In Ep. 110, Conor Richardson joins the show once again making him the first 3-time guest on the show. We briefly talk about his book, Millennial Money Makeover, and also discuss a report published by the US Government Accountability Office that outlines the difficult financial landscape Millennials have entered. We talk about how Millennials can navigate this landscape and still have their chance at living the American dream!
Conor Richardson, CPA – The Millennial Financial Landscape
Tim Mullooly: Welcome back to Living With Money. This is Tim Mullooly. On today’s episode, I am joined once again by Conor Richardson. He’s a CPA, a personal finance expert, author of the book Millennial Money Makeover and, as far as I know, you’re the first three time guests on Living With Money. So, Conor, thanks for coming back on the podcast for a third time.
Conor R: Tim, thanks for having me. Glad to set the record.
Tim Mullooly: Yeah, you’re in elite company. Last week we had someone come on and join the two timers club, but now we have a three timers club. So we’ll see if anyone else makes it, but prestigious territory for you here on this episode.
Conor R: Yeah, thrilled to be here. Thanks.
Tim Mullooly: So for the listeners, we had Conor on episode number 44. So a while back. And then even earlier before that, he was also on episode 19. Conor has been with us pretty much since the beginning. But for the listeners out there who may have missed the first two interviews, Conor, do you want to kind of bring us up to speed briefly about you personally and what you do for a living?
Conor R: Sure. So, I’m a CPA by training. I started my career in New York City, I was working for one of the large accounting and finance firms there. And while I was in New York, I was working really long hours and, a couple of years into it, I had this sort of financial awakening, which really sort of jump started and sort of was the catalyst for my personal finance journey. And that led me to ultimately leave New York and move to Austin, Texas where I live now. I wrote a book called Millennial Money Makeover during that process and that was released in January of last year. So I work in finance and accounting professionally and personal finances, a passion and a hobby.
Tim Mullooly: Awesome. Yeah, and episode 44, it came out in November of 2018, so the book hadn’t been released yet. Can you talk to the listeners about the book? It’s called Millennial Money Makeover. Just briefly, what’s the overall message of the book and what are some of the main points that you touched on in the book?
Conor R: Yeah. So it’s called Millennial Money Makeover: Escape Debt, Save For the Future, and Live the Rich Life Now. The book came out, as I mentioned, in January of last year, and since then, we’ve seen a tremendous response to the book. It’s sort of spreading like wildfire, which has been terrific to see. When you put a work of your own out into the world, you never quite know what the response is going to be, but I’ve had incredible feedback and we have thousands and thousands of readers, and I get emails all the time from my readers and have a newsletter. But I guess to answer your question, really the three main themes of the book almost, kind of like the subtitle, it really walks readers through three phases of their financial life.
And the first is what I call turning professional with your money. And that’s really the decision to stop and turn yourself around in terms of facing whatever it is and wherever you are in your financial journey. So whether that’s talking about money for the first time, whether it’s acknowledging how much debt you have, or whether you’re going to take this thing called money and really learn about it and take it by the horns and really direct your life.
The second is sort of learning how to get rid of debt altogether. So our generation, as a whole, millennials, is encumbered by debt, whether it’s credit cards due to loans or another type of consumer debt, we have a tendency to acquire this debt at rates that far exceed previous generations. So I walk readers through how to get rid of debt altogether, because I’m a huge believer in that.
And then lastly, once you get rid of debt, and I call it crossing from red into black. So you’re in the black, you’re saving money. It’s learning how to begin that process of saving, building up that sort of savings infrastructure that will give you the economic and financial base to begin saving and investing and really igniting that fire.
Tim Mullooly: We talked a lot about the book in the second interview that we did, but just that first point that you were talking about, especially for millennials, just kind of turning yourself around and, like you said, getting professional with your money and facing your fear of money, I feel a lot of millennials get to that point in life and they haven’t actually sat down and thought about their money in a professional way. They kind of would prefer not to look at it in a sense. I know you said that you’ve been getting a lot of emails and feedback; what has the feedback been? Are there any things that kind of stick out in your mind when you think about the feedback that you’ve gotten on the book?
