Money. Just the thought of money brings many emotions to mind: needing more of it, learning how to invest it, teaching kids to use money wisely, and so much more. Recently, I was introduced to Mike Finley, aka The Crazy Man in the Pink Wig, through his free classes at the University of Northern Iowa.
What makes Mike interesting to me is that he is a self made millionaire who retired from the military at age 45. He did not come from money nor did he win the lotto. Instead, he decided to change his life in his 20s and get on a new track that would lead him to financial happiness. He decided to invest in himself by consuming all the financial knowledge he could.
After retiring from the military, he moved to Cedar Falls, Iowa, and decided to give away his knowledge for free, to help encourage both students and non-students to increase their financial knowledge and make decisions that would lead them down the same road of financial happiness that he achieved.
In 2015, Mike gave away $100,000 of his own money (to the top 10 top scorers of his financial literacy quiz) in amounts ranging from $1,000 to $25,000. In April 2018, he presented 30 classes over 30 days and gave $100 of his own money away in a drawing during each class. I even won once.
I wanted to learn more about The Crazy Man in the Pink Wig and what advice he would give to families regarding money and finances. Mike generously agreed to sit down with me for an interview, and our conversation is below. I hope that Mike’s perspective provides valuable insights for you no matter your age or stage.
Q: Who is Mike Finley?
A: I grew up in Iowa. A small little town called Jamaica, Iowa. I left Jamaica to join the United States Army. I was lost and confused. My dad gave me an ultimatum one day, he said I had to find another place to live. He was giving me that boot that I needed. The US Army gave me the opportunities to start to find who it was that I was going to be in life. Over time as I started educating myself about money. That lead to one thing and then another and then another. It took me to this place now where I am trying to help other people find the right path for them as it relates to money and life.
Once I fixed my financial life, I started to help other people do the same. I saw people around me having struggles financially and so I felt compelled to help them. Through that process I had a message but I didn’t really didn’t have a visual to it. I didn’t have anything visually that I could attach to this message of financial freedom that I talk about. Back in 2009, my great niece had a pink wig. I put it on to make her laugh, she was 3 years old at the time. She laughed and her mother took a picture of me. I placed that picture on Facebook as my profile picture. Little by little people started calling me “The Crazy Man in the Pink Wig” and it hit me that that actually covered my message in the sense that I try to help people think and behave differently when it comes to money and maybe their life. It’s the idea that maybe being crazy, maybe sticking out could actually mean that you are on the right path.
Q: Why aren’t you out having fun?
A: There are multiple things happening at one time here. One is that I have enough. It’s the concept of having enough and once you can accept the reality of that you can stop chasing after more money and more stuff and you can redirect your time and money towards something more important which for me is helping people and I am having fun doing that. I think some people might think “Why don’t you just go live on some island and chase pretty girls and have a good time at the bar?” That would be a very hollow life, and it would get old very fast. I’ve come to understand what it is that’s going to bring real happiness to me and that is giving unconditionally to others. By looking at other people like John Bogle and Ghandi, you can start to see the value of doing something in an unselfish way to help other people. One of my messages is that I am going to show you my beliefs, I’m not going to necessarily tell you them, I am going to give people an opportunity to see me and then they can make a decision on whether or not that message is for them. Because a big part of my message is about giving.
Q: How did you know that you had enough?
A: As I started to read and learn from other sources that would never have entered my life, I started to understand a different way of thinking which was this idea that stuff doesn’t make you happy, money doesn’t make you happy beyond a certain amount, beyond your basic needs and it was the understanding of what I picked up over time was how I could use eastern philosophy (the understanding of the self) in a way that under our western civilization and all the freedoms and the opportunities we have, those two things combined have helped me understand myself. So it’s to be mindful of what I am actually trying to accomplish with my life. A big piece of it is learning from other people who have maybe found some of these answers and maybe rejecting plenty that I am hearing externally in my normal environment because one thing I have learned is that you can change the environment or you can let the environment change you.
Q: Do you have any financial advice for those looking to have kids in the near future?
A: I would start immediately learning about money. Once the parents know about money, they can teach their kids. It’s incredibly important to understand money and how to manage it and how to grow it so you can not only help yourself but your loved ones. You can teach your children how to be wise with money but you’re going to have to do that first. There is a website called myclassroomeconomy.org and that is a site K-12 online (free online education) where a child can learn at their pace about the world of money and a parent can work with a child through that process as well.
One of my goals is to help adults learn so we can build generations of financially educated children.
Q: Does the role change for parents as your kids get older?
A: Certainly it can. Anyone with a teenager can tell you that it probably changes quite a bit at times. Kids may not listen to you carefully, but they are always watching you. They watch everything you do. The best message we can provide kids is to simply be that message. To live whatever it is that we are trying to teach because at the end of the day it what we do that matters. Not what we say, but what we do. Teaching a child through our life experiences is key; I am also a big believer in giving a kid at any age, some degree of responsibility, some autonomy to handle money.
