0:00:15.397,0:00:17.067 So thank you so much for having me. 0:00:17.067,0:00:21.339 I'm Alexa von Tobel and I'm incredibly[br]passionate about personal finance. 0:00:21.339,0:00:25.314 I wanted to start talking to you all today[br]about my favorite television show, 0:00:25.314,0:00:29.481 which would of course be,[br]The Biggest Loser. 0:00:29.481,0:00:32.571 I love The Biggest Loser and I'm sure[br]many of you watch it here. 0:00:32.571,0:00:35.256 I love to watch it while[br]I'm on the elliptical machine. 0:00:35.256,0:00:39.009 Everything from the crazy donut binges,[br]to the dramatic weigh-ins, 0:00:39.009,0:00:41.333 it's incredibly entertaining. 0:00:41.333,0:00:44.092 Though when I watch it[br]I often step back and I think: 0:00:44.092,0:00:45.802 "What a great television show." 0:00:45.802,0:00:47.647 America is struggling with obesity 0:00:47.647,0:00:50.261 and this is a show that[br]brings that to the forefront. 0:00:50.261,0:00:54.438 Six million people view it every Tuesday[br]night and I often pause and think, 0:00:54.438,0:00:58.494 "God I really wish something like this[br]existed for personal finance." 0:00:58.494,0:01:02.709 I really wish that there could be a show[br]like The Biggest Loser for person finance 0:01:02.709,0:01:06.336 but unfortunately money is still so taboo. 0:01:06.336,0:01:08.671 In America right now, the average person[br] 0:01:08.671,0:01:12.408 makes approximately 6 to 10 money[br]decisions every single day. 0:01:12.408,0:01:14.844 Those decisions can range[br]from simple things like 0:01:14.844,0:01:16.863 whether or not to buy a cup of coffee? 0:01:16.863,0:01:20.359 to bigger things like[br]What should I do with my 401K? 0:01:20.359,0:01:24.825 I think what's important about that is[br]those decisions are completely unguided. 0:01:24.825,0:01:28.614 Right now personal finance[br]isn't taught in high schools, colleges, 0:01:28.614,0:01:31.574 or graduate programs across[br]the United States. 0:01:31.574,0:01:35.243 People typically learn about personal[br]finance by talking to their parents, 0:01:35.243,0:01:39.738 who unfortunately were also never formally[br]educated about personal finance. 0:01:39.738,0:01:44.044 The take away there is most people[br]simply learn through trial and error. 0:01:44.044,0:01:46.450 Money is such an important thing[br]it effects us all 0:01:46.450,0:01:50.079 and most people simply[br]learn about it through trial and error. 0:01:50.079,0:01:53.180 So from there, it's easy to understand[br]that money right now 0:01:53.180,0:01:56.930 is the number one thing[br]that young people really stress about. 0:01:56.930,0:02:02.378 Worse 76% of the country feels completely[br]out of control when it comes to money. 0:02:02.378,0:02:06.191 Pause for a second, four of your closest[br]friends, three of them right now 0:02:06.191,0:02:09.458 feel out of control when it comes[br]to their personal finances. 0:02:09.458,0:02:12.055 Seventy five percent of this room[br]feels out of control 0:02:12.055,0:02:14.825 when it comes to their personal finances. 0:02:14.825,0:02:17.345 Unfortunately we're not doing anything[br]to change this. 0:02:17.345,0:02:21.319 Right now 84% of college graduates[br]said that they need more help 0:02:21.319,0:02:24.560 when it comes to personal finance[br]but they're not getting it, 0:02:24.560,0:02:30.146 and as a result of all of this, 61% of the[br]country is living paycheck to paycheck. 0:02:30.146,0:02:32.981 More than 50% of our country[br]is not quite sure 0:02:32.981,0:02:36.252 how they're going to pay their bills[br]next month. That is staggering. 0:02:36.252,0:02:41.020 Think about the stress[br]that puts on individuals. 0:02:41.020,0:02:44.579 So I often ask myself:[br]How on earth did we get here? 0:02:44.579,0:02:47.194 How do we end up where[br]this thing that is so critical 0:02:47.194,0:02:49.976 to every single person in this room? 0:02:49.976,0:02:53.171 It's something that we've never learned. 0:02:53.171,0:02:56.923 I want to take the 1.8 million college[br]graduating seniors from this year 0:02:56.923,0:03:00.116 and I want to walk you through exactly[br]what ultimately happens. 