I am writing this letter as you have been hard to reach. Being forced to stay at home is not what you or anyone wants to do. As the coronavirus has spread, we as a family have essentially been locked down. Yes, other young adults are still out there congregating, almost flaunting their right to do so. That is so wrong, but their parents can fight that battle.
Several major states have shut down businesses, urging nonessential workers and people generally to stay home. No one wants to lose their freedom like this. However, I am proud of you that you have started to come around to understanding how bad this health crisis is becoming.
Respect What Is Being Asked For Our Community’s Sake
Striving to contain the spread of COVID-19, closures have become necessary virtually everywhere. Communities are being forced to take drastic measures in an attempt to “flatten the curve” rather than permitting cases to continue to rise unchecked. Unfortunately, virus infections are likely to increase, peak, and hopefully drop quickly. With closures of schools, colleges, restaurants, entertainment, sporting venues, we are increasingly isolated. Our economy is beginning to slow.
Why Am I Telling You This?
For one thing, I love you with all my heart. Staying at home is harder for you than it is for your sister, Alex, Dad and I. While you may not be as vulnerable as others, you are an incubator and can spread the virus. This health crisis is bigger than us. We owe this action to our neighbors, our communities and your own Dad. As you know, he is in the high risk category due to diabetes and high blood pressure.
I am sorry we are all going through this. The coronavirus is no one’s fault but it has changed millions of lives overnight. We should play a small part in doing what is asked of us–staying home–to slow the virus from spreading. You can still communicate easily with your friends in groups or individually. Take a walk in this nice weather. The virus has not slowed your ability to play xBox, be on Facetime, Minecraft, Snapchat, or binge on Netflix. I think it is time to invest more in yourself. Later, I’ll share some of my other thoughts for you as to what can you do with this time.
We are in better financial shape than many although a recession will hurt. People will lose jobs if they haven’t already and businesses will fail. I have sympathy for college seniors who should be on interviews for their first job after college graduation. Opportunities they did have may dry up or will likely be deferred. Yet, they still have loans to pay. Millennials were a generation at risk due to the Great Recession, As a result, they have had a late start with their careers and finances. They know firsthand how economic difficulties can throttle growth.
King Solomon’s Ring
We can all use more humility and less hubris.
I came across a Yiddish tale about King Solomon. There are several versions of this story told in Persian, Turkish and Buddhism languages and cultures, Even Abe Lincoln had his way with the moral of the story.
King Solomon wanted to teach Benaiah a lesson in humility. He told Benaiah “I have heard rumors of a fabulous ring that has a unique power. When a sad man gazes upon it, he becomes happy, but when a happy man gazes upon it, he becomes sad. Find this ring and bring it to me.”
Benaiah set out in search of the ring, but no one had ever heard of such a ring. He was about to give up when he spotted a junk shop. Benaiah approached the owner and described the object of his search.
“A ring that cheers the sad and saddens the cheerful?” said the junk dealer. “Come inside.”
They entered the shop. From a boxful of baubles the junk dealer took a plain, silver ring. He engraved some words on it and gave it to Benaiah. Benaiah read the inscription, nodded sagely, and headed back to the palace.
A Lesson In Humility
King Solomon was expecting an unsuccessful and humble Benaiah. So when Benaiah strode in and handed him the ring, the king was taken aback. Inspecting it, he read the inscription and laughed, “It was I who needed a lesson in humility,” he said. “This ring has reminded me that wealth and power are fleeting things.” King Solomon removed the costly rings and slipped on the ring from the junk shop.
The Yiddish phrase engraved on the ring: GAM ZU YAAVOR meaning “This too shall pass.”
However, you are upset about being cooped at home and can’t socialize as you would prefer with your friends. You are nearly an adult but you will always be my child. In recent months I have seen you blossom in many wonderful ways, having a maturity to listen, debate and being more curious about the world around you. This is a perfect time for me to share some of my experiences and pass on some lessons about money. As your great grandmother often said, “Poor or rich, money is good to have.”
O Youth, What Do You Really Know?
