Podcast: Financing the Future, Tim Ranzetta on Educating and Empowering the Next Generation | NewRetirement (2024)

In this episode of the NewRetirement Podcast, Tim Ranzetta, founder of Next Generation Personal Finance (NGPF), discusses the importance of financial education for high school students. NGPF aims to equip students with essential financial literacy skills by providing free curriculum and training for teachers, advocating for legislative changes, and supporting the integration of financial education in schools.

Tim shares the recent success in California, which became the 26th state to require a semester of personal finance education for high schoolers. The conversation covers the challenges of implementing such programs, the need for early financial education, and the role of critical thinking in understanding financial products. They also discuss how teachers and parents can be involved in the process and the importance of storytelling and real-life applications in teaching finance.

Tim highlights the growth of NGPF, which has trained thousands of teachers and reached millions of students, and expresses the organization’s goal of making financial literacy education accessible to all students by 2030.

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Callouts from the Episode

#FinancialLiteracy, #Education, #HighSchool, #PersonalFinance, #NGPF, #Legislation, #FinancialPlanning, #NewRetirementPodcast, #FinancialEducation, #YouthEmpowerment

Next Gen Personal Finance

Transcription

Introduction (00:00):

This episode is brought to you by the New Retirement Planner. Create a financial plan for free at NewRetirement.com.

Steve Chen (00:19):

Welcome to the NewRetirement Podcast. Today we’re thrilled to have Tim Ranta, the founder of Next Generation Personal Finance, a nonprofit dedicated to revolutionizing financial education for the next generation on the show with us. So NGPF goal is to empower every high school student with financial literacy for providing curriculum and training to teachers nationwide and also to support legislative changes that require financial literacy to be taught in high schools. So hopefully I got that right. Tim, welcome to our show. I think I wanted to open with the news. I know that you had some big news in California. Would love to have you share what happened recently in the last couple of weeks.

Tim Ranzetta (00:57):

Sure, yeah. Thanks Stephen for having me on your show. Yeah. The news in California is the end of June became the 26th state in the nation to guarantee all high schoolers a one semester course in personal finance. Aside from it being my home state that I’ve lived in for 32 years, California is about 13% of the high school population. I believe it’s majority Hispanic also. And so I think this is an effort that’s been ongoing for two decades. So this year we chose a non-traditional path. We knew this is incredibly popular with voters and when you are blocked in the legislature for 20 years, our thought was, let’s take this directly to the voters. Through a process in California called the initiative process. We put together a campaign team about a year ago we collected signatures, in fact close to 900,000 signatures and we were qualified to go to the ballot. So we were all set to go to the ballot. This November, however, in California there’s an option for the legislature to take up the issue. And so when we were able to get a bill that looks in form and substance very similar to what we were trying to accomplish in the initiative, we were very happy that Governor Newsom signed the legislation AB as Assembly bill 2927 authored by Kevin McCarty from Sacramento. We were very happy when that got signed in early July.

Steve Chen (02:27):

That’s awesome. I know you’ve been working on NGBF for a while, but you’ve been working in California for 20 years on this process?

Tim Ranzetta (02:33):

No, no, no. For me it was only three.

Steve Chen (02:35):

Okay.

Tim Ranzetta (02:36):

Still, I didn’t get into this business expecting I would need to get into politics. It was three and a half years ago where we looked at where we were as a nation and there were eight states requiring a course in personal finance and we said how can, it’s too slow. There were teachers and students making it happen on an individual school basis, but we said if we want to create systemic change, we’re have to find a new strategy. And so at that time we set up a new entity because nonprofits in the form that we are, we’re an operating foundation, can’t lobby. And so we created a C4-501C4 called NGPF Mission 2030 Fund. In the last three and a half years we’ve been involved in 18 states that have passed laws requiring a personal finance course. And so it’s exciting that it’s 26 states, but because of California and it’s a extremely large state, almost two thirds of students in high schools across America are either required to take it today or will be in the next several years because an implementation period.

Steve Chen (03:41):

No, that’s great. I mean, I appreciate the work. I mean, we originally met in a conference you were running a few years ago, probably five years ago about this and I had met Jonathan Clements and he is like, Hey, I’ll be in San Francisco, come on over. And I barely knew Jonathan and then I met you and you’re running the thing and I met Ellen Roth and some of the Bill Bernstein, all these guys that subsequently came on the podcast, all what happened through your NGPF conference, I learned about the work that you’re doing was great and I’ve been, for what it’s worth trying to, at least I mentioned it probably it’s the most mentioned group in this podcast because I talk about like, Hey, why don’t we do this? I mean it’s great that you’re at 26 states and two thirds of students, but yeah, I guess I have two questions. Why wouldn’t the legislature, this seems like such an obvious no-brainer. Why do you have to go through this public driven process to do it? Why do you think that was in California?

