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Narrator: You're listening to a Towson University podcast.

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Mark Ginsberg: Welcome to On The Mark, where we have candid conversations about meaningful and consequential work happening here at Towson University. I'm Mark Ginsberg, president of TU, located in Towson, Maryland. And on this podcast, we're introducing you to members of our university community who are engaged in high-impact teaching, research, and student success practices.

Today, we're exploring an important topic that affects every household. The topic's financial literacy. I'm joined by Dr. Rachel Gordon, an associate professor in TU's Department of Finance. Dr. Gordon holds a doctoral degree in Finance from Drexel University, and here at Towson, she's created a course called Perspectives on Money, a class that helps students with practical skills in saving, borrowing, investing, and budgeting; and understanding how inequality and access to financial services can widen wealth gaps in our communities is another area of interest and expertise.

Whether it's student loans, credit cards, retirement accounts, investing, or simply making ends meet, financial decisions shape opportunity, stability, and long-term well-being. And yet, research consistently shows that many adults continue to struggle with basic financial concepts like interest, inflation, and risk. So, why does financial literacy matter so much? What happens when we don't have it? And what should schools, university, and policymakers be doing differently? Well, today we'll unpack the evidence, the challenges, and the path forward. And Dr. Gordon, thank you so much for joining with me today on On The Mark.

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Rachel Gordon: Thank you so much for having me.

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Mark Ginsberg: Delighted to have you here. Why don't we start with kind of a basic question to establish the baseline. How do you define financial literacy, particularly in today's world?

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Rachel Gordon: That's a great question because obviously, everybody has a different perspective as to what being financially literate means. I think of it as it's not just the knowledge about things like savings and borrowing and investing or risk management, but it's the capability to actually take that knowledge and put it into practice. And that's where we see a lot of the gap many times, that people might understand conceptually, "Oh, I should save more money," or "This is what a credit card interest rate means."

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Mark Ginsberg: Right. Right.

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Rachel Gordon: But they don't actually know how to put that into practice, and so it's both components, really.

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Mark Ginsberg: So, what does it mean for them essentially?

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Rachel Gordon: Exactly.

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Mark Ginsberg: Yeah.

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Rachel Gordon: That once you have that knowledge of, "Oh, I should have a lower interest rate loan," but then actually being able to put it into practice is, I think, both components of really what financial literacy is about.

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Mark Ginsberg: Sometimes when we think of the concept of literacy, it's being able to speak clearly, to understand fully, and in the financial world, I suspect it's really more the latter, understand what the implications are of some of your financial decisions, as well as the challenges you face.

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Rachel Gordon: Absolutely. And it's one of the things that in my class, we talk about, but also in the real world of understanding, "Oh, I have four different interest rates available to me to borrow money." Well, what does that actually mean? And are you able to make the best choice for you, given the information that you have, and weed through and decipher what the implications of that choice is?

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Mark Ginsberg: Yeah, it's interesting, and the world has become more complex as we know every day. I'm sure over the course of your career, you've seen the financial issues and challenges become more complex as well. How have some of these issues changed over the last couple of decades? And what are some of the things that are different today than maybe were here and some of the issues and challenges people were struggling with in the financial world a decade or two ago?

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Rachel Gordon: So, there's, I think, a couple components to that. So, one is on the basic household side of things, right? Where people 10, 15, 20 years ago were worried about things very differently than what they're worried about now. A lot of times right now, the biggest issue for people is just making ends meet, right, with costs of inflation, costs of goods, and trying to figure out just, again, am I going to be able to pay my bills this month? And what are the implications of that? And then on the flip side, we also have just the financial market in general has become so complex.

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Mark Ginsberg: Yeah, it sure has, it sure has.

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Rachel Gordon: And there's so many different types of products that are available, and even just reading through them, people get lost in the weeds. So, there's that education side of, well, wait a minute, what is the difference between a Roth IRA or a traditional IRA or a 401(k)?

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Mark Ginsberg: Yeah. I wish I knew.

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Rachel Gordon: There's so many... [Laughter] I know, right? So, I think it's both pieces, right? That the needs of households are very different now, I think, given our current economy and political state than they were 15, 20 years ago, and also just the market in general has so many more options. And on the flip side of that, there's also the idea that with all the fintech that's been happening, many more people can now get involved in things like investing because there's a lot more apps that are like, "Hey, you have $5. You want to invest? Let's play."

