Indecent Exposure?

I’ve always been an advocate of financial education.

One of the reasons we had the financial crisis of 2008/2009 is because too many people are far too financially “unaware”: taking out silly mortgages they didn’t understand and couldn’t afford. I’m using a euphemism to disguise the word I really want to use for those people, but then again, to coin the famous expression: “There, but for the grace of God go I.”

When I was a kid, and thinking that money grew on trees, my mom sat me down at our dining room table one afternoon. She showed me my dad’s salary, the mortgage payment, the electricity bill, and described a few other “odds and sods” that comprised our family expenditures. I think I was about 14.

My dad was a mechanic, and my mom worked part-time at a retail store so she could have a flexible schedule—flexible enough to be around when her four kids came home from school.

Seeing our family’s finances was a good thing for me. I can’t say I really “got it”, but it planted a seed, and I’ve thought about it a lot since then.

But the world of money isn’t a fair one. I worked part-time at a supermarket in 1985, earning $10 a hour. On Sundays, they paid me $12 an hour. Meanwhile, my friend Joe worked at a restaurant as a cook, earning just $3.10 per hour. Arguably, he worked a lot harder than I did—yet I earned triple his salary.

I mention this because I’ve always touted that parents should fully disclose their personal incomes and expenditures to their kids—to keep it real. And I’ve always done the same. Ask me a personal question about money, and I’ve always given an answer. Keeping money-talk “private” leads to ignorance. And I’ve never been a fan of that.

But our world is a funny one. Teachers (arguably the most important professionals of all) can end up scraping by in certain U.S. states, while Hedge Fund Managers (who make the rich richer, or bleed them dry) get disproportionately huge salaries for the value they DON’T necessarily add to society.

Then there’s the question of investing money. Most people are so unaware of the fees they pay for the products they buy (actively managed mutual funds) because they haven’t learned better. David Swensen, Yale University’s endowment fund manager says, “…the market failure resulting from the mutual-fund industry’s systemic exploitation of investors requires government action.”

How about just exposure and education Mr. Swensen? Is specific exposure “indecent”? Sometimes? Always? Never? When does it cease to be educational and become indecent? I think investors should have the courage to ask their advisors, “Exactly how much do you make off me each year?” But we’ve quietly labeled money-talk as “indecent” or “crass”—so the exploitation can continue.

But how open should people be about salaries? When I exposed that I made $12 an hour on Sundays, and Joe made only $3.10, did that help him or hurt him?

Does a father, making a six figure salary, help or hinder his kids when declaring his income and expenditures to them?

And when a blogger reveals his or her wealth and investing profits on a blog, is that beneficial, inspirational, or occasionally disheartening to the reader?

As a schoolteacher, my job isn’t one that’s normally associated with a huge pay package. But my assets are more financially aligned (in dollar terms) with surgeons and lawyers than with teachers.

So, when revealing my personal finances on my blog, am I inspiring or demoralizing readers?

I have a lot of questions about money in this post. Do you have any of the answers?

 






Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I’m happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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23 Responses

  1. Very interesting. I know that it would not work if salaries were shared in our office. Co-workers do talk about it but it sometimes create issues. Since we are salaried employee, there is a certain offer & demand in place with the competitions to hire talented employees.

    However, I loved it when I read about family scenarios in Money Sense as it helps put your side in perspective. So I think it helps. I also think it's not about competition in this case but about learning to do and be better with money and finance.

    For your friend Joe, I don't think it hurt him since you are not doing the same job at the same company and being paid more. He just learned that there are better options out there and he can work towards those.

    My kids ask how much I have at times (they are still young) and I entertain them with numbers and explain what the money pays for. I do not share specifics though at their age but one day I may when they have a better grasp. I have not quite decided how much will be shared but enough to show by example.

  2. @The Passive Income Earner

    Hey Passive Income Earner:

    Your last statement is particularly interesting. I wonder how much we can/should share with our kids. For my parents, they could show everything: but they barely had to nickles to rub together after they paid the mortgage and fed 4 kids. So showing me all of the details was a good thing. But for parents with high salaries? It might not be the kind of thing you'd want to share with kids. Then they'd tell other kids, and… Well, you can imagine where that might go.

    It also makes me wonder about some of the strange inequities in life too. When I walk out the door, I meet a man, daily, who sweeps the grounds of the complex I live in–here in Singapore. I think he's from Bangledesh. He could also have far more intellectual potential than I have. But he was never given the opportunity that I was given. If he ever asked me what my salary is, I would dance around the issue and never tell him. Perhaps it should be kept quiet, in cases of unfairness.

