I’m on a rampage!!! I’ve been on vacation for a week and I think that sleeping 16 hours a day really sharpens the mind. If you have questions about personal-finance, this is a really good time to ask. Email me or just add a comment to any post on this site, and I’ll try to help out.
MP Dunleavey wrote a nice column about the money myths we inherit from mom.
I’m going to suggest something unconventional: talking to your parents about money–but this time, you quiz them.
- What’s their investment strategy?
- What’s their asset allocation? When was the last time they rebalanced?
- Why do they own their mutual fund(s)? How much are they paying in fees?
- Are they aware of better investments in terms of cost and risk?
- Are they maximizing investments based on their tax status?
- What % of their salary are they saving?
- What fees do they pay for their bank accounts and credit cards?
- Speaking of credit cards, what’s their average monthly balance? Why isn’t it 0? How could they get it there?
- Are they maximizing their 401(k), at least as much as their company matches?
- What about other retirement vehicles like a Roth IRA? Do they have one?
- Do they read http://www.IWillTeachYouToBeRich.com? NO? WHY NOT, POPS?!?! (Note: highly recommended that you scream this really loudly)
You don’t have to know all the answers to these questions. But if your parents are investing, they should. At the very least, they should know what they don’t know.
I’ve actually had the most fun when people email me to tell me about talking to their parents after they take my 1-hour class. For example, one thing I always tell people to ask their parents is to guess what percentage of mutual funds beat the market. Do you know? (Hint: It’s really low.) When the students tell their parents the answer, the parents’ typical response is either disbelief or anger; something like “You don’t know what you’re talking about!” or “I don’t believe you! How could that be?”
I’ve heard this from a bunch of my students. I love it.
So try asking your parents some questions tomorrow. See what their response is. And please let me know. Money should be talked about more openly in families, and I’d love for it to be educational from both ends–parents and children. Plus you can seem really smart and maybe you can hit them up for some new jeans or something.
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