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Mark Ginsberg: Yeah. So, that's really probably changed dramatically over the last decade.

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Rachel Gordon: It has. As I tell my students, I'm slightly older, right? And when I grew up, we didn't have internet. We didn't have smartphones. I didn't get a smartphone till I was... I won't say that.

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Mark Ginsberg: All right, don't say that. Don't say that.

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Rachel Gordon: But well older. And so the ability to access financial information and products is so much more readily available now, which is great because it means that it's potentially more accessible for people.

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Mark Ginsberg: Sure, sure.

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Rachel Gordon: But at the same time, you also have to know what you're doing and how to use it for it to actually become effective.

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Mark Ginsberg: It sounds like there's both danger and opportunity.

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Rachel Gordon: A hundred percent.

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Mark Ginsberg: Yeah.

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Rachel Gordon: We have a debate about that in my class. [Laughter]

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Mark Ginsberg: Do you really?

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Rachel Gordon: We do.

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Mark Ginsberg: How's the debate with your students about that?

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Rachel Gordon: I usually assign them pros and cons to saying do we like these options within fintech or is it taking advantage of people, and it's great to hear them kind of articulate both sides because it's not a clear black and white, right?

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Mark Ginsberg: Sure. Sure.

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Rachel Gordon: Like most things in life. It's very gray, and in some ways, it's wonderful, and other ways it's... You still got to read the fine print.

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Mark Ginsberg: So, it's making finance instruments, I guess a way to say it, more accessible, but also probably people more vulnerable, right?

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Rachel Gordon: Right. It's making all aspects of finance more accessible, right?

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Mark Ginsberg: Right.

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Rachel Gordon: In the sense that you don't have to go to an ATM anymore, right, to deposit a check, right? You just go to your phone.

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Mark Ginsberg: Who goes to a branch? Right.

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Rachel Gordon: Right. You don't go to a branch anymore.

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Mark Ginsberg: Right.

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Rachel Gordon: And so fintech encompasses all of that, right? The mobile, the online banking, the online loans, all aspects. So, it's great in some ways. In other ways, you still got to read the fine print. [Laughter]

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Mark Ginsberg: Interesting. It relates a little bit, I was reading recently that Alan Greenspan, the former chair of the Fed, recently said the number one problem in today's generation and the number one problem in today's economy is the lack of financial literacy. That's sort of what you're talking about is that it's hard to grasp, understand all these things.

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Rachel Gordon: Absolutely. And what we find in general and what studies have also shown is that the generational impact is huge. And what I mean by that is, is if we're looking at young adults today, let's say 18 to 25, where they're getting their financial knowledge most often is from their households.

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Mark Ginsberg: Mmm. Mm-hmm.

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Rachel Gordon: So, if they grew up in a household where their family, their parents, whomever weren't savers or held a lot of credit card debt or whatever decisions they make, that's what they know, and they don't necessarily know if they can improve upon that or not. And so, we find that a lot of the financial literacy has that lasting impact, that your culture and your upbringing dictate a lot of what your choices and what you choose to do are.

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Mark Ginsberg: So, let's dig down just a little bit deeper. When you think about financial literacy and you think about the core skills that people need to master, what are some of those skills? And our students here, many of them are in the 18 to 25 category, say by age 25, what mastery ought we have gotten to?

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Rachel Gordon: Great. I always think about the four buckets, right?

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Mark Ginsberg: Four buckets.

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Rachel Gordon: Of kind of financial issue.

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Mark Ginsberg: Okay.

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Rachel Gordon: We have the ability to save, right?

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Mark Ginsberg: Okay. Bucket one.

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Rachel Gordon: The idea of how to borrow effectively.

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Mark Ginsberg: Okay. Borrow, bucket two.

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Rachel Gordon: Investing.

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Mark Ginsberg: Saving, borrowing...

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Rachel Gordon: And then risk.

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Mark Ginsberg: ...investing, and risk.

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Rachel Gordon: Like risk management, right? So, if you think about those four buckets, by the time you're 25, you should have a good sense of what that means to be effective in each of those buckets. And so, what I mean by that is obviously saving, right? We're moving past the sticking the $50 into the cookie jar or under the mattress in the bed, right? That's not going to help you in life.