0:03:00.116,0:03:03.949 I want to introduce you to someone[br]who will represent the absolute norm 0:03:03.949,0:03:07.484 and we're going to find out[br]how they ended up on such a ride. 0:03:07.484,0:03:11.594 So meet Jessica. She's 22 years old,[br]she studied English. 0:03:11.594,0:03:16.502 She's going to graduate from college[br]this year with $25,000 in student debt, 0:03:16.502,0:03:21.376 and $4,000 in credit card debt,[br]and she's going to end up, if she is lucky 0:03:21.376,0:03:26.269 and I repeat lucky, with a job right out[br]of college, where she'll make $35,000. 0:03:26.269,0:03:32.448 That means that her monthly take home pay[br]will be approximately $2,300. 0:03:32.448,0:03:35.843 I'm going to walk you through[br]5 decisions that Jessica's going to make, 0:03:35.843,0:03:39.215 some that she's aware were bad decisions,[br]some that she's not, 0:03:39.215,0:03:42.497 and it helps you better understand[br]how she ended up in a situation 0:03:42.497,0:03:45.917 that most of America is in.[br]So first she's not going to have a budget. 0:03:45.917,0:03:47.964 Jessica thinks about her life now[br]and says: 0:03:47.964,0:03:51.607 "I barely get any money that I'm making.[br]Why am I creating a detailed budget? 0:03:51.607,0:03:53.935 I'll be lucky if I can just pay my bills." 0:03:53.935,0:03:57.653 She doesn't know that good financial[br]planning recommends that 50% of her money 0:03:57.653,0:04:00.036 that she takes home[br]goes towards essentials, 0:04:00.036,0:04:03.880 30% towards life style,[br]and 20% towards the future. 0:04:03.880,0:04:06.743 That's really key, 20% towards[br]her future savings. 0:04:06.743,0:04:09.903 Jessica's going to move[br]after college to a big city. 0:04:09.903,0:04:13.768 First she's going to do what every other[br]college graduate does, get an apartment. 0:04:13.768,0:04:15.955 Then she's going to spend $1,200 on rent. 0:04:15.955,0:04:19.051 In the beginning, a simple decision[br]such as getting her apartment 0:04:19.051,0:04:22.886 is going to throw even the chance of her[br]having a balanced budget 0:04:22.886,0:04:26.290 completely out of whack, but also put her[br]in jeopardy for years to come 0:04:26.290,0:04:29.889 as she won't have that 20%[br]going towards her future. 0:04:29.889,0:04:32.851 Next Jessica already has lots of debt.[br]She thinks to herself: 0:04:32.851,0:04:35.955 "Everyone in America is in debt.[br]Why do I have to worry so much?" 0:04:35.955,0:04:39.964 Instead of aggressively paying it down she[br]only going to pay her minimum payments. 0:04:39.964,0:04:42.305 Worse she's going to miss a few[br]of those payments. 0:04:42.305,0:04:44.744 She doesn't even understand[br]what a credit score is. 0:04:44.744,0:04:48.715 Nor does she understand why[br]it's so critical to her financial future. 0:04:48.715,0:04:51.576 After that she's not going to think[br]about emergency savings, 0:04:51.576,0:04:54.795 and the reason is she can[br]barely think about how she pays her bills. 0:04:54.795,0:04:57.195 She thinks: "What do I need[br]emergency savings for?" 0:04:57.195,0:04:59.761 What she doesn't know[br]is if she loses her job tomorrow 0:04:59.761,0:05:02.910 or has any type of an emergency,[br]she's completely vulnerable 0:05:02.910,0:05:07.698 and she's going to rely on credit card[br]debt to keep her head above water. 0:05:07.698,0:05:11.506 Her fourth big mistake is she's not going[br]to negotiate her salary. 0:05:11.506,0:05:13.695 She is so thankful that she got a job 0:05:13.695,0:05:16.330 that she's not going[br]to negotiate her salary. 0:05:16.330,0:05:19.434 She's going to wait for her boss[br]to tell her when she gets one. 0:05:19.434,0:05:22.756 So few years later[br]she's still making just $35,000. 0:05:22.756,0:05:25.386 The final major mistake[br]that Jessica's going to make 0:05:25.386,0:05:28.216 is she's not going to think about[br]retirement in her 20's. 0:05:28.216,0:05:30.757 The reason she's not[br]is retirement is 43 years away. 0:05:30.757,0:05:33.118 Why on earth would she think about it?[br]She says. 0:05:33.118,0:05:37.377 Because of that she doesn't take advantage[br]of her employer 401k match program, 0:05:37.377,0:05:41.250 and she doesn't open a Roth IRA.