Carrie Schwab-Pomerantz is an industry leader in financial literacy. A seasoned financial planner, she is senior vice president of Charles Schwab, the low-cost US bank and brokerage firm her father founded in 1971. Ms Schwab-Pomerantz has advised two White House administrations and is the author of multiple personal finance books. Here, she shares her insights on financial literacy, gender parity and the importance of having a financial plan.
Financial literacy has been a part of your entire life. What made you so passionate about it?
I've been working for Schwab since I was 16. The company was basically a startup at that time. My father built the company on democratising investing and creating more accessibility for everyday Americans. They say apples don't fall far from the tree, so I guess that my whole career has been about democratising investing and making it more accessible for those not well-served by our industry.
Growing up, my father - before Schwab - was a struggling businessman. He had several ventures that didn't pan out. And when I was young my parents divorced. My mum was Stanford Phi Beta Kappa - my parents met at Stanford - but she was definitely a woman of the time. And with my dad struggling and the divorce I think it had an impression on me about women's financial empowerment. Women really (need) to be engaged in their finances and independent.
I've been fortunate to learn about investing and saving at an early age and see the benefit of that.
You mentioned underserved populations, should certain groups be taking better care with their money?
I have been working on this for 30-plus years and along with my colleagues have created financial literacy programmes for women, for inner city kids, for working poor over 50 - everyday Americans. And I'm talking to our clients from rich to poor. What I have concluded is that the lack of financial literacy cuts across Americans from all walks of life. It is blind to economic status, gender and age. Our latest research found there was some positive news: women's attitudes and aspirations are in the right place. Unfortunately, cultural habits and society still get in the way of women having economic parity and that is discouraging.
How can that change?
I think it is one thing where we all need to come together. Financial education can be embedded in school curriculums. And in the public sector, the government has a bully pulpit. I think together we can all start to make the change.
The bottom line is a lot of these issues start at home - how we talk about money. The gender gap starts at early ages so we've got to be talking to daughters the same way as sons. Also, it's about creating a culture that it is our personal responsibility to be engaged in our finances.
What is the biggest hurdle for those wanting to take control of their money?
It's about making a plan for getting there. That intentional act of focusing on your finances can make such a difference. It's also about being scrappy - you've got to know what you are spending your money on, where you are spending your money and where can you cut. You just have to be a little more disciplined sometimes. If you have aspirational goals you are more likely to be motivated. I think people think it is scarier than it really is.
I understand even you get professional financial advice?
I recently revealed this. I always did it on my own and it wasn't until my 40s that I got outside help. I was flying all over the country. I had three kids, a husband and a big commute. I couldn't do it all on my own. I went into a Schwab programme and we met on a quarterly basis and I did the work. Using an adviser felt kind of like a personal trainer. It creates more accountability. I meet with them on a regular basis and I learn from that person and I get better results.
What's your advice for educating children on financial literacy?
I did start early and I had a little system. When my kids were young - 5 years old or so - I gave them an allowance, not very much. And that was the beginning of them experiencing money and putting value on it. I remember my middle child pleading to get Pokemon cards and I was tempted to buy them and move on. But I said: 'You have an allowance, why don't you get them for yourself'. He thought about it and thought about it and said: 'I think I'll pass.' He decided his money was more valuable than mine. Learning the value of money early and making choices is important.
When it came to investing, I made them come to the Schwab office and fill out paperwork. I could have done it for them but I wanted them to experience working with a financial institution. It can be intimidating for a lot of people. And when the kids got jobs I opened up a custodian Roth IRA where they started saving.
How much do you pay attention to your competition, and what do you try to learn from them?
If you follow the competition too closely, you can get bogged down in the weeds. I try to stay focused on my mission, along with the right intentions, and don't pay too much attention to outside news. For me, that's a winning formula.
What advice do you have for small business owners right now?
Entrepreneurs have to be so focused on building their businesses that they often forget about their personal finances. So try to strike a balance between making your business and personal financial planning equally important. I say it a lot, but it's important to remember you don't get a second chance at saving for retirement.
How do you manage work-life balance?
I haven't yet figured out how to add more hours to the day, but I do believe that focusing on what's important to you, rather than just looking for an escape, can add dimension to your work that renews you. That's why I focus less on work-life balance and more on work-life blend.
What else should we know about financial literacy?
Learning about finances isn't a one-point-in-time thing, it's a lifelong pursuit. Life changes and therefore your goals change.