Conor R: They are. And you have to sort of think about the phenotype of someone that picks up a book or orders a book called Millennial Money Makeover.
Tim Mullooly: Right.
Conor R: As I lay out in the beginning of the book, people pick up the book for a reason. They’re yearning for something, they’re trying to get more knowledge or they just don’t really know where to start. And so one of my favorite parts of writing this book is really it’s becoming what I wanted it to be, which is a tremendous conversation starter. And it’s making sure that you will have all of those things knocked off your to do list from a financial perspective that’s going to set you up for the next 30, to 40, to 50 years of your life. And an interesting thing that I kind of really didn’t think about because the book is titled Millennial Money Makeover, I’ve had a tremendous amount of people email me and say, “I’m not a millennial, but these points absolutely apply to me, and here’s what I’ve been doing to go down that path and turn around my finances.”
Tim Mullooly: Right. Yeah. I feel it’s very timely for millennials just starting out their financial lives, but like you said, I feel a lot of people, even in older generations who might not have started to take their money seriously, it doesn’t matter how old you are, eventually you’re going to have to sit down and do things the right way and get yourself on track. So those points can hit home for other generations as well. It’s great that it’s starting the conversation you intended.
Conor R: Yeah. And I think in the book I lay out 10 principles of success that I really tried to make universal. So they cross generations, they cross genders and, I mean, it’s a starting point for everybody to bounce off of. And people start at different points throughout their journey, but another thing that I found interesting as well is wherever people are, even if they have paid off debt or they’re just starting to save for that emergency fund, they find all facets of the book useful, because it serves as a reminder to, a, maybe not make the mistake of getting in more credit card debt, or if they do, they know right where to turn to to eliminate that from their life.
Tim Mullooly: Right. Yeah, that makes sense. It’s a good guide for people to have. Like we said, the book was published January of 2019, so it’s been over a full calendar year since the book has been published. I wanted to ask how have the main points in the book held up over a year? When you print something, it’s final and you can’t really go back necessarily and change it, unless you want to put out a second edition or a follow up book. But how have those main points held up? And have there been any points, or small details, or anything looking back that have kind of changed over the course of a year?
Conor R: I think so far so good.
Tim Mullooly: Right, yeah.
Conor R: In the course of 12 months, the main themes all still apply and they’re all incredibly relevant.
Tim Mullooly: Right.
Conor R: One of the things that that did change, to your point, is some of the statistics that are laid out in the beginning of the book may have changed slightly up and down, but really the main themes still hold, which is the millennial generation, as a whole, is suffering economically in a much different way than previous generations are; and I think it’s important to acknowledge that. And we will continue to if we don’t do something about it. And that’s really the catalyst for the rest of the book. But all the main themes apply and I’m happy to see that.
Tim Mullooly: Right. Yeah, that’s awesome. Kind of piggybacking off of that, there was an article that I saw online, and I know you read it as well, published recently by the GAO, is about millennials in comparison to past generations like you were just talking about. So I know you’ve kind of dug into the article a little bit. For you, what were some of the most interesting takeaways that you think the listeners and millennials and other generations should know about?
Conor R: What I found interesting, first of all, was that the government accountability office had been tasked with writing this research paper.
Tim Mullooly: Right.
Conor R: That’s interesting unto itself.
Tim Mullooly: Right.
Conor R: And I thought it was particularly irrelevant given that, really, if you take a read through it and I encourage your readers too, to do, but what it highlights is that what you feel in your day to day life is not just an anecdotal experience, but it’s actually systemic of a generation and everything that’s happening to millennials as a whole, as it relates to other generational cohorts. So that’s one really interesting fact. Some people can think, “Man, this feels like a lot,” or, “Did other generations really have this student loan debt burden?” Well, the answer’s no. We’re unique in that way. But I think one of the interesting takeaways in the article is that it sort of lays out three different definitions that I can kind of talk to. And the main theme is basically that mobility within our generation is declining in terms of economic progress and a couple of different indicators.
