So what if we turned, then, to the formal education system? This is where we would think about: “We need to learn to make money.”
So, the latest term that we have here is called financial literacy. This is supposed to help all of our money woes.
But if you look at the narrative about what is still being discussed when it comes to financial literacy, we still are talking about the same old, same old: “save more,” “spend less,” “budget your money.”
And I want you to think about it for a second. If we actually took this idea and started helping people to know how to make money, and then they started spending money based on the profits that they actually made from money they earned, how would that change the conversation about money?
We need to help our students realize that when it comes to the markets or the ability to make more money, this can be actually very achievable for most of us. But we need to stop trying to make millions of dollars and risk it all and start realizing that this is a skill that any of us can do at any point in time.
We need to take some of the skillsets that kids already learn. So think about something like: “compare and contrast” or “sorting” for that matter.
In kindergarten, they’re starting to learn how to sort things and build patterns. Those are skills that actually I use in the market every single day.
And, in fact, when I learned how to trade — and I trade for a living — a lot of the skills that I use aren’t actually financial skills; they’re skills that I actually learned in other areas. So we need to help students bridge the gap between information they’re already learning and tying that to conversations about money.
The other piece that I want to talk to you about is realistic expectations. Again, this is something that can be very appropriate for students when we talk about this with them.
When it comes to the market, it’s not all or nothing. So, just for example here, about a week ago, I got an email from someone. And he had $5,000, and he wanted to know how long I thought it would take to go from $5,000 to $10,000. And that’s the problem.
$5,000 to $10,000, that’s a 100% return; that is doubling your money! Gosh, if everybody could do that, wouldn’t we all? It’s all about our expectations. It would be far more realistic for him to take his $5,000, trade with it, enjoy that, and take his family out for dinner once a month as opposed to trying to double his money.
There is nothing wrong with taking a small amount of money that you have and only just focusing on making some profits, and then spending those profits on all the fun things that you love rather than trying to double your money. It doesn’t have to be all or nothing.
And let me tell you, I am not an ex-institutional trader. And by the way, just because you are an ex-institutional trader doesn’t mean that you actually know how to make money, or that it’s appropriate for us as average people.
I also want you to know that I am not a certified financial planner. I do not have an MBA, nor do I have a business degree. I am an average person.
And when it comes to making money, I am no more capable of this than you are. Home Depot brought “do-it-yourself” construction projects to the masses with the tagline: “We can show you how.”
We need something like this for money-making skills, too, for average people. We need to start seeing depictions in media and entertainment that are actually more realistic and focused on what most of us can do with all of this.
We need to stop idealizing these very fantasized versions of trading in the market and start realizing that this can be appropriate for all of us.
So, there are three things that I really hope you’ll walk away with today. And now that I do know how to make money, this is what I hope you will write down and you will continue to tell other people.
The first thing is that when it comes to making money, there’s this language to it. And there’s lots of complicated terms. And one term is often used to define another term.
So no wonder it’s confusing for all of us because none of us are using plain English when we start talking about making-money skills, but particularly in the market.
So let’s start asking our financial planners, all of the media outlets to start talking about all this in plain language so that we can actually understand. If you want to continue to invest with someone else, that’s fine, but maybe we’ll have better questions to ask about the decisions being made.
And if you want to do that yourself, it’s even better. I also want you to know that the language shouldn’t be the barrier for you to do this; you don’t need to know all of the words to know how to make money. And vice versa: you can make money without knowing all of the words in this industry.
The second piece is that when it comes to investing or trading or making money, it doesn’t have to be a full-time job.
Now, I love this, and I have to say I’ve done this part time, full time, and I started trading four days after my second baby was born. You can do this as a hobby too.
The best part about trading and making money that’s more realistic is when you go to Starbucks and you order a latte and it’s free. And you know why it’s free?
Because I’m spending the profits that I made on a trade in Starbucks, the stock, about a week earlier. That feeling is something everybody can feel.
If you have a little bit of money saved and you focus on spending it on your indulgences, how does that change your perception about money?
The third thing that I want you to know when it comes to making money is that it’s a skill. Unfortunately, there are a lot of people that come to the market and think that they are Olympic mountain bikers before they’re really ready to take the training wheels off.