As an teen, I know you don’t need my advice. You know better than your parents as all typical teens believe. Remember, I was once young but it was a long time ago so what do I know. If you don’t want my thoughts and recommendations, you can throw this letter in your sock drawer later on. The drawer is actually empty as your dirty socks are strewn around your bedroom. As digital natives, you adapt quickly to technology and absorb information quickly. Of course, that doesn’t mean you know it all. As you know, I learn from you.
Our culture favors youth as the future of our country. Your generation represents energy, happiness, and freshness as well as being thrill seekers. The curse of youth derives from the blocking of your ability to fully understand what you don’t know. As smart as you are, you still lack at age 16 years the common experiences to know it all. Heck, no one knows it all!
As the level of virus infections rose, photos of young adults at the beaches were going viral on social media. At the same time, I was recommended “Youth” an autobiographical short story by Joseph Conrad written in 1898.
Narrated by Charles Marlow to friends,he recounts his first voyage on the Judea to the East twenty two years ago when he was 20 years old. The trip should have taken 150 days but it was significantly longer. However, Marlow fondly reminiscences about the many obstacles—storms, collisions, fire, retrofitting, and other dangers–with vibrant enthusiasm and optimism of a still young man.
Here’s a quote that nails youth’s nature:
“O youth! The strength of it, the faith of it, the imagination of it. To me she was not an old rattle-trap carting about the world a lot of coal for a freight–to me she was the endeavor, the test, the trial of life. I think of her with pleasure, with affection, with regret–as you would think of someone dead you have loved. I shall never forget her…Pass the bottle.”
Remember Reverse Mortgages
You and your sister, Alex shared a room when you were toddlers. Dad and I would read to you and then I would draw letters on each of your backs. You would guess at the letters. As you were older than Alex (you were about 3.5 years old), we would ask you to guess the letter. Then we asked you to give a word starting with the letter.
One day, you correctly said, “R,” and shouted out “Reverse Mortgages!” as the word. Alex jumped out of your bed running around the room saying, “I never heard of that, how does Tyler know it, what is it, I want to know!!” Dad and I were hysterical at her reaction. You didn’t know it either other than parroting the term from a recent commercial. However, you both demanded an explanation. We were happy that you wanted to know. We explained it as long as your attention span would hold (not much in those days or even now!).
So here are my 12 recommendations:
1. Time Is More Than Money
Tyler, they say time is money but time is a far more precious resource. You can always generate more money but you can’t get back time if it was spent poorly. Be productive of your time. Time value of money is a concept whereby money has the potential to grow in value over a given period of time. When we deposit $100 in cash into a savings account, it will be worth more a year from now if the account earns interest. Treat your time with respect. Use it wisely.
Time and money are inextricably related as in “Time is Money,” but are the words truly interchangeable?
Asking someone “How did you spend your time today?” is acceptable while “How did you spend your money today?” is not.
Money and time are resources but as time is finite, it is a more valuable resource. We can make more money although we all differ in our abilities to do so. We can’t purchase money but we may buy other people’s time for various services (eg. help with doing household chores) so we can have more time to do other things we need to do.
We live by the same 24 hour day clock as everyone else. At your age, you aren’t worried about wasting time, which you have an abundance of. I was no different at your age. However, by learning how to be productive now, you will have learned a great skill beneficial for the rest of your life. Invest in yourself, Tyler.
2. Avoid Procrastination
High school students are big procrastinators. You are a high school student. So it follows, Tyler, that you are a big procrastinator. Dad and I have seen firsthand how you often delay your school responsibilities until the last minute. Or you miss the due date. As you have gotten older, we have noticed your procrastination has gotten worse.When you turned 16, we thought filling out the paperwork for your drivers learner’s permit would be a lay up. What 16 year old doesn’t want to learn how to drive?
Learn From Dad’s Mistakes
As you know, Dad’s greatest fault is his perfection at being a great procrastinator. We have paid dearly in late fees, finance charges and missed opportunities for this bad habit. When I was working 24 x 7 hours, I was unaware of his inability to see a deadline for what it was. Tomorrow was always a better day to take care of something for Dad. Only in recent years did it occur to us all how significant the issue was. Since then, I have worked tirelessly for years and finally began paying all the bills myself.