[br]Now I want to fast forward 15 years. 0:05:41.250,0:05:43.651 Applying those exact same[br]behavioral traits, 0:05:43.651,0:05:47.566 not learning much more about personal[br]finance, making a few more mistakes, 0:05:47.566,0:05:50.814 Jessica's going to get married[br]and she's going to have 2 children. 0:05:50.814,0:05:54.030 Fifteen years later,[br]applying the national APR of 15%, 0:05:54.030,0:05:57.119 Jessica's going to be closer[br]to $20,000 in debt. 0:05:57.119,0:06:00.171 As her life grew,[br]credit card was her answer. 0:06:00.171,0:06:02.431 Her interest rate has of course gone up. 0:06:02.431,0:06:05.756 From there, she still has about $10,000[br]of her student loans. 0:06:05.756,0:06:10.217 So a decision she made 2 decades ago[br]is still haunting her every single month. 0:06:10.217,0:06:15.704 Additionally her credit score has gone[br]from 622 to something more in the 500's, 0:06:15.704,0:06:20.402 and that's because she's amassed more debt[br]and she's missed more payments. 0:06:20.402,0:06:22.562 She started thinking about retirement, 0:06:22.562,0:06:26.462 but she currently has less than $10,000[br]in her future retirement savings. 0:06:26.462,0:06:30.310 Which actually is about[br]54% of America right now. 0:06:30.310,0:06:33.472 Beyond that, she doesn't set up[br]a 529 plan for her children 0:06:33.472,0:06:36.580 because she has no other dollars[br]to think about. 0:06:36.580,0:06:40.823 So I want to pause for a second and I[br]want to think about the national impact. 0:06:40.823,0:06:44.162 I just walked you through Jessica's story[br]and I want us to pause 0:06:44.162,0:06:51.586 and I want us multiply that by a thousand[br]by a million, and by tens of millions. 0:06:51.586,0:06:54.842 Jessica's story is the story[br]of tens of millions of Americans 0:06:54.842,0:06:57.367 living in our country today. 0:06:57.367,0:07:00.183 You understand that[br]and we pause and really think about it. 0:07:00.183,0:07:04.525 It helps you better understand why we[br]currently are a country where we have 0:07:04.525,0:07:08.828 $2.5 trillion, yes trillion dollars[br]in consumer debt. 0:07:08.828,0:07:13.492 We're in a position where the American[br]dream of home ownership is not a reality 0:07:13.492,0:07:18.002 as 25% of applications[br]are denied immediately. 0:07:18.002,0:07:22.430 Where 31% of Americans today[br]have no retirement savings 0:07:22.430,0:07:25.462 and therefore the American dream[br]of pausing when you're 65 0:07:25.462,0:07:28.788 when your bones are starting[br]to get brittle and being able to retire, 0:07:28.788,0:07:31.975 they're not going to have that[br]as a reality, and finally 0:07:31.975,0:07:36.919 and maybe even worse, money is the number[br]one cause of fights in marriages. 0:07:36.919,0:07:41.439 And married couples who fight[br]are 30% more likely to end up in divorce. 0:07:41.439,0:07:45.456 So this gives you an idea[br]of where we are today. 0:07:45.456,0:07:49.324 But this doesn't give you[br]a sense of the domino effect. 0:07:49.324,0:07:52.386 Jessica and her husband[br]they have two beautiful kids. 0:07:52.386,0:07:55.755 Those kids will go off to college[br]with the exact same credit card debt 0:07:55.755,0:07:57.999 and student loan debt that Jessica had. 0:07:57.999,0:08:01.919 But worse, they're probably going to have[br]to help Jessica with retirement. 0:08:01.919,0:08:05.309 That domino is going to fall down for[br]generations to come 0:08:05.309,0:08:10.254 and as you can see Jessica has flipped[br]a domino and the downward financial spiral 0:08:10.254,0:08:16.501 that will continue for many generations.[br]So what if we could rewind? 0:08:16.501,0:08:20.389 What if I told you that I really believe[br]that there's a solution to all of this? 0:08:20.389,0:08:23.597 I really believe that we can go back[br]to the tens of millions -- 0:08:23.597,0:08:28.712 We can ultimately go back to Jessica[br]and there's a simple solution. 0:08:28.712,0:08:31.749 We can take her[br]before she enters the world, 0:08:31.749,0:08:34.939 before all of our college seniors do,[br]and we can basically 0:08:34.939,0:08:37.703 stop and teach them 5 principles. 