Show Notes

• 00:00 – Intro: This Week on the YMYW Podcast
• 02:53 – Jonathan Clements’ Getting Going on Savings Initiative
• 05:23 – $1,000 Roth IRA Contributions and Personal Finance Education for Young Adults
• 07:55 – Exponential Growth: The Sooner You Save, The Better
• 09:44 – Research Study Will Measure Impact on Young Savers
• 11:56 – Financial Education is Important
• 14:05 – The John C. Bogle Center for Financial Literacy
• 14:38 – The First 100 People to Email Us Receive a Free Copy of The Best of Jonathan Clements: Classic Columns on Money and Life
• 15:45 – How Does a Healthy 62-Year-Old Non-Smoker End Up Living With Stage IV Lung Cancer? The EGFR Exon 20 Insertion Mutation
• 18:52 – HumbleDollar.com, The Jonathan Clements Getting Going on Savings Initiative, and The Best of Jonathan Clements Book

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Transcription

(NOTE: Transcriptions are an approximation and may not be entirely correct)

Intro: This Week on the YMYW Podcast

Andi: Imagine being told you only have 12 months to live. What would you do with your time? Today on Your Money, Your Wealth podcast number 532, we’re thrilled to welcome our friend Jonathan Clements back for his fourth appearance. For thirty years, Jonathan has been known for his personal finance writing: in his column “Getting Going,” which appeared in the Wall Street Journal over 1,000 times starting in 1994, on his website HumbleDollar.com, and in his many acclaimed books. About a year ago, Jonathan Clements was diagnosed with a rare form of lung cancer and was told he had about a year to live. Today we’re celebrating the fact that he is still here with us, and we’re inspired by his decision to use his precious time to launch The Jonathan Clements Getting Going on Savings Initiative. Stay with us to find out how you can get a free Kindle copy of Jonathan’s new book, and how you can help Jonathan pay it forward for the next generation. Jonathan Clements, we’re so grateful to you for spending some of your time with us today. How are you feeling?

Jonathan Clements’ Getting Going on Savings Initiative

Jonathan: I’m feeling okay. as, as you mentioned, I’m 12 months into this, cancer diagnosis. I did make the year and I think I got a little bit more time left in me, but, 12 months of chemotherapy and 12 months of recurring cancer growth does take its toll. My back is pretty short. I’ve, I’ve had to have it shored up with something called bone cement. I’ve also had multiple radiation treatments, not only on my spine, but also on my brain. I go for chemo every three weeks. I’m about to try a new treatment plan because my current treatment plan is no longer proving effective. it’s a journey, as they say.

Andi: It’s a lot. It’s a lot. And the fact that you are dedicating your time and efforts to, to this initiative is just above and beyond. you’re not just focusing on your family or your friends or anything like that. You’re focusing on the next generation.

Jonathan: I think we all want our lives to matter and with what little time I have left, I want to be able to continue to contribute to the conversation and the conversation that I’ve spent my adult life being part of is the financial conversation, trying to help people get their personal finances head in the right direction. This one last effort I hope will bear fruit.

Al: Jonathan, welcome to our show. We’re really, we’re pleased to have you. It hits home to me. I just lost my mom last week and she-

Jonathan: I’m so sorry to hear that.

Al: Thank you. And she lived her life to the fullest, to the end. she was suffering with a disease, but she didn’t complain very much, and she made the most of what she had. And I can congratulate you for doing this. Same because it’s, not everyone makes that decision. And, and I think you’re a great person for doing that. thank you. So you’ve, you’ve got this book. This is kinda what you want to be your final legacy in terms of, what you’d like to be known for. Tell us about the book. Tell us why it’s important or how this came to be.