Tim Ranzetta (04:37):

It’s a great question and I think what we’ve seen over time is the more engagement we have with the key stakeholders, the folks who are involved in running schools every day because you can imagine there’s a lot of issues pressing on their time. There’s a lot of issues pressing for their attention. One of the things I’m really grateful for is that we were able to have to sit down with key stakeholders during the legislative process. And I think the bill that came out that was ultimately signed, answered a lot of the implementation questions that may not have been answered had we gone through the initiative process. As I mentioned, the bills are not entirely the same. They both accomplish the same thing, but the legislation has more detail. So I think we’re geared up and ready to go and we’ve had again, really good conversations with key stakeholders. They compromise, we compromise and I think that’s kind of a sign of good legislation.

Steve Chen (05:30):

It just feels like there’s a no why. I mean obviously we’re close to this business. We work in personal finance and we’re trying to help people make better choices and we know how important it’s for their lives. But it seems like it’s a no loss. Teach every high school kid about personal finance. Seems like a good idea, right? There’s not a downside to this.

Tim Ranzetta (05:50):

Yeah, I think it’s implementation and I think that’s where having an integrated model like we have, which is to say okay, there’s the advocacy piece which has had success at getting legislation passed. But I think because we can say, and guess what, when you pass the law, we will be ready to partner with you at zero cost to taxpayers because our curriculum, which is used by over a hundred thousand teachers nationwide, including close to 6,000 in California and at least a thousand in almost every other state, not only will we provide you the curriculum and there’s other high quality nonprofits with curriculum, but we’ll train your teachers. That is the biggest concern they have, rightfully so how is this going to get done in the schools? And I think the fact that we can say, don’t worry about the curriculum, and by the way, if you buy a textbook for the curriculum, it’s out of date the minute you print it because as you know, the financial sector moves at warp speed. The third thing we’ve done, we’ve added this, we’ve just responded to the market. We just added another leg. I used to call it a stool, I guess. I dunno if stools have four legs or not, but it’s implementation. We’re going to work directly with state leaders as well as large districts to say, Hey, we’ve got experience working with large entities to be able to scale this course. I think that’s really helped us to be able to say that we’re not about legislation, we’re about successful implementation.

Steve Chen (07:19):

Well, by the way, if you want feedback, our lead educator inside of our company is a woman named Nancy Gates who was a former Spanish teacher from upstate New York, Syracuse, like the next town over before I grew up in Rochester. She has looked at your curriculum and would love to give you feedback if you’re open to it. She has a lot of ideas about, I mean her team educates 2000 people a month about retirement planning and financial planning. Mostly adults in our business right now. But if you’re ever open to it, I’m sure she would love to talk to you.

Tim Ranzetta (07:48):

It’s the only way we’ve gotten better is teacher feedback is gold. So absolutely.

Steve Chen (07:53):

Well, I will connect you and I’m just glad I got to mention Nancy on this call cause she does a lot of good work for a lot of people. Cool. Well look, I’d love to hear from your perspective why you started this business. What drew you to the space?

Tim Ranzetta (08:07):

I’ll give you, I think my why goes into two different periods in my life. The first is I was one of the fortunate few to actually get this knowledge at a very young age. My dad was a banker and my mom was a homemaker raising six kids, but she was always somebody who believed in giving back. So she was the Girl Scout troop leader. She rented a library to kids for probably 40 years. She worked at a soup kitchen. So I think the combination of both, I knew a lot of this stuff. I grew up in a family of six, we had to pay for college. That was a great gift my parents gave us. It was a work ethic to like, Hey, you got to save money if you want to go to school. I assume most people got this knowledge the same way I did.

(08:51):

We used to literally talk about money at the dinner table. I as a 7-year-old kid, I had a dog walking job. Every Friday I’d get a crisp $5 bill. I’d go walk to the United Jersey Bank in New Jersey, deposit it and my dad would want to see the pass book at dinner. And I just remember the feeling I had of like, and he didn’t teach me that you could withdraw money until I went to college, which is when I needed all of it. But I just remember the warm feeling I had and the habit I started. My neighbor took about a year to recover. So whatever, I saved $250 over the course of the year. So that’s one point in time. And then I volunteered. I volunteered to teach a course at a high school in East Palo Alto, California. It was a school serving first generation kids and I just saw how excited the kids were to learn this content.

(09:44):

Then the unintended consequence of parents reaching out to me. So there’s one student who I still keep in touch with. David, he was the one who went home, talked to his dad about investing for retirement. I realized kids are going to take this stuff home to their parents and parents who may not have thought about investing when their high school child comes home and starts talking about it. They want to learn more too. And so I remember going to the brokerage office with David’s dad to open an IRA and just the sense of pride he had taking that first step to retirement. So fast forward, David’s the first student from that high school, Eastside College prep to work on Wall Street. Nice. You realize, and David was the wide-eyed kid who when you’re talking about stocks, you could just see the fire burned with him. So I just felt why aren’t we giving every student in this country the opportunity? So I’m going to create an organization to try and make that happen. And that was kind of the genesis. So I taught for eight years, three years into it said we need to do this on a broader scale. And so I had the very good fortune. We’ve got a great team at NGPF hats off to my co-founder Jessica, who’s really the driving force behind everything good from NGPF, from our curriculum development to the approach we take to training teachers.

