Dr. Julie Szendrey has a Doctorate in Business Administration and she is the author of the paper, “I Think I Can Get Ahead; Perceived Economic Mobility, Income, and Financial Behaviors of Young Adults”. In this episode, Dr. Szendrey talks about how one’s perception of “getting ahead” affects financial behaviors. Tune in for another fact-based, knowledge-inspired episode.
Chris Pratt: I am really excited today. We have an amazing guest. She has a Doctorate in Business Administration from Anderson University. She’s currently a professor at Walsh University and she is author of the paper, “I Think I Can Get Ahead; Perceived Economic Mobility, Income, and Financial Behaviors of Young Adults”. And I love the title of his paper. And her name is Dr. Julie Szendrey. We were talking a little bit before this, but we had a little bit of trouble just scheduling this episode, but I really wanted to make sure, um, uh, that we got it done because this paper that you wrote among other research and work that you’re doing is really phenomenal. Uh, I think it comes from a really amazing perspective. It examines this thing called “perceived economic mobility” and you cite some research just as a background in the beginning of this paper. That’s really amazing. You cite research that says from Gallup saying, “millennials are noted for spending $13 less per day than the comparable age group in 2008”. So this is called Gen Z Green, but I’m sure Gen Zer’s spent even less than millennials, even though we don’t quite have that data yet. But before we get into the paper, I want to talk about your background because you studied first mechanical engineering, correct?
Dr. Julie Szendrey: Correct. Yes. Yes. That’s my background, a whole different avenue than what I’m currently in, but I believe things happen for a reason. And you learn from your previous experiences, they carry you into new experiences and hopefully make you better at what you’re doing.
Chris Pratt: Yeah. So, tell me about that. So you got your undergraduate degree in mechanical engineering, and then you shift gears into business. Where did that come from? Where did that decision come from? Why did you want to go to grad school?
Dr. Julie Szendrey: I liked how you threw the word “gear” in there too, with mechanical engineering.
Chris Pratt: No pun intended.
Dr. Julie Szendrey: Thank you. So, yeah, it was a pun intended, I think. Yeah. So when I was in high school, I liked math and science and everybody said, Oh, you need to go into engineering. That’s the direction. And, and I was, I was really glad I did go into engineering. I thought it taught me a lot. And then I ended up working for General Motors for 10 years as a product development engineer. And it was neat because I learned a lot, not only about engineering, but also the marketing side, because product engineering and marketing are really tied together from the product development sector. And so it taught me a lot how to, um, that it’s only about developing the product, but that you also have to have a customer involved and think about the customer, what they want.
And so I started seeing not only the science, the pure sciences, the physics from that dimension, but I also saw the people element, the social sciences side that kind of plays into it. And so that’s why I decided to get my MBA. And I worked towards that. And then as I got out, I got done with that and was working full time, but then I was married to a great guy. We have two children. I also wanted the flexibility of being a mom. And so that kind of led me into, well, why don’t I get into teaching? And then why don’t I get into, um, maybe getting my doctorate and seeing if I can make this a long-term thing. So one thing led to another, and that’s how I ended up into teaching marketing. But then it sort of migrated not only from looking at marketing, how people buy and sell goods, but actually how do people spend their money. And so that’s how I ended up in this, uh, area of research into financial management behaviors. And, uh, that’s how all these evolved.
Chris Pratt: You know, it’s amazing because how many years in between were there between your bachelor’s degree and your master’s degree?
Dr. Julie Szendrey: Probably about 10 years for the time I started my bachelor’s degree till the time I finished my master’s degree.
Chris Pratt: Okay. That’s great. And the point I wanted to make is that, you know, you can shift gears, no pun intended, whatever you want. My grandmother went to college in her, I believe in her sixties.
Dr. Julie Szendrey: That’s great!
