Financial Literacy: A Checklist for Success

Financial literacy is the foundation for financial success. You really can’t have one without the other. Not even a massive sum of money provides financial success. Just ask your favorite professional athlete or almost any lottery winner.

New things are intimidating -- finance is no exception. The readers of this blog have spent many years learning the intricacies of medicine. Becoming experts in their respective fields. In all of my years of formal education, I had a blip of personal finance in high school and a single presentation during the “business of anesthesia” course in grad school.

The Financial Cocktail is my self-perceived honorable attempt at increasing CRNA financial literacy. Good intentions are laced in the poorly written blog entries. And this one is no different.

If you are making CRNA dollars and living paycheck-to-paycheck, this one is for you. Coworker, friend, or family member struggling financially, send ‘em here. This is a list of where to start and the hyperlinks to entries explaining topics in greater detail.

Financial Literacy Checklist

• Mindset

• Resources

• Budgeting

• Managing Debt

• Investing

• Legacy

Mindset

Go to school. Get a job. Work for 40+ years. Retire at 65. NOPE! I refuse.

That mindset won’t do it for me. I was raised with this sort of mentality which is part of the reason for becoming a CRNA. It was a respectable profession that paid well. Maybe, if I was lucky and saved reasonably, I could retire before 65.

Then I began financial self-education around age 27 and everything changed. The race to no longer trade time for money is underway. It takes the belief and acceptance that trading time for money over 4 decades only to retire late in life is not the only way to go.

Pearls before swine is both a well-written comic strip by Stephan Pastis and an overused cliché.  Nor cast your pearls before swine, lest they trample them under their feet,… I’m jumping on the overused cliché bandwagon here.

Simply by reading this blog entry, it shows desire for knowledge or verification. I respect that. Good for you. It requires effort to make a change.

I said to myself, “hey, I actually don’t want to have a boring life where I worry about money and hope to retire while I can still get around without a walker. I want to try something, learn from my mistakes, and make adjustments along the way.”

I have learned that trying something and seeing 80% of the value is better than being frozen by analysis paralysis and doing nothing which results in 0% of the value. Let me share exactly where I started. It’s not perfect, but exponentially better than nothing.

Resources

I’ll throw out a shameless plug that The Financial Cocktail is the blog version of the notes I kept during my self-education process. A process that continues to this day. I created a must-read list to share the best works. I have a few more to add, but the 15 on there are a great starting point.

Audiobooks on 1.5x or 2x speed allowed me to cover a great deal of content with descent retention. There are summaries out there, but I would limit use to a refresher, not a means to bypass the books.

Budgeting

A triggering personal finance word. I used to dread budgeting because it was time consuming, and I didn’t get much from it. Those were the college days of little income the objective was to just get by. Now Mrs. TFC and I have a substantial amount of money coming in and many avenues that receive payments.

I wrote an entry about making budgeting easy. I even have some simple templates available to download if you need one.

If you are a big spender, be real with yourself. Assign your dollars a home before that paycheck arrives. Be proactive. Because Mrs. TFC and I aren’t big spenders, we track expenses retroactively.

When the paycheck arrives on Friday, the brokerage account eats the following Monday. This satisfies our investing goals. We live off everything else. We have six simple categories and that’s it. Since the investing goal was met, it doesn’t really matter where the other dollars go as long as we don’t spend more than we have.

We handle the finances during the first week of the month. We have a pretty good system for budgeting and updating our net worth in 30 minutes or less -- tolerable in my book.

Like anything else, if you drag budgeting into your life, but find it miserable, it won’t be sustainable. Know yourself and find a system that works. Looking for suggestions? Reach out.

Managing Debt

I’m averse to personal debt because it tends to bind people to work. Income is necessary to satisfy the payments. No debt à No payments à No problems.

I consider anything with an interest rate greater than 5% high interest debt. This interest rate adds up and minimized wealth building potential.

Credit cards are a big offender of carrying a high interest rate. Vehicle loans are catching up fast at 7%. Student loans are now between 6.5-8%. Money is no longer cheap to borrow.