Steve Chen (11:08):

It’s awesome to hear the formation story and it’s also great that you’re doing the work itself, teaching the kids and seeing the impact and you’re like, okay, how do we make this a bigger movement? And I appreciate that it takes a team to make it happen. I think it’s so interesting that it comes from outside the industry. I think it shows, one of the reasons I started this company is I was like, I believe there’s an incentive alignment problem in parts of financial services where generally if you look at how people make money in this ecosystem that I’m part of, I mean I came up writing software working at Schwab and different places and there’s two ways you’re like if you don’t have as much money, people will lend you money at varying rates of return. The most onerous is credit card debt. They hand ’em out candy.

(11:56):

It’s like, I remember when going to college and it’s like, oh, I was greeted by a bunch of tables. Sign up for your credit card. I still have a Citibank credit card. It’s great. I mean luckily was immediately started paying it off. I didn’t carry balances around. But that’s not the business. So it’s one way and the other way is if you have a lot of money, you can get great services, but there’s very often fees attached. It’s not always perfectly transparent. It’s really not in the interest of the industry for people to be super well educated like special stuff that financial services does for you. And we’d all do better as a society if people were more educated consistently so they could make wiser choices themselves. But it’s interesting, you’ve had to create this. You’re doing volunteer work teaching and then you got to create this volunteer organization into a 5 0 1 3 C or whatever it is, but I guess that’s the state of the world.

Tim Ranzetta (12:44):

Yeah, it is and it’s been the most gratifying part of my career. I’m in my late fifties and yeah, this, I’ve never stayed at a job longer than four or five years. I’m on year 10 going into 11 and every day is a joy. So I’m in Kansas City now helping run teacher fin camps. That’s kind of our one day workshop. I was just in Omaha yesterday and I’ll tell you, those will carry you a long way because there’s something different about this community of educators because again, something I didn’t count on is the curriculum’s important, but ultimately the reason such progress has been made is because 10 years ago folks would’ve said, we can’t do this in high schools because who’s going to teach it? There’s not a lot of financial experts running around in high schools. Well guess what? Today there are and it’s because they want to learn about this.

(13:33):

This not only helps them feel empowered because now they’re teaching a course where every student’s going to walk out saying, I know how I’m going to use this in my life. And they also hear from the parents when they run the parents back to school night, the parents will come in and be like, thank you. This is so important. It’s been really difficult for me to talk about at home. But the third piece is it’s helped them in their own lives. I mean the number of teachers who have said, I now understand 4 0 3 B plan what an index fund is and I can invest. I know how to invest to see people so empowered by it, and you can imagine how that impacts their teaching. I mean it is tremendous. Great role models. I want to say 75% of our teachers, maybe higher, maybe 80% of our teachers are women. We know there’s a gender gap. It’s sad there’s a gender gap in finance and now they’re helping to close it and they’re the best role models out there.

Steve Chen (14:30):

Yeah, you’re touching on a lot of stuff that we’re about, which is one of the things is for us, we think that financial competence is important because it empowers people to do what they want to do, find their main thing they can do. So you I think have some degree of financial independence or have that in your life and you have agency and then you can find things like this very purposeful work that you really lean into and you don’t think of it as work. You’re like, it’s my calling. And you’re really into it. And that’s I think a giant unlock and you therefore do incredible work. You’re like a case study for what we think can happen here and you’re doing that then for other teachers, which is helping them get confident and understand what’s possible. That’s Nancy’s story. I mean, Nancy’s financially independent. She worked hard, didn’t probably make a fortune as a teacher, but invested it as a bogle head and learned all about it and probably has more money than 90% of the people in our company or she’s an unassuming person walks around, but that’s allowed her to like, oh, I like what you’re doing at New Retirement. I’ll come teach people here. And then she’s like, holy smokes. We’re teaching 2000 people a month. I never thought that was possible and it’s all coming together. So

Tim Ranzetta (15:44):

Anyway, it’s awesome that you provide that service.

Steve Chen (15:46):

Well, actually a question for you. A lot of our users do lean into this. Is it only teachers that teach in high schools or can people listening to this podcast be like, oh, I want to go sign up with MGPF and go talk to my local high school and see if they do it and support them. Is that something the community can just get behind?

Tim Ranzetta (16:03):

My advice to folks is always tap into your network. So if your kids are in a school district, it’s always best to go through somebody who knows somebody within the schools because the reality is it can be a challenge. There’s a lot of people standing outside the gates of school saying, I want to help. I want to volunteer. And it can be difficult. Teachers love having guests in the classroom, especially folks with financial expertise. Know that number one, you’re going to want to make sure you somehow know one of the teachers there is going to be willing to let you in and second be ready to have an activity ready to go. You can go to our website. We’ve got a lot of activities that are available. Kids, you all know if you have kids, the attention spans aren’t what they used to be. And it took me about 10 minutes of my volunteer teaching experience as I’m like, I’m going to impart everything I know to these young people and they’re just going to be so wow. 10 minutes in I was flailing. And I think that’s reflected in our curriculum. We have a set of activities called move activities, which as it sounds, kids are out of the seat doing stuff and learning about personal finance in the process. We have arcade games. I like to think we make finance fun because it has such heaviness to it, because it is so loaded with jargon because it can be so intimidating and I think we try and use really a multimedia plus different ways to kind of connect young people to these topics.

