WEBVTT

00:00:15.397 --> 00:00:17.067
So thank you so much for having me.

00:00:17.067 --> 00:00:21.339
I'm Alexa von Tobel and I'm incredibly
passionate about personal finance.

00:00:21.339 --> 00:00:25.314
I wanted to start talking to you all today
about my favorite television show,

00:00:25.314 --> 00:00:29.481
which would of course be,
The Biggest Loser.

00:00:29.481 --> 00:00:32.571
I love The Biggest Loser and I'm sure
many of you watch it here.

00:00:32.571 --> 00:00:35.256
I love to watch it while
I'm on the elliptical machine.

00:00:35.256 --> 00:00:39.009
Everything from the crazy donut binges,
to the dramatic weigh-ins,

00:00:39.009 --> 00:00:41.333
it's incredibly entertaining.

00:00:41.333 --> 00:00:44.092
Though when I watch it
I often step back and I think:

00:00:44.092 --> 00:00:45.802
"What a great television show."

00:00:45.802 --> 00:00:47.647
America is struggling with obesity

00:00:47.647 --> 00:00:50.261
and this is a show that
brings that to the forefront.

00:00:50.261 --> 00:00:54.438
Six million people view it every Tuesday
night and I often pause and think,

00:00:54.438 --> 00:00:58.494
"God I really wish something like this
existed for personal finance."

00:00:58.494 --> 00:01:02.709
I really wish that there could be a show
like The Biggest Loser for person finance

00:01:02.709 --> 00:01:06.336
but unfortunately money is still so taboo.

00:01:06.336 --> 00:01:08.671
In America right now, the average person


00:01:08.671 --> 00:01:12.408
makes approximately 6 to 10 money
decisions every single day.

00:01:12.408 --> 00:01:14.844
Those decisions can range
from simple things like

00:01:14.844 --> 00:01:16.863
whether or not to buy a cup of coffee?

00:01:16.863 --> 00:01:20.359
to bigger things like
What should I do with my 401K?

00:01:20.359 --> 00:01:24.825
I think what's important about that is
those decisions are completely unguided.

00:01:24.825 --> 00:01:28.614
Right now personal finance
isn't taught in high schools, colleges,

00:01:28.614 --> 00:01:31.574
or graduate programs across
the United States.

00:01:31.574 --> 00:01:35.243
People typically learn about personal
finance by talking to their parents,

00:01:35.243 --> 00:01:39.738
who unfortunately were also never formally
educated about personal finance.

00:01:39.738 --> 00:01:44.044
The take away there is most people
simply learn through trial and error.

00:01:44.044 --> 00:01:46.450
Money is such an important thing
it effects us all

00:01:46.450 --> 00:01:50.079
and most people simply
learn about it through trial and error.

00:01:50.079 --> 00:01:53.180
So from there, it's easy to understand
that money right now

00:01:53.180 --> 00:01:56.930
is the number one thing
that young people really stress about.

00:01:56.930 --> 00:02:02.378
Worse 76% of the country feels completely
out of control when it comes to money.

00:02:02.378 --> 00:02:06.191
Pause for a second, four of your closest
friends, three of them right now

00:02:06.191 --> 00:02:09.458
feel out of control when it comes
to their personal finances.

00:02:09.458 --> 00:02:12.055
Seventy five percent of this room
feels out of control

00:02:12.055 --> 00:02:14.825
when it comes to their personal finances.

00:02:14.825 --> 00:02:17.345
Unfortunately we're not doing anything
to change this.

00:02:17.345 --> 00:02:21.319
Right now 84% of college graduates
said that they need more help

00:02:21.319 --> 00:02:24.560
when it comes to personal finance
but they're not getting it,

00:02:24.560 --> 00:02:30.146
and as a result of all of this, 61% of the
country is living paycheck to paycheck.

00:02:30.146 --> 00:02:32.981
More than 50% of our country
is not quite sure

00:02:32.981 --> 00:02:36.252
how they're going to pay their bills
next month. That is staggering.

00:02:36.252 --> 00:02:41.020
Think about the stress
that puts on individuals.

00:02:41.020 --> 00:02:44.579
So I often ask myself:
How on earth did we get here?

00:02:44.579 --> 00:02:47.194
How do we end up where
this thing that is so critical

00:02:47.194 --> 00:02:49.976
to every single person in this room?

00:02:49.976 --> 00:02:53.171
It's something that we've never learned.

00:02:53.171 --> 00:02:56.923
I want to take the 1.8 million college
graduating seniors from this year

00:02:56.923 --> 00:03:00.116
and I want to walk you through exactly
what ultimately happens.