Every month, meet the minimum payment on each debt. As a general rule, prioritize paying off IRS debts first. Then pay off debt by interest rate starting with the highest rate. Credit cards which commonly have a 20%+ rate are among the first to go.

Make a list of your debts and go right down the list. Any debts with deferred interest can temporarily go to the bottom of the list. When interest resumes, adjust accordingly.

It’s okay to save mortgage debt until the end. Consider holding a mortgage for the term if the rate is less than 3%. I even have a post titled, Debt: Pay if off or Let it Ride?

There is nothing wrong with paying off debt that has a low rate. All debt carries risk, even secured debt. I don’t know anyone who locked down their finances well enough to become debt free that regrets the decision or effort to accomplish such a feat.

I’m a Clint Eastwood fan and have a post titled Debt: The Good, the Bad, and the Ugly.

Worst comes to worst, think of the 80% rule. Starting somewhere is far better than paying the minimums for 10 years.

Investing

I love investing. This is where I turn my earnings into little worker bees producing more income. What a deal.

Investing analysis paralysis is the topic of nearly half of my consulting inquiries. And that’s because it’s confusing. There are professionals for that. Do I need one? Are they any good? Can I invest myself?

So many unknowns around investing that can be squashed with the 80% rule. Think about it this way… Financial planners aren’t worth their salt. They charge a ton of money and don’t consistently outperform the market. Boom, checked that one.

Where do I invest? Any brokerage of your choosing. I use Vanguard. Try Fidelity. Charles Schwab. Robinhood for all I care.

Here is a strategy to minimize fees and maximize returns…

Instead of picking stocks, there are single investments called passively managed index funds that allow you to buy and own a small piece of a ton of companies with a single investment. It’s easier than making a purchase on Amazon.

It was really intimidating opening my first brokerage account. Since then, I have opened many different accounts through Vanguard. I buy index funds with total confidence. It really is easier than online shopping. Or maybe it’s online shopping for index funds?!

I have an appropriately titled post Money Management: How to Start Investing. If you are looking for a little more spice try this one – Which is best? VTSAX, VT, VTI, or VOO?

If you read the books on the must-read list, this will all make sense.

I’m going to be a broken record by saying just pick a brokerage, account, and index fund. Continue to research, inquire, and learn. Move those 80% results to 85%. Then 90%.

Before you know it, you will be a master of asset allocation and sharing with your peers how you mastered the Factors of Wealth Building: The Accumulation Phase.  

Legacy

The cart is leading the horse because I have been thinking of legacy. Never too young to start.

As a husband and now father, there is more to life than me, myself, and I. Mrs. TFC and I have been discussing adjustments to our life insurance and disability insurance strategy.

As of next week, I will carry a $6M 20-year term policy should the ultimate catastrophe happen. Hopefully both insurance policies will be short lived. As we continue to grow our nest egg, the importance of insurance policies decreases. Regardless, it is important to me that the TFC nuclear family will be covered financially.

Legacy is also about contributions to society. Being a CRNA and providing anesthesia to a community is fulfilling. I find great purpose in the work. I don’t regret the hours. As priorities change, I may seek greater balance. But for the present, I’m pleased with my choices.

When asked about the number of hours I work in a year, some inquire if I ever enjoy the financial rewards. Yes, Mrs. TFC and I enjoy our earnings. We spend quality time together – not always quantity time.

We already have 4 trips planned in 2024 with 2 being international. And I don’t feel as though I’m missing out on any material possessions, especially considering the financial progress we have noted over the past year.

We are proudly 36% of the way to our financial independence number after just 1.5 years of working as a CRNA. The thought behind this aggressive saving and investing strategy is the future ability to dedicate time for the next worthy cause.

The Financial Cocktail was a product of legacy. I was thinking of ways to share my learnings to accelerate the financial literacy of those around me. No need to reinvent the wheel.

Find a medium others would find helpful and create a ripple effect. Not sure a blog was the strongest choice. All in an effort to make society a better place.

Being a CRNA is stressful. If The Financial Cocktail could alleviate financial stress from CRNAs, it would be worth it. If financial literacy and discussion could save a marriage or relationship, it would be worth it. If I could impact someone’s legacy to their family, it would be worth it.

As always, thanks for reading!