We all procrastinate a little bit. Delaying is part of the lifestyle of high school and college students. However, if you don’t control it, there are downsides to delaying financial decisions like paying bills, saving, paying off debt, and investing. Procrastination is stressful and costly. Instead, take small steps, make a to-do list and get things done. It feels good to do so.
Related Post: 11 Ways To Avoid Costly Procrastination
3. Be In The Real World
Put down your phone once in awhile. Make eye contact with others and be socially engaged. It may reduce some stress and anxiety from envying what your peers may be doing. It’s not just you looking down into a 5.5 inch box conveying the virtual world. Unplug your phone and take a look around at the real world rather than the virtual world others want you to see. There are beautiful trees just outside your door.
4. Reduce Screen Time
Our screen time is likely up now as we stay closely in touch with family and friends. However, you should find some time to get off the screen. The average American spends more than 11 hours per day on their screens. However, not all of that time is wasteful. We watch shows, read, listen, play video games and interact with others. Our phones, notably iPhones, come with screen-tracking so it is easy for us to see how we spend our time with our devices.
On average, we spend nearly two hours on 5-6 social media platforms, including Facebook, Instagram, Twitter, Snapchat, YouTube, and Twitch. That equates to 5 years 4 months, just behind the 7 years 8 months we spend on watching TV according to Mediakix.
That’s a lot of time to spend looking at a screen. Try other things like exercise while you are largely forced to be home. Yes, the treadmill has a screen but at least doing something more.
5. Embrace Learning
I can almost feel your eyes rolling at me. You know that I have always valued continuous learning. Accumulate knowledge and understand both sides of an argument, read different genres and go out of your comfort zone. Deepen what you know rather than read superficial information that expires in a short period of time as forgettable bits. The wealthiest and most successful people read a lot and expand their creativity to build businesses. Warren Buffett, Mark Cuban, Elon Musk, Oprah, Chelsea and Hillary Clinton all read a lot.
Learn from different media like TED Talks or podcasts that interest you. I have always found it fascinating to hear your point of view. Try to also know the opposite perspectives as well.
6. Eat Healthy And Exercise
Having the right frame of mind is often helped by eating healthy, exercising and remaining positive. Being healthy helps to enjoy more of life and longer. I have been eating far more healthy in recent years but should do more exercise. Tyler, your diet is largely Oreo cookies, chips, sausages, and pizza bites. To a lesser extent, you will eat hamburgers, plain bagels (with nothing on it!) and some fruit. I was happy to see you added grapes, strawberries, and apples to the latest list. Due to the coronavirus, it has been difficult to get pizza bites or regular pizza deliveries.
I have cooked nearly every night. So I made several Asian dishes with bok choy, bbq ribs, chicken tikka masala, escarole with white beans, cabbage salad with chicken, Chicken and eggplant parmigiana), and shawarma. I believe chicken parm was th only dish you tried. Tell me what you would like and I will do my best.
I admit that I could do better with making more time for myself. I enjoy being outdoors, especially taking a long walk in our neighborhood. I am trying to carve out more time in the beautiful outdoors. I spend a lot of time teaching and writing, especially now with distance learning replacing class time with my college students.
You are young, Tyler, and you should be far more active. It’s a bummer that you were supposed to be on the track and field team this spring. However, the weather has been great so run outside. Use the treadmill we recently bought with you in mind. A fit and healthy body accompanies a clear mind and increased stamina.
7. Learn New Skills
Challenge yourself to learn new skills. Sometimes it is intimidating to learn something new at first. Learning can be frustrating and may raise some doubts in your mind. The harder the skill, however, the greater the reward. Just dive in and enjoy the experience.
Throughout my life, I have always looked to eliminate a weakness by learning something new. One of the major demands of being an analyst is being a public speaker. I was never going to find success in my chosen career unless I tackled my fear and lack of skills. I joined Toastmasters with a friend for about a year. It was an exhilarating experience! I am still not a great speaker but I came a long way from hiding behind others when I was called on to speak in class.