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Mark Ginsberg: I had a Christmas club when I was a kid. Those are probably outdated.

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Rachel Gordon: A little bit, a little bit.

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Mark Ginsberg: Yeah, yeah.

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Rachel Gordon: So, the idea of where should you put your money or how much savings you should have, that safety net is huge because that's where we find that most people become vulnerable, right? Is that they don't have the couple months of savings built up. And so if something happens, even it's something little like your car breaks down and all of a sudden, you need a thousand dollars to fix it. Well, if you don't have that safety net, what are you going to do? And that brings us to the second bucket of, okay, how do you borrow money? And one of the things, there's lots of options available, but they all come with different costs associated with them.

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Mark Ginsberg: Right. Right.

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Rachel Gordon: And it doesn't mean that you're always going to be able to choose the lowest cost option. It may not be available to you, but knowing how to decipher and understand what does it mean when they say the interest rate is X? And what are the implications for that? So, being able to decipher the credit market, right, with borrowing. And then for investing, you have to manage the first two before you can ever get to the third one, right? Because if you never get to the part where you have savings, then you're never going to be able to have additional money for investment, whatever that means, right?

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Mark Ginsberg: Right. Right.

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Rachel Gordon: And so it's helping people have the understanding of how to achieve the first two buckets to then start to grow assets, grow that safety net. And then risk management's a huge part of that. And should you have health insurance? Maybe, maybe not. You have to make that cost benefit decision for you, but being able to weed through all of the information that's available to you, and especially for our young students when they graduate and hopefully have a job where they offer multiple different aspects in these buckets, okay, how do you use them?

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Mark Ginsberg: Right. So, it sounds like those first three buckets – saving, borrowing, investing, buckets one through three – the overarching concept to me seems to be risk, of how do you assess risk in each of those buckets and how do you integrate that risk so that you minimize it across all the buckets?

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Rachel Gordon: And everybody's going to have different risk levels of what they're comfortable with. Some people really want to have six or seven months of savings, right? And some people are like, "If I have like a month, I'm cool," right? But that idea of managing through and the implications of those in your decision really help make people change from being vulnerable to being stable.

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Mark Ginsberg: Right. So, I imagine there's lots of individual differences in terms of one situation, the amount of income they have, the lifestyle they choose to lead, the responsibilities they have for themselves and their families, but I'm wondering, are there any general recommendations or guideposts that you might suggest about how to structure income across those three buckets?

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Rachel Gordon: It's a great question. The thing I recommend, and it's one of the things that we do in my class, and it's one of the things that the Finance Department actually has a workshop on is budgeting.

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Mark Ginsberg: Uh-huh. Yes.

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Rachel Gordon: So many people don't realize where their money goes.

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Mark Ginsberg: Yeah, it's a good frame.

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Rachel Gordon: I have my students track every single dollar for the month and they're like, "Oh, my gosh, I did spend $42 on vending machines this month."

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Mark Ginsberg: [Laughter]

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Rachel Gordon: Because you don't realize. All of a sudden, you go twice a week, right?

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Mark Ginsberg: Mm-hmm.

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Rachel Gordon: And so, I think that's probably the biggest skill – that if you can develop and figure out how to develop – know how to track your expenses and income and develop that budget, you then can figure out all of the other ones because you have a sense of where you are financially, whether that's positive, negative, just making ends meet, but that skillset, it takes a little practice to set up, but once you have it going, that sets you up for life because that budget is just key.

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Mark Ginsberg: Yeah, yeah. So essentially coming up with a plan is what you're saying, a budget. I guess a budget, in essence, is a plan, right?

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Rachel Gordon: It is.

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Mark Ginsberg: So, how do you figure out how much you can spend, how much you need to save? And then the question of investing comes up, that's your third bucket. Teaching people about investing must be incredibly complex.

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Rachel Gordon: It is. Right. And so, with regards to the plan, the way that you develop that, right, is you have to look historically. So, the way I always tell people when we're talking in class or in a seminar, look for the past month. What you actually did spend, right? Because that gives you the starting point.

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Mark Ginsberg: Yeah.

