If you are celebrating with family and friends this holiday season and hear grumblings about inflation or credit cards or student loans, I have the perfect response for you: Join the club.
No, really. Invite your family, friends or whomever you choose to join a money club of your own creation.
I can't think of a better time to do this. Americans' savings are down from pre-pandemic levels. Credit card balances grew 15% this year, the highest year-over-year increase in 20 years. Kaiser Family Foundation in a recent study found that nearly a quarter of U.S. adults "have medical or dental bills that are past due or unable to pay." Student loan payments have been paused again but will have to be paid one day, probably mid-2023.
These financial realities seem implausibly harsh in light of the now distant memory of the pandemic stimulus. I would argue many people don't need a scalpel to address their budgets -- they need a sledgehammer.
I'm seriously hoping that you start this club. Unfortunately, the immediate mission of the club has to be to help us not make a dumb financial move. Frankly, the good ol' days of money mistakes and rising from the ashes are over. We literally cannot afford to make money mistakes at all. Many have already made the major money mistake of being middle class, entrapped by rising costs in health care, education, housing -- I could go on.
Whereas the budget scalpel is us alone, in front of our computer, downloading a budgeting app or spending a day reducing and leveling bills, our sledgehammer maybe looks like a group of financial optimists offering each other ideas and inspiration to get ahead by eliminating expenses, not just reducing them, and accountability to stay the course. In other words, we need help from each other.
In the book, Join the Club: How Peer Pressure Can Transform the World, Tina Rosenberg makes the case that groups like these actually work. She gives powerful examples of them improving health and finances in India, organizing in Serbia and increasing attendance at churches. Apparently, not only do these groups work to accomplish their objectives, these groups that meet monthly "will increase your happiness as much as doubling your income."
Rosenberg makes the case for why these groups of fellow humans work better than individual efforts. "What matters to us most is our relationships with fellow humans -- the most commanding force for change." We care about what other people think.
Let's be real, don't we sometimes fantasize driving up to that Christmas gathering in the new Tesla? Oh, is that just me? But in all seriousness, what if family or friend groups adopted an alternative to destructive materialism masquerading as wealth? For example, instead of celebrating a new car, they are celebrating and impressed by you paying off the old one!
There is a problem to such organizing in America, however. According to Rosenberg, Americans generally think these groups are great "for other people." She reminds us that "Americans and people in other wealthy countries have a blind spot about the tremendous value of community and social capital. We believe we don't have time for people; we already have enough friends; we want to keep our private lives private."
Meet Danyell Cummings, EdD and assessment expert in the Little Rock School District, and Eboni Sanders, credit counselor with Southern Bancorp Community Partners. This aunt and niece duo have always had an affinity for each other and enjoyed an open dialogue on money for years. Eboni at age 40 has become a successful saver like her aunt, overcoming obstacles that would have led many to have the opposite financial outcome. Her personal success paying off debt and aggressively saving, in fact, led her to her career inspiring and helping others to do the same.
Saving and investing for Danyell and Eboni was not just a chore; for them it was exciting. And they realized that if they were having this much fun and finding so much financial success, imagine if they could share this with their family. When I sat down to interview them, the main reason for the desire to "share the wealth" was a fierce love of family and the recognition that everyone wins if everyone does better with money. Danyell further argued, "We need to develop healthy financial habits that stop generational poverty and promote generational wealth. This may take time, but there was no better time to start learning than now."
Eboni and Danyell started with a simple idea for a financial literacy and spiritual journey club of friends and family. When family members joined the first Zoom meeting of their club, they didn't just find a smart financial and faith curriculum, they found love, trust, optimism and confidentiality.
The club has a routine for each meeting. They start with a mantra. Then they celebrate wins, learn a bite-sized financial topic, and set goals for the next week. They always end in prayer.
The club has only been going for 6 months but is already a success. One member has successfully paid off a credit card, one paid off a car, and another saved ahead for a health expense. Every member has opened some kind of investment or retirement account. Everyone is now budgeting.
One group member experienced a major health event recently that wiped out the newly built emergency fund. It was a difficult moment for the whole group to feel that member's pain, but on further reflection most Americans' finances are too fragile to absorb a bill in the thousands. That emergency fund was a win.
While attendance is not mandatory, a sizeable group continues to show up. Many have remarked that they feel empowered to have the topics on saving, credit scores, interest, and budgeting demystified.
While Danyell and Eboni are financially literate, themselves, they draw from experts and books like Get Good with Money, Bogleheads Guide to Investing, and The Total Money Makeover.
Many people want to join these groups, but we need folks willing to organize them. Could it be you? Imagine the gift you will be to so many people. If you feel intimidated by a lack of financial knowledge yourself, remember the power of the group is peer-to-peer sharing, optimism and accountability -- not financial expertise.
Inspired by Danyell and Eboni, I sent my invites out last week. Even the "experts" need the chance to share, the opportunity to receive frequent doses of optimism and, most of all, the accountability to stay the course.
Sarah Catherine Gutierrez is founder, partner and CEO of Aptus Financial in Little Rock. She is also author of the book "But First, Save 10: The One Simple Money Move That Will Change Your Life," published by Et Alia Press. Contact her at sc@aptusfinancial.com.