8 CEO-Approved Financial Lessons That Might Change The Way You Think About Money

"It seems like this one thing that nobody understands is the gateway to everything."

April is Financial Literacy Month, and while that might not sound like a ~fun sexy time~, it's still incredibly important. Let's face it, our financial system is complicated, and many of us only learn how it works through a very stressful process of trial and error.

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And younger people are especially hungry to learn more. A recent survey by Greenlight, a financial education company, found that about 3 out of 4 teenagers don't feel confident or knowledgable when it comes to managing money, and 73% said they want more financial education.

So I spoke with John Hope Bryant, entrepreneur and CEO of the financial literacy education non-profit Operation HOPE, to learn about his mission and find out the key lessons that everyone needs to know about managing money.

Courtesy of John Hope Bryant

Operation HOPE provides financial tools and free education to low- and moderate-income teens and adults. In addition to their ongoing financial literacy programs, in 2020 they launched the 1 Million Black Businesses Initiative, in partnership with Shopify, aimed at giving Black entrepreneurs the tools and support they need to succeed in hopes of starting 1 million new Black-owned businesses by 2030.

Here's what he had to say:

1. Financial struggles can be a source of trauma, but education is one way to begin to heal.

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Anyone who's ever dealt with money trouble can tell you that it's stressful, but what you might not realize is that this type of prolonged stress can, in fact, lead to trauma. And this type of trauma affects Americans across racial and political lines. As John Hope Bryant puts it, "I've come to the conclusion that whether it's poor whites who stormed the Capital on Jan. 6, whether it's Black and brown people who are marching for Black Lives Matter, these are all people who are in the surviving class. They've got too much month at the end of their money, and they're living in trauma."

Healing from trauma can be a lifelong road, but financial education can be a great first step in the right direction. Learning healthier money habits and demystifying the often-confusing world of finance can help you start to break out of the paycheck-to-paycheck cycle and improve your relationship with money.

2. And a strong financial role model can also inspire you to take positive steps.

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During our conversation, Bryant shared that when he was 9 years old, a financial educator visited his school in Compton and made such a lasting impression that Bryant still remembers the color of his tie (red, if you're curious). He credits that man with introducing him to concepts like entrepreneurship and helping him imagine his future in a new way.

So, how does this apply in your life? You might find it helpful to think about who you'd like to emulate financially. It could be a friend, a relative, a teacher, or a mentor at work — just find someone you trust who you can talk to about money (and hopefully learn from!).

3. Don't spend more than you make. This is THE golden rule of financial literacy.

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There are so many stories out there about lottery winners who end up broke and celebrities declaring bankruptcy. It just goes to show that you can make millions of dollars, but if you don't know how to manage it, you won't have lasting wealth. So, it's worth repeating: don't spend more than you make.

This applies to your personal budget and in business too. For example, Bryant shared that his dad ran a cement contracting business but didn't have a strong financial background. So, he would often fall into the trap of underbidding competitors to get a job, only to lose money when the bid wasn't enough to cover his own costs. "He confused cash flow with profit," Bryant reflected.

So whether you're working on growing a small business of your own or managing household expenses, keep an eye on how much money you have coming in versus going out. Your bank account will thank you.

4. The best way to build wealth is by paying yourself first.

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Paying yourself first is another good habit that can help you save money for big goals, like buying a home, or for unexpected emergencies, like flat tires or vet bills. "When you make a dollar, train your mind that you made 90 cents. Take your 10 cents and set it aside," Bryant advised. If you get paid via direct deposit, you could ask your company if it can automatically deposit 10% of your pay into your savings account. Or you can get into the routine of transferring money into your savings every time you get paid.

Even if that 10% seems small, it will add up over time, and having a bit of money stashed away in savings can give you some extra peace of mind.

On the other hand, if you're not sure if you can afford to set aside 10% of your pay, you might try easing into saving with a smaller percentage or a set dollar amount. If you save $10 a week, after a year, you'll have $520 stashed away, which could help you avoid going into debt if a surprise $500 bill pops up. Get into the habit of prioritizing saving money before doing any shopping, and you'll be that much closer to reaching your financial goals.