00:03:00.116 --> 00:03:03.949
I want to introduce you to someone
who will represent the absolute norm

00:03:03.949 --> 00:03:07.484
and we're going to find out
how they ended up on such a ride.

00:03:07.484 --> 00:03:11.594
So meet Jessica. She's 22 years old,
she studied English.

00:03:11.594 --> 00:03:16.502
She's going to graduate from college
this year with $25,000 in student debt,

00:03:16.502 --> 00:03:21.376
and $4,000 in credit card debt,
and she's going to end up, if she is lucky

00:03:21.376 --> 00:03:26.269
and I repeat lucky, with a job right out
of college, where she'll make $35,000.

00:03:26.269 --> 00:03:32.448
That means that her monthly take home pay
will be approximately $2,300.

00:03:32.448 --> 00:03:35.843
I'm going to walk you through
5 decisions that Jessica's going to make,

00:03:35.843 --> 00:03:39.215
some that she's aware were bad decisions,
some that she's not,

00:03:39.215 --> 00:03:42.497
and it helps you better understand
how she ended up in a situation

00:03:42.497 --> 00:03:45.917
that most of America is in.
So first she's not going to have a budget.

00:03:45.917 --> 00:03:47.964
Jessica thinks about her life now
and says:

00:03:47.964 --> 00:03:51.607
"I barely get any money that I'm making.
Why am I creating a detailed budget?

00:03:51.607 --> 00:03:53.935
I'll be lucky if I can just pay my bills."

00:03:53.935 --> 00:03:57.653
She doesn't know that good financial
planning recommends that 50% of her money

00:03:57.653 --> 00:04:00.036
that she takes home
goes towards essentials,

00:04:00.036 --> 00:04:03.880
30% towards life style,
and 20% towards the future.

00:04:03.880 --> 00:04:06.743
That's really key, 20% towards
her future savings.

00:04:06.743 --> 00:04:09.903
Jessica's going to move
after college to a big city.

00:04:09.903 --> 00:04:13.768
First she's going to do what every other
college graduate does, get an apartment.

00:04:13.768 --> 00:04:15.955
Then she's going to spend $1,200 on rent.

00:04:15.955 --> 00:04:19.051
In the beginning, a simple decision
such as getting her apartment

00:04:19.051 --> 00:04:22.886
is going to throw even the chance of her
having a balanced budget

00:04:22.886 --> 00:04:26.290
completely out of whack, but also put her
in jeopardy for years to come

00:04:26.290 --> 00:04:29.889
as she won't have that 20%
going towards her future.

00:04:29.889 --> 00:04:32.851
Next Jessica already has lots of debt.
She thinks to herself:

00:04:32.851 --> 00:04:35.955
"Everyone in America is in debt.
Why do I have to worry so much?"

00:04:35.955 --> 00:04:39.964
Instead of aggressively paying it down she
only going to pay her minimum payments.

00:04:39.964 --> 00:04:42.305
Worse she's going to miss a few
of those payments.

00:04:42.305 --> 00:04:44.744
She doesn't even understand
what a credit score is.

00:04:44.744 --> 00:04:48.715
Nor does she understand why
it's so critical to her financial future.

00:04:48.715 --> 00:04:51.576
After that she's not going to think
about emergency savings,

00:04:51.576 --> 00:04:54.795
and the reason is she can
barely think about how she pays her bills.

00:04:54.795 --> 00:04:57.195
She thinks: "What do I need
emergency savings for?"

00:04:57.195 --> 00:04:59.761
What she doesn't know
is if she loses her job tomorrow

00:04:59.761 --> 00:05:02.910
or has any type of an emergency,
she's completely vulnerable

00:05:02.910 --> 00:05:07.698
and she's going to rely on credit card
debt to keep her head above water.

00:05:07.698 --> 00:05:11.506
Her fourth big mistake is she's not going
to negotiate her salary.

00:05:11.506 --> 00:05:13.695
She is so thankful that she got a job

00:05:13.695 --> 00:05:16.330
that she's not going
to negotiate her salary.

00:05:16.330 --> 00:05:19.434
She's going to wait for her boss
to tell her when she gets one.

00:05:19.434 --> 00:05:22.756
So few years later
she's still making just $35,000.

00:05:22.756 --> 00:05:25.386
The final major mistake
that Jessica's going to make

00:05:25.386 --> 00:05:28.216
is she's not going to think about
retirement in her 20's.

00:05:28.216 --> 00:05:30.757
The reason she's not
is retirement is 43 years away.

00:05:30.757 --> 00:05:33.118
Why on earth would she think about it?
She says.

00:05:33.118 --> 00:05:37.377
Because of that she doesn't take advantage
of her employer 401k match program,

00:05:37.377 --> 00:05:41.250
and she doesn't open a Roth IRA.
Now I want to fast forward 15 years.