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Rachel Gordon: And then you have to figure out, okay, which of these expenses and income is not changing and which ones are flexible or fluid, right? And then once you have that, where you've been, you then can then project out, okay, well, what is this plan going forward? Am I good with that? Do I want to try to save more money? Because then you then, at the end of the day, have that net cashflow, right? You've tracked your expenses and income. You've made the plan.

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Mark Ginsberg: Right. Right.

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Rachel Gordon: And you can assess, oh, I do have $500 left over every month.

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Mark Ginsberg: Exactly.

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Rachel Gordon: Now you have a number that you can start figuring out how to invest in.

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Mark Ginsberg: Right.

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Rachel Gordon: Yeah, there's a lot of different investment options, so it really depends on what your goals are.

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Mark Ginsberg: Right. Right.

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Rachel Gordon: And that's usually how I recommend to people is first of all, what is your goals? Is it retirement? Because then maybe you start with a company 401(k) or a Roth or an IRA or something like that. Or is it that you can't think about that right now, and you're just trying to save up for a car because you know yours is going to break down in the next, you know, likelihood in the next six months, and that opens up different types of options.

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Mark Ginsberg: Yeah. Yeah. So, some people are very successful with managing their money and other people are, kindly stated, less successful. What are some of the common misperceptions people have about money management that lead them to be successful or maybe some of the things that have led them to be successful...

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Rachel Gordon: Unsuccessful. Right.

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Mark Ginsberg: Yeah, depositors. What are the things are really the essential elements to know?

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Rachel Gordon: For being successful, it just takes that initial kind of impetus to set up something that's easy for you to manage. Well, it may be easy for one person to track and budget or how to track may not work for someone else, right? Like I'm an Excel sheet girl because of how I grew up. So, all of my stuff goes in an Excel sheet, but I have students that there's some wonderful apps that are available and they just plug it into their apps and it tracks that.

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Mark Ginsberg: There it is on their phone.

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Rachel Gordon: Right? Exactly. The first thing is to figure out what works for you, and then you take that half hour a week or hour, whatever works for you, and you just keep tracking and updating it. And a lot of times when people are unsuccessful, it's because they feel like they don't know where to start, or they feel like it's just too much information or overwhelming.

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Mark Ginsberg: Yeah.

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Rachel Gordon: And for a lot of them, I say, well, you don't necessarily have to go to all 45,000 buckets that you might have your expenses on, but if you even just start with big buckets, like this is how much I spent on the grocery store versus going out, right? Or this is what I spent on my gas, like, my utility bills versus subscription services, right? Like have an idea of what you can control and what you have less control over.

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Mark Ginsberg: Yeah. Yeah. And what you're able to spend.

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Rachel Gordon: Right. Well, and once you create that budget, you see it in black and white. It becomes like a very big awakening for a lot of people that have never done it before.

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Mark Ginsberg: Yeah, yeah. Yeah, it's interesting. Sometimes I had the perception that people who make relatively little money may be actually better at managing their money and some high net worth individuals, at least in my experience, tend sometimes not to be so good at it.

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Rachel Gordon: A hundred percent. Well, when your rounding error is a couple thousand dollars a month, right? That's a very different story than if your rounding error is $20 a month.

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Mark Ginsberg: You got to be much more careful.

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Rachel Gordon: Exactly.

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Mark Ginsberg: Much more careful.

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Rachel Gordon: And so, some of the households that I've worked with and known in the past, they do the envelope method. That it's like, okay, we've budgeted 60 bucks for food this week. That goes in an envelope. Once we spend it...

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Mark Ginsberg: It's gone.

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Rachel Gordon: It's gone. And that sometimes is a very easy way for people to identify or to just start small and say, "Okay, I only want to spend this much this month on this."

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Mark Ginsberg: So, costs keep going up. We talked about runaway inflation.

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Rachel Gordon: [Sigh] Oh, my gosh. Yeah.

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Mark Ginsberg: You know, in my own life, going to a restaurant now becomes an incredibly... It's almost like an investment. You almost need a mortgage to go to a restaurant.

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Rachel Gordon: It's true.

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Mark Ginsberg: So, making those decisions about where to spend money, particularly as prices continue to escalate faster oftentimes than a person's income, are tough decisions. Yeah.