Out of necessity sometimes we are forced to learn how to do new things. I truly have a fear about technology. You know that and laugh at me. Due to the virus, they shut down the colleges, replacing my face-to-face classes with distance learning. While I had been trained on Blackboard Collaborate a few years back, I didn’t think I could use the program. As emergencies happen, all the faculty were retrained with the need to teach for the second half of the term. I am no expert but I was able to get all of my classes on Collaborate. Surprisingly, I actually like it a lot and more importantly, I am glad students will not miss any of the work that was planned for this term.
Find something that interests you, watch YouTube videos and the news. You really don’t have that much homework thus far so make better use of the time.
Remember When You Did This?
About a year ago, I was pleasantly surprised when you started speaking Chinese at the dinner table. Apparently, you had found a site (www.Duolingo.com) at school to help you with Spanish. You then self-started the Chinese program and enjoyed learning Chinese characters which most find difficult.
Tyler, the years I worked on Wall Street 7 days a week, I found myself to be virtually ignorant about many aspects of life. So consumed was I as a telecom equity analyst, I had no time or energy to read a book or learn anything else. It is very important to be interested in all that the world has to offer.
8. Take An Interests Assessment Survey
This may be a good time to take an interests assessment survey. They are free, relatively short and may provide valuable information. You’ll be looking at colleges and various programs soon. There are a number of sites that ask a set of questions about what you like/don’t like or your strengths and weaknesses. Different types of assessment focus on specific areas like skills, interest or values.They have more indepth assessments available.
There is truly no downside I see to spending a few moments doing a survey. They may point you in a direction that may ignite a new area for you to research further. There are a number of places that offer a variety of interest assessments here.
9. Work Hard Now For More Options Later
Tyler, your life is just beginning now. You can accomplish whatever you want to within reason. Determine what your interests are. They will change and expand over time. Be open to new things rather than stubbornly sticking to a narrow focus. Know what you most want to be and design a path that gets to where you want to be. You may want one kind of lifestyle now and it may change over time.
Achieve some sort of a balance that suits you. You can’t control everything but there are things you can do today that may make things better for you. Most importantly, work hard and do well at school now so that you have more options.
As Mark Twain (and many others) said, “Find a job you enjoy doing, and you will never work a day in your life.” I know you can achieve success. Have a “can-do” attitude. Be the best you can be. Collaborate and network with others to fill in gaps when you don’t have all of the skills needed. Tyler, know what you don’t know. That is not a weakness. Instead, it is a weakness to think you know everything and are not open to learning more.
10. Stock Market Games
As a happy warrior when playing simulated games, why not get a bunch of friends to join a Stock Market Game. It is a great way to get started with understanding basic investing, terminologies and strategies. It is easy to set up. You were in a stock market club that used a similar game I use for my college students. It is free and has a lot of resources.
Given how volatile the market has become as a result of the COVID-19, it is an interesting time to understand the markets and our economy. We are heading towards a recession. I recently wrote about the coronavirus, economy and money. Here is that post: You can read some information about simulated stock market games here.
As you know, I was an equity analyst working on Wall Street for an investment banking firm. I have some experience analyzing a group of companies within one industry and understanding the financial markets, the economy and many factors that affect stocks. I don’t have any foolproof way to make money but I do use a disciplined approach as every investor should do. The nearest concept to magic is the power of compound interest when you earn interest on interest generated by your investment portfolio. It can boost your portfolio over the long term. I even have a post here that provides help with essential Wall Street jargon that you can share with your friends.
11. Invest Your Money
Today, you don’t have a lot of savings on your own. Dad and I set aside some money for you in a 529 Savings account that you can use towards your college tuition. I also set up a UTMA account for each of you and Alex. I have often talked about it with you but it probably still is an abstract subject for you. Let me just say that it was doing quite well until the peak in the market in February. Since then it has dropped about 33%.