Steve Chen (17:35):

Well, it’s super empowering. As you were telling your story about making money as a dog walker and having a pass book. It’s like my middle son just got his first, I mean, he’s 20, right? My older son worked his old life and that X-Ray served him really well. He’s now an entrepreneur on his own, which is crazy, but middle son’s teaching surfing and he showed me his Venmo or bank, it’s like got four grand. He was totally psych. He was like, I get it, it’s good. I mean he does has a great job. He likes it works with kids and all that stuff, but he makes money. It’s like, yeah, it’s your money. You can do what you want with it. It would be good. Start investing. And he is like, okay, yeah, no, let’s start investing it too. I think they picked up a little compounding matters, get it started early. When you’re young,

Tim Ranzetta (18:20):

You’ve taught him well.

Steve Chen (18:22):

Yeah, it’s totally empowering and I’d love to actually dive into, it’s so interesting you’re teaching kids and then some of them teach their parents that motion of, I think culturally, I think we are definitely coming from a place where people didn’t use to talk about money. I grew up in the northeast, people didn’t talk about money. It was rude to talk about money and people grew up in the dark about it. So it’s cool that your family talked about it. Do you see a weird dynamic where you’re educating these kids and then they bring it home and they want to talk about it? Do the parents freak out or do you teach ’em how to talk to their parents about money?

Tim Ranzetta (18:54):

That’s such a great question. So many facets to it. I think what we’ve seen teachers do is find ways to involve parents in the learning. So maybe it’s go home and interview a parent about their first job. I mean, you have to be very careful about how you frame the activity and the questions you are asking. Maybe you skip a generation and you talk to your grandparents, but finding ways or sending parents home. We have templated newsletters, so every unit that you’re teaching send a newsletter home to the parents. You’re not saying they don’t know these issues, but you’re saying, Hey, here’s what we’re teaching your child teachers going even further than that, and this is I think a brilliant concept, renting out the cafeteria and having your personal finance students set up bulletin boards and have the parents walk through. You’re there to support your child, but at the same time, there may be a lot of topics there that you’re not familiar with, and so you’re learning about all the various elements of credit scores and the dangers of credit cards and you’re doing it very nonjudgmental, just I’m here to learn and also celebrate my child for this newfound knowledge that they have.

(20:04):

I think those are wonderful activities to incorporate parents.

Steve Chen (20:07):

I like the mechanic of interviewing your parents about that. It’s great on a lot. You engage and people like to share stories and so much of that is how you came up. And if your family’s really good at it or that talks about it, you inherit that and vice versa.

Tim Ranzetta (20:23):

You touched on something there, which I think great educators do too, which is storytelling. Storytelling is so important with families too. I mean, I always make it a point to talk about my parents who came from basically nothing. My dad had a high school degree coming over from England, spent 42 years at a bank working himself up from a bank teller to ultimately a position where he could afford a lifestyle for a middle class family in New Jersey. And there were just things he did that still, I still remember he had a pair of tennis shoes that were like 50 years old. They had paint all over them, they had holes in them. That was a symbol to me that we’re investing in. You guys we’re investing in kids and he used to polish his shoes every Friday night. He changed his souls. He never bought new shoes and my mom’s closet had such a limited amount of clothing and you just realize how much self, you don’t realize it as a kid, but now that you’re a parent and an adult and you think back and you’re like, they sacrificed a ton for us,

Steve Chen (21:23):

That’s the power of it. People learn and then they start living it hopefully in the next generation per your name. They really learn it. It is a generational thing. I mean, I see this in our family too. We’re entrepreneurs. Our son has now become an entrepreneur and it’s kind of like, oh, he learned a lot. He was paying a little attention here. He’s able to do things that probably most early 20 year olds are not going to do. I’m actually going to go try to start a company out of school from scratch with my own money.

Tim Ranzetta (21:50):

What’s his business?

Steve Chen (21:51):

So he does a business called Rev delivery. It’s like hyperlocal on-campus delivery. And of course I was like, there are venture backed businesses in this space. I was like, and it was a me too business. I was like, oh, there’s a lot of reasons I don’t think this is a great idea. And of course he does it. He is like, well, as a good entrepreneur, I was like, well, I see this and you don’t, so screw you. I’m going to go do it. And then he made it work. It’s profitable. And now what’s happening is interesting. Venture backed businesses are blowing up because they raised too much money and they had too much cost and it was like they’re making money but they’re not making profit and they’re kind of imploding a bit. And then he has the opportunity to get assets. So now he’s in this next phase of trying to figure out how to grow it and capitalize it and all that stuff. And so we’ll see. That’s awesome.

Tim Ranzetta (22:34):

That’s an important message for parents too, is because even folks who are like, we don’t talk about money enough. Kids observe you. They watch what you do. You have to be really cautious. Are the things that you’re doing modeling behavior that you want young people to follow? Because even if you’re not talking about it, they’re watching bottom line.