00:05:41.250 --> 00:05:43.651
Applying those exact same
behavioral traits,

00:05:43.651 --> 00:05:47.566
not learning much more about personal
finance, making a few more mistakes,

00:05:47.566 --> 00:05:50.814
Jessica's going to get married
and she's going to have 2 children.

00:05:50.814 --> 00:05:54.030
Fifteen years later,
applying the national APR of 15%,

00:05:54.030 --> 00:05:57.119
Jessica's going to be closer
to $20,000 in debt.

00:05:57.119 --> 00:06:00.171
As her life grew,
credit card was her answer.

00:06:00.171 --> 00:06:02.431
Her interest rate has of course gone up.

00:06:02.431 --> 00:06:05.756
From there, she still has about $10,000
of her student loans.

00:06:05.756 --> 00:06:10.217
So a decision she made 2 decades ago
is still haunting her every single month.

00:06:10.217 --> 00:06:15.704
Additionally her credit score has gone
from 622 to something more in the 500's,

00:06:15.704 --> 00:06:20.402
and that's because she's amassed more debt
and she's missed more payments.

00:06:20.402 --> 00:06:22.562
She started thinking about retirement,

00:06:22.562 --> 00:06:26.462
but she currently has less than $10,000
in her future retirement savings.

00:06:26.462 --> 00:06:30.310
Which actually is about
54% of America right now.

00:06:30.310 --> 00:06:33.472
Beyond that, she doesn't set up
a 529 plan for her children

00:06:33.472 --> 00:06:36.580
because she has no other dollars
to think about.

00:06:36.580 --> 00:06:40.823
So I want to pause for a second and I
want to think about the national impact.

00:06:40.823 --> 00:06:44.162
I just walked you through Jessica's story
and I want us to pause

00:06:44.162 --> 00:06:51.586
and I want us multiply that by a thousand
by a million, and by tens of millions.

00:06:51.586 --> 00:06:54.842
Jessica's story is the story
of tens of millions of Americans

00:06:54.842 --> 00:06:57.367
living in our country today.

00:06:57.367 --> 00:07:00.183
You understand that
and we pause and really think about it.

00:07:00.183 --> 00:07:04.525
It helps you better understand why we
currently are a country where we have

00:07:04.525 --> 00:07:08.828
$2.5 trillion, yes trillion dollars
in consumer debt.

00:07:08.828 --> 00:07:13.492
We're in a position where the American
dream of home ownership is not a reality

00:07:13.492 --> 00:07:18.002
as 25% of applications
are denied immediately.

00:07:18.002 --> 00:07:22.430
Where 31% of Americans today
have no retirement savings

00:07:22.430 --> 00:07:25.462
and therefore the American dream
of pausing when you're 65

00:07:25.462 --> 00:07:28.788
when your bones are starting
to get brittle and being able to retire,

00:07:28.788 --> 00:07:31.975
they're not going to have that
as a reality, and finally

00:07:31.975 --> 00:07:36.919
and maybe even worse, money is the number
one cause of fights in marriages.

00:07:36.919 --> 00:07:41.439
And married couples who fight
are 30% more likely to end up in divorce.

00:07:41.439 --> 00:07:45.456
So this gives you an idea
of where we are today.

00:07:45.456 --> 00:07:49.324
But this doesn't give you
a sense of the domino effect.

00:07:49.324 --> 00:07:52.386
Jessica and her husband
they have two beautiful kids.

00:07:52.386 --> 00:07:55.755
Those kids will go off to college
with the exact same credit card debt

00:07:55.755 --> 00:07:57.999
and student loan debt that Jessica had.

00:07:57.999 --> 00:08:01.919
But worse, they're probably going to have
to help Jessica with retirement.

00:08:01.919 --> 00:08:05.309
That domino is going to fall down for
generations to come

00:08:05.309 --> 00:08:10.254
and as you can see Jessica has flipped
a domino and the downward financial spiral

00:08:10.254 --> 00:08:16.501
that will continue for many generations.
So what if we could rewind?

00:08:16.501 --> 00:08:20.389
What if I told you that I really believe
that there's a solution to all of this?

00:08:20.389 --> 00:08:23.597
I really believe that we can go back
to the tens of millions --

00:08:23.597 --> 00:08:28.712
We can ultimately go back to Jessica
and there's a simple solution.

00:08:28.712 --> 00:08:31.749
We can take her
before she enters the world,

00:08:31.749 --> 00:08:34.939
before all of our college seniors do,
and we can basically

00:08:34.939 --> 00:08:37.703
stop and teach them 5 principles.