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Rachel Gordon: 100%. Yeah, inflation is outpassing most COLA, the cost of living adjustments.

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Mark Ginsberg: Exactly. Exactly.

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Rachel Gordon: By and far.

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Mark Ginsberg: So, let's talk about buckets one and two for a second. Let's differentiate between savings and investing. If you're to give people advice about the relative balance between saving and investing, general advice about that?

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Rachel Gordon: So, the general rule of thumb is, I mean, you look at all of the guidance and they vary, right? Some people say two months' worth of expenses you should save. Some people say six months, right? But you have to start with savings before you can even think about investing because if you don't have any savings, what are you putting into your investment products? So, I usually start, I recommend the idea of figuring out that budget first to really know on a regular basis, how much are you able to have leftover at the end of every month, week, whatever that unit is for you? Again, it really depends on the person of that risk level of whether they really want to have two months or whether they want to have six months and also depends on the size of your family and things of that nature.

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Mark Ginsberg: Yeah. You were talking earlier that sometimes someone low net worth may start with $20, somebody high net worth may start with $2,000. Is there some general advice about when it's best to start investing or should we start investing really early, whether you put away $10 a month or $10,000 a month?

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Rachel Gordon: Earlier's better.

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Mark Ginsberg: Earlier's better.

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Rachel Gordon: Yes. So I have several kids, and I had this whole conversation with my eight-year-old the other day about compound interest.

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Mark Ginsberg: Compound. Oh, boy.

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Rachel Gordon: Right?

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Mark Ginsberg: With an eight-year-old, you're starting them early.

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Rachel Gordon: Because he was like... Yeah.

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Mark Ginsberg: You're starting them early.

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Rachel Gordon: Well, of course. Right? They own stock. They go into Target and they're like, "I own a share of this. I own this company." I'm like, "Yes, but your fractional share is so low that you don't have any say."

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Mark Ginsberg: Now, they didn't try to fire the cashier, did they?

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Rachel Gordon: Yeah. They did. They did.

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Mark Ginsberg: Okay. Okay.

[Crosstalk 00:18:34]

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Mark Ginsberg: Just checking. [Laughter]

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Rachel Gordon: "...one more sticker." But the idea that he was like, "I have $46, Mom. I want to save up to go to college," and I'm like, "That's great."

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Mark Ginsberg: Yeah. Super.

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Rachel Gordon: And he's like, "Okay, but if I put it in my bank account and I get compound interest, I'm only going to have like 80 bucks by that time." Long story short, the idea of saving early, even if it's $10 because where you start getting that growth is in 15, 20, 30 years. And yeah, it doesn't seem like a lot now, but if you can put $10 away a month, right? That's $120 at the end of the year, and then that can keep growing and growing, even if you're just sticking it into a savings account.

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Mark Ginsberg: Yeah. Yeah. It reminds me of Ben Franklin's famous line, a penny saved is a penny earned.

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Rachel Gordon: Yes.

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Mark Ginsberg: Right. But another person who I've read recently, Suze Orman, who's on TV all the time, said that financial literacy is not a luxury. It's a necessity.

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Rachel Gordon: 100%.

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Mark Ginsberg: Teaching your children about these issues early as an eight-year-old, they're going to grow their acumen about these topics geometrically over time.

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Rachel Gordon: And you have to, right. And that's kind of what we've seen that a lot of the young students today and younger population haven't had that or haven't been exposed to it as much. And that's why I want to kind of ramp up and get them as much as possible because it is a necessity for you to have success and to not view, you know, I don't want to have to work till I'm 150.

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Mark Ginsberg: Sure. Yeah, yeah.

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Rachel Gordon: I mean, only because I like it here, right? And I want my students to...

[Crosstalk 00:19:58]

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Mark Ginsberg: I feel like I have worked till I'm 150, by the way.

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Rachel Gordon: Well, you know, differentials.

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Mark Ginsberg: Yeah, I know.

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Rachel Gordon: But the only way to succeed in that area is to start as early as possible. I even tell people that have the 16-year-olds and 17-year-olds, if you have a part-time job or get them into those IRAs, try to help them start investing that early.

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Mark Ginsberg: So, speaking about starting early, let's talk about bucket three.

