Knowledge is Power: Understanding Financial Literacy with Ro$$ Mac

What do creativity and personal finance have in common? Just about everything for multi-hyphenate Ro$$ Mac . A former Wall Street professional turned entrepreneur-financial educator-musician-philanthropist, Mac makes it his mission to simplify the often confusing world of finance.

“The smartest investors are thinking creatively to see the future,” Mac explained during a live-streamed interview with SoFi’s Brian Walsh, CFP®.

A champion of financial literacy, Ro$$ broke down how to use financial knowledge to generate fiscal gains.

Write it Down

The journey to financial literacy starts within, Mac reminded. Before looking for information outside of bank statements for what to do next, people should have a look at the statements themselves.

Budgeters should look into how much they’ve been making versus spending on a monthly basis, as well as debt totals and savings account balances. Recover passwords from forgotten HSA accounts, or dig through old bank statements to figure out the balance of an old savings account.

Excavating personal finances can feel intimidating, and even a little scary, but financial literacy has to start somewhere.

“Write it all down,” suggested Mac, everything from debt to savings and spending categories. Financial knowledge includes self knowledge.

Once a budgeter has a better idea of the financial shape they’re currently in, they’ll have a better guide for the next steps they need to take.

Finding Motivation

If a person doesn’t know where they’re headed, how can they be expected to make it there?

Once a person has an understanding of their current financial health, they can start to think about where they want to be in the future. Aspiring financial literacy shouldn’t start diving into the books and blogs without first asking, “why?” reminded Mac, “Why am I trying to get smarter about money?”

There’s no right answer, and motivation will change from person to person. For Mac, one of his motivators at the moment is saving for his child’s future. For other budgeters, the “why” behind gaining financial literacy could be the desire to break the paycheck to paycheck cycle.

It could be as simple as wanting to build wealth for the heck of it, said Mac.

Motivation is an important element of the financial literacy journey. To both our benefit and detriment, there is seemingly limitless information online about how to manage finances, invest, and save.

“Access to everything is at our fingertips,” explained Mac. Someone could spend their lives reading everything there is to know about saving for retirement, but never take action on it.

Discovering motivation can help guide what information a person will seek out right now. It also can help narrow down all the information out there, revealing a clearer path to financial literacy, and action.

Learning the Language

“Financial literacy is a language,” reminded Mac. “The earlier you learn it, the more fluent you’ll become.”
But, starting early isn’t the only key to mastering financial literacy. Just like taking Spanish classes in high school, any fluency gained at that time will be lost if the student stops practicing.

“It’s all simpler than it appears to be,” Mac said. It’s just a matter of finding the right content that speaks to a budgeter, whether that be podcast or infographic.

Mac created his own series, Maconomics , because he wasn’t finding content that spoke to him specifically, or broke down the concepts in a way he thought was understandable.

It’s not only learning the language, but also continually engaging in educational materials to stay sharp in financial topics. “Take advantage of the digital tools that can serve you. Our parents didn’t have this stuff growing up,” reminded Mac, “the internet has been able to level the playing field.”

Blogs, YouTube channels, podcasts, and content from financial education sites like SoFi Learn can make challenging topics more digestible.

Transforming Knowledge into Action

Knowledge is power, but at some point, it needs to turn into action to make an impact on financial goals. With so many misconceptions around building and growing wealth, Mac understands when aspiring budgeters feel intimidated or unmotivated.

“You don’t have to be the smartest, richest, or from the best background to make smart financial decisions,” said Mac, “it’s about bridging the information gap.”

Learning about finance is one thing, but taking the knowledge and applying it to our lives feels like a big jump. Mac recommends going back to the trusty notebook, and looking for small action steps; “don’t try to drink from a water-hose, find ways to take small sips.”

If a person feels buried under student debt, the amount owed can feel huge and intimidating. Instead of dwelling on the number, they can look into actionable steps to make the debt more manageable. That could be anything from refinancing loans for a more favorable interest rate, to renegotiating payment plans.

Financial literacy gives them the knowledge and confidence, and breaking down action plans into bite-sized steps can make the whole process seem less overwhelming.

Challenging Assumptions Around Finance

As a person dives deeper into learning about finance, they have an opportunity to challenge their preconceived notions. In this way, it literally pays to start learning more about money.

“There’s a misconception that you need to be rich to start investing,” Mac said.

For example, big name stocks can be pricey, and can make people feel like they can’t afford to get into the market. But, with a little research, budgeters can discover fractional share investing tools like SoFi fractional shares, where people can start investing with as little as $5 with no commission. That knowledge can be a confidence boost to get a beginner investor into the market, when they previously thought it was impossible.

Similarly, a downpayment on a home might be unattainable at the moment, but that doesn’t make investing in real estate out of the question. Investing in real estate through REITs can yield similar results without the large upfront investment and commitment.

Or, it might feel like there’s never enough left over for savings at the end of the month. Using simple, free online tools like automated transfers and multiple savings accounts can take the stress out of the experience.

Mac also urged budgeters to think over some of the financial advice they hear time and time again. As people learn to manage their budgets, they also need to think past the “Spending 101” ideas they constantly hear.

“It’s not always about saving the $2 on a latte—keep in mind big purchases make big changes,” Mac said. Of course, thoughtless spending can be a drain on finances, but focusing just on small purchases won’t lead to big changes.

Once thoughtless spending is under control, people can take a step back and consider what big purchases are important to them. Is the rent or mortgage eating up too much of the budget each month?

Are car payments spreading things thin? Moving somewhere more affordable, or trading a car in for a cheaper model can make a larger impact, month over month, in a budget than curbing a coffee habit.

Cashing in on Financial Literacy

Financial literacy isn’t just about learning, it’s about gaining enough confidence in the subject to make money moves that build wealth. Reaching financial literacy comes from setting goals and reading up on how to achieve them, but there’s always opportunity for free help and tools along the way.

SoFi’s team of financial planners are here to assist, and SoFi members can set up complimentary appointments with the click of a button. Read up! It’s time to start reaching for those financial goals.

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