So one is called absolute mobility. And what absolute mobility means is, basically, are you earning the same amount of money as your parents did or previous generations did? And of course, that’s adjusted for inflation. And the answer is that’s declining over time and that’s not necessarily a good thing for millennials.
Tim Mullooly: Right.
Conor R: The second is a definition called relative mobility. And that means that it’s really looking at can you move into different income brackets with the same amount of income as before? And what the GAO found is that those income brackets are expanding. So even if you earn more money nominally than your parents did, you may wind up in the same income bracket, because it’s just grown in width.
And then the last definition is inter-generational income elasticity. And this is a really, really interesting one, because what it does, it looks at, they call it the persistence of advantage over time. So how much of your parents’ economic advantage is really translated down to you? And they measure this from zero to one. So, if you’re inter-generational income elasticity is zero, that means your parents income and financial well-being really has zero impact on how far up or how far down you can move. And as it approaches one, it’s a strong degree of correlation, meaning that your parents, their economic status, has everything to do where you end up. And what we’re finding is that over time, over generations, we’re moving gradually from zero to one, which is not necessarily marrying with the so called American dream of the rags to riches story. And that’s what this report really highlights.
Tim Mullooly: Yeah. It kind of showed that, like you said, the American dream is people know that if you work hard you can be successful. But seeing statistics like you were just talking about, the elasticity, as it gets closer to one, it’s like, “Well, if my parents work hard, then I might be able to benefit from that.” I think for me, in the report, there was something that showed that even though millennials are more highly educated than past generations, it doesn’t necessarily mean that they’re going to earn more money, especially with the student debt crisis the way it is right now. What do you think that that means for the importance of higher education if more people know that, “Well, I can get highly educated, but it doesn’t necessarily mean that I’m going to earn more money”? What does that mean for higher education and the value that it has?
Conor R: Yeah. Well, higher education, as a whole, has really taken a surge and that tends to happen when you don’t necessarily have great alternatives.
Tim Mullooly: Right.
Conor R: Or money is cheap to borrow. So one of the things that the report highlighted was that millennials actually have the highest debt to income ratios of any generation prior to them. And so that kind of shackles you financially in terms of your financial progress, because you have all of this debt to pay off before you’re making those major life choices, like buying a home, and those major investments or just saving for retirement altogether. I think what it is going to do over time, and I actually speak to this a little bit in Millennial Money Makeover, is it’s going to force people to have the conversation about money, one, earlier in their life, and two, it’s going to require people to think about the economic benefit of the degree that they’re actually receiving, because not all degrees are created equal in terms of economic output. And where people really get hung up is if they go into even an undergraduate program or an associates program and they take out those loans, and then they don’t graduate. And that’s where people can really get hung up. So it’s thinking about what you’re majoring in, maybe augmenting that major with something else, and then really being coy about taking on a lot of graduate level debt.
Tim Mullooly: Yeah, it’s definitely a conversation that needs to start a little bit earlier than where it does now, which is usually somewhere in junior or senior year of high school for kids. That’s when it starts to pop up in their minds. At least starting that earlier and maybe thinking harder about what they actually to do with their degree and what field they want to go into would definitely benefit them in the long-term.
Conor R: Yeah, and I think your choice of words there is so critical, because they’re exactly that, at 16 and 17, they’re kids. So we’re giving them the opportunity to sign on the dotted line, and a lot of them do this with the assistance of their parents, and that’s a whole other conversation, but they don’t have a tangible way to reconcile figures on a paper to, what’s that going to translate into in terms of output to actually pay this thing off? And so that brings up a whole conversation about college onto itself. We can take that any way you want.
Tim Mullooly: Just for me, thinking back when I was 16, 17 years old, like you said, you see the numbers on a piece of paper, but it’s hard to actually think about the real life potential consequences that you could have down the road. Everyone at that point just wants to go to college, because that’s what their friends are doing and they’re going to study whatever they want to and not really think about the consequences. And it’s hard to blame kids, because they’re kids. So do you think that that responsibility, to kind of make them more responsible decisions, lays on the parent’s shoulders?
