One of the benefits of aging is looking back at your past mistakes, and then cautioning your younger relatives and friends to avoid those mistakes.
Early in my work career, when I was 18, my employer offered a plan in which they would deduct a percentage of my weekly paycheck, and match that amount upon the end of my employment. I could select any amount between 2 percent and 10 percent to be deducted.
I did not ask anyone for advice. My 18-year-old self, living with my parents with no expenses to speak of, opted for the smallest amount to be deducted. I liked seeing as many dollars as possible on my paycheck. I guess that made me feel good. So, I reluctantly permitted the company to deduct a measly 2 percent. They weren’t going to chop 10 percent off my check. I wanted that money now! I gave it about a minute’s thought and turned in the paperwork.
Fast forward 5 years, when I took another job. I had long forgotten about that weekly 2 percent deduction. I had other things (girls) on my mind. A few weeks after I left the company, I got an envelope in the mail from them. I assumed somebody there missed me, and had written me a letter. I opened the envelope and found a check written to me in the amount of about $1,600. I was thrilled! I didn’t even know what it was for.
It wasn’t Christmas time, and they never awarded bonuses of that size anyway. I wasn’t aware of any money they owed me. Back then, I had to work several weeks to earn 1600 bucks. There was no explanation included with the check. Was this some sort of bookkeeping error? I had been saving up for one of those fancy new video cassette recorders, which cost about $800 at the time. I’d hate to spend that money, only to be notified a week later that my big surprise check was a mistake.
I called the company’s business manager, just to be sure. “David Carroll here, remember me? I just got a check from you guys for 1600 dollars. I have no idea what I did to deserve this, so I’m just making sure it’s really mine.”
She paused for a moment and said, “Did I forget to put the letter in that envelope?”
“I didn’t see a letter,” I said. “Just a big ol’ check.”
“Oh, that’s your employer contribution payout,” she said. Ever the genius, I replied, “My what-what?”
She said, “You don’t remember? We had a big meeting about it.” She then repeated what I had probably slept through five years earlier. When I was 18, my mind would often drift during important, grown-up meetings. I only paid attention if I was getting a raise, or getting fired. The other stuff was BOR-ING.
She ended by congratulating me on my $1600 windfall, and advising me to either save it (yeah, right), or spend it wisely. Then she dropped the bombshell. “I just wish you had opted for the highest deduction. If you had chosen the 10 percent option instead of 2 percent, that check would have been for more than 8 thousand dollars. Oh well, anyway, have a nice day!”
It was only then I realized what a poor decision I had made five years earlier. EIGHT THOUSAND DOLLARS would have bought me a new car. I mean, a NICE new car. And again, living at home for most of those years, I would have never missed a few more bucks deducted from my paycheck. Sure, I could have asked my dad for advice, but I was (allegedly) too mature to do that.
Which brings me finally to my point. I had not gotten any financial education in high school. Not one class, not one minute devoted to saving, paying taxes, paying bills, buying insurance, applying for a loan, understanding credit cards, dealing with interest, explaining investments, maintaining a good credit rating, and learning which box to check when an employer wants to give you free money.
Today, in most states a student must pass a personal finance class in order to graduate. Better late than never.
