College can be in interesting time in someone’s life for many reasons even when it comes to your money. Robert Brown is on the show today to discuss the unique challenges young people face from debt to savings to keeping their spending under control and how all of this helps young adults get through school on the right track with their finances.

Welcome to The Maple Money Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. Smart Savings by our sponsor, Wealthsimple, is a better way to save. There are no fees on deposits or withdrawals and they offer higher interest rates than the big banks. You can find out more about Smart Savings at maplemoney.com/wealthsimple. Now, let’s chat with Robert…

Tom: Hi Rob, welcome to The Maple Money show.

Rob: Hey Tom, thanks for having me on.

Tom: I’m glad to have you on. I loved your book, Wealthing Like Rabbits. I know you’ve taken that and kind of turned that into going out speaking at a lot of colleges and universities. I wanted to run through some of the things you would tell the young people at these colleges and universities. First off, can you tell us a little bit about these talks you’ve been doing?

Rob: When I released, Wealthing Like Rabbits, way back in 2014, I didn’t do any speaking on the messages from the book for about a year and a half because I was just focused on getting it out there and promoting the book. Then I started to get inquiries from a couple of colleges and universities to come out and speak on the subject of financial literacy—not that that’s great…But what a great way to spread the message and get out and see the rest of the country. When I started to do them I really worked hard on developing a presentation that would speak to almost everyone. One of the things I talk about first in the presentation is how, when we hear the words personal finance, everybody gets hung up on the word finance. Then they start thinking about investing and real estate and crypto currency and rates of return and all the different acronyms. It’s a pretty dry and boring subject where I argue the most important part of personal finance is the personal part; making decisions that are right for you. And that can vary, very differently from person to person and from situation to situation. Then I go on to contradict myself by saying that even though that’s true, there really are some fundamental rules. God knows I hate that word, but foundations or principles of personal finance really do apply to almost everyone. Now, how we apply them—how we integrate them in each of our lives could be really different from person to person and from situation to situation. But at the end of the day those underlying principles usually apply. So that’s kind of where I started.

Tom: I find that too, that personal finance has become—or maybe it always has been and I just haven’t noticed it, but it’s been a tough word. I tend to just use the word money a lot more. People are interested in how to make more money, how to save money but they don’t want to get into finance. So yeah, you’re right that sounds like you need a degree.

Rob: It’s funny, when you talk about money or finance you’re almost looking for new words to describe it because you’re saying the same things over and over again either in writing or in speaking.

Tom: Yeah. For someone who is in college or university, what’s the most important thing they need to know about their money?

Rob: I start by talking about three points and I kind of touch on each one. The first one I talk about is the need to stay out of what I call, “dumb, excessive, debt.” Now, I hope you notice I didn’t say to stay out of all debt because I understand a lot of students can’t complete a post-secondary education in any career or occupation without taking on what I hope is some well-considered student debt. But that doesn’t mean they need to be racking up excessive credit card debt while they’re going to school or drive a new car while they’re going to school—that sort of thing. Anything they can do to minimize that debt load while they’re going to school is going to decrease the amount of money they owe upon graduation will allow them to get off on a quicker start as they start to build their finances.

Tom: Okay, and what’s the next one?

Rob: The second thing I talk about is the Jones’. That section is actually called, Screw the Jones’. I talk a little bit about how important it is for young people to make decisions that are right for them and their financial future without worrying about what anybody else thinks. I think that’s hard today. I think they’re lying if anyone says they’re completely blind to keeping up with the Jones’ syndrome. Sometimes it’s out of control. And in the era of social media when everybody is posting pictures of the great dinner they went out for last night or the great car deal or vacation they went on, it becomes a lot harder. You feel a little bit of pressure to keep up. I talk about this at the speeches; nobody ever posts their credit card bill on their Facebook page.

Tom: (Laughs). And what’s the third one? Then we’ll run back through all of them.

Rob: The third one is that they need to be committed to starting a long-term savings plan as soon as reasonable possible. Of course, I understand it’s hard for most students to start saving for their future, their retirement, for their house or whatever while they’re still going to school. But I wanted to get that message in their heads so that when they graduate and hopefully start earning an income that they won’t delay that savings plan by five, 10 or 15 years once they’re out in the workforce. I want to kind of set that seed so they’ll start to think about that early. Those are the three things I talk about.

Tom: I’ve touched on this in past episodes. In college is when I was worst at my money. I failed at all of those three things. I had student loan debt. Not only did I have the debt, I did such bright things with it like getting a new car stereo and spending a lot of it in the first week. I just wasn’t used to having money. I didn’t really have a job until a year before college. During high school I didn’t have a job so I wasn’t used to having to earn money and keep money. Then all of a sudden I had that student loan and not long after that I had a college credit card. So, between these two things, I had a big problem with debt.