Steve Chen (22:53):

For sure. Well, you realize it’s like I was thinking about this. I was like, well, we’re looking at frankly lending him money as a loan for his business. And I’m like, all right. I look at it as I’m much entrepreneur. I’ve got venture backed company here and all that stuff. So I’m looking at it and trying to help him make good decisions, but also, well, you were privileged that you can do this, right? That we could give you enough money to make it happen for you, but I don’t want to not do it like, okay, we’ve also worked hard our whole lives. We work really hard here. I mean, every successful person. I know hard work is part of the mix, right? It’s like there’s a work ethic that happens and people see that, but that’s what you want. It’s like, okay, well we work hard. You want to go for it. There’s a real reason you want to go for it. You’ve proven some stuff already enabling that in other families and across generations like, hey, you build wealth and that gives you control. You can do stuff with your own life and you can enable your kids to do stuff with their lives that they might not have been able to do. So I’m getting your name more and more,

Tim Ranzetta (23:56):

So I’m wondering if there’s a forgivable aspect to that loan, but we can talk about that later.

Steve Chen (24:03):

I’ll see. I mean, I think that goes into, there is a whole, I’m not thinking about it that way. I mean, I’m thinking about it as like, oh listen, I want to support you, but I also don’t want to get killed. I’m not wildly financially independent here. Definitely the mechanic of there is a lot of money that’s going to move between generations and there’s a lot of dialogue around when people should give money because another, I mean just as an aside, a lot of people using our platform, they’re like, okay, I’m planning till I might be 90 to 100. It showed both the probability of you’re going to have a certain amount of money, but also the probability that you’re going to be alive in the future. And it’s like, don’t over index on 85 to a hundred at the expense of, I mean, yeah, your father made sacrifices, but hopefully he also enjoyed his life. I mean, he obviously got rewarded and you’ve gotten rewarded or your family’s gotten enabled, but there’s a balance in life per the Jonathan story we were talking about with Jonathan Clements, who backstory here writes the humble dollar and has been a personal finance person that has brought all for the good and across his whole career, and now fast forward is 61 years old, has brain cancer and may only live 12 months. Nothing is guaranteed in life.

Tim Ranzetta (25:11):

Yeah, that’s for sure.

Steve Chen (25:13):

In terms of what happens after high school, do you think it’s enough just to teach kids in high school or do you think this needs to continue past high school?

Tim Ranzetta (25:19):

I think first of all, it needs to start sooner than high school. So I think in middle school you can start instilling some of these lessons that have to be developmentally appropriate. Having a bank account is a good start in middle school. Yeah, I think it needs to continue. My hope is one of the skills you’re providing in high school is confidence. I’ll call it the two Cs, confidence and curiosity. They get the tools to be able to advance their own learning because this is a lifelong learning subject. Things are constantly changing in the world of finance. My hope is this leads them down the path. Many people will say, oh, just in time is the way to go. So you really shouldn’t talk about mortgages until you’re about to sign off on the loan. But I’m just a believer multiple exposures, you’re going to pick up different things as you go.

(26:07):

And there’s a decay element to this, and that’s one of the reasons we’ve created a curriculum that is really project and activity based, because you remember that activity you did in school a lot more than the lecture that your professor gave. It needs to be ongoing. Products change so quickly, and I have this favorite adage, which is financial products are constantly coming out and they’re always going to be ahead of the regulators because they move at warp speed and it takes time for regulators to move into action and understand what these products are and whether they have the expertise or not. And so if they’re not going to regulate, we got to educate. One example from today is buy now, pay later. There’s a little bit of regulatory arbitrage going on here. I think they’re going to now call it equivalent to credit cards. They’re equivalent to a loan.

(26:58):

But before that, they kind of fit into this now area. We as humans tend to be optimistic creatures. And so the idea that you can split something into four payments and not have to pay any interest is pretty darn appealing. Of course, I’m going to be able to make those payments in the future. Well, probably more aptly should be called buy now, pay late, because 40% of folks who use it pay late fees. So one of the things we have to teach also is just critical thinking skills. And so we have a project be an app reviewer, and so we give them some of the most popular apps out there, whether it’s online trading or whether it’s buy now, pay later and have them be critics, pros and cons because the products will constantly be changing, but the idea that you should be looking through a critical thinking lens won’t change.

Steve Chen (27:45):

Critical thinking is the core at all.

Tim Ranzetta (27:48):

And it drives crazy when people say, how can we spend any time on personal finance when math and reading scores are so low? And I’m like, what do you think personal finance is? It’s math. And guess what? Kids learn math when they’re motivated to learn it. And if it’s about money, they’re going to pay a lot more attention than giving them abstract examples that don’t apply to them in their life. And then when it comes to reading, Hey, guess what? We have these great activities called fine prints because I got tired of hearing people say, you got to read the fine print. And then we never taught people how to actually analyze fine print. So we have all these products from a rental agreement to a credit card agreement to bank statement with charges that’s reading. Guess what? That’s really analytical reading too. So we have these real life fine prints and then we have them answer 10 questions to make sure they understand it. So this is how we should be teaching math and this is how we should be teaching reading because the motivation level will be a lot higher.

