Financial Literacy Month represents a month long effort to promote financial education and create healthy financial habits. Throughout April, our colleagues will be providing helpful insights about the role of finance in their lives, and how they are passing on the lessons they have learned to their children and families. We hope their feedback can assist you when talking to someone in your family about the benefits of understanding the world of finance throughout their lives.
We spoke to Burke Dempsey, EVP and Head of Investment Banking, about the importance of being financially literate and how his father taught him the importance of spending and saving from a young age. Visit our Financial Literacy page for resources parents and teachers can use when talking to children and young adults about finance.
Why is it important to be financially literate? How have you benefitted from knowing a few things about finance?
Those who are financially literate minimize their risk of being taken advantage of by predatory groups who shroud their overly expensive or even fraudulent offerings with pleasant words. Financial literacy like any form of education or knowledge can give one confidence to lean into the world and actualize a personal ambition or help someone else.
Your sons have gone to college, now that they are on their own, what have you taught them along the way about the value of money?
I teach them that money saved is money earned—turning off unused lights, driving cars and wearing clothes for many years, cooking or washing clothes yourself instead of going out for service, not only saves money, it is doing your part to help the planet. I also shared the virtues of trying to live a low, or no debt life as soon as one can.
When did you start to learn about the importance of finance?
When I was a teen, my dad was a top salesman of mainframes for Honeywell. He quit full of entrepreneurial spirit and started a tech company in time sharing, something that today might be called the cloud. He needed to find a money partner. One day I came home from school and met his proposed venture capitalist (VC). This man made me feel very uncomfortable. I told both my mom and dad of my feelings, but not being a finance expert, it was more a hunch. My dad took this man’s money and a few years later my dad was thrown out as president by that man and his stock repurchased at cost. The company was sold a few years later for millions (today it would be about $60mm). My father was innately a smart man, but was not as financially literate as he needed to be in interacting with a VC, and thus trusted what he was told by an “expert” who had ulterior motives.
What is the best piece of advice in regard to saving/investing/knowledge that you have received or that you have given?
From my father: spend only 90% of your gross income. Getting to savings via “spending” reminds one that money is to be used and enjoyed, but keep it at 90%. Ergo, save 10% of the gross. Given taxes and basic costs of living, that forces one to live below their theoretical means at that moment in time—not easy to do at any phase of life. But as my father also said: “If you have the will to win, you will not lose.” Therefore, set a spend-but-save habit early in life; or start now, it’s never too late. Worries about running out of money, or being put in a compromising position to obtain money on short notice, will be vastly reduced. Then one can focus on the exciting business of living!
What is something you found challenging when learning the benefits of financial literacy and how did you overcome it?
Keeping my long term perspective of what I said in my HS yearbook—An education is to entertain an idea, your friends and yourself. Some people want an education in finance to use it as a weapon and dominate others, versus it being one of many life skills of a complete human. The movie Karate Kid comes to mind. Going to karate class was to become literate in this ancient and valuable skill. Yet some treated karate as a weapon, whereas some saw it as a means to creating a better life. Believe me, I have had my leg swept and been injured financially by some rough financiers who just want to accumulate money and power. But I side with Mr. Miyagi and Ralph every time. So I enter the deal ring now with any top financier knowing that I have been taught well, and can “do the crane” if needed!
Burke shared some great examples about the benefits of being financially literate and how a lack of financial knowledge can hinder your decisions. Having a parental figure to guide and teach you the importance of finance can be a foundational step to life long success. Burke’s fatherly advice he was given was to “create a spend-but-save habit early in life”. Is there one piece of financial advice you could teach your kids about or share with your friends and family? We encourage you to find time this week to teach someone an important lesson you have learned about financial literacy.
EVP and Head of Investment Banking