Kenneth O. Doyle Ph.D_ - Financial Literacy for Generation Z

This book aims to teach you about things you need to know to make good financial decisions. The text is for educational purposes only. Im certainly not providing legal, financial, medical, psychological, or spiritual advice, and you should surely not make decisions based solely on this text. Thats what your own lawyers, financial planners, accountants, psychologists, physicians, and other professionals are for.

Ive tried hard to keep the information I provide accurate and up to date, but I cant guarantee that the information I provide fits your situation exactly or that I cover all aspects of every relevant topic. Again, that is why you need your own advisors. I also cant guarantee that no error has crept into the text.

Think of this book as a primer to help you prepare for thoughtful, financial conversations with friends, family, and professionals.

Copyright 2019 by Kenneth O. Doyle, PhD

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, except for the inclusion of brief quotations in a review, without prior permission in writing from the publisher.

Library of Congress Cataloging in Publication Control Number: 2019020668

ISBN: 978-1-4408-7066-8 (print)

978-1-4408-7067-5 (ebook)

232221201912345

This book is also available as an eBook.

Praeger

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This book is printed on acid-free paper

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No one writes a book alone. My companions span lots of time and space.

The earliest were my parents, an Atticus Finch kind of lawyer and his truly loving wife who taught me values, along with a platoon of uncles and cousins, attorneys almost all, whofor better or worsetaught me to think like a lawyer.

Then came a phalanx of priests in Milwaukee, Michigan, and Rome who are responsible for the affection I feel toward the Greek philosophers and the Thomistic tradition; psychologists and psychoanalysts in Minneapolis, Minnesota, and New York who made me see value in both Jung and Eysenck; and estate planners and financial planners around the country who, by teaching me a little bit of what they know, taught me almost everything I know.

Thanks also to my Praeger editors, Hilary Claggett and Erin Ryan, and the Praeger production people, most notably Bridget Austiguy-Preschel, and Eswari Maruthu who transformed a rough-hewn manuscript into a finished product; and my undergraduate research assistant, Kenny Ekblad, who really functions like a graduate assistant.

On the personal front, crucial emotional support came from my daughter, MacKenzie, who is making a mark as a music therapist in Germany; Andrea Fields, my special friend and confidant whose most important job (among many) has been raising her daughter, Anayah, my favorite tweenager in the whole wide world. And certainly not least, my buddy Bryan, eight pounds of Chihuahua-Dachshund mix, who every day shows me what unconditional love is all about.

To all these I express my gratitude.

The purpose of this book is to help Gen Zers make better lifelong financial decisions by blending financial planning and financial psychology. Financial planning is the what and how of money: What is insurance; how does it work? What are investments, taxes, employee benefits, and so forth, and how do I make good decisions? Financial psychologythe psychology of moneyis the why: Why do different kinds of people do what they do with their money and property? Why do they make the decisions they make? The guidelines in this book turn on understanding both financial planning and financial psychology.

To illustrate, some types of people hate risk and go out of their way to avoid it, while others enjoy it and seek it out. Those who avoid risk are vulnerable to inflation; the diminishing value of the dollar will eat up their savings. Those who pursue risk open themselves to investments that may very well go broke. Each type needs a little nudge away from their natural inclination to make more prudent financial decisions. The more clearly you understand yourself and why you do what you do, the better decisions you will make.

The same line of thinking applies to all financial decisions, from choosing a career to budgeting for retirement. Our personalities often incline us in directions that might not be the best for us. On the other hand, we need to respect those personalities: you wont stick with even the best financial plan if it doesnt feel right to you.

In this book Ill show how personality affects financial decisions and how different types of people can make better decisions throughout their lives. Ill spend most time on the decisions Gen Zers face today and tomorrow, but Ill also get into the decisions of later life so readers can be better prepared for the future. Ill define financial planning broadly, to include important decisions that will affect your entire financial life, starting with choosing a career. Ill go beyond plain academic description and get into the details of what I suggest you should do and why.

Ill start with a chapter on the language of money, in which Ill show why people use money as they donot just to buy things but to communicateto send messages to the important people in their lives. From these messages Ill construct four key personality types that Ill focus on throughout the book.

Then Ill get into the decisions that are right at Gen Zers doorsteps: choosing a career, financing their education (whether trade school or college and university), learning to manage money, starting to give to charity, and so forth. Ill describe tried-and-true tools and techniques for making decisions on each of these topics, and Ill show how people of different personalities, because theyre naturally inclined in particular directions, may need a little adjustment to keep themselves on the straight and narrow.

Next Ill approach decisions that are not immediate but right around the corner, like buying a house and car, purchasing insurance, evaluating job benefits, controlling taxes, and starting a family. Ill share a few tricks of the trade for making money from your house and car, and Ill show you how to pick the kinds of insurance you need most, save money on your taxes, and prepare to start a family.

Ill also mention the concerns Gen Zers will face later, when they become part of the middle-aged sandwich generation, pressed between supporting their own children and taking care of their aging parents and grandparents.

Finally, Ill just touch on how Gen Zers can protect themselves from eventualities nobody wants but many people will facefiling bankruptcy, losing a job, and getting a divorce. The idea is to get people thinking about what they can expect in their financial lives from high school to retirement.

The financial world is changing fast. Artificial intelligence, big data analytics, and deep machine learning are taking over financial services. Were just beginning to see what banking, investments, insurance, real estate, and so forth will look like in the future.