The timing of Teacher Appreciation Week (May 7–11) and Mother’s Day (May 13) got me to thinking about what my mom taught me about finance. While mothers may not be teachers in the official sense, they play an important role in teaching us about the world around us.
I have to admit up front that if you’re reading this blog based on the title, you’re in for a bit of a surprise, and I hope you won’t feel too bad about being hoodwinked.
Articles with titles like this are almost obligatory in the financial press this time of year. If you’re reading this, you know why: They get people to read. Everyone wants an inside track on what’s going to be “hot” next year.
I remember first being introduced to the concept of market efficiency during business school. At the time, I was working for a large Wall Street firm in close proximity to the equity trading floor. As I thought about the precision with which market efficiency was being described in class and contrasted that with the controlled chaos of the trading desk, I couldn’t quite reconcile the two.
As the years have passed, I’ve had more opportunities to learn about financial theory, as well as observe how people make financial decisions in general, and investment decisions in particular. I still struggle with how markets can be efficient when people are involved!
I recently attended the Pennsylvania Conference for Women with a group of Vanguard colleagues. The conference featured an impressive array of speakers who focused on a broad range of personal and professional development topics for women. Sessions were offered on building a small business, leveraging social media, cultivating mentor relationships, and seemingly everything in between. But given that I work in the financial services industry, and that my area of focus at Vanguard is investment advice, I was most interested in the breakout session led by money coach Farnoosh Torabi, author of Psych Yourself Rich.
Yesterday, I pulled up to an automated teller machine (ATM) in my automatic-transmission car, opened my automatic car windows, and withdrew cash that had been automatically deposited in my bank account on payday. I then used some of the cash to take my car through an automatic car wash, and when I arrived home, I used the automatic garage door button to close the door behind me. Then I walked into the house just in time to hear the dishwasher beep to let me know it had automatically shut off after automatically drying my dishes. (I just wish it would automatically empty itself.)
We live in a set-it-and-forget-it world, and in most cases, the convenience of automation is fantastic. But, when it comes to money, I’m a proponent of thoughtful automation, or “thoughtomation.” What I mean by thoughtomation is simple: Use automated investment and payment systems, but keep track of them and routinely reassess whether they’re working well for your financial goals. In other words, when it comes to your money, set it, but don’t forget it.
