Robinhood/GameStop fascinates me. There is so much conflicting information online and so many differing opinions to consume. And I am no expert, but I do live with a guy that got an MBA in Finance and was a public company CFO for many years…working with investors around the country, watching how things affect a company’s stock, etc. So we’ve had some interesting conversations at home around social media posts, comments, articles, manipulations, etc. He’s lived some of these different situations described online. He’s probably tired of me asking “So-and-so posted this…what does it mean? Do they make sense? You should see THIS comment!” We’ve evaluated and discussed all the posts…probably yours too. HA!
For this particular “Robinhood/GameStop” situation, there are things on both sides of the story that sound shady. I wouldn’t be shocked if both sides did illegal activity. And, of course, the internet is divided once again by thoughts and opinions, with some partial facts thrown in for good measure. But my take-aways are really larger than this week. Not that I don’t care about the specifics of this “not-so-black-and-white” situation, but it’s led to broader financial conversations. If anything good comes from this, may it be more of those conversations in homes everywhere.
We’ve personally had some great discussions as a family (yes, including the kids!) about all things financial. Here are some of the highlights.
When you enter into any agreement, the fine print is there for a reason. Many people (myself included) don’t read all the fine print of every single thing. Like every app we download. For example, to say Robinhood halted trading and that specific act was illegal…is wrong. Read the fine print. Halting trading may be more common than you think. However, is the way they did it questionable and should it be investigated? Possibly. So again, READ THE FINE PRINT if you want to be able to complain about it later. Know what you are talking about.
Stocks, lottery tickets, casinos, etc. all have risk. They can be fun to dabble in, but you should know what you are getting into when you participate. There are no guarantees. You shouldn’t expect to be bailed out of a situation in which you made a bad decision.
Money management should start at an early age. The best thing I ever did was to work as a bank teller throughout my college years. I learned so much watching what other people did with their money – the good and the bad. And I understand that some things won’t work for those living in dire financial situations. But I also learned you don’t have to have a huge amount of disposable income to start paying your savings first before other extras like going out to eat. And no amount is too small to start saving. At my first job, I put $5-10 in savings every time I got a paycheck. That money added up over time! Couple that discipline with a basic budget, and compiling savings is doable at any income level.
We use a three-jar system with our kids and their allowance. Their allowance must be split into the three jars – Save, Spend and Give. We are trying to teach them early that they need to have money set aside for saving up for something (most recently a new bike for one of them), money to give to others (they choose a charity or giving opportunity) and then money to freely spend. My preteen loves to shop. My favorite question when she shows me items in a store is “You buying it with your money?” This has made her realize what she really, really wants versus an impulse buy.
Having an outside financial advisor is also a great thing. Even living with a finance guy, we still have an outsider review all of our financial stuff with us. I think there’s often been this stigma that only rich people have financial advisors. Not true. Are there advisors who specialize with different income brackets? Absolutely. Because different things are needed at different levels. Basically, it’s always good for an outside, unbiased person to look at your financial situation.
For us, the Robinhood incident was a great reminder to openly discuss financial situations with each other and our kids. Talk to your kids about money. And research an appropriate financial advisor for your family and goals. It never hurts to put together a budget and track against it. In that budget, make saving part of your normal monthly payment stream. You are investing in yourself. You don’t even have to use Robinhood to save and invest. Think before you make purchases. Impulse buying can definitely put a big dent into your plans if you aren’t careful.
What tips would you add?