Rob: That’s a really great point. One of the things that drives me crazy is when you read or hear that Millennials— To be honest, I hate that phrase but it is that bucket-list term to describe everybody between the ages of 30 and 40 now because they’re all getting older. But anybody who describes young people today as being disengaged, irresponsible or entitled, I always think back… Even when you mentioned the car stereo it made me smile because the first thing I did when I got a credit card was buy this monster Pioneer stereo.

Tom: I think mine was Pioneer as well.

Rob: All generations have their thing. I honestly don’t believe young people today are any less responsible than generations before them. We all made mistakes. And hopefully we learned from them. And hopefully we can give people that are younger today a little bit of advice so they can at least avoid or reduce the mistakes they’ll make.

Tom: Yeah, going back to then, I wish I had someone like you talking to me then if I was actually looking to listen. I don’t know though. It’s hard to think back to then but I wish there was a personal finance class in high school even. But you still have to be willing to take it, assuming it’s not mandatory, and actually care about taking it. Maybe you’ve got some ideas on how to reach out to these younger people to help them notice that?

Rob: Well, the part on ‘staying out of debt’ I talk about credit cards and student credit cards a lot. This is a true story; one of the reasons I decided to write, Wealthing Like Rabbits, is the day I  drove my daughter, Jennifer, to school on her first day of university. She went to York which is not far from where we are. The day we got there we headed over to their student center to grab some lunch and there were four separate banks set up in the lobby of the student center handing out student credit card applications. When I say handing them out, Tom, they were actually going out into the crowd, bringing the students back to the table and urging them to sit down and fill out an application for a student credit card. And if they did, they got a T-shirt. Another one was handing out Frisbees. And that’s just wrong. That’s not the way to go about it. It’s not that I’m anti-student credit card. I’m really not. I just think students have the right to be better informed about how they actually work so they can make better decisions about choosing to use them. I promise you, that education piece is not happening at orientation week when they’re getting their Frisbees in the school lobby. So a large part of my presentation is a little bit of ‘scared straight’. I walk them through how a credit card calculates interest. I walk them through minimum payments and just how much interest you would pay. I walk them through cash advances and the fact they start paying higher interest plus the fees on the interest as soon as the money comes out of the machine. I go through about five or six different things that’s right in your credit card agreement (which no one on earth has ever read) to let them know just how much money they’re subjecting themselves to. I talk about how we talk about our credit cards. When we go out for dinner or put gas in our truck we pay with our credit card. But when you use your credit card, you’re not paying for anything. The credit card provider is paying  for you. What you’re doing is actually called, borrowing. And now you’re in debt. I crack a joke about someone going to a Best Buy to buy a new big screen TV. I run through a little  mock where they would go through the cashier and the cashier says, “Hey, will you be paying for your big screen TV with cash or debit? Or will you be taking out a crippling high interest loan with credit card?” Because deep down in, you can’t afford the TV. It’s kind of funny and gets some people laughing but they start thinking because half the time, that’s exactly what’s happening.

Tom: With my credit cards, specifically in college, if it had been a larger limit, I would have got myself in a lot of trouble. I think the limit was low, probably under $1,000. I don’t quite remember but it was lower. But I just considered it free money. I’d think, “Oh yeah, I can afford that car stereo because I  have the limit for it.” Unfortunately, that bill does come.

Rob: Yeah. So that whole credit card piece is a little bit of scared straight. I talk a little bit about rewards programs and I caution them not to be buying anything just to get the rewards because chances are it’s not good value. Make your spending decisions based on what you really need and want (and how to budget for it). If you get a couple extra points for it on the side, that’s fine. But if it’s part of the spending decision, I would caution them against that.

Tom: I didn’t even have a rewards card at the time but certainly, I can see that being an additional motivator. Especially if you know you’re going to get one percent back in points—why not spend it?

Rob: It’s interesting. I have been doing the presentation for about 6 months and I was speaking at a school in Bellville, here in Ontario, Loyalist College and I got talking to the organizers afterward and they said, “Rob, why don’t you tell them about pay-day loan places?” I asked them if students used a lot of pay-day loan places and they said students were there all the time. So, this is a learning experience for me as well. I didn’t know that. I got talking to some students about it and now I talk about pay-day loans and just how much they’ll charge you if you’re in a habit of rotating with them. I’m not nice to them at all. I’m pretty general with the credit card theater but I’m not with the pay-day loan places.