One example a very bright young mother came up with was when they went to a restaurant their children could order some drink or the child could drink water and get a dollar bill. So, which do they want? The choice was up to the child. If the child wanted the soda they would not receive a dollar bill. However, if they wanted that dollar bill, they would drink the water. All of a sudden it is a decision made by the child, not the mother or the father. I believe as a child gets older, we should be trying to give them more responsibilities so they can start making decisions with the money they now have in their pocket and then they have to live with those consequences. So if they make some poor decisions, they are going to have to live with that. If they make some good decisions, they will learn from that as well.
Q: When would you start teaching a child how to deal with money they receive?
A: I would start immediately. No matter what the age, if a child receives a certain amount of money, I would treat it like it was earned income. Meaning you decide how much will go wherever.
Maybe you decide that the money should be divided up like this:
- 20% will go towards savings
- 20% goes towards taxes (which would go towards savings for the child)
- 10% giving
- The remaining 50% belongs to the child
So, children learn that they only get 50% of their income because they had to pay taxes, they had to save their money, and they had to find a way to give.
Building those habits at a young age and can easily transport them into adulthood in a much better position – not just financially but their mind and their habits and how they see money coming into their life.
It’s never too young to get children started with investing. You can start a target date fund at Vanguard and own stocks and bonds at a very low cost for a $1,000. You can start to show them the value of saving and then investing where your money is actually earning money. This whole idea of your money earning money is a powerful concept. That passive income where all of a sudden it’s not you earning money, it’s your money earning money. As that starts to grow, that can have an impact on a young mind.
— What is the best way to learn about investing in a Vanguard account?
First, take the time to understand no-load (no commission) mutual funds. There’s no reason you should ever pay a commission when investing your money. Then, own an index, like an entire market at a very, very low cost so you have pooled assets with a mutual fund. You put that money in every month so that you’re investing in companies, companies that produce quarterly dividends and earnings growth on a yearly basis.
Through those earnings and dividends, your money starts to grow over time, so getting kids started early and understanding how to invest wisely so you (the person with the money taking all the risk) end up with most of the return. The way you do that is by squeezing out the cost. You get rid of loads (sales charge or commission fees), you pay the lowest possible expense ratio (the annual fee that all funds or ETFs charge their shareholders) which goes with every mutual fund and by squeezing out those costs, those returns over time will be much, much bigger.
Q: What is a good way to plan for college?
A: This may sound sacrilegious to a lot of people but not every kid should go to college. We should talk about the many options they have in life and for some people, some kind of trade could be a better option than college. The military could be a better option. The military was a better option for me. I was not ready for college. I personally think we focus our efforts on shoving people into college when some of them are not ready.
Many students will be ready for college right out of high school; some are not. Some may need to spend some time in the world of work or somewhere else before they are ready. You are trying to prepare them to be self sufficient of course, as far as investing for their future needs you could look at a 529 Plan. The state of Iowa has a very good 529 Plan that invests in Vanguard Index Funds. That is money that goes in pretax, so you get a state tax deduction on it up to a certain amount, that money can grow there and be pulled out for college expenses without paying tax on it.
A second option to fund a college education is with Roth IRA money. I only recommend that option when someone has other retirement money like an IPERS account or another 401K.
A third option is doing it outside of retirement where you have a target date fund that is non-retirement. A parent can put as much money in there as they want and then when their child hits those college years they can use some of that money for college. If the child is not going to college, then that money can be used for anything else with no penalties; you can pretty much use the money as you see fit.
Q: Is it true that a 529 Plan needs to be used for college?
A: Correct, 529 Plan money needs to be used for college. If you don’t, there will be a 10% penalty for money pulled out and you will have to pay tax on it. Generally speaking, the 529 Plan is for college.
You want to have as many possibilities and opportunities as those years come to you because we don’t know the future. We don’t know what the college experience is going to look like in 4 or 8 or 10 years, so trying to be flexible is wise.
Q: Is there a financial plan that parents should take with your adult children?
A: Yes, everyone has to figure that out for themselves. I am not here to tell parents what they should do. I can tell you personally I think the best approach is to teach young people to be as self-sufficient as you can. Once you’ve done that and they head out into the world, they need to rise and fall based on their own behaviors and what they do.
I am not a big fan of adults bailing other adults out. If a 25 year-old wants to make poor decisions, then they need to live with those poor decisions. I am not implying that anyone needs to live on the street, but they need to have consequences for their behavior otherwise they just keep getting bailed out. They don’t learn.
