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Rich by Thirty, a 20-something is already there
Author of book talks to Island youth about financial literacy
At the young age of 24, Leslie Scorgie is financially set. She is a veteran investor with money in stocks and real estate. She owns a three-bedroom townhouse, has been on the Oprah Winfrey Show and Montel Williams for her admirable money skills, and holds a degree in marketing and finance. Yet Scorgie also invests in others.
Over the past seven years, the financial guru has been touring the United States, helping young and old to better understand their money. She speaks to school children with piggy banks, students with college loans and parents saddled with mortgage payments. But mostly she targets youth in their 20s because they are starting to make money and because they have time.
Her recently published book, Rich by Thirty; A Young Adults Guide to Financial Success, was created precisely for this demographic. It was written by a young person, for young people. Its honest, direct and easy to read. Its not meant to scare. Its meant to be fun. A 20-something herself, Scorgie has the finesse and charisma to reach other youth and help them understand the importance of saving early in life.
Last week, during her Seattle book promotion, Scorgie spoke to a group of young students and adults at the Mercer Island Public Library. She also sat down with the Reporter to talk about her aim as a motivational speaker, her new book and why school districts have a duty to include financial planning in their curriculum.
What is the main financial message you want to get across to youth?
My main message for young people is to start saving and start young, because what they have that other people dont have is time. The earlier you start to save and invest your money, the more time you have to grow it through this wonderful thing called compound interest. Its not a secret and its not magic [compound interest] starts to snowball after awhile. The longer you have to take advantage of the impact of that snowballing effect, the more well-off you will be.
Mercer Island is an affluent community. Often, Island youth do not feel the pressing need to save and invest until it is too late. How do you advise young people coming from such a setting?
Im very aware that this is an affluent area, which is wonderful. However, one of the commonalities through different demographics across America is that a lot of times there isnt a financial literacy curriculum built into the school systems. So basically, its left up to the parents and the spheres of influence they bestow upon their children whether its books or knowledge. Its up to parents to show their kids what to do with their money.
I try very hard to encourage parents to talk to their schools because the school system, at this point, does not have [financial education] as a mandatory curriculum. At the end of the day, being financially literate is a must-have. When we are not financially literate, we are not capable of having a healthy relationship with our money. [America] is in some trouble right now, and a lot of it has to do with many people not knowing much about money and making decisions based off the little that they do know, which may or may not be true.
What about the generation gap? Young people today are living in a much different financial setting than our parents.
Is financial literacy a critical success factor for our youth? Absolutely. It used to be, many generations back, that debt was something that you choose to get into. Debt is now a part of life. Its whether or not we choose to navigate it properly. Unfortunately, the under-30s, were the generation that have to have. Were not necessarily willing to wait and save for the things we want, and this is different from previous generations. There are some pretty powerful marketing and media sources out there are all saying one thing: You need to have this product or service and you need to have it now. I read recently that we are bombarded in the course of a year with over 30,000 messages saying that.
When choosing to invest your money, the more risky investments - such as stocks - can be quite daunting for young professionals. How do you know where to begin?
There is a difference between our savings and our investments. Savings is for shorter-term things such as laptops, vacations and down payments. Investments are for longer-term things but typically cost more and therefore require that we invest more time, energy and dollars into them. The average 20-something and 30-something today is carrying about $8,000 worth of credit card debt -- this is per household -- and approximately $40,000 in student loans. The average household income is $59,000 and the average savings of this couple is $2,500. Theyre going to need about $2 million to retire based on this income.
Now what if you threw a child in there, or 2.4 children, which is the average? Its not a good scene because if one party lost their job or something went wrong they wouldnt last for much more than a month. Some of the big questions I get asked are Here I am, part of the average, what do I do first? Do I take care of my debt or do I start saving? My answer to that is absolutely, without fail, start saving as youre tending to your debt, even if its $25 per month. The reason I say this is that after the student loans are taken care of, a car comes along and student loans turn into car loans. And because weve been trained to continue to spend and take on credit, we will. In essence, well never start saving if all were doing is focusing on our debt. Its futile.
Where did this financial motivation come from?
Growing up [in Calgary, Canada] my family of five lived off $24,000 a year. The poverty line isnt much more over $19,000 for a single person. We were straddling that line for almost a decade. So if you wanted something you had to go out and get it - without stealing of course. So we had lemonade stands, cutting grass and babysitting to make the money wed need to buy a bicycle. But this encouraged us to be more frugal. We learned first hand, because we had to, how to stretch every dollar that we had. As a 10-year-old, I made the decision that I wanted more than this. I bought my first savings bond at age 10 and it made sense to me: invest $100 now and years later it will be worth $135. What really resonated with me is that I didnt have to do anything to get that extra money. And it kind of spiraled from there... into mutual funds and stocks. And here I am, 24-years-old, and by the time Im 30 Ill be in a position to be totally financially flexible. Thats cool and it all happened because I was young.
Tell me a little about your book, Rich by Thirty.
Everything in Rich by Thirty is my own experience. Ive tested it, Ive tried it and I wouldnt have put it in there unless I knew everything about it. When I was a student, there werent a lot of financial resources out there and the books that were available were super boring. Thats why I wanted to write one. What will make this book continue to be a unique product going forward is that its fun. Its finally turning the most boring subject in the world into something thats fun and easy to read.
I think whats different about Rich by Thirty is that its coming from a young person to young people. Its written in an accessible voice and tone and its written by somebody who actually cares. I really, honestly do care that we smarten up and become better savers and investors, because on the path that were going down right now -- with negative savings rates, saddled with debt and buying, buying, buying -- we arent in a good position. Nor is our economy in a good position. We are only starting to see the by-product of some bad financial decisions this year that have been taking place for over a decade now.
What efforts have been made -- if any -- to get personal finance into Americas school curriculum?
Ive been writing and speaking about this since 2001. I go to schools, the community and I also go to parents because I think parents have a lot of pull. There are three demographics that I deal with: parents, young workers and school-age children. Each one has a different message. The kids that I talk to in elementary school - the message is very simple. Whats saving, whats investing? And they get excited about that. The message to my 20-year-olds is to get out of debt, get started, buy your home and spread the word. The message to parents and those that are more developed in their career is that, to set a good example in your home, you have to be financially literate yourself. We go through far more sophisticated strategies to get these older groups financially literate. I also light a bit of a fire with them and say, It is up to you to start talking with your school board. Thats my expectation. I can only talk to so many school boards and meet with so many principals and different levels of government before the parents have to come into play.
But to answer your question, Ive caught wind of a few schools that have adopted a personal finance curriculum. Some of the Montessori schools have developed basic money 101 with their kids. But its very sporadic. Oftentimes, its a number of teachers who have taken it on, on top of the curriculum that they already have to teach.
At the end of the day, what Im here to do is promote financially literacy in our youth so that they, no matter where they are, can make healthy and better choices with their money. That, in turn, has a ripple effect on their ability to build better communities and businesses and governments. In the long-term, it doesnt matter where they are, where they go or how much money they make. Its going to be up to them and their ability to manage their money and their dreams. And their dreams are going to be what fuels the economy -- thats the link.