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Rachel Gordon: Yeah.

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Mark Ginsberg: Let's talk about borrowing for just a moment.

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Rachel Gordon: Okay.

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Mark Ginsberg: How can a young person begin to build credit responsibly so that they have the opportunity to borrow when they need to?

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Rachel Gordon: That's a great question. So, the borrowing, obviously, we think about it, there's lots of different ways to borrow and it depends on how much you're trying to borrow. And so, the thing I actually recommend all people I talk to is to get a credit card, and even if you just put one charge a month on that credit card and just pay it off, right? So, you spend $10, you pay it immediately off, so you don't carry a balance.

That's going to start building your credit history, and it's going to start giving you that ability to use your credit card for building credit, which will help you get loans in the future for the larger loans, right? And so, part of what people have to realize is, are you trying to look for a short-term loan? Well, credit cards, if you pay them off in full, technically are 30-day, 45-day loans, because you're charging this month and you don't have to pay it off for 45 days. If you're talking about large sums of money and you want to go to a bank, they're going to ask you for your credit score. And so, getting that credit card, and not only having it for a long period of time, but then paying that off every month shows both your credit history and your payment responsibility.

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Mark Ginsberg: Plus so many young people to run up that credit card debt.

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Rachel Gordon: And you got to pay it off.

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Mark Ginsberg: You got to pay it off. They're paying what? Eighteen, 19, 21 percent interest?

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Rachel Gordon: Absolutely. You got to pay it off. And that's where...

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Mark Ginsberg: Bad strategy.

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Rachel Gordon: It is. I had one of my students come to me and was like, "Hey, I'm that student. I have the debt." And I was like, "Well, let's look at your options. If you open a new credit card and they have a zero balance transfer and no interest for six months, do that and then pay it off in those six months. And then you've wiped it clean and you're not paying 21% interest." But you have to know how to do that.

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Mark Ginsberg: You have to know how to do it. Yes.

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Rachel Gordon: Right? You have to know that that's an available option. We're talking about debt consolidation and what happens if you don't have enough money to pay all your bills, which is very common, right? What bills should you pay first?

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Mark Ginsberg: Yes.

[00:22:31]

Rachel Gordon: Right? And that's a very real conversation to have.

[00:22:33]

Mark Ginsberg: And the bills you should pay first are which?

[00:22:36]

Rachel Gordon: Well, the ones that are necessary for survival.

[00:22:38]

Mark Ginsberg: Okay.

[00:22:38]

Rachel Gordon: So, like usually utilities.

[00:22:39]

Mark Ginsberg: It's kind of a hierarchy.

[00:22:39]

Rachel Gordon: Right. There's a hierarchy, Maslow's Hierarchy of Needs, right?

[00:22:42]

Mark Ginsberg: Maslow's Hierarchy of Needs, yeah.

[00:22:43]

Rachel Gordon: But when you get to after you pay rent, let's say, and you pay your utility bills, and let's say you're left then with credit card or a bank loan or whatever – you pay whatever has the most interest.

[00:22:55]

Mark Ginsberg: So, let's say that clearly again, for everybody out there, pay off the debts you have that have the highest interest payment.

[00:23:01]

Rachel Gordon: Highest interest rate. Absolutely. Because those are the ones that are going to accumulate fastest.

[00:23:05]

Mark Ginsberg: And that's probably a credit card.

[00:23:07]

Rachel Gordon: Not necessarily because a lot of...

[00:23:08]

Mark Ginsberg: What are some other high-interest debts?

[00:23:10]

Rachel Gordon: So, people who need to access payday loans, auto title loans, pawn shop loans, right? All of those have huge interest rates. Payday loans have interest rates up to sometimes 400%.

[00:23:22]

Mark Ginsberg: So getting those loans are people who actually need cash in a fast way.

[00:23:26]

Rachel Gordon: Absolutely. And may not have the traditional going-to-a-bank option available.

[00:23:30]

Mark Ginsberg: Might not have a credit card.

[00:23:31]

Rachel Gordon: Correct. Or they may not have a credit card. Sometimes you're never in a good position, right? You got to have the money for whatever reason, and the only options are not great options. But at least if you have the knowledge of what the impact is, you can hopefully make the best worst option.