Jonathan: I don’t wanna take too much credit for this. it all started with a group of, friends essentially coming to me and saying, we’d like to, launch a journalism prize in your Honor. And I was like, the world does not need another journalism award. If you’re gonna do something, let’s do something that will really help people. And the idea that I had was, how about we help? Kids, young adults from, less privileged families get started as investors and do that by donating, say, a thousand dollars so they could open a Roth. IRA. I just threw it out there without, giving it much thought beyond that. But this group of friends, professional friends, people I’ve known all of whom had some association with the, John C. Bogle Center for Financial Literacy. Took it and ran with it and essentially left me alone. I didn’t have to sit through any committee meetings, thank goodness. I didn’t have to get involved in the nitty gritty details instead of, these group of individuals worked out all the details. And a pilot program for the savings initiative will start this summer. The connection with the book is this, the funds raised by selling the book will all go towards supporting, this savings initiative that you can also donate directly. From what I gather, there’ve been a fair amount of donations so far. The book, it seems to be selling really quite well. the book itself consists of 60 plus of my columns from my Wall Street Journal days. I did have a hand in selecting the, Articles that are included, and I did some editing on them, but even the production of the book, Was handled by this group of friends, people, the many listeners may know Bill Bernstein, Jason Zweig from the Wall Street Journal. Christine Benz from Morningstar, Mike Piper, who’s a well-known, blogger and book author, and Karen damato, who’s been my friend for many years and used to be at me with me at the Wall Street Journal. They’ve all been heavily involved in this, and then they’ve been working with some outside organizations to make the initiative happen.

$1,000 Roth IRA Contributions and Personal Finance Education for Young Adults

Al: Yeah. Good for you. and so tell us about the initiative. So this is a thousand dollars Roth IRAs being set up for individuals is that correct?

Jonathan: That’s correct. Of course, to put a thousand dollars into a Roth, you need a thousand dollars of earned income. so the first thing to do is to make sure that these kids have some sort of summer job where they earn. a thousand dollars. So in the first instance, as part of the pilot program that’ll launch this summer, the city of Boston, they have a summer work program. They’re working with the initiative to help put these kids into jobs and then you, these kids will receive some financial counseling. They’ll be talked, talk about the virtues of investing and so on. And this is a serious research program, so only some of the kids are gonna get a thousand dollars and some will not. But all will receive financial counseling and sort of advice on how to. Open a Roth IRA, you know what their investment options might look like and so on. And the notion is to see whether if you seed accounts with a thousand dollars, whether that will have a different outcome than if you’re, you just received the counseling and it’s up to you to put the money in. So what they hope is to have some serious research findings that may guide future initiatives like this. will it work? I certainly hope so, but you never know, right? I remember being, 21 and getting, I think it was 150 pounds from my paternal grandparents in a savings account, and I think it sat in the savings account for about three months before I spent it. I didn’t receive any financial counseling, but maybe these kids, if they received the financial counseling, if they understand the virtues of long-term investing, maybe at least some of them will stick with it. And if they do. They become lifelong savers and investors. the payoff is huge. How great would it be that if we could get, every young adult in America, interest in the financial markets and saving regularly from an early age? Think about the, not only the reduction in poverty at a later age, but also the sense of financial security that people would have throughout their lives. one, we know that money doesn’t always buy happiness, but the one way money is shorter by happiness is if we don’t spend it, we don’t spend money and we leave it in the bank. And we have that sense of financial security that money in the bank can bring, that can greatly boost our happiness, and that I think is what I would wish more than anything for these kids.

Exponential Growth: The Sooner You Save, The Better

Al: I a hundred percent agree with you that the, when you think about, saving, you know as well as I do that sooner you save the better. A lot of people get to their forties and fifties, even sixties with very little or even no savings. And if we can get people starting earlier, it makes such a difference. rule is 72. If you get roughly a 7% rate of return in 10 years, it’s gonna double. Every 10 years it’s gonna double. That’s without adding extra money, but you add extra money, it can grow exponentially. And, you start saving in your fifties, it’s a lot different than if you start saving in your twenties as to what your final savings will be in going into retirement.

Jonathan: No, you’re absolutely right. but it, the key is to get those savings habits set early.

Al: Yeah.