0:08:37.703,0:08:41.133 We can help them[br]avoid making these mistakes, 0:08:41.133,0:08:43.492 let them understand why[br]a budget is so critical, 0:08:43.492,0:08:46.789 learn the principle of living beneath[br]their means; 0:08:46.789,0:08:49.543 help them better understand[br]that debt is not an answer 0:08:49.543,0:08:53.078 and in fact it is absolutely so important[br]to aggresively pay it down 0:08:53.078,0:08:55.732 as it is designed to defeat you; 0:08:55.732,0:08:59.095 help them understand that an emergency[br]savings account is so critical - 0:08:59.095,0:09:01.883 if anything happens, you want[br]to be able to sleep at night 0:09:01.883,0:09:03.821 and that's why it's there; 0:09:03.821,0:09:07.470 help them understand that they have to[br]negotiate their salaries along the way 0:09:07.470,0:09:09.609 that their voice will always[br]be the loudest; 0:09:09.609,0:09:13.883 and finally that retirement is something[br]you have to think about in your 20's. 0:09:13.883,0:09:16.555 I saw this graph many, many years ago. 0:09:16.555,0:09:19.005 It's a simple principle,[br]it's compounding interest. 0:09:19.005,0:09:23.409 An individual who starts contributing[br]to retirement in her 20's versus her 40's 0:09:23.409,0:09:25.919 and they both contribute the same dollars. 0:09:25.919,0:09:28.914 This is a really powerful graph[br]and a really important thing, 0:09:28.914,0:09:34.202 and I just always wonder[br]what if we can make this go viral? 0:09:34.202,0:09:37.096 So I want to go back[br]to the educated Jessica. 0:09:37.096,0:09:40.184 Let's say we did actually teach her[br]all of these empowered facts. 0:09:40.184,0:09:43.690 Years later she'd be in a position[br]where she could open the coffee shop 0:09:43.690,0:09:45.680 she'd always dreamed of. 0:09:45.680,0:09:49.213 She and her husband now own a home[br]because they knew about credit score. 0:09:49.213,0:09:53.368 They knew not to miss their bills[br]and they knew to keep it in the 700's. 0:09:53.368,0:09:55.446 They're looking forward to their[br]retirement. 0:09:55.446,0:09:58.260 They took advantage of all those things[br]in their 20's 0:09:58.260,0:10:01.530 and compounding interest worked its magic, 0:10:01.530,0:10:04.672 and probably best yet,[br]her children have 529 plans. 0:10:04.672,0:10:08.140 They'll go off to college and they'll be[br]in a significantly better place 0:10:08.140,0:10:10.859 than Jessica was decades ago. 0:10:10.859,0:10:14.379 This is the empowered Jessica. 0:10:14.379,0:10:18.439 So I wish it weren't true but it is,[br]money is such a lifeline. 0:10:18.439,0:10:21.456 If you love someone you can travel[br]around the world to see them, 0:10:21.456,0:10:24.674 and if you're sick, as I know this week[br]you're going to want to pay 0:10:24.674,0:10:28.729 the best dollars that money can buy[br]to get the best doctors. 0:10:28.729,0:10:32.538 Money will affect us every single day[br]of our lives until the day that we die, 0:10:32.538,0:10:35.511 and I wish it weren't true,[br]but it's a fact.[br] 0:10:35.511,0:10:37.952 I look forward to a future where[br]we can pause, 0:10:37.952,0:10:40.652 we can take all of the people[br]before they enter the world 0:10:40.652,0:10:43.676 and teach them these[br]basic financial principles. 0:10:43.676,0:10:44.980 That we can empower them 0:10:44.980,0:10:48.150 so that they can end up[br]living really powerful financial lives. 0:10:48.150,0:10:52.122 That they can feel great about money and[br]from there it ultimately is going to have 0:10:52.122,0:10:55.460 fantastic impact on our balance[br]sheets and as our nation as a whole. 0:10:55.460,0:11:01.208 But most importantly it's going dwindle[br]down for many generation to come. 0:11:01.208,0:11:04.554 When I think about money[br]I think it's not important to be rich. 0:11:04.554,0:11:08.228 It's not about being rich. It's about[br]being able to live your richest life. 0:11:08.228,0:11:10.775 I want that for me.[br]I want that for Jessica. 0:11:10.775,0:11:14.413 I want that for the hundreds of millions[br]of Americans who deserve just that. 0:11:14.413,0:11:15.518 Thank you. 0:11:15.518,0:11:18.808 (Applause)