[00:23:49]

Mark Ginsberg: The best worst option. The best of bad options.

[00:23:53]

Rachel Gordon: The best of the... Yes.

[00:23:53]

Mark Ginsberg: The best of the bad options.

[00:23:55]

Rachel Gordon: [Laughter]

[00:23:55]

Mark Ginsberg: So, let's go down another path for just a second because a lot of the financial planning we do leads ultimately to a later stage of life, and for some people that stage of life is called retirement. How does one, when should one, and what are some of the recommendations you might suggest about planning for retirement? Because that's a big part of, I suspect, a big part of the financial literacy component.

[00:24:18]

Rachel Gordon: It is. So, again, the biggest thing is start early and several of the retirement options, like your IRA, for example, your individual retirement account, you're allowed to pull out of that account without penalty for certain stipulations in life, but really the goal is to start early and what I tell a lot of the young people that I'm around, especially when they're starting to work, look at what your employer matches. A lot of employers offer, for a 401(k) or 403(b), they'll offer to match a percentage of your contribution.

[00:24:49]

Mark Ginsberg: Yes. Right.

[00:24:50]

Rachel Gordon: So. If you can't max it out every year, which a lot of people can't, but you can at least contribute to that, to whatever they're matching.

[00:24:58]

Mark Ginsberg: Right.

[00:24:57]

Rachel Gordon: That's free money that then is invested and is going to grow for the next 40 years.

[00:25:02]

Mark Ginsberg: Yeah. Yeah.

[00:25:03]

Rachel Gordon: So, that's really the biggest thing for retirement is even if you have no idea when you'll retire or what you're going to be doing, you start early and as much as you can. But a lot of those options too, depending on which company your company uses to manage their 401(k) or 403(b), whether it's a Fidelity or a Vanguard, a lot of times they'll offer meetings with you. Like they'll offer education to say, "I know you probably don't know what you're doing," and it's usually a free service and it's 30 minutes or time, maybe an hour. So, if you don't know what you're doing, odds are there's people that can also help you, big picture, look at that.

[00:25:41]

Mark Ginsberg: That raises another interesting question and I'm sure you'd have some advice for our listeners. Many people seek financial managers, financial planners, people who helped them through that process. When one's looking for somebody, when one's looking for a professional in this area to help them, what should one look for? What kind of a person, what background, what are some of the things to look for in selecting a person?

[00:26:03]

Rachel Gordon: So, there's a lot, yeah, there's a lot of financial planning firms in this area that we have great relationships with and in general are phenomenal to work with.

[00:26:12]

Mark Ginsberg: Right. Without mentioning any in particular though, if you're looking for them, what do you look for?

[00:26:14]

Rachel Gordon: Right. You're looking for someone that's probably designated a CFP, a certified financial planner, right?

[00:26:19]

Mark Ginsberg: A CFP, a certified financial planner.

[00:26:21]

Rachel Gordon: A CFP, yep. Because they've gone through the idea of how to look at your estate as a whole, right, to take into account both retirement, asset management, taxes, estate planning, all of that in combination. So, they're usually a good place to start, and if you're not sure whether you want to have that personal touch, there's also some pretty good online options that, for a small fee, will give you based on your targeted, let's say, retirement age and whatnot, a recommended portfolio for you to invest in. So, there's kind of options depending on which level you...

[00:26:54]

Mark Ginsberg: I see.

[00:26:55]

Rachel Gordon: ...or the complexity that you're looking in.

[00:26:57]

Mark Ginsberg: Mm-hmm. But having somebody to advise you, a good strategy? Particularly those who don't have the sense of confidence in their own ability to do it?

[00:27:06]

Rachel Gordon: I think starting out, it's not as important starting out because you don't have as much complex in your life, but as your life becomes more complex, I do think they do provide significant value in helping you manage all of these different pieces.

[00:27:22]

Mark Ginsberg: But when you're looking for a financial planner, your advice is think about somebody who's – you used the initial – getting a CFP.

[00:27:29]

Rachel Gordon: CFP.

[00:27:29]

Mark Ginsberg: Certified financial planner.

[00:27:30]

Rachel Gordon: A certified financial planners is at least a good place to start, right?

[00:27:34]

Mark Ginsberg: Good place to start.