    But where should the line of secrecy about money be drawn?

  3. I think it's worth differentiating between a salary from employment, and the success from investing. The salary is more private than my investing successes/failures I would say. I was happy to tell a friend that my retirement plan is currently on target to pay me 3700$ this year and possibly show where it's going in the long term 10 or 20 years from now. My hope is to educate by sharing financial success as oppose to share salary details. We all know that you don't need the highest salary to do well financially 🙂

    If the sweeper was to ask you about investing, would you share some information?

  4. Mich @BTI says:

    Hi Andrew,

    Life is not fair, but it has to be that way in order to have a fully functional society. If most or all of us succeeded financially in terms of salary or investing who will be left to sweep the streets? to nurse the sick? or to bag groceries? Every working member is as important regarding which level of work he did. The Bangladeshi guy might be richer than all of us if he needs very few possessions.

    Disclosing financial information to people you don't know on the internet will have no repercussions on you while disclosing it to people around you might end friendships as a result. Not long ago, I emailed a blog that disclosed its monthly income to thank the blogger because he proved that it was possible to monetize and shows what realistic expectations should be.

  5. @The Passive Income Earner

    Passive Income Earner:

    You make some good points. I wonder if money made via investments could have the same potential, social repercussions as talking about a high salary. If the investments gains are large enough, would the person hearing about it feel the same kind of resentment? I'm not sure. What do you think?

  6. @Mich @BTI

    We have such a funny relationship with money, don't we? It's weird that we can hear about a friend's good "income" fortune and it potentially strains the relationship–yet we can hear about he same success from someone anonymous, and we're OK with that. It's not a hard and fast rule, Mich, but there's some truth to what you're saying. It's a pretty messed up testimony to humanity, don't you think?

    I like what you said about the Bangladeshi guy being rich if he doesn't want possessions.

    Maybe we're also rich (in a different way) if we can enjoy our friends' successes too. What do you think?

  7. For me, it's about sharing enough to educate. If the person seek further advice, I may disclose more to show success (or failures) and educate further. I wouldn't just plainly disclose everything up front as it may be seen as bragging.

    It's about teaching a man how to fish for life.

  8. I don't share what I make with the kids, but I do try to teach them about money, and how to handle what they make in a smart way. Guess I inherited that behavior from my parents who were both raised in the Great Depression and very modest about themselves and what they spent. They never discussed their finances with me, but tried very hard to make sure their money principles were drilled into me.

  9. @The Passive Income Earner

    Hey Passive,

    That sounds like a good line to draw. Share enough to educate. I like it.

    As Mich mentioned, life isn't fair either, so we can accept that reality, but help people, educationally, if we can.

    As for sharing investment advice with the Bangladeshi worker, he makes about $1.50 Canadian an hour. So he knows more about money than I do–in a different sense.

    I should probably clarify that last part, because you guys might be interested. I don't know the sweeper's salary for sure, but this might shed some light on things:

    Five years ago I went out for dinner with a Korean man who works for Samsung. We might think of Samsung as an electronics company, but it's primarily a construction business.

    The Singaporean Chinese will often ask, "How much you make?" or "How much you pay for that?" I was asked how much I made by a girl working at "The Juice Zone" at our school. Think of it as an "Orange Julius". I switched it right away to "How much do you make?" and it turned out that she made $3 Singapore an hour, which is about $2.50 Canadian.

    I was sharing this with my Korean friend, and he echoed my surprise by saying, "Really?"

    I thought we were on the same page until he clarified his view with, "Really? That's too much!"

    His Bangledishi employees here in Singapore make $1 Singapore and hour, perhaps equivalent to about 75 Canadian/American cents.

    We talked about money (the Korean man and I) making me realize that, perhaps, I couldn't talk about money with people making so little. I had nothing to add. Nothing to educate them with. Unless, of course, I was willing to take some very big, committed steps.

  10. Mich @BTI says:

    Andrew,

    There is no "competition" with that anonymous someone when it comes to finances. Our nature is pretty messed up, we like to compare possessions from cars to houses, some even compare wives. Why is it in our nature to always measure? I don't know. When that someone succeeds it often reflects negatively on those around because they were not the ones who did. The key here is "satisfaction", I have met "materially poor" people who are extremely *wealthy* because they are satisfied with their lives. When you are satisfied, nothing else will matter around you, but in our materialistic society we obey the rules of relativism and we end up measuring everything relative to the person next to us.

