A little over half of US adults are considered financially literate, while 15% of American adults are losing an excess of $10,000 due to their financial shortcomings, all according to Zippia research. Aces Advisors Founder and Managing Director Andre Jean-Pierre joins Yahoo Finance’s Brad Smith to detail the biggest mistakes Americans may be making with their finances and how they should be planning for the different stages in their life as they age.
“The younger generation and Millennials, as we go further into the information age, we’re seeing people who have more and more access to information, more and more access to proven strategies,” Jean-Pierre explains. “But what I would advise in regards to that is that everyone has their unique journey to financial literacy and financial freedom — no two plans are the same, no two investment strategies are the same because everyone is their own individual and they’re not like anyone else.”
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Editor’s note: This article was written by Luke Carberry Mogan.
Video Transcript
BRAD SMITH: You might feel like you already know everything that there is to know about keeping your finances in check. But only 57% of American adults are financially literate and 15% of people lost over $10,000 due to lack of financial literacy, according to Zippia. Now, that’s a lot of bread to lose over, just not knowing any better. So to break down what you might be doing wrong with your finances, we’ve got Andre Jean-Pierre, who is the Aces Advisors Founder and Managing Director here with us.
I’ve got to know, first and foremost, you think about some of the biggest client mistakes that you’ve seen in the past, what is the number one mistake that repeatedly comes up in some of the conversations and some of the different instances you’ve seen?
ANDRE JEAN-PIERRE: Well, first off, hello, Brad. It’s great to see you again. And to start off, the biggest financial mistake that we’re seeing clients make, whether they’re older or younger, is the habit of mental accounting, not knowing exactly what their numbers are. Whether it is having a written budget in place, tracking your expenses, and having a written financial plan, the difference between having financial wishes and financial goals is having that financial plan on paper and that budget on paper.
BRAD SMITH: You didn’t have to come for my neck like that right out of the gate, Andre. I’d like to think I’m pretty good at mental math, but apparently not good enough.
ANDRE JEAN-PIERRE: It works. It keeps us honest. But seeing the numbers in black and white, it’s a sobering feeling sometimes for a lot of people to see it in black and white.
BRAD SMITH: Certainly. What’s step number one then? To kind of make sure that you reverse that, how do you make sure that you put the steps in place to say, hey, I’m not just going to do this mentally anymore, continue to fall into this mistake or other mistakes.
ANDRE JEAN-PIERRE: The solution is to put pen to paper. Get that budget in place, start tracking your expenses. If you work with a financial advisor or a financial planner, they can help you with that and get that financial plan and that budget on paper, so you can start turning your wishes into goals and make them actionable items.
BRAD SMITH: It’s interesting, there’s kind of a generational divide of mistakes that we’ve also been tracking and we know that you have been hearing as well across your client base. What does that divide look like based on different generations?
ANDRE JEAN-PIERRE: Different generations have different reliable sources of information and who they trust. Now, with my younger clients, Gen Z and younger millennials, I do see a large issue with them trusting social media posts a little too much, online financial gurus that are unvetted, unregulated. And they are able to speak very eloquently and make things sound too good to be true but absolutely too good to ignore.
My advice to those people are to stick with reliable sources of information, reputable sources of information that are more trustworthy and can avoid financial ruin in the long term.
BRAD SMITH: You know, it’s interesting. While we’re talking about generations here, every generation seems to have a unique concern that’s aligned to their specific stage of life. I was looking at a Lincoln Financial Group study earlier this morning that was just published. “Gen Z paying for education and expenses, student loans.” Top three concern there, millennials. I mean, how many economic challenges can millennials, us, continue to face?
“Gen X most concerned with having enough income in retirement.” Across the ranges of concerns here, what are some of the mistakes that you’re now seeing the generations be a little bit more cognizant of and do better about their planning for?
ANDRE JEAN-PIERRE: I think, Brad, the younger generation and millennials, as we go further into the information age, we’re seeing people have more and more access to information, more and more access to proven strategies. But what I would advise in regards to that is to understand that everyone has their unique journey to financial literacy and financial freedom. So no two plans are the same. No two investment strategies are the same. Because each individual is their own individual, and they’re not like anyone else.
So I would advise everyone that’s listening, if you take the time, know your own individual goals and how you can get there, you can have your individual financial plan, and you can avoid trying to follow the plans of other people. Because like you mentioned, people are in different stages of life with different financial needs. So following the advice of someone that is in a different stage of life or has different needs might not be in your best interest.
BRAD SMITH: You talk about stages of life, and we’ll end here because this could perhaps be a week in itself when we think about–
ANDRE JEAN-PIERRE: Absolutely.
BRAD SMITH: When we think about millennials and stepping into planning families. [CHUCKLES] At this juncture right now–
ANDRE JEAN-PIERRE: Yes.
BRAD SMITH: –what is the– because I know and I see the– we were talking about the little basketball back there. I know that you’ve got–
ANDRE JEAN-PIERRE: Yeah.
BRAD SMITH: –a family. And what is the number one thought that people should be, millennials should be thinking through with their finances as they are doing that family planning as well?
ANDRE JEAN-PIERRE: The number one thought that I would bestow on any young investor is you do not have as much time as you think. That basketball is my son’s basketball. He is loving the tournament right now. And I’m thinking, I remember some of these players when they were playing in AAU, when they were in seventh grade, eighth grade. And now, I’m watching them on TV.
We don’t have as much time as we think. I’ve watched people over my career say, wow, when did I become 35? When did I become 45? When did I become 55? You don’t have as much time as you think. And in the world of investing, time is your best asset. Make sure that you use it on your side because as they say in sports, Father Time is undefeated. You rather have him on your side than on the other side.
BRAD SMITH: Andre, great reminder there to end things off. Andre Jean-Pierre, who’s the Aces Advisors Founder and Managing Director. Appreciate it.
ANDRE JEAN-PIERRE: Thanks, Brad.