Conor R: Yeah. I mean, I think it certainly lays on both of them, right? So, as a parent you have to educate your children on the value of what they’re buying. That’s number one.
Tim Mullooly: Right.
Conor R: Number two is that while education costs much more today than it has in the past, college tuition has grown at a rate of 6% higher than inflation for almost the past decade. The college premium, so those who graduate college, still earn 50 to 60% more than those who don’t graduate college. So there’s still a tremendous economic benefit, but it’s having the analytical skills to make sure that what you’re majoring in is going to actually translate to that economic benefit is really the important decision to have.
And thirdly, the success sequence, as you describe it, which is you get good grades, you get into a good college and then you go, no matter what. That last piece is what really needs to be questioned. People have different answers depending on where they are, because student loans are a wonderful catalyst for people to go to schools that they otherwise couldn’t afford and that’s what makes the higher education system in this country so great as well.
Tim Mullooly: Yeah. I think there are a couple of different decisions that need to be made. One, to take on the loans, and then, two, I think the responsibility then becomes even greater on the student to finish school, like you said, especially if you have those loans. I mean, if you’re self-funding college or your parents are paying for 100% of it and you’re not taking out any loans, dropping out or not finishing I guess has slightly less of a consequence to it. But if you have those loans and you don’t finish school, you’re not going to get the economic benefits that a college graduate would have in terms of money that you make after college and you still have to pay those loans back.
So the responsibility kind of does shift even more onto the students after they take the loans to stay in school and finish. Would you agree with that?
Conor R: Absolutely. And I think that there’s another point in there that’s really critical, is parents co-sign these loans a lot of times and there are horror stories of them doing this to their own demise, right? The student doesn’t graduate and then parent is on the hook for these loans. And the parents, at that point in their life, should only be co-signing these loans if they are financially secure and they have their retirement already set to go, otherwise they shouldn’t be co-signing. They need to focus on themselves at that point. And a lot of parents have this cloak of guilt by not co-signing, but the reality is you’ve raised a child, up to 18, to get them into a college, and that’s an accomplishment unto itself, which should be applauded. And then if you have that economic benefit to be able to co-sign, then that’s great, but there’s also the element of giving the student the independence and the freedom to learn and make those decisions on their own. And then if they come back later, you can have that conversation with them.
Tim Mullooly: Yeah, I agree. It shouldn’t necessarily just be an automatic given that parents will co-sign for those loans. I feel parents sometimes will not necessarily give it the right amount of thought that it deserves thinking about the consequences of what happens maybe if the kid doesn’t finish college; so I have to agree with that. In the report, like you were saying, I mean, if things like parental income and geography, so where you live in the country, will play pretty significant factors in earnings potential, what can millennials and younger generations do to kind of combat certain disadvantages that they have working against them to still live a flourishing financial life?
Conor R: Geography is critical, and it really boils down to education, I think. So, communities that have the conversation early and often about money are the ones that are winning here, and that is going to hold true from now and into the future. So I think educating yourself about money, how it works. One of the biggest fallacies I’ve seen over the last year in talking to people is that they think that they have to know everything about money. And just like the conversation we were just having, you actually don’t have to know that much about money at all. What you have to do is make a couple of really good decisions, and then everything else is much easier.
So, it’s thinking about those big decisions in those critical decisions, and everything else downstream gets much easier. Having that conversation early with your children, with your family, I think families don’t have this conversation enough, especially when kids are entering in college or thinking about it. Equally as bad is mortgage debt as well, not having that conversation about affordability, being able to make mortgage payments versus balancing that with savings, et cetera. So, those are two big areas that people get caught in a vacuum of this success sequence, whether it’s going to college or buying a house right after they get out of college as a proxy for success, and it’s not necessarily the case.