    We are definitely rich in different ways, no matter where my mood stands, i try to always answer with a smile and a very good. As long as my family is in good health, I consider myself to be amongst the wealthiest. In the end, one takes nothing with him so one should *try* not to give too much importance to material wealth…alas with our nature it is sometimes harder to say than to do…

  11. @The Biz of Life

    Hey Biz,

    I guess your parents taught in the best possible way: by example.

    A kid won't ask his parents for a car if his folks don't own one–not if the folks take the bus everywhere. I'm not saying that was the situation for you, but it probably rings true, thematically, in your case.

    The generation after the Great Depression did well, financially. I wonder if prudence (in business and with personal finance) was modeled from those who suffered through the 1930s. Could that be one of the reasons the Boomers were successful? And then the following generation got sloppier (as did the generation in the 1920s)—entering into leveraging for both individuals and businesses.

    I think there may be more to your "example", Biz, than I first realized.

  12. @Mich @BTI

    Hey Mitch,

    This is going to sound "dorky" but I'm so happy to have met (online) such a thoughtful group of people. Your latest comments thoroughly solidifies that for me.

    You're right. What's "next door" is what's relative. We compare to that. We don't compare to the people in Vietnam or Cambodia—we compare with our friends and neighbours.

    You've nailed the secret of happiness. The Buddhists suggest that we need to look around us, and appreciate what "is".

    Like you, I think I can also do that. I've often been asked, "Why are you so happy? Why are you always smiling?" The cafeteria ladies I work with call me, "Mr. Happy" (no jokes there gents!)

    Anyway, when asked "why?" I usually respond with the only relative comparison I should ever make. I am alive. No matter how "successful" people are or have been, we all end up as ground mulch eventually.

    I tell people that I'm happy because I recognize that I'm one step closer to my ultimate demise. Most people think that sounds morbid (and I've said it since my 20s, so cancer didn't affect me this way). Anyway, there are those who truly get it, and that's cool. Each day is a gift. If I'm going to "compare" with anyone, compare with those who are dead. We have what they all want: life. And with health, and health for our families, the rest of it doesn't matter.

  13. Mich @BTI says:

    Hey Andrew,

    Same feelings apply, If you ever drop by Eastern Canada i'd love to have you over a nice BBQ!

    Cheers!

  14. I share a lot with my kids about how to shop economically, how to prioritize what you really need and such. However, I have not gone through and gone into detail about our monthly bills and such. They are all old enough now, so I think it is definitely something I should consider. (Especially since so much of our money goes towards them! 🙂 )

  15. "It’s weird that we can hear about a friend’s good “income” fortune and it potentially strains the relationship–yet we can hear about he same success from someone anonymous, and we’re OK with that."

    "When that someone succeeds it often reflects negatively on those around because they were not the ones who did."

    "It’s about teaching a man how to fish for life."

    I think that people naturally evaluate their standing relative to those around the. Someone might be happy making $22/hr at a company, but when they find out their friend just got hired elsewhere at $30/hr, then they often think it somehow reflects badly on themselves.

    I share information if I believe it will help the other person out. I won't share if I believe it will hurt the relationship or it will simply make the person envious or jealous. As Mich mentioned, we've both personally benefited a lot from fellow bloggers who have shared information on traffic and revenue. On the other hand, sharing salary at your place of employment is indeed a sensitive topic.

    By the way, $10 to $12 an hour in 1985 at a grocery store certainly wasn't too shabby! 😉

    "And then the following generation got sloppier (as did the generation in the 1920s)"

    I read a good post by Joe Plemon at Personal Finance By The Book about the power of "no": http://personalfinancebythebook.com/%e2%80%9cno%e

    I think people today are greatly disconnected from cause and effect, and government intervention is one of the biggest culprits. People want easy money, and the government provides it to them. People want the banks to lend them mortgages, so they tell the government to do whatever it takes. If government relegated itself to preserving life, liberty, and property, and did nothing else, I imagine that people would necessarily need to learn, since there would no longer be a gold-plated pension fund for some, bailouts for others, and certainly no quantitative easing.

    The way I see it, government does so much for us today that it's like we're all children who have never grown up. Government is the dad we love to hate, but the dad we run to whenever we need help. There is much less pressure to self-educate and be self-responsible because dad will always be there to take care of your mess.

    The truly fair and just society is one where everyone is equal under the law; where some groups are not privileged over others by redistribution, where some groups are not protected by special laws at the expense of others, and where everyone has the equal opportunity to succeed, as well as the equal opportunity to fail and learn from their mistakes.