Tom: Yeah, I agree. You can use a credit card like a tool but with pay-day loans you just get nailed with so much in fees right off the bat, there’s no upside to that at all.

Rob: I let them know if they use their credit card properly and responsibly which means deciding not to use it at all sometimes, it can be a very valuable tool. It’s hard to buy stuff online without a credit card these days. And it helps them establish a credit rating. Those are all good things used responsibly. You can’t make any of those arguments for pay-day loan places.

Tom: Exactly, I agree completely. Let’s head over to the second thing—keeping up with the Jones’.

Rob: That’s actually the third thing I talk about. I went out of order.

Tom: Oh, okay. So which was the real second one then?

Rob: The real second one is to encourage them to develop a long-term savings plan. I don’t say retirement because it might not be for retirement. When you’re talking to a bunch of 20-year-olds, retirement is ‘forever’ away. I was no different when I was 20 so I understand that. But I do want them to start thinking about long-term. As I said before, I understand it’s nearly impossible for most post-secondary students to save money while they’re going to school. There may be some people out there who are working full-time and can do that, but it’s usually the people who are good with their money that come to the money presentations.

Tom: That’s my concern, yeah. It’s hard to get them to care sometimes. Unfortunately, it seems we all have to make mistakes before we totally catch on to how all this works.

Rob: I do walk them through a little bit about how important it is to start a savings plan as soon as reasonably possible. Then we walk through some real corny and cheesy compound interest examples just to demonstrate how important it is to start saving earlier and how much more money you can generate with an additional five or ten years. I make the point—and it’s a true point because we see this all the time—a lot of Canadian adults today that are 40 and 50 years of age have virtually no savings. It’s not that they’re bad people. It’s just that they’ve always had something else to deal with. They get out of college or university and they’ve got student debt to pay for. I understand that. Then after paying off their student debt they decide they want to have their first real car. It doesn’t even have to be a new car. Maybe it’s a used Honda Civic or something like that but they need to borrow the money to do that. Then a girlfriend or boyfriend comes along and they start talking about a wedding and that costs money too. And once they’re married they’ve got to buy a house and Lord knows that costs a lot of money. Then kids come along and suddenly the Honda Civic is not doing it anymore so they need a new mini-van. Then there’s hockey lessons and ballet lessons and all of a sudden they wake up and they’re 43 years of age and they’ve saved no money. That’s not a criticism. It happens all the time. It’s tough, but the earlier in life you commit to —and I walk them through the whole, “pay-yourself-first” system, a pay-yourself-first type of savings plan. The easier it is to commit to that, the less they’ll miss the money. I give them some examples like, if the price of coffee went up at Tim Horton’s tomorrow the country would collectively scream but I promise you the drive-thru lineups wouldn’t go down because people would adapt to that new reality. I forget who I stole this from but the best example is the federal government when they collect their taxes off your paycheck. They don’t wait until the end of the year to collect their taxes because the country would go broke. They insist on getting their taxes upfront and they’ll settle up with you at the end of the year. That’s the pay-yourself-first system. It should be pay-yourself-second for the rest of us. I give them those types of examples and they say, “Oh, I see what you mean.” I really try to set the message of saving and the power of interest and the power of the longer timeframe in their mind while they’re still in school. And I do give them the gears a little when I say one of the things they can do to start a savings plan as soon as they can is to stay out of what I was just talking about; dumb, stupid, excessive debt. I like to tie those two together.

Tom: Maybe it’s just because I’m a money nerd but it seems like nowadays saving and investing can be a little bit sexier with apps like robo-advisor and peer-to-peer lending and the round up your purchases into savings… there’s just a lot of millennial-friendly ways to put money away now.

Rob: That whole investing nerd thing—I don’t talk to them about investing at all because I really want them to think about those foundational habits that will get them set up so that someday they’ll have the money to invest. Almost every time I finish the speech and ask for questions, within the first two questions someone will ask me what I think about investing? A couple of years ago everybody wanted to invest in Bitcoin. Nobody asks me about Bitcoin anymore.

Tom: It’s all marijuana now.

Rob: I don’t know about getting rich in marijuana. You know what? Use some marijuana for awhile then get rich on it. There are obviously a few students that want to talk about investing outside and I’m okay with that. But the essence of the presentation is to really get some strong foundational, personal finance habits and we’ll talk about investing later. The analogy I use is there’s no use in talking about which piece of cardio equipment you’re going to use when you go to the gym if you’re not going to the gym but you’re going to Kentucky Fried Chicken for dinner three nights a week. Let’s get the foundations in place first.

