When a man who recently sold his company for $170 million shows up at a public event in 40-year-old shoes, you can’t help but reassess your own attitude towards money.
The shoes in question belong to Mint.com founder Aaron Patzer. At Intuit’s second annual Town Hall event on April 28, Patzer teamed up with personal-finance experts Anya Kamenetz and Beth Kobliner to discuss personal finances with a group of New York City high-school students, followed by a group of about two dozen consumers from throughout the country, each with their own financial worries and goals.
The students – most in their senior year at the Coalition School for Social Change and several juniors in Rice High School in Harlem – discussed how they spend their money. (“Clothes, ‘cause you gotta stay fashionable,” said a young gentleman. “Hair and nails,” a girl chimed in. “Tattoos!” said a third.)
The 40-year-old pair of shoes – with new soles and perfectly shined — originally belonged to Patzer’s father. You could absolutely not tell their age. Father and son – both present at the discussion – discussed the importance of spending your money wisely: one of the qualities most highly valued in the Patzer household.
“Most people who are rich are not rich because they have flashy careers,” Patzer said. “They are rich because they were very methodical about their saving.”
Patzer got into a “saving” mode at a very young age, when his father introduced him to the wonders of interest compounding. Finding out that money, when left to earn interest long-term, can grow exponentially because interest earns interest, which then goes on to earn interest and so forth, Patzer had calculated that if he saved his allowance, he could have $65 billion by the time he retired. (His giddy bubble was burst soon thereafter, however, when his father also introduced the concepts of taxes and inflation. Oh well.)
Yet for most Americans these days, the importance of wise money management has come to the forefront. Most of us are still very much in saving mode, even as we slowly begin to emerge from the recession. Many Town Hall participants shared their concern of not having properly funded emergency funds or spending too much on unnecessary items.
Participant Sarah Alexander, 27, shared her biggest worry: after 10 months out of work, the clock is ticking on her unemployment benefits. It’s also ticking on a much happier occasion: her wedding is in just a couple of weeks. Alexander and her fiancé have $4,000 in credit card debt – and a lot of wedding expenses down the pipe. They have cut their wedding budget in half, to $8,000, which they plan to fund with the first-time home buyer credit they are due to receive on the recent purchase of a home. (This couple is not alone, mind you: as Kobliner pointed out, the cost of the average wedding has come down dramatically, from $29,000 in 2007 to $19,000 in 2009.)
Finding creative ways to save money and the importance of learning about finances (whether from your parents or in school) were just two of the topics discussed at Intuit’s Town Hall. MintLife was happy to have a first-row seat at the event and would like to share some of the most clever money management lessons learned:
The 10-10-10 Rule
It stands for 10 minutes – 10 months – 10 years. Whenever you feel the urge to buy something that may be above your budget or just seems expensive to you, ask yourself this: Will you remember that purchase in 10 minutes? How about 10 months? Ten years? “You may remember a concert of your favorite band, but getting your nails done today versus waiting a week – you will not,” said Kamenetz.
Turn price tags into hours worked
So you don’t really need another pair of jeans, but you eyed one that costs just $40. Inexpensive, right? That depends on how you think of it, Patzer said. Say you earn $7 an hour at your part-time job (not uncommon for high school or college students who work after school and on the weekends). You’d need to work almost 6 hours to pay for those jeans. If you work 10 hours a week, that’s 60% of your work time. Think of it this way, and that pair of jeans doesn’t look that cheap, after all.
Think of your money is a goal enabler
At the end of the day, money is more than just a bunch of numbers. “At Mint.com, we say that money is a tool for living,” Patzer said. What’s the point of working hard for your money and saving it if you don’t have goals to look forward to achieving?
Patzer gave Town Hall participants the very first peak at Mint.com’s new feature, Goals, to be rolled out soon. It will allow Mint users to set goals in seven categories: Get Out of Debt, Save for Retirement, Buy a House, Save for Your Child’s Education, Buy a Car, Improve Your Home and Take a Trip (because everyone’s got to live a little, right?). Mint will automatically populate users’ savings towards each goal, marking their progress within a specified time frame. You will even be able to upload personal pictures to help you visualize each goal. Because what is personal finance, after all, if not personal?