Steve Chen (28:47):

It’s something that you will definitely use in your life or you’ll be abused by if you’re not aware of how it works. One thing back to Jonathan that I really like about what he does is he just boils it down. He talks about, okay, you want to invest because you want to capture returns in the market because it’s the most efficient use of capital, but you don’t want to try to beat the market. There’s so much crass around like, Hey, Nvidia or Bitcoin or whatever, there’s a fast way to get rich and everybody loves that idea. So win the lottery. Why lottery tickets are people love it. I might have a chance of getting rich, so I’d rather put a lot of money into that than to be guaranteed to get rich, but it’s going to take me 20 years. But if you can absorb that lesson and realize that the nominal rate of return is 6% in the market and the real rate of return is 4%, and what does that even mean, right? Well, the real rate is the inflation remove inflation, but that’s what you can get safely in perpetuity, right? If you see things that are going to promise you a hundred percent rate return, there’s nothing that comes in life. If you have high returns, you have high risk. And high risk means high chance of loss. That means if you put a hundred thousand bucks or whatever, a thousand bucks into something and it has really high expected potential returns, you could also lose it in all of it. And what would that be like?

Tim Ranzetta (30:04):

I think one of the things that’s really been driving legislators to pass these laws to require principal finance education is if we don’t teach it in schools, kids are going to learn it through social media, spend a little bit of time on YouTube and go look at the most popular videos, 10 million views. It’s day trading, four x trading. We have teachers asking us, can you create curriculum around four x? We’re like, no. Oh, sorry. They’re selling a $299 program that will guarantee that we know how to trade current. Are you kidding me? Those are the most sophisticated traders out there. We shouldn’t so get rich quick schemes, especially to a young mind, incredibly appealing. So if we can’t get to them before, that’s dangerous. And it’s funny, you were talking about Nvidia and one of the most popular games in high schools today is the stock market game.

(31:06):

I’ve had enough teachers tell me what happens after the game gets played. The students who spend the most time, who don’t perform well because an eight week or a 10 week game, and it’s totally random, they walk away believing I’m not an investor. That is the worst possible message. And the person who wins, who’s taken, like you said, probably the most risk, probably bet on an earnings announcement or the highest beta stock or biotech company because they thought phase three trials were coming or they bet based on momentum, we lionize them. I always felt the certificate should be made. You are the luckiest investor. We should not be leading people to believe. And so we spent a lot of time in our course talking about index funds. When I got started 10 years ago, I’d walk into a room full of teachers and I’d ask, how many of you are teaching index funds?

(31:59):

And if I was in a room of a hundred, there might be three. And I was like, okay, I’m going to channel Jack Bogle. We got to bring Jack Bogle to high schools. And so we spent a lot of time and there’s a stat that really sticks out, and you’ve probably seen the research too, take different periods of time, either 1926, and I’ve seen studies since 1980 4% of the stocks contribute almost the entirety of stock market returns. Besa Bender or as a professor at Arizona State, if we’ve ever had an example of why you shouldn’t be looking for the needle in the haystack, but instead buy the haystack. That was Jack Bogle, I think who said that. And then when people say, don’t you wish you owned Nvidia? You can say, I

Steve Chen (32:42):

Do own Nvidia. I do. Exactly.

Tim Ranzetta (32:44):

I do. And guess what? I benefited from the runup because

Steve Chen (32:47):

I own the s and p or whatever it is. Yeah,

Tim Ranzetta (32:49):

Index fund. Yeah,

Steve Chen (32:50):

Index funds. It’s pretty interesting. They should change that stock market game. Is that stock market game something they teach or just something kids play?

Tim Ranzetta (32:57):

Some will use that as their personal finance course. This is the way we’re going to teach the stock market. Now, I do agree to make the stock market come to life, you do have to talk about individual stocks. One of the things I do with my son is money he saved. We’ll sit down and talk about investing and the only rule I have, you can invest in whatever stock you want, but 50% of it has to be in an index fund just so he can see over time because they are interested. He loved Roblox, and so he bought Roblox at a 52 week high and he’s learned what risk is,

Steve Chen (33:29):

Right? That’s so interesting. It’s so important. What older people have is wisdom and perspective. I remember I interviewed J Collins, he wrote a simple path to wealth, and he lived this journey himself. I’ve lived it myself too. I’ve made plenty of mistakes along the way, and I remember I had a bunch of cash. He’s like, basically the math is just throw in the market and forget it. It still took me another few years to actually do that. And he is like, buy V-T-S-A-X or VTI, whatever it is, you can buy these funds, own the whole thing. I now have done that. It works. I’ve done it all. I’ve traded options. I’ve traded Forex and I see this in young people, especially men. Whenever I got a huge sign for risk, I’m making some money. Screw it. Let’s roll the dice and you get some wins and you’re like, if it’s only 10% of your savings are net worth, whatever, I mean it’s still expensive for you, but constrain it, don’t do it with everything. And these are the people that are lucky enough to learn about it and actually be investing. Hopefully they don’t blow themselves up, but most people just don’t even invest. Huge punch in this country, doesn’t even invest, doesn’t even know how to do it. Or they’re in crappy defaults, excuse my language, bad defaults for just getting slowly fixed in the 401k retirement area. But

Tim Ranzetta (34:39):

The trends have been really good. Recently though in that we’re seeing an influx of young investors come in. I think there’s a couple factors here. Number one, commission free investing, fractional shares and just really low minimums. And so people are getting more now you have to balance that out against some of these platforms. Treat investing like entertainment.