Tim Mullooly: I feel a lot of people just think that’s what they should do. They should go to college, and then, right after, they get a job, and then it’s like, “Well, I should buy a house, right? That’s what people have done, so that’s what I should do.” And I agree with you. That’s not necessarily the game plan for everybody. And getting back to what you were saying about just making a couple of decisions, right? As opposed to knowing everything. Money and managing your money and personal finance becomes a lot more digestible and easier to get a grip on when you don’t try and take it all on at once, because there is so much to learn and you don’t need to know it all at once, you just need to get the basics.
Conor R: And you can’t.
Tim Mullooly: Yeah, exactly.
Conor R: You can’t know it all at once. So this is a lifetime of knowledge that you will accumulate-
Tim Mullooly: And it’s always changing.
Conor R: And you’ll accrue, and it changes. And that’s why it’s so important to come up with a set of principles, and Millennial Money Makeover gives that playbook to people for a certain set of principles to follow. But if you think about principles on a very broad basis, they’re great at guiding you to the right answer, because if you keep asking yourself a question over and over again, you will get to the right answer. It just might take you a little while, but that’s why principals are so incredibly powerful.
Tim Mullooly: Yeah. And if you have those principles, I mean, if new challenges come up, you can always default back to your principles and it helps you make those decisions and move on to the next thing. In the article, they talked about, and we’ve mentioned it a couple of times now, it’s the, in quotes, “the American dream.” It seems a lot of the old elements of what the American dream used to be have changed over the years, especially in the last handful of years with this new generation. So I wanted to ask you, in your opinion, what is the American dream today, if there is one at all?
Conor R: I think that’s a great question and I think a lot of people are grappling with this, but to me, I think the American dream is still alive and well. And that really is this idea that if you work incredibly hard and you take massive action in your life, you can go from the bottom to the top. I sort of quantify that and qualify that with what I call the rich life; and that’s really what I think the American dream is. And that’s designing your life in a way where you don’t actually have to think about money all the time, but there may be a reordering of the success sequence that allows people to get there now. The American dream is alive and well, it will continue to be. It’s certainly slowing down and the data suggests that, but that just means that people need to be that more conscious about the decisions that have been marketed to them and question things along the way.
Tim Mullooly: And you mentioned living the rich life, and that is one of the mantras of the book, and I wanted to ask you, given all of that information in the report and what we’ve been talking about millennials and their ability to earn and accumulate wealth, how can millennials still go about living the rich life or figuring out what the rich life means to them? Is it maybe just defining it a little bit differently than they might have thought in the past?
Conor R: Yes. I mean I think it’s a complete redefinition and I think we’re riding that definition right now. I mean 57% of millennials want to retire by the time that they’re 60 years old. The whole idea of retirement is being redefined as, not this singular stopping point in life, but there’s new ideas like taking the mini retirements throughout your life, augmenting your skill sets so that you can take on passion projects and earn money through things that you’re passionate about. So I think that it will continue to evolve, and the rich life, really, to me, begins when you learn the skillset of delayed gratification. And if you can harness delayed gratification in, let’s just call it your early 20s, or in your early 30s, the benefits of that accrue for the rest of your life.
So it’s making sure that you’re challenging what is average, and then you are going a step beyond that to make sure that whatever the cards are in your hand that you’ve been dealt, you play the best hand that’s dealt to you. And it might take you a little bit longer than what’s marketed as normal, and that’s totally okay, because you don’t have to sprint at the same pace as somebody else, but you can still get to the destination ahead of them.
Tim Mullooly: Right, exactly. Yeah. So it’s all about, especially going back to the American dream and in coordination with that living the rich life, it’s about figuring out what that means to you. So I agree. And that point about retirement, how it’s changing, the report talks about how almost a third, potentially up to two thirds, of wealth comes from inheritance passed down from parents. How does that affect this generation’s ability to plan for retirement? If that big of a portion of wealth is coming down from your parents, but you’re not necessarily sure when it’s going to come, or how much it’s going to be, or if it’s going to come at all,. I mean, how do you game plan for something like that when it comes to something like retirement?