    Government and the people are in a sense reflections of each other, but if you took away daddy's long arms and committed them only to ensuring that the kids play by the rules, instead of pampering them with low interest rates, special subsidies, etc…, then I guarantee you that you would see a more honest society and the values to reflect it. I'm not religious, but I think that the emphasis on personal responsibility and voluntary giving is a valuable lesson that everyone can learn from!

  16. @Mich @BTI

    I'd love to swing by one of these days Mitch. Thanks for the invite. And if you're ever in my neck of the woods, let me know.

  17. @Everyday Tips

    Everyday Tips:

    I found it especially helpful when my parents showed me their finances. I guess you can be in control of what you show them and what you don't. Perhaps show them your mortgage payments, food bills, tax payments, and then say, "Gosh it's tough, but if you don't ask for too much, we can probably afford to keep you." I just hope they're old enough to know that you'd be joking. I'd hate to overhear them tell their friends' parents that!

  18. @Kevin@InvestItWisely

    Hey Kevin,

    Are you referring to Canada as a fair and just society or not? I think you and I have alluded to "perks" given to certain people–and that those perks weaken the recipients instead of empower them. In that sense, Canada wouldn't really fall under the fair and just society, would it? It would be really tough to find one that is. As Mich suggested, "Life isn't fair". So perhaps hoping for a just society is like trying to catch your shadow.

    As for that job in 1985 paying $10 to $12 an hour—yeah, for a 16 year old kid, it was amazing. I worked there from 1985 to 1988 (when I graduated from highschool). But of course, at the time, I didn't really appreciate how much that was. I do fantasize sometimes about going back in time. What would I buy, knowing everything I do now? Instead of a 1980 Honda Civic, I would have put that $2,500 into Microsoft's IPO. But then….where would I go from there? I'd probably end up living a life of misery. There's a lot to be said for fighting the good fight.

  19. Great post (and comments)!

    To answer your question, I think it's inspiring Andrew. You have a passion, you are keen about personal finance and investing, so much so, you've achieved personal wealth and parlayed your interests into a host of hobbies. Nothing wrong with sharing what you've learned, observed, and experienced. What's wrong with that? Absolutely nothing IMO! Absolutely nothing wrong with providing reflection or perspectives on your journey (and to others as well). You are not demoralizing your readers. I would say that about you and other bloggers. Those that want to learn and share, always will 🙂

    I think talking about money; money education; salaries; personal wealth becomes indecent when it's not done with honesty, integrity, objectivity or tact. Having a dialogue with anyone about money, does not have to be “indecent” if those principles are followed. It never has to be confrontational, condescending, insulting, depressing; any of those things. It has been a taboo topic for too long because of how we (most of us; all of us from time to time) approach the subject.

    I agree with many of the comments above, certainly what Mich said. If you have your health and people around you who care about you (and vice-versa), you REALLY have it all. You are very *rich* – whether you realize it or not. Money is just a tool that brings more opportunity and choice to your everyday life. Nothing more. I'm not saying money is not helpful (certainly is) but comparatively speaking, it's just NOT THAT important 🙂

    At the end of the day, if you ask most people if they had to choose between money or happiness, most people would choose the latter. "Happiness" has much more lasting power than money ever will. Cheers.

  20. @Andrew Hallam

    Hey Andrew,

    "I think you and I have alluded to “perks” given to certain people–and that those perks weaken the recipients instead of empower them."

    Indeed. Whether life is fair or not, the only consistent legal and moral framework is one that treats all humans equally under the law.

    I'm not the most intelligent guy in the world, nor am I the dumbest. Would it be OK for me to tax my more intelligent coworkers?

    I am not the most handsome guy in the world, nor am I the ugliest. Would I be justified in placing a beauty tax on Brad Pitt and giving myself an "ugly Joe" subsidy, so to speak? 😉

    Although life is unfair, we can have fair justice and fair laws. They are obtained when we have equal respect for each individual's right to life, liberty, and property. Attempting to correct life's imbalances by violating life, liberty, and property usually leads to a more unjust situation.

    Take social security in the US. It was originally intended as an emergency measure for those who did not have adequate savings, and it was implemented at a time when most people did not live long beyond 65. Nowadays, huge numbers of people rely on SS as their sole pension plan, and a huge chunk is taken out of each current worker's paycheck in order to pay these pensioners. When you look at future liabilities and future income, the system is screwed. Young people today are forced to contribute money which they could have been putting toward their own savings; money which they are not even likely to see in equal measure in the future.