Steve Chen (35:00):

It is entertaining, right? I mean it’s entertaining, but you have to have the perspective on what you really should be doing. I mean, I’ve used Robinhood and it’s like cool, it makes it really easy to buy individual stocks, but if you want to look up what you own or your cost basis, you can’t find stuff in there. It’s like, what is this? So if you ended up with a material amount of money, it’s not obvious your portfolio is all that stuff or how to find your way around, but I’m sure, I know they’re working hard on it and they did get 20 million people into the market. That’s great. But hopefully help ’em achieve better outcomes. The whole thing is achieving better outcomes, what you’re about. That’s what we’re about. To your point, it’s like they should have labels on things. They should have a label on the buy now, pay later or buy now. Pay late, like 40% of this, you’re going to end up paying a lot of interest or use this credit card stripe. This is the outcome that you’re likely to face. That’d be great to have that known.

Tim Ranzetta (35:57):

They’re not looking at credit scores, they’re not assessing credit scores. And so typically you’re tapping into folks who are not able to get credit elsewhere.

Steve Chen (36:06):

It’s called adverse selection or the other thing is people should remember is caveat emptor, just buyer beware. All these things. Keywords to know. Okay. So as you look forward, what are your goals for next generation personal finance over the next three, five years? Why do you think this unfolds?

Tim Ranzetta (36:25):

Our mission, we call Mission 2030. So we set a date certain by which we would hope every high school student as taken a personal finance class. So we’ve got six years and we’ve got 36% of students to go. So the good news is there’s clearly a lot of wind at our back because you don’t want to be the last state that’s guaranteeing this class. I think as an organization, I think the biggest challenge is ultimately it’s not about legislation, it’s about successful implementation. So we’re really excited about the opportunities to work with. There’s currently 16 states in the process of implementing to ensure that this gets done well, so that there is a highly qualified confident teacher using a high quality curriculum in every classroom because ultimately it’s not about a hundred percent of students getting the course, it’s about a hundred percent of students getting a high quality course.

(37:21):

Our biggest growth area as an organization is really building out our implementation team. So districts don’t feel like they’re going alone here because the high school curriculum unfortunately does not change that often. And so when you have a change like this adding in a semester course, there’s not folks with a lot of experience to pull something like this off. So we’re really excited about partnering with states in large districts to ensure success. So again, the market’s going to basically triple over the next three to four years. I love growth because it creates an entirely new set of challenges. Some you anticipate and some you figure out as you go. We’ve had a pretty good track record of adjusting the organization to meet the needs of the marketplace.

Steve Chen (38:06):

How many people are in the organization today?

Tim Ranzetta (38:08):

17.

Steve Chen (38:09):

17. And how many teachers have you trained?

Tim Ranzetta (38:11):

17,000 in the last four years, one to

Steve Chen (38:15):

A thousand.

Tim Ranzetta (38:16):

So that’s 17,000 unique teachers and they’ve invested on average 25 hours with us. So we do courses, 10 hour courses on specific topics to one day workshops called fin camps again, which we’re doing 15 of them this summer. And we also do conferences, have a back to school conference, virtual conference on August 24th. So I think it’s the greatest. It should be anybody who wants to get into this space, whether it’s an incumbent who’s currently doing work or whether it’s a philanthropist who’s saying, how can I help this movement? It’s very simple. Invest in teacher professional development.

Steve Chen (38:56):

Okay, awesome.

Tim Ranzetta (38:57):

That’s another thing. You’ve got a lot of listeners who are very financially sophisticated, mentor a teacher, find a teacher in the district who’s teaching this. The number one topic they are least comfortable teaching is investing. We have an investing course, an advanced investing course. We run a lot of professional development around it because for me, that is the single most important topic in terms of building long-term wealth.

Steve Chen (39:23):

Interesting. We should give access to our planning platform to these if they want it. We can have a student version for kids to create financial plans. It’s kind of interesting. You look across your whole life, it’s like, okay, we show people what happens in the future. How many kids have you taught

Tim Ranzetta (39:38):

The typical teacher? In a given year, there’ll be about 50,000 teachers actively using our curriculum. On average, they reach about 80 to a hundred kids, so upwards of 5 million kids a year.

Steve Chen (39:52):

Wow, that’s amazing. Look at you from an idea to 17 people. You said 17,000 teachers you’ve trained up and then you’re, they’re teaching 5 million kids a year.