That was one of the best things that my father did for me. He told me it was time to move on. It was time for me to start taking control of my life. I was not going home to my father for any help because my father told me “This is your life. You need to go out there and make it.” Some people might think that is a tough love message, but I think it is about love. You want your kids to be self-sufficient. You want them to do for themselves because that is going to bring them a higher level of personal satisfaction. Repeatedly bailing out an adult is not helping that person.
You also don’t want to be an older adult who has bailed out your children far too many times and now you don’t have enough money in retirement. You could end up being a burden to your children because you helped them too many times. It can be a very dangerous cycle.
Q: What is the best approach to legacy planning?
A: I think one of the best things people can do is teach their kids and grandkids about money management and investments because it is probably not going to matter how much you leave them if they don’t know what to do with that money. They will probably run through any amount that you give them if they don’t know how to manage money effectively.
On the flip side, you can give them a smaller inheritance and they could do much better with that money if they know what to do with it. I’m a big believer in teaching them how to deal with money if it falls into their lap through an inheritance.
Q: How much should we save?
A: 20%. That is my number, and it has always been my number. 20% of your gross income. So you take whatever you earn per month and save 20% of that number. Some people might say, “Oh, that’s too much money.” Well, change the way you think. If you change the way you start to see the value of savings and start paying yourself first (save first) before you pay everyone else, you start to see things differently, you start to live below your means. You start to take that money and invest it wisely and grow it over time. You make it a habit. It’s really a mentality, “I’m going to do this. I’m going to save 20%.”
Some people might put that 20% toward debt. That’s fine. Then you take your 20% savings and you put it toward debt reduction on top of your minimum payments. You’re committed to saving that chunk of money month after month, year after year. With that mentality, you become that version of yourself. You become a saver. If you learn how to save consistently over time and invest wisely, that is one of the quickest routes to financial freedom.
Q: What’s your final advice for us?
A: The number one thing someone needs to know is that they can do this. They can take control of their life as they take control of their money. You want to believe in yourself. You want to have this idea in your mind that you can actually become your own financial expert. That seed was planted in me about 30 years ago, and it’s a tough one because you’re not totally sure you can do it. I wasn’t. But as you start to read and start to learn, you start to realize that you can do this. That gives you the confidence to keep going. To keep learning and keep doing more as you better understand this world of finance. Believing in yourself is important, and then you go through the process of tracking your spending carefully. It has to be one of the first steps that people have to do, to have an understanding where every dollar is going. Do a net worth statement yearly where you identify your assets and subtract your liabilities. This will show where you are financially. Far too many people gauge themselves by their income level or their stuff. That is a poor way to identify how you are doing financially. Your net worth is the correct way.
Finally, I would tell a person to sit down and write some specific goals: goals for their short-term (maybe for the next year) and long-term goals for years to come. Goal setting and making it specific can make a big difference for people. They are laying out on paper what they want their life to be. You’re starting to be the creator of your future life, and I think that is a powerful beginning for anyone who wants to take control of their money and their life.
You are the answer to your life. Don’t look to some politician or some government official or even a boss or a parent for the solution. It’s not their job to manage your life; it’s your job, that person in the mirror. That’s the person who is going to have the biggest impact on your life. Once an individual takes full responsibility for their life, that is when it starts to change in some pretty big ways.
Thank You to Mike Finley
I want to thank Mike Finley for taking the time sit down with me and sharing his wisdom with the Iowa Dad Life community. If you would like to learn more about Mike and how he can help you increase your financial IQ, you can visit his website at TheCrazyManInThePinkWig.com or read any one of his books. Mike’s four books are listed below, including a brief synopsis of each book in Mike’s own words:
Financial Happiness was my first book. What I try to do in the book is help people understand the path that leads to financial happiness and how to use money as a tool to build a better life. Money doesn’t equal happiness, but money can provide opportunities and possibilities. The book is about the world of money, how to use it when dealing with expenses, insurance, investments, and all these things that make up our everyday life.
My second book is on investing. What I came to realize is that people needed a simpler manual on how to invest their money, how to actually understand what to do and what not to do, and then to understand how the financial services industry actually works. I created this book for the average person to start understanding how you can grow your money overtime. Through passive income, your money can make more money than your job and when that starts to happen, you may not need a job.
My third book called Graduation is a term that I use for retirement. I really don’t like the ‘retirement’ term; it sounds outdated to me. It sounds like you retire and do nothing, which I don’t like. I like the idea of graduation. You graduate to the next phase of your life. You are doing something else, hopefully something you really want to do. This book is about the process of how to retire financially as well as psychologically.
Now What? is for the high school and college graduate. They walk across the stage and get their diploma and they look out into the world and say “Now what? What do I do with my life and my money?” I tried to get them started on the right path heading up to the world.
If you have any comments or questions regarding this interview, I’d love to hear your feedback in the comments below.