Once you do have a job, even part time, a portion of your savings should go into investing in stocks. You have a long horizon and can weather turbulence in the market when you are young. Investing is the best way to accumulate money so you can have a comfortable lifestyle. By the way, Tyler when I say invest, I mean buying and holding stocks for the long term. I am not referring to trading stocks which require different skills.
Whether you putting aside money for investing or retirement, compound growth is an important concept to learn. I know you are not going to save for retirement now. However, you probably will when you are in your 20s and start working. Typically, the money is taken out of your paycheck by your employer and invested in stocks. The company often provides a match contribution based on the amount you saved.
Let’s say you are 25 years old, your salary is $75,000 per year and you want to save 6% of your salary or $4,500 for retirement money. Your taxes will be deferred (not deducted) on that amount. In addition, you may also qualify for a match from your employer. Usually, your company may contribute fifty cents of every dollar you saved for retirement, meaning an additional $2,250 more from your company for a total of $6,750 a year for a total of $270,000 ( $6,750 x 40 years).
After 40 years, you have about $1.4 million in retirement money using an online retirement calculator. By the way, if you push out savings by 10 years, to age 35, your retirement amount drops to just under $700,000. That is a big difference when you delay saving for retirement. These numbers are back of the envelope calculations. When the time comes you can look into the different investment options you have to put your money. Sometimes your employer will match you dollar for dollar so when you save $4,500 in your account, your employer matches your contribution with another $4,500. How about that, Tyler?
I wanted to use the retirement example to illustrate compound interest which works with investing as well as.
A Disciplined Approach
Investing can be risky as we have all seen in recent weeks. We are now in a bear market shortly have after the 11 year bull market peaked. If you have a long term horizon and do not need the money to pay bills, you will be fine. Investing in stocks is always risky and but are compensated with higher returns than safe securities like treasuries. Diversification of your portfolio is one of the best ways to reduce risk in your investment portfolio. It means that instead putting all of your money into one stock, you buy a basket of several different kinds of stocks in different businesses to offset possible weaknesses in one stock.
Pick A Low Cost Mutual Fund
The best way to do that is through purchasing a Vanguard low cost mutual fund for example which is usually managed by a portfolio manager who has expertise in the different stocks in the fund. There are inexpensive ways to invest in such a fund or even an ETF which is similar to a mutual fund.
I want you to be empowered by what you can do when you are handling more money than you have now. The more you know now the better your habits you will have. Later on, you will want to learn about how to buy a new or used car; how to rent an apartment and other personal finance topics. There are more lessons I want to share now so that you can be a strong person to be reckoned with.
12. Setbacks Are Normal
Assume you will have some obstacles in life. Setbacks are learning experiences. Reframe the failure to strengthen and motivate you. They may be blessings in disguise and point towards better opportunities. Expect mistakes will happen and learn how to recover from them. You will be stronger. Many great inventors failed over and over before they became famous for their product. The point is to use feedback you are given to learn from errors and to motivate yourself.
Setbacks early in life are like a gift so long as you learn from it. No one has a straight ride to success without some fumbles along the way. Learn how to dust yourself off and try again and again. Stamina is needed as much for failure and success. However, without setting some goals for yourself, how will be able to measure your achievements?
Final Thoughts For You
This letter is devoted to you. You and Alex are so different. I love you both dearly. She and I communicate a lot more. Sometimes you can be distant, stubborn, moody, and a bit lazy. Still, you have wonderful qualities with that wry sense of humor, intelligence, passion for others. I want you to value yourself and be confident about your abilities. I’d like to see you be more active and plan more. College preparation is coming. Are you ready? Take charge of your future and invest in you!
Keep growing as the amazing person you are becoming. I know that you will learn to handle money with the care it deserves. This letter is not laced with personal finance topics like I shared with Alex but you take can a look my letter to her here.
PS: Tyler, I know you are a subscriber but many of the topics I want you to learn more about are discussed on the blog and can be found: https://thecentsofmoney.com
Thank you for reading! Stay healthy during this time!
With a passion for investing and personal finance, I began The Cents of Money to help and teach others. My experience as an equity analyst, professor, and mom provide me with unique insights about money and wealth creation and a desire to share with you.