    Andrew, you really said it best when you said " those perks weaken the recipients instead of empower them." Are we ever going to have a just society? I think the world has been moving toward that through history, overall. Political dreams always hit the wall of economic reality, sooner or later, and with increased distribution of information, it is harder for those in power to lie about why.

    Winston Churchill once said that "Democracy is the worst government, except all the ones that have been tried." I acknowledge his point, and I also believe that evolution never ends. What we see as normal today, we will probably see as hideous and unjust in a century from now.

    "As for that job in 1985 paying $10 to $12 an hour—yeah, for a 16 year old kid, it was amazing."

    Yep, I remember I was getting less than that for my first summer job, 14 years later 😉

    "Instead of a 1980 Honda Civic, I would have put that $2,500 into Microsoft’s IPO. But then….where would I go from there? I’d probably end up living a life of misery. There’s a lot to be said for fighting the good fight."

    You? I think you would keep on fighting the good fight either way! Even without a Microsoft IPO, you are still relatively in a much better position financially than most people your age, and yet you still fight the good fight, right? 😉

  21. @Financial Cents

    Hey Financial Cents:

    Thanks for such a detailed, inspiring response. Your compliments were well-timed. During this blogging process, I've revealed a lot of financial information that made me uneasy. Even this post itself, for some reason, wasn't a certainty for me. I kept asking myself, "should I really post this?"

    It is odd, in many ways, that we have such a strange fascination with wealth. You put it in perspective when you said: "Money is just a tool that brings more opportunity and choice to your everyday life."

    Strangely, however, we often put God-like status on the rich. I may have shared this story before (forgive me if I have) but it's one of the strangest (and coolest) experiences I ever had.

    In 2005, I wrote Buffett a postcard in front of my students, and I sent it to Omaha from Singapore. I told my students that I wanted to meet Buffett, and that a quirky postcard might get his attention. As I mentioned to Mr. Buffett in the postcard, I was going to attend the Berkshire Hathaway AGM, and there wasn't a hotel in Omaha….so…I asked if I could sleep in his garage or on his living room sofa. (Hence the "Sleeping on Buffett's Sofa" title/subtitle to the blog) To make a long story short, Buffett read the postcard, sent a copy of it to the Wall Street Journal, then got back to me asking if the WSJ could write about my plea. They did. I met Buffett and Gates, got interviewed by Squawk Box's Debbie Quik (sp?).

    Anyway. When I got back to Singapore, I found out how revered Bill Gates was to the school community. My class wanted to know where I went, what I did etc. They knew about the postcard, but they went all "goo goo gah gah" when I mentioned the short conversation I had with Gates.

    If they were doing it over his philanthropic efforts, maybe I'd understand. But they did it because he was the world's wealthiest man. And that really puzzled me…the degree of reverence for a man they knew nothing about. All they knew was that he was rich. Of course, Gates and Buffett are now known to be building a much nobler legacy than that. And Gates had been doing that for years…they just didn't know that (or care).

    But was my reverence for Buffett the same as everybody else's reverence for Gates? I don't think so. I knew so much about the man (having read just about everything published about him) and I found his mind fascinating—far more so than his wealth.

    Thanks Financial Cents.

  22. @Kevin@InvestItWisely

    Hey Kevin,

    I like the fact that you're such a thinker–and thanks for sharing those thoughts. You're obviously so curious about so many things: history, finance, politics. Charlie Munger would love you. Do you know much about Munger? He believes that great investors need to be multi-disciplined. Benjamin Franklin is his hero, in that capacity.

    One of Munger's favorite terms is "Invert. Always invert". He suggests to look at invesment ideas (and ideas in general) from every possible angle.

    He's a humble man who has had a much greater influence on Buffett's investment ability than most people realize.

    When I think of your interests, I think of a young Munger. But you're a lot more polite than he is!

    Thanks for another fantastic, detailed comment. Who knows? Like Munger, maybe your intellectual interests and fascination with compounding wealth will eventually make you a billionaire. At the rate you're going with your blogging, you might even grow to be that "millionaire blogger" that I get to profile before the decade is up!

    Andrew

  23. @Andrew Hallam

    Hey Andrew,

    I like that idea of inverting things, to look at them from different angles. I'll tell you what; if I do become that billionaire blogger, I'll have you over for a drink on my cruise ship… or even my humble seastead condo 😉

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