MF 166 : Douglas McCormick on Moving Forward with Financial Literacy for the Family
Douglas McCormick is the creator of familyinc.com and author of the book, Family Inc., which educates families on financial literacy. Today, Doug will share how your family can move forward with a Family CFO.
Successes at a glance:
20 years experience as a professional investor on Wall Street and 15 years experience as a business owner
Author of Family Inc.
Doug started his career as an active duty Army officer. Doug left the military after a 5-year stint and got his MBA from Harvard. He struggled with the transition from military life to paying for an education. On top of this, Doug had a family to think about. Afterward, Doug started his career on Wall Street and has been a professional investor for the past 20 years and a business owner for the last 15. Throughout, Doug experienced a lot of success but also challenges in navigating what he calls the “financial game of life.” Doug shares that growing up, his family was very big on education. His father, in particular, started Doug’s investing education early by giving him his first stock certificate at age 7 as a Christmas present. While Doug didn’t appreciate it at the time, today, he attributes that early present as the beginning of Doug’s road to investing.
Doug’s big why:
Based on his own experiences, Doug’s big why is teaching financial literacy for families and instilling the concept of a family chief financial officer (CFO). As Doug shares on this episode, the landscape has changed with market and labor turnover – it’s now the norm for young people coming out of school to go thru multiple jobs and careers over their professional lives. Moreover, social safety nets such as unemployment and social security are drastically changing, while life expectancies are increasing at an unprecedented rate. Thus, becoming financially secure requires skill sets for prioritizing based on fundamental principles, which are not being taught in schools.
Biggest challenge today:
Financial advice is a crowded market, most of which try to sell you a product.
Moving forward past that challenge:
Doug sees himself as selling an approach rather than a product. Doug’s mission is to create a framework so families can make better decisions. Doug is also creating tools to help families understand the best ways to use his framework to facilitate important financial literacy conversations. Doug is also involved in several organizations to advocate and educate families and veterans on financial literacy and entrepreneurship.
Doug shares this framework. Think of your family’s finances as the equivalent of running a small business. In that sense, we are all business owners.
As “family” business owners, we mostly have two big assets:
The family CFO is someone who spearheads managing the finances of the family unit (“the business”). This is more than managing dollars and cents, it’s also the basis for decision making for the family’s future.
Building a Personal Brand
Risk (insurance, unemployment / emergency plans)
How each member of the family deploys his or her labor
Learn more about financial literacy and the Family CFO:
One tip for a family CFO to start planning for the family’s financial future:
Start with an evaluation of your labor capital, not just in your weekly paycheck or annual income but over a lifetime. When you adopt that framework, you often make different career and education decisions.
Decide who should be the family CFO:
This is largely a personal decision based on a lot of family dynamics but Doug offers some general guidelines:
Who has the aptitude
Who has the interest
Who wants to communicate consistently about this
How early should children be involved in financial education for the family:
The earlier the better since financial literacy takes a lifetime to master. Recognize that parent-child conversations on this subject will continue into adulthood.
How Doug is moving forward today:
Coming on Moving Forward to talk about financial literacy!
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Who is Doug in five years?:
Doug is similar to who he is today but 5-years older. However, the topics he’s talking about today will be even more timely in the next 5-years. The implications and consequences of not being financially literate will be more apparent so Doug will keep at the message, advocating for and educating families on financial literacy.
“As the chief financial officer of the family, remember you are a business owner and as such you need a CFO to manage the big picture, not the day-to-day. And, it’s easier to grow wealth than save wealth and it’s certainly a lot more fun and don’t forget that a long time horizon is a strategic asset.”