becoming more financially literate and putting their money to work for them. You said that money is not everything, but I think in this society, it's everything, right? You see posters everywhere for people who are in debt,

different ways for you to manage debt, being advertised for debt relief on the subway. What approach to debt are you teaching in your book? Well, I mean, as far as I'm concerned, debt is like a sumo wrestler that pins you to the mat. And our job in life is to get out of its grip and to never allow ourselves to become in its grip again. Debt is the enemy.

Debt is evil. Debt is the worst. Debt leaves us beholding to somebody else. We're prisoner to somebody else until we can dig ourselves out. And we live in a world that seems to reinforce this idea of being in debt as normal. You know, look at how they market credit cards to people in university.

And yes, I'll give you this. Having a credit card and establishing that you are able to pay it back responsibly, that's good for your credit rating. But we both know that a lot of young people, if they sign up for a credit card, they don't read the fine print at the bottom of the documents that they sign. They don't understand that if they don't pay their debt back within that grace period, which is usually three to four weeks, guess what? That credit card starts charging them 20, 20, 21, 22 percent daily on their debt.

True story. I am. I am. When I was in university, I went in, my credit was ruined over $500 because I did get a credit card and I didn't understand it. I will say this. When I talk about money with my husband, I apologize to my husband for saying this publicly, but it's one of those things that we end up having an argument because money, it sometimes feels like a trigger. How do we work around that in order for us to actually talk about money, talk about the future,

and talk about how, and have that connection you're talking about with money. I understand why you might say that having discussions with your spouse or with a loved one about money can be a trigger because money is a very personal thing that we all grow up with or discussions around money in households. Either you live in a household where money was a very open discussion and your parents tried to educate you about money and there was no shame around perhaps getting yourself into trouble being in debt. There was just a conversation

about how we're gonna get ourselves out of this and how we're gonna make sure it never happens again. But some people were not lucky to live and fortunate enough to live in a household where money was an open discussion and that there was no shame around it. I think my generation, I'm a baby boomer, I think that is very true for that generation. People didn't talk about money, they were embarrassed if they had lost money, they didn't want to admit it to their friends or their

family that something had happened and that, you know, they had messed up. I'm of the opinion that, I mean, first of all, I've made as many mistakes as anybody else. I just don't mind talking about them because I know that if I talk about them, people will feel that they're not alone and that we can learn from each other's mistakes and we can ensure that ourselves and our children don't make those mistakes again. So, you know, I answered your question, how do we work around that? I think we just have to understand that money is no different from any other aspect of life. The more we learn about it, the better we get at it, the better we can teach our children and make sure that they do an even

better job than we did. We just have to become more open in our discussions about it. We have one minute. Sorry, we only have one minute. We only have one more minute left. And one of the ways that you say you connect to your money is you get the money, put it in an envelope, cash stuffing, so you know exactly. There we go. You have that. And it helps us to budget. What are the most important things to consider when planning your first budget? And we have one minute left. If I could say the most important thing when planning your first budget? And we have one minute left. If I could say the most important thing when planning your budget or writing it down, first of all, write it down.

Second of all, put it on a giant piece of paper and post it on a wall so that it's in your face. Whenever you want to look, the numbers are right there. You can't hide from them. They're not in a file folder tucked away in a filing cabinet somewhere or in an app that maybe you don't open when you should. It's right there.

Those are two of the most important things that I can suggest when it comes to a budget. Also, incorporate everything. It's so easy to leave out $15 here or $20 that you owe Apple there. If you leave that stuff out, it's gonna catch up with you. You need to be honest and write everything down and hold yourself accountable

for not only paying yourself first but paying every single bill on time. And you're like you said when you think about trees the best time to plant a tree was yesterday, the best time to do it is now and that's the same thing with money, correct? Right now. I love that you brought that up. Today is the second best time to do it now. Thank you so much, Karen. We appreciate your time and thank you so much for writing this book. I know it's meant for students, but parents do benefit from it as well. Thank you.

It's my pleasure. Thank you.