Tim Ranzetta (40:03):

So the numbers are basically over a hundred thousand on our platform, 50,000 active per year. 50,000 use our curriculum. 17,000 have participated in professional development.

Steve Chen (40:15):

Got it. That’s impressive.

Tim Ranzetta (40:17):

It’s fun. Bend

Steve Chen (40:18):

That curve. Hopefully the kids appreciate it. We should interview, you said David was the first student?

Tim Ranzetta (40:24):

Yeah, actually we had him, three of my students, so we celebrated our 10 year anniversary in May and we brought back three of my students. Yeah, I get chills down my spine just thinking, because you asked the question, what do you remember from the course? So there’s one student who’s like, I remember career day you brought in all these. That was one of my favorite. It was the last session I’d bring in six professionals and they’d sit at a table with four kids and the students would learn how to do informational interviewing and he said, I met an entrepreneur, you’ll love this. He said, I met an entrepreneur. I didn’t realize they existed. I didn’t know what they were. It turns out he’s an entrepreneur. And then there was David who’s like, I remember the first class you taught us think about investing. And then I told the story about David earlier, and there’s another student who’s at Stanford now who reached out to me, I think her freshman year at Stanford. She said, I remember you talking about index funds. I got a job this summer. I want to do a Roth IRA. Can you just remind me what I should be thinking about? Wow.

Steve Chen (41:30):

Yeah. It is amazing. I think it’s about more of what’s possible. I think that’s what’s so powerful. I remember in college I graduated, I had no idea what I was going to do, and then I talked to a friend of mine who went to Princeton. I went to Boston University. He’s like, yeah, I’m interviewing at McKinsey and Bain. I’m like, what are these things? I had even no idea they existed. And then because I read up about them and I was able to talk about them with other people, it helped me get hired at a better job, which enabled big things. But it’s like if you don’t have the awareness of what’s out there or how this works, that’s where you get hosed or you don’t appreciate why you go to college or learn about personal finance and just how the system works. You’re going to be subject to the system. You can spend your whole life basically subject to that, which is a bummer versus using the system to your advantage.

Tim Ranzetta (42:19):

Absolutely.

Steve Chen (42:20):

That’s the empower of it. Okay, awesome. Well, great. So we will link to next generation personal finance, help people get connected. We’ll make that easy for people. We would love to have our community with our people meeting up now about our little platform, which is kind of crazy, their little meetups, and so we’re like, okay, let’s have these people do some good stuff too. So hopefully we will make it easy for folks to get connected and mentor teachers, teach ’em about investing, get into high schools. I think that’s super powerful stuff.

Tim Ranzetta (42:50):

We’ve got stuff on our website too, so we’ve seen changes at the grassroots, and so we’ve seen parents testify at school board meetings at their local school districts saying, this is important. We should be teaching this. And here there’s no cost. There’s free curriculum, free professional development. We’ve got some advocacy resources on our website too to help people make the case.

Steve Chen (43:11):

Last question for you. Do companies, I’m sure lots of companies would want to be part of this, but are there companies that you see that could be aligned to where they make it easy for the kids to save or whatever it is in an aligned way that participate in this? Or is it totally no commercial stuff, which I could also see would make a lot of sense?

Tim Ranzetta (43:30):

Yeah, I mean I think there is, when it comes to curriculum mixing commercial interests with curriculum is kind of a big no-no, I would say we’re seeing more and more corporations get in the game and actually creating high quality financial literacy resources where in the past it might’ve been window dressing. We’ll just throw a lot of content up there. I think there are some groups out there being a lot more thoughtful about creating curriculum, and then obviously there’s a huge, one of the largest platforms out there. Khan Academy recently entered the game and they’re building kind of a robust personal finance curriculum, so there’s going to be no shortage of resources out there. And again, I think where the most opportunity for investment is really in how do we support teachers and make sure that they’re ready when these, because there’s going to be huge influx of new teachers required to teach it. The good news is they’re extremely motivated to want to learn this. They both want to teach the course and they want to help themselves.

Steve Chen (44:28):

Well, we’re going to have to try to figure out how to support those folks too ourselves. So I’ll think about that. Okay. Anything else you want to share with our audience before we wrap it up?

Tim Ranzetta (44:35):

No, just thanks for the opportunity to speak to your audience.

Steve Chen (44:38):

Tim. I appreciate you coming on and sharing the work you’re doing with Next Generation Personal Finance. We will link to it. Congrats what you’ve built. I mean, it’s really impressive to hear the story about how you started teaching and now built a team and educating tens of thousands of teachers and millions of students every year. It’s good stuff. It’s all for the good. And then for folks out there, go to Next Generation Personal Finance. Look up Tim Ranzetta. Look up Jessica, sounds like she’s the co-founder, and find ways to pitch in for our audience in general. All feedback to this podcast are welcome. All reviews are welcome, and your sharing is welcome. If you want to build your own personal financial plan, you can do it for free NewRetirement.com. Thanks, Tim.

Tim Ranzetta (45:19):

Alright, thanks Stephen.