Jonathan: With my kids, I made huge efforts to get them started as investors. I opened financial accounts for them, not just to pay for college, but also to help ’em with their first house down payment. I funded Roth IRAs for them and so on and because they knew that, I probably, disinherit them if they didn’t. They all, they all became good savers and investors and today, in their thirties they’re, they don’t have enough to retire, but they are. Financially comfortable. they understand the virtues of frugality. They understand the virtues of long-term investing, but not everybody has the good fortune, maybe the mixed fortune, but the good fortune to have a parent who is a, wall Street Journal reporter, a lot of people grow up in households where money simply isn’t discussed in this way. the stock market is an alien being, and so if we can get that as part of the conversation early on it has the potential to transform lives.

Research Study Will Measure Impact on Young Savers

Andi: And one thing I wanted to point out was the fact that this isn’t just any old research study. This is being done by the J-PAL North America Center, which is part of MIT. So it’s a randomized controlled trial to measure the impacts of grants like this and to evaluate whether they’re an effective tool to help young adults to see whether or not this makes a difference, if it helps these folks longer term. So will they be followed throughout their lives to see what happens, 10, 20 years from now?

Jonathan: I don’t know how far forward they’re gonna take the study, but I know certainly they’re gonna be following them in the short term and seeing what, the money gets spent and so on. And I would imagine that the design of the program will change over time. I certainly hope it will as they get, have learnings from, this initial crop of, kids who are part of it and, Who knows, maybe this is not the way to go, but I have an inkling that maybe if you really take kids and don’t just, give them, a personal finance class in high school, if you actually take them and help them get invested in the financial markets with real money and they get to see how that works. Perhaps it, the lessons will really sink in. One of the things that we know about, teaching kids about money is that the knowledge tends to degrade very quickly. if you take a personal finance class within 18 months to two years, most of it is forgotten. Instead that what they talk about is having just in time financial education, giving people. Lessons on the different aspects of having a mortgage when they’re taking out a mortgage, so that the information is immediately relevant. So in this case, the information they get will be immediately relevant and with any luck, that will mean that it sticks and that they continue with it. I have, I’m not, I’m not here in la land. I know that some significant portion of the kids will cash out the money, just as I did with the, savings account from my grandparents. But if we get half the kids to stick with it, and then they start to, and some of them add to those accounts every time, that would be a huge win.

Financial Education is Important

Al: I think you’re right. I think it’s, education is great and critical, but education with the money in the account, that actually makes it real. If you just give money without the education, we know that’s pretty much doomed. So I think the combination – I go back myself, I was of all things a sociology major in college and I graduated, unsure what to do, and I decided to go into accounting and finance. I took my accounting courses at night, and I was actually working as an accounting clerk with a company, and the stuff I learned the night before, I was applying the next day, and boy, what a difference for me, it made in that education.

Jonathan: Or the notion of risk tolerance, which is a notion even at this late stage, I find it fascinating. There are these quizzes you can take to assess your risk tolerance and so on. There’s the old stupid, “would you do this? Would you skydive” question. As if that was relevant to how much stock market risk you’re willing to take. But we know that the best way to learn about your risk tolerance is to live through a bear market. That’s when you’ll know. And right now I think a lot of people are discovering what their risk tolerance is for the first time. It’s easy to be big and brave when the market is up. It’s a lot harder when we get these wild swings and share prices, it is real life that is the best teacher Tuition bills are high, but it’s still the best teacher.

Al: Yeah. And we really haven’t had that much volatility, in the past decade or more. So I think people are getting educated right now.

The John C. Bogle Center for Financial Literacy

Al: So let’s talk about the John C. Bogle Center for Financial Literacy. They’re taking donations on behalf of your initiative, so let’s talk about that.

Jonathan: As I said, all the hard work on this was done by various people involved with the Bogle Center for Financial Literacy. I had some involvement with the book. I have had no involvement with the technicalities of, how this program was put together. But yes, if you have a donor advised fund, you know this is a great way to use part of the money that you’ve accumulated there. you can do direct charitable contributions. One of the best ways for any older listeners is to do a qualified charitable distribution from your IRA, that’s available to people who are 70 and a half and older. That way, you actually substantially ensure that your contribution is tax deductible. Unfortunately, for a lot of people these days, given that the standard deduction is so high, their contributions are not gonna be tax deductible. But with a qualified charitable distribution from your IRA, it is effectively tax deductible.

