We go to school, learn to play nice in the sandbox, do our math homework, get a reading assignment or two, go through a battery of state testing, cross our fingers and hope for the best. If we get “so-so” grades, we go to commensurate institutions of higher education or choose a path that doesn’t require an ability to test or study well. But there are things we never learn in the United States education system – my elementary or middle school teachers never showed me how to balance a check book, set up a bank account, invest in stocks or taught me the value of saving. No one in school offered help with my resume, or even suggested that a part-time job may allow me to set aside funds for planning my future down the line. We never learned the difference between simple and compound interest and certainly didn’t understand the fundamental aspects of a bank loan. Even today, not much has changed. Kids are sent to school to learn spelling, reading comprehension, grammar and math. They spend seven hours a day in school; their daily custodians (i.e., school teachers) take them to recess, ensure that everyone is behaving within the confines of acceptable social norms and if the kids are young enough, give them nap time.
Here are some facts that should alarm you: one-third of Americans only have $1,000 in retirement savings. Now, because of this egregiously low amount of money that our peers have saved, 37% of Americans plan on working until they turn 80 years old. You read that right. We are not saving enough for retirement, and the cost of living is outpacing salary growth. You grow up, you get hitched, have a kid, get a house and start paying for commodities that you cannot afford. When our parents went to college, they could work over the summer to cover the cost of tuition for the ensuing college semesters. Today, that is far from the case. The environment has changed; student loan debt is in the trillions. Year over year, this number only increases. The cost of attending college is high. Sure, the ease of getting a loan allows for traditionally disadvantaged individuals to attain a higher education, but this is not necessarily a set-up for success.
Inevitably, life (and accidents) happen. I’ve spent much of my career in pre-settlement funding, otherwise known as litigation finance or legal funding. Most Americans live paycheck to paycheck, and when you get in a car wreck or hurt yourself, most of us are unprepared to deal with the cost of living expenses. So, what is a “legal funding?”
In the early 2000s, many personal injury law firms were working with small, regional funding companies to get their clients “bridge funding” while they had lawsuits pending. Initially, law firms were not amenable to working with funding companies. Over time, however, as the market became more aware of the service, lawyers started to recognize that this service was invaluable to clients.
Legal funding provides both attorneys and clients with the breathing room they need. Most clients need funds immediately to pay for basic living expenses. I’ve spent countless hours on the phone with clients; many of them are out of work, having a difficult time making ends meet and are looking for advances as small as $500 to meet daily needs.
Many of us are not adept at managing our finances. We receive salaries and wages, and often don’t plan for tomorrow. This is a problem nationally, and is not limited to just impoverished or lower-income communities.
It’s important to set budgets and be mindful of how you’re planning for your financial future. You must plan for that rainy day, because Murphy’s Law shows us that that rainy day will come, sooner or later. You should be putting at least 20% of your paycheck away to save for emergencies, retirement or disability. It’s important to invest, but it’s advisable to seek help online or through a registered professional to figure out what works best for you. Perhaps you want to trade on the stock market, or perhaps your money would be best spent on real estate. There’s no way of knowing until you do your homework.
Becoming better at managing your finances takes time. Look at your bank account today: what would happen if you lost your job tomorrow? Where’s your next payday? Where can you downsize?
It’s never too late to start planning for your financial future. Don’t wait.