Tom: Yeah, fair enough. One of the things that probably would have got me interested in saving at a younger age (because I wasn’t saving either) was that I had friends that may have been saving (or maybe they were doing it all in debt) who would go on trips. It’s pretty common in college to go on trips. I did not because at that point I had no money.

Rob: Yeah, I went to Europe for the first time two years ago when I was 53. And people would say, “You’ve never been to Europe?” And I’d say, nope. I had other priorities, other things I wanted to do with my money.

Tom: I’m still looking forward to getting out of North America myself. Maybe it will take me into my 50s as well.

Rob: Fair enough.

Tom: But the idea of something a little more interesting like that. Like you said, people aren’t really looking to invest at that age but the idea of saving up for a car or trip just to get that habit of saving—

Rob: The habit itself, exactly.

Tom: So now we can go to the third one which was keeping up with the Jones’. This is a great one because, just as you mentioned, everyone kind of falls for this to some degree even if it’s not really your neighbor. Maybe it’s just a television ad. Something’s going to make you envious of having something and that leads to spending, right?

Rob: Yeah. I start by actually telling the history of the phrase, keeping up with the Jones’. What a lot of people don’t know is that was actually the name of a comic strip that ran in an American newspaper from 1915 to 1938. The comic strip poked fun at a couple by the name of Mr. and Mrs. McGinis who were always buying things they didn’t need so they could impress their wealthier neighbors, Mr. and Mrs. Jones. The comic strip ended in 1938 but for some strange reason the phrase stuck and has been with us ever since. I actually show an example of one of the comic strips that was from 1917. When I started showing it, it was exactly 100 years old. In it, Mr. and Mrs. McGinis had just bought themselves a brand new phonograph, a record player. Mrs. Jones said, “That’s nice, you own a new phonograph,” and Mr. McGinis says, “No, I don’t own the phonograph. I’ve got 108 more payments to make before I own the phonograph.” And that leads me into talking about how we become so comfortable in making payments for things we want to have as opposed to saving for things we have. Tying it back to the credit cards, it’s become so easy for people to get things they don’t really own because they haven’t paid for them yet. When you see people with newer cars, clothes or whatever it happens to be, don’t assume they’re in better shape than you are financially. Looks and appearances can be incredibly deceiving. I talk a little bit about making decisions that are right for them and not worrying about what anyone else thinks or what their social media feed thinks. That kind of message resonates as well.

Tom: A great book for that (other than yours, of course) is The Millionaire Next Door. Like you said, the person you assume is rich probably isn’t. They’re the ones that have a lot of debt. The person living within their means is probably better off.

Rob: Don’t assume that buying something new and shiny is going to make you happy. That thing that was new and shiny last week won’t be new and shiny six months from now and won’t have anywhere near the value, either real or perceived value, than it did when you bought it. But the debt is still very real and that can make you even more unhappy. So try to keep those things in prospective.

Tom: Yeah, it’s a bad direction to go in where you’re building up your debt while everything you bought is depreciating. The whole Marie Kondo thing is a big thing right now. It doesn’t spark joy. There is all sorts of stuff in my house that I’ve bought in the past that does not spark joy. And you kind of get weighed down by all of that. Not just the debt itself, but all the stuff you bought.

Rob: The other thing I ask them to consider is if you think the debt over the long-term could be a stressful experience for you, consider the happiness of the pride that can be driven when you buy something you really wanted where you’ve done the work and saved for it so you’re not in debt. You’ve worked toward a goal and you’ve accomplished it. That’s a nice feeling. I don’t want them to lose track of that either.

Tom: Just the act of saving means you’re taking that time to find the item you actually want. It’s not an impulse purchase on the credit card. This has been great. Can you let everyone know where they can find you?

Rob: Well, you can always find me on Twitter where I might be saying something person finance related or I might be saying something silly in complete finality too. You can find me on Twitter @wealthingrabbits. If anyone is interested in my book you can find it at Chapters across the country or on Amazon as well.

Tom: And, what’s your website address?

Rob: wealthinglikerabbits.com.

Tom: Great, thanks for being on the show.

Rob: Tom, thanks for having me. It’s been fun.

Thanks to Rob for sharing his insight from talking to young adults at various colleges and universities. And thanks to you for listening. I really appreciate it. You can find show notes for this episode at maplemoney.com/robertbrown. We’re still continuing the Maple Money 10th Anniversary Giveaway throughout February. We’ll be handing out 10 Amazon.ca gift cards worth $100 each. Subscribing to the show is one of the many ways to get additional entries so you already have a head start. You can enter at maplemoney.com/giveaway. Thanks again for listening and we’ll see you here again next week.