Be it for college, a car, or a candy bar, we constantly make choices with our money. Some purchases are bigger than others, but even the smallest expenses can multiply over the years, with cascading consequences.
Gene Natali Jr. and Matt Kabala both hold MBAs and manage money for institutions. They realized that their friends, family members, and just about anyone else could benefit from some basic financial lessons.
“It’s a subject that affects 100% of us,” Mr. Natali said. “We make decisions about money every day. When you’re making bad decisions, it can become a trap, and one that’s often hard to dig out from. You see how many good people dig financial holes—not because they’re not smart, but because they were never taught.”
So the pair decided to share their expertise with the hope that people—especially recent college graduates—would put their money into an investment vehicle like a Roth IRA instead of a luxury car or a lifetime habit of lattes.
Save early, save often Last year, Mr. Natali and Mr. Kabala co-authored and self-published The Missing Semester, so named because its lessons aren’t often taught in high school or college. They hope the book, packed with common-sense financial guidance, will set readers down the path to financial freedom. Delaying gratification, avoiding debt, and saving are constant themes, and there’s also advice on investing, choosing a career, and even the college selection process.
“Do not let your spending dictate your savings,” Mr. Natali said. “It’s the biggest trap out there—one more night out, one more cup of coffee. Peer pressure digs you into holes. Put your obligations first and then [have] extra for the good times.”
The Missing Semester, provides some sobering statistics. For instance, “43% of households spend more than they earn each year” and nearly “50% of baby boomers are at risk of not having enough money in retirement to pay for basic expenditures.”
Mr. Natali, now 33, said he was fortunate enough to start saving and investing early. He and his brother earned money caddying, and he opened a Roth IRA as a teenager. He devoted a section of the book to the Roth IRA because its earnings can be withdrawn tax-free.
“It was exciting the way it was presented,” Mr. Natali said. “I was lucky to have parents steer us that way. They walked us through it and we learned the power of compounding and starting early. If you make it part of your everyday life, it becomes comfortable.”
Spreading the word Together with Mr. Kabala, Mr. Natali’s ultimate goal is to inspire young people to take their financial health seriously. He estimates about a dozen colleges and 15 high schools have incorporated The Missing Semester into their curricula. The pair is busy promoting the book and the ideas it represents to schools, investor education groups, conferences, and book stores.
When they made a return visit to a western Pennsylvania high school recently, Mr. Natali said he was heartened by the introduction from one of the students.
“It’s our job to inspire, and importantly to create awareness, about how important this subject is, and the incredible opportunity that young folks have in front of them. “Mr. Natali said. “The student who gave the introduction [to his peers] said: ‘After reading this book, I opened a Roth IRA. I want you to pay attention for the next hour because this is really important stuff.’ If you can reach high school and college students, and recent graduates, and they see the benefits and become excited about it—then they tell their peers in everyday conversation, and I think you start to address the problem.”
At the same time, Mr. Natali has been encouraged by those he’s trying to inspire.
“It’s a remarkable generation,” he said. “It’s remarkable what they can do. If we can simply make them aware of the importance of this subject, they’ll absolutely impress us with how they take control. Our job is to provide the teaching and the tools that will help them to do so.”
Read more on Vanguard’s website.
Note: All investments are subject to risk, including the possible loss of the money you invest. Withdrawals from a Roth 401(k) are tax free if you are over age 59½ and have held the account for at least five years. If you take a withdrawal from your Roth 401(k) account before age 59½ and less than five years from the first contribution, the portion of the withdrawal that is attributable to earnings may be subject to ordinary income tax and a 10% federal penalty tax.