[00:27:35]

Rachel Gordon: And then depending on your own personality, you might say, "Oh, I really want a small firm that only has a couple of people and work one-on-one," or you might want to go with a larger firm that potentially has a bit more resources. Again, that's kind of your feeling.

[00:27:50]

Mark Ginsberg: But no guarantees with what the outcome's going to be.

[00:27:52]

Rachel Gordon: There's never guarantees in the world of finance.

[00:27:54]

Mark Ginsberg: Right. But looking at what their track record is at least gives you some sense of the success rate they've had in the past, I suspect.

[00:28:01]

Rachel Gordon: You can. Although when you talk about it, I guess, the CFP track record, it's your previous clients, are they happy? Have they met their goals working with you? Because it's not like, "Oh, they had a 15% return," where we're not looking at that when we're talking about looking at financial planning as a holistic point of view.

[00:28:18]

Mark Ginsberg: Let me go down one more path. We only just have a couple minutes left, but I'm curious about your sense about this too, and you've been teaching financial literacy, you've been writing and researching about financial literacy. What's your sense about embedding financial literacy training – financial literacy education, probably better stated – as a subject in our schools? Not just in our higher education institutions, but in our P-12 environment. So, it's almost like teaching a young child about wellness and health, to me. It's almost like teaching a young child about whatever it is that's going to help them to be successful in their life, but we don't see financial information embedded in the curriculum of our educational systems as much as I was thinking it might be. What are some of your thoughts about that?

[00:29:02]

Rachel Gordon: We definitely don't. We've started moving that needle. If you look at the United States as a whole, there's more than 30 states that have some sort of economics or financial literacy requirement for high schoolers to graduate, but it's not uniform, it's not consistent. And you can see there's a high correlation between the states that have some sort of requirement or at least some sort of recommendation to have this taught in the curriculum versus the states that don't, and the financial literacy rates are very, very different for those states.

[00:29:34]

Mark Ginsberg: And certainly we know that many people get themselves in difficulty, in life difficulty, in family difficulty, and difficulty in their career, and difficulty in so many aspects of their life, if their money management skills are deficient.

[00:29:47]

Rachel Gordon: Absolutely. And so, that's why hopefully more and more people, we can. There's lots of good programs that are out there to help get people educated, but they have to make the first step of attending one of those programs, right?

[00:29:58]

Mark Ginsberg: So that brings me to my last question, any specific recommendations or specific advice you can offer?

[00:30:04]

Rachel Gordon: So, a lot of sites now today have free tools available to improve your financial literacy. So, the FDIC has a money smart program, Charles Schwab has a free program as well, that are resources on all different areas that become very clear for you to just gain a little bit more knowledge if you don't have a local resource.

[00:30:26]

Mark Ginsberg: Well, thank you very much, Dr. Rachel Gordon of the Department of Finance at Towson University. Thank you for joining me on On the Mark and really appreciate the conversation. Great opportunity to hear and learn about financial literacy. And financial literacy is not, as you've been talking about, it's not becoming a Wall Street expert. It's about developing a sense of confidence and competence in your ability to make informed decisions, decisions that affect your stability, affect your opportunities, affect your future. So, when individuals understand money, they're better equipped to manage risk. They're better equipped to build wealth, and also, I think, to reduce the stress in their life, as we were just talking about. When communities and individuals in them are financially literate, our economy becomes stronger and individuals become more resilient. Again, Dr. Rachel Gordon, thank you so much for being my guest on On the Mark.

[00:31:13]

Rachel Gordon: Thank you very much.

[00:31:14]

Mark Ginsberg: And thank you for listening. Thank you for listening to On the Mark. If you like what you've heard, please give us a follow or leave a review. It helps ensure that we can keep bringing you more candid conversations about the consequential impact of higher education. And if you have feedback about our podcast, feel free to send me a message at onthemark@towson.edu.

[Music]

Narrator: Founded in 1866, Towson University is a top-ranked comprehensive public research university recognized as Maryland's number one public institution by the Wall Street Journal. As Greater Baltimore's largest university, TU proudly serves as an engine of opportunity for nearly 20,000 students, the state of Maryland and beyond. Explore more than 190 top-ranked undergraduate and graduate degree programs and make our momentum yours at towson.edu.