00:08:37.703 --> 00:08:41.133
We can help them
avoid making these mistakes,

00:08:41.133 --> 00:08:43.492
let them understand why
a budget is so critical,

00:08:43.492 --> 00:08:46.789
learn the principle of living beneath
their means;

00:08:46.789 --> 00:08:49.543
help them better understand
that debt is not an answer

00:08:49.543 --> 00:08:53.078
and in fact it is absolutely so important
to aggresively pay it down

00:08:53.078 --> 00:08:55.732
as it is designed to defeat you;

00:08:55.732 --> 00:08:59.095
help them understand that an emergency
savings account is so critical -

00:08:59.095 --> 00:09:01.883
if anything happens, you want
to be able to sleep at night

00:09:01.883 --> 00:09:03.821
and that's why it's there;

00:09:03.821 --> 00:09:07.470
help them understand that they have to
negotiate their salaries along the way

00:09:07.470 --> 00:09:09.609
that their voice will always
be the loudest;

00:09:09.609 --> 00:09:13.883
and finally that retirement is something
you have to think about in your 20's.

00:09:13.883 --> 00:09:16.555
I saw this graph many, many years ago.

00:09:16.555 --> 00:09:19.005
It's a simple principle,
it's compounding interest.

00:09:19.005 --> 00:09:23.409
An individual who starts contributing
to retirement in her 20's versus her 40's

00:09:23.409 --> 00:09:25.919
and they both contribute the same dollars.

00:09:25.919 --> 00:09:28.914
This is a really powerful graph
and a really important thing,

00:09:28.914 --> 00:09:34.202
and I just always wonder
what if we can make this go viral?

00:09:34.202 --> 00:09:37.096
So I want to go back
to the educated Jessica.

00:09:37.096 --> 00:09:40.184
Let's say we did actually teach her
all of these empowered facts.

00:09:40.184 --> 00:09:43.690
Years later she'd be in a position
where she could open the coffee shop

00:09:43.690 --> 00:09:45.680
she'd always dreamed of.

00:09:45.680 --> 00:09:49.213
She and her husband now own a home
because they knew about credit score.

00:09:49.213 --> 00:09:53.368
They knew not to miss their bills
and they knew to keep it in the 700's.

00:09:53.368 --> 00:09:55.446
They're looking forward to their
retirement.

00:09:55.446 --> 00:09:58.260
They took advantage of all those things
in their 20's

00:09:58.260 --> 00:10:01.530
and compounding interest worked its magic,

00:10:01.530 --> 00:10:04.672
and probably best yet,
her children have 529 plans.

00:10:04.672 --> 00:10:08.140
They'll go off to college and they'll be
in a significantly better place

00:10:08.140 --> 00:10:10.859
than Jessica was decades ago.

00:10:10.859 --> 00:10:14.379
This is the empowered Jessica.

00:10:14.379 --> 00:10:18.439
So I wish it weren't true but it is,
money is such a lifeline.

00:10:18.439 --> 00:10:21.456
If you love someone you can travel
around the world to see them,

00:10:21.456 --> 00:10:24.674
and if you're sick, as I know this week
you're going to want to pay

00:10:24.674 --> 00:10:28.729
the best dollars that money can buy
to get the best doctors.

00:10:28.729 --> 00:10:32.538
Money will affect us every single day
of our lives until the day that we die,

00:10:32.538 --> 00:10:35.511
and I wish it weren't true,
but it's a fact.


00:10:35.511 --> 00:10:37.952
I look forward to a future where
we can pause,

00:10:37.952 --> 00:10:40.652
we can take all of the people
before they enter the world

00:10:40.652 --> 00:10:43.676
and teach them these
basic financial principles.

00:10:43.676 --> 00:10:44.980
That we can empower them

00:10:44.980 --> 00:10:48.150
so that they can end up
living really powerful financial lives.

00:10:48.150 --> 00:10:52.122
That they can feel great about money and
from there it ultimately is going to have

00:10:52.122 --> 00:10:55.460
fantastic impact on our balance
sheets and as our nation as a whole.

00:10:55.460 --> 00:11:01.208
But most importantly it's going dwindle
down for many generation to come.

00:11:01.208 --> 00:11:04.554
When I think about money
I think it's not important to be rich.

00:11:04.554 --> 00:11:08.228
It's not about being rich. It's about
being able to live your richest life.

00:11:08.228 --> 00:11:10.775
I want that for me.
I want that for Jessica.

00:11:10.775 --> 00:11:14.413
I want that for the hundreds of millions
of Americans who deserve just that.

00:11:14.413 --> 00:11:15.518
Thank you.

00:11:15.518 --> 00:11:18.808
(Applause)