The First 100 People to Email Receive a Free Copy of The Best of Jonathan Clements: Classic Columns on Money and Life

Andi: Fantastic. And then of course, the other way to contribute to The Getting Going on Savings Initiative is to get a copy of the brand new book, The Best of Jonathan Clements Classic Columns on Money and Life and it’s available on Amazon in paperback for $21.99 or you can get the Kindle copy, which is $9.99. And for listeners to Your Money, Your Wealth – and viewers to Your Money, Your Wealth right now, if you are a Kindle user, we have 100 copies of Jonathan Clements’ new book, and it will be available to the first 100 people to email info@purefinancial.com. That’s info@purefinancial.com. We will send you the Kindle copy of this book, and those 100 copies of the book that are going out will actually help to fund one of those $1,000 Roth contributions for IRAs for the low-income family young adults who are taking part in this initiative. So email info@purefinancial.com if you would like a copy of the best of Jonathan Clements, that is yours free from Your Money, Your Wealth, to support The Jonathan Clements Getting Going on Savings Initiative.

How Does a Healthy 62-Year Old Non-Smoker End Up Living With Stage IV Lung Cancer? The EGFR Exon 20 Insertion Mutation

Andi: So Jonathan, one more thing while we have the opportunity to talk about it. You and I have talked about the fact that cancer support, raising awareness, and advocacy is something that’s near and dear to my heart. So I’d like to do a little bit of awareness raising for those who are wondering, how does a healthy, active 62-year-old non-smoker end up living with stage IV lung cancer?

Jonathan: Well, it was a little bit of a surprise. In fact, it was almost exactly a year ago that I discovered that I was a little unsteady on my feet and, you know, I thought that I might have some sort of a sinus infection, you know, it’s allergy season, you know, maybe that was the reason. Maybe I had some blockage in my ears. This went on for five or six days and eventually I wandered into an urgent care clinic. Within 12 hours I was in hospital and, you know, after, a whole bunch of testing, they discovered that, you know, I had a tumor growing in my lungs and I also had lesions on my brain. That was the reason for the imbalance that I was feeling, and all of this was the result of a defective gene. I have a defective gene that caused the lung cancer. For those who are inclined to put stuff into Google, it’s called EGFR Exon 20.

It’s relatively obscure among the genetic defects causing cancer. I think there are only 3,500 people who are diagnosed with this each year in the US. But what it means is, one, because it’s a defective gene, this is not gonna affect my kids. It’s not gonna affect my siblings. And in fact, in the case of my defective gene, the people who are most likely to get it are women and people of Asian origin. So, you know, the fact that I ended up with it is, might seem a little strange, but just shows how random it is. And I think the warnings to people who are listening to this is, you know, anybody can get something like this. It’s, there is nothing. I know that I did that warranted, you know, getting this, this particular version of cancer. In fact, there’s very little history of cancer in my family. Just this just came outta the blue.

HumbleDollar.com, The Getting Going on Savings Initiative, and The Best of Jonathan Clements Book

Al: Well, Jonathan, we really appreciate the time you’ve given us this. This has been amazing. You are looking good, my friend. I would like to have this conversation a year from now and we’ll see how this is going because you’re an inspiration to all of us. So again, thanks for joining us.

Andi: Hear hear.

Jonathan: I appreciate you having me on. It’s been fun. Thank you.

Andi: Thank you very much. That is Jonathan Clements, former Wall Street Journal personal finance columnist. You can find out more about him at HumbleDollar.com, and of course you can contribute to the Getting Going on Savings, Jonathan Clements’ brand new initiative, by either getting yourself a copy of his book, making a donation through the John C. Bogle Center for Financial Literacy, And of course, you can also email info@purefinancial.com to get a copy of the book on Kindle. Jonathan Clements, thank you so much.

Jonathan: Thank you.

Andi: Pure Financial Advisors is a registered investment advisor. This show does not intend to provide personalized investment advice through this podcast, and does not represent that the securities or services discussed are suitable for any investor. As rules and regulations change, podcast content may become outdated. Investors are advised not to rely on any information contained in the podcast in the process of making a full and informed investment decision.

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