Conor R: So, that is a fantastic question and I think the answer is that you plan as if it’s not going to come.
Tim Mullooly: Right. Yeah.
Conor R: And if you plan as if you’re not going to-
Tim Mullooly: It’s safe to say you don’t plan for it.
Conor R: Right. If you don’t plan for it and you do everything that you’re supposed to do yourself, that will be an added benefit. But inheritance can be a thorny issue. There’s a saying that money doesn’t necessarily make people evil, but it certainly shows their true side and their true colors, and people act differently about inheritance altogether. And so, to me, that’s not necessarily living the rich life. The rich life is planning for your success and your family’s success, and then everything that comes after that is gravy.
But it does encumber you with the thought that you need to actually learn how to manage money. So while you can do that for yourself, you also have that added mantra to be able to handle your family’s income as it comes in as inheritance and pass that baton on to the next generation.
Tim Mullooly: Right. Yeah. I’d have to agree with that. And we see clients or people come in with inheritance issues going back and forth. Even family members and siblings can turn on each other when inheritance comes. So I definitely agree it can be thorny and I also agree that it’s no way to live your life just waiting for an inheritance. You can go out and make your own financial success and, like you said, have the rest just be gravy on top. We’ve been talking about this article and then also the book. Having the book been out for a year now, I wanted to ask, through the feedback and everything that you’ve heard, have you learned anything from people that have read the book or that have kind of given you feedback that maybe you weren’t expecting, or heard something that you thought was that was really impactful, or some sort of really good feedback from people that have read the book since it’s been published?
Conor R: Yeah. Actually one of my favorite parts of having written this book is that I get pinged for new information all the time. People send me articles, send me links, and so I’m constantly learning. Just like we were talking about earlier, even once you write a book about personal finances and money, they’re just still so much more to learn. Whether it’s a new angle on a new thought or people are sending me new ideas on funds. But one of my favorite things to get are success emails, and especially when people are following the steps laid out in the Millennial Money Makeover. And I actually just received one about a week ago from a gentleman who had paid off over $35,000 in student loans and credit card debt by a following Millennial Money Makeover. And he has been keeping in touch with me, just keeping me abreast of his progress, and I occasionally check back in with him. But yeah, he’s debt free now and he’s moving on to his emergency fund, and then building up his slush funds. So, I think seeing those successes is incredibly rewarding.
Tim Mullooly: Yeah, definitely. That has to feel really good to know that what you’ve wrote is making an actual impact on people’s lives and helping them turn around their financial situations. So that’s really great. So now-
Conor R: I think that an important point is even if someone picks up Millennial Money Makeover, sometimes books don’t speak to you in the right moment, right? So you can pick up a book and it just might need not be the right time for you to get it. So whether it’s Millennial Money Makeover or a whole host of other great personal finance books out there, for everybody listening, if you’re thinking about trying to pay off debt or don’t know where to begin investing, just pick up something and start your journey today. That’s so important.
Tim Mullooly: Yeah, absolutely. I totally agree with that. So now, a year removed from the book, are there any other plans in the future, maybe for a second book? Are you working on anything in the future? Or just going to continue to spread the good word of Millennial Money Makeover?
Conor R: Definitely going to do the latter, and then I write on my blog, at ConorRichardson360.com, with regular posts and think that there’s definitely going to be another book in the works, so you can stay tuned for that.
Tim Mullooly: Yeah, definitely. We’ll have to make you part of the four time guests members club when that book comes out. So, Conor, that was all the questions that I had for you today. Thanks again for coming back on the show. First time, three time guest.
Conor R: All right, thanks so much, Tim. Pleasure to be here.
Tim Mullooly: So for the listeners out there, I’ll link in the show notes to ConorRichardson360.com. You can check out all the blog posts and the book Millennial Money Makeover, and more information about Conor as well. So thanks for tuning into this episode of Living With Money, and we’ll see you on the next one.
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