5. Learn the difference between "good" debt that helps you grow wealth in the long run vs. "bad" debt that drains your funds.

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You might think that carrying any debt is a problem, but there is actually such a thing as "good debt" and "bad debt." For example, Bryant explained, "I've had people tell me, well, when you own a home you don't even own the home — the bank owns the home because they have a loan against it." But Bryant says this is 100% wrong.

Taking out a mortgage is generally considered "good" debt because a home can grow in value over time. Other kinds of "good" or constructive debts include student loans (because an education might allow you to earn more than you'd make without it) and small business loans (because growing your business might make you richer in the long run).

On the flip side, there's "bad" debt. These are things that go down in value, like taking out a loan to buy a brand-new car or shopping for shoes with a credit card. Not only do those things depreciate pretty much the second you step out of the store or off the car lot, but going into debt to get them means you're often paying more than the base price in interest charges and fees.

6. And watch out for predatory financial services that target lower-income people, like payday loans.

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Speaking of destructive forms of debt, many people living in lower-income neighborhoods are underbanked and rely on alternative financial services that can come at a big cost. "In these neighborhoods, what you see is a check casher next to a payday loan lender, next to a rent-to-own store, next to a title lender, next to a pawn shop...and they're preying on financially illiterate people," Bryant said.

Take payday loans, for example. These are short-term loans with incredibly high interest rates — in some states, they can go over 600% (!!!!) — and it can be very easy to fall into a draining debt cycle where you're taking out a new payday loan to try to pay off an old one.

As an alternative, if you don't have access to a bank in your neighborhood, you can sign up for an account with an online bank. Generally, online banks pay more interest on your savings and charge fewer fees, so they tend to be a great deal. And if you do need to borrow a little money from time to time, you might look into building credit with a traditional or secured credit card. You'll pay much less interest than with a payday loan, and if you pay your bills on time, it'll go toward improving your credit score. But always take into account your own situation and remember to read the fine print.

7. Financial literacy alone won't change the world, but on an individual level, it can change everything.

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Some critics of the financial literacy movement say that it unfairly puts the burden of solving systemic problems onto individuals and distracts from reforms that could make a big difference on a broad scale.

But still, Bryant maintains that financial literacy is an important part of creating a more equitable society. "There are deep systemic issues," he acknowledged, "and I and others continue to work with government and policy makers to make ‘ground water’-like changes at that level. But those changes won’t ‘change things’ unless we likewise upgrade our software at the individual, family, community, and group ‘mindset’ level, so it is all connected."

Think about it like baking a cake: You can have all the right ingredients but wind up with an inedible mess because you didn't have a recipe and you just kinda guessed. On the other hand, you might have a great recipe, but your cake still won't turn out right if you can't get your hands on the ingredients you need. For all of us to succeed, we need the recipe *and* the ingredients. Financial education is one piece, but voting, organizing, and advocating for economic policies you believe in is the other.

8. And finally, if you're feeling hopeless about changing your money situation, or if you're scared to start, you're not alone.

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If prolonged stress about money has you feeling like things can't get better, you're in good company. Bryant has been there — and plenty of the rest of us have been there too. Looking back on how he used to see money, Bryant said, "It seems like this one thing that nobody understands is the gateway to everything."

But getting a solid financial education (and years of hard work) helped Bryant turn things around, and there are likely small steps you can take today that can help you get into healthier money habits too. "None of this is easy," Bryant said. "It goes beyond financial literacy, into mindset, etc., but you cannot achieve it without financial literacy either."

Getting started might look like listening to a podcast about money, checking out a book on financial literacy, or seeking out a mentor. Just keep taking small steps, because they do eventually add up.

If you're interested in exploring Operation HOPE's resources or want to talk with a free financial coach, you can download the HOPE in Hand app on iOS or Google Play, or get in touch with an Operation HOPE location near you.

Who or what has taught you the most about financial literacy in your own life? Share your experiences in the comments below.

And for more money tips and tricks, check out the rest of our personal finance posts.