Money is something that connects us all; historically, it is a form of trade, it has a kind of value which many people ascribe as part of their self-worth. In our generation, money has taken centre stage in the way we interact with people, it affects our job choices, it affects our lifestyles and it can affect our personal relationships. Money can both attract and repel, and a lack of it can lead some people towards desperate measures, and in excess, it can isolate people. A lack of money has lead people to suicide (E.g., investors on Wall Street after the 2008 stock market crash), and sometimes the promise of money has lead others to act against their own ethics (E.g., doctors who recommend and prescribe medications in order to receive payouts from the pharmaceutical industries). But one thing our generation has never questioned is: How can we free ourselves from money? And is it possible to live without being dependent on money?
These are some of the philosophical questions I discussed with Matt Goren last month, whom I had met last year when I was in Athens, Georgia. Matt is a former Assistant Professor at the University of Georgia in the Financial Planning Programme and is a financial adviser to students and businesses. Matt is the creator and co-host of the podcast, Nothing Funny About Money, in which he helps students understand how financial institutions and credit unions work. However, Matt has a multi-disciplinary background and he received his Ph.D in Psychology from UC Berkeley.
Psychology and Financial Literacy
Matt was originally interested in psychology because he was interested in human behaviour and interpersonal dynamics. However, during his studies, he focused on conflict resolution but was frustrated that his work wasn’t making an immediate impact. In addition, he was disillusioned by the replication crisis in psychology, which is actually also a pervasive problem that applies to science and medicine.
"Evidence-based medicine" may be rife with errors: many studies in medical and scientific journals might utilise misleading statistical models and may contain biases from corporate sponsors. (See also: Replication Crisis: Most scientists cannot replicate studies by their peers.)
During an era when science has become the religion of our times, and money has become the god that everyone worships, Matt sought for deeper meaning and moved from the Bay Area to Athens, Georgia, where he immediately fell in love with the surroundings and the humble, down-to-earth attitude of the people. However, he was distressed by the high level of poverty inherent in the population, although it is not visible to the public (as the homeless is in San Francisco) Georgia has something akin to a 21.3% population that is living under the national poverty level in 2016.
Matt decided that what he wanted to do was take the reins and control that very thing that seemed to control so many people: money.
“We should ideally become financially literate before we are 18, and it should be part of our high school education, but usually that isn’t the case in the US, and we often learn too late of what we could’ve done years before we develop a relationship with money.” - Matt Goren, Creator and Co-host, There's Nothing Funny About Money
I ask Matt, What is the advice he would give to the 21.3% of people living in poverty in Georgia and what sort of investments they should be focused on?
“Well, the problem with investments is that if someone wants to make a return that can be life-changing for an individual or a family in need, they either have to put in a lot at a young age to attain compounding interest, or they need a lot of capital to receive higher returns. When a person is in poverty, I think what is most important is they have access to education in order to find a higher paying job.”
I mention that this probably is true, in the way that this was how India and China were able to break out of the poverty cycle in a short period of time, due to children having access to education and pulling their families out of poverty when they attained positions in the tech sector away from the labour-intensive back breaking work of farming and factory work that their parents were involved in, and why there is such a push now for American students to enter STEM fields.
“What people should worry about, apart from investing in the financial markets is investing in themselves, in education…They should also think about having emergency savings, and if they have kids, they should also consider life insurance. Because if something happens to young parents, an accident, for instance, then a life insurance policy is going to make a lot of difference to the kids.”
Matt adds that apps like Robinhood now allow people to be able to easily buy stocks without a commission fee, a subscription fee or a monetary requirement such as Deutsche Bank’s $100K minimum or a typical $5-10K for a stock exchange account, so that people are able to invest with as little as $10, and that has democratised and brought in a larger group of investors who were previously unable to invest without the capital requirement.
Psy, the South Korean pop singer global phenomenon. From pop stars to rap stars to popular figures in the media, the image of worshipping money has been used to psychologically condition the minds of people, both young and old.
I go back to the concept of money and how that has affected people in our generation, from pop songs, like Bruno Mars’ “I want to be a billionaire” to daytraders who are essentially gambling with other people’s money, to tech companies that develop AI algos to essentially gamble for them, and I ask Matt, How far will it go before people lose their minds, and their sanity in order to have access to more money? Do you think people are willing to forgo their self-respect and integrity in order to attain more money at any cost?
“That’s a hard question to answer, because I don’t really know,” Matt says. “I think that we do live in a materialistic world in which most people are obsessed with stuff that money can buy; it’s a side effect of capitalism that we push people to buy stuff and that’s something we can’t really deny...I think that if we had a different kind of trading system, one in which we didn’t depend on money, but maybe on goods and services, that it could be possible.”
You mean, like a bartering system, I ask?
“Yes, like a bartering system,” Matt says, then he adds thoughtfully, “Although, I don’t think it’s possible to have a large-scale barter system.”
Tactics in a Bear Market
Currently, we are at all time highs in the stock market, but I ask Matt, What sort of advice he would give to people, if we were to suddenly find ourselves in a downtrend?
“In anticipation of bear mode, I would say to go to cash and put 10-20% less in investments and more into house down payments. I would shift my money into peer-to-peer lending in lending clubs or another alternative….of course, you could just stay the course, but I would make certain to have an emergency savings account, disability insurance and have a savings account in a credit union...Investing is usually in a 20-30 year time frame so I wouldn’t put all my investments out, but I would make certain I had a comfortable cushion for a downtrend that might last a few years.”
What about Bitcoin and Cryptocurrencies? Do you think they are a worthwhile investment?
“The problem with cryptos is that they’re not backed by anything, so you could theoretically lose your entire investment overnight. However, I think once they are regulated then backed, they could potentially be the future of money and transactions in America and abroad. But, right now, I would have to say no, and I definitely don’t think ICOs is something that the average investor would want to be a part of until there is more regulation in the sector. For the average investor, just investing in an ETF in the stock market would have given them better returns."
That’s interesting, I read anecdotal stories and blogs of many people who were either censored or banned on sites like reddit for criticising Bitcoin on Bitcoin forums last year when Bitcoin was attaining new highs.
Censorship in the media, especially on publicly accessible, "free" sites such as reddit seems to be an ongoing problem in that they curated by corporations, oftentimes utilising PR agencies and paid forum posters in order to sway public opinion and silence those who criticise the status quo. For those and other reasons, it has been reported by global cyber commissions that public trust in the internet has eroded.
What do you think about major tech companies actively censoring content on the internet?
“I think [censoring content on the internet] is a bad idea. It’s like telling people, ‘Hey, you can’t think for yourselves, because you never learned critical thinking in school, so we’re going to think for you.’ It’s just moving towards a place where we become more divisive as a country and people are fearful to express their true opinions, and a meaningful discussion never takes place because it’s all been decided for you.” -Matt Goren
What a world we live in.
“It’s not perfect, but it’s the only one we’ve got,” Matt adds pensively, “As long as people are aware and are skeptical of what we read in the news or on social media, then I think people won’t make such bad choices.”
Matt Goren is a financial educator and consultant. He’s taught personal finance to over 3,500 students at University of Georgia and UC Berkeley. He’s helped universities, non-profits, and businesses make better, more affordable products and services for low and moderate income families.
Disclaimer: This article is for educational purposes only and should not be considered financial nor investment advice.