Chris Pratt: So it’s never, yeah, it’s never too late to change what you want to do or to start doing something that you’ve never done before. I think that’s really, that’s a really inspiring story. So you got a DBA and you work at Walsh University. Now how many students are there at that University?
Dr. Julie Szendrey: We have approximately 2000 students.
Chris Pratt: You can say a pretty small university, right?
Dr. Julie Szendrey: I would consider it small. Yes. But there are obviously a lot of benefits, not only for the students who attend a smaller university, but also the faculty. Um, for example, the research that I did is directly involved with my research partner. She, Dr. Laci Fiala is a sociology professor. And so, uh, you know, it’s harder to do cross-disciplinary research work when you’re at a larger institution. So
Chris Pratt: I only did my undergrad and I can attest that it’s harder to do anything at a larger institution. And that’s what I wanted to mention was that I think in the past that last episode I recorded, we talked about research institutions, but you don’t necessarily have to go to or work at a research institution to do research. And this paper that you wrote was absolutely phenomenal and, and a great testament to that, so I want to get into this paper because it’s really amazing. And I just want to highlight some of the background a little bit. I mentioned that millennials spend less than the comparable age group in 2008. You also say that research indicates those less than 35 years of age, engaged in financial planning, monitoring, and goal writing more so than those aged 35 to 34. So this is another point to millennials and Gen Zer’s. I selectively picked out these quotes to, uh, for our benefit. Folks, I highly encourage you to read this paper. I think it’s very consumable and the background on it is really great. So the actual research that you did examined how perceived economic mobility relates to financial management, cash management, credit management, saving, and investing, and you sampled 1,245 young adults aged 18 to 34, right?
Dr. Julie Szendrey: Correct.
Chris Pratt: Can you talk a little bit about why you decided to write this paper where, where it came from a little bit of the background?
Dr. Julie Szendrey: Yes. I was actually at a, a conference just hearing one of the speakers talk and I thought, you know, this would be an interesting direction to head into looking at the behaviors of young adults and how it relates more to their financial management behaviors. What are those different connections? And I was aware of an opportunity to pursue a mini grant through an organization called the Acton Institute. And so I talked to my research partner about that, Laci Fiala and we decided to go ahead and pursue the grant. We were awarded the grant. We use the grant monies to actually do the data collection for that 1200 plus sample of 18 to 34 year olds.
Chris Pratt: Yeah. And in the paper you control for things like income level, age, gender, education level, employment, right. These basic things, but then you also control for a thing called family of origins, perceived income level. What is that, and how is that different from their, I suppose, their actual income level.
Dr. Julie Szendrey: We were reflecting on how does an individual’s childhood or especially their adolescent years when they’re starting to really see differences in how their family that they grew up in behaves differently than maybe friends of theirs, um, other people that they know and their school board environment. So what we ask them to do is to reflect on when they were in 10th grade, specifically 10th grade to think about how did their family compare to other families in terms of how much did they have or not have, and just behaviors. And the reason we did this was because when you’re in 10th grade and somebody says, well, how much does your family make? You really don’t have an idea in terms of a dollar amount, let alone, would you remember. And then people come from all different areas of the country. So somebody that lives in Ohio, their family might make a whole different amount than somebody in California, but the cost of living in California would be that much higher than that person’s in Ohio, for example. And so that’s why we decided to make it more of a reflection of how you actually perceive that family of origin that you came from. And what were, um, what was that income level? Were you similar? Did your family have more, does your family have less?
Chris Pratt: Yeah, and there are some really interesting findings. You say that the perception of the ability to get ahead, regardless of the circumstances of one’s birth seemed to matter more for those who saw themselves as growing up in a family that had less than average family of origins perceived income. And so that, that seems to imply that the opposite is also true, that people who had more than average family of origins, perceived income felt that they couldn’t get ahead as much. What are some of the interesting findings that you got from, from this research?
Dr. Julie Szendrey: Well, if you want to look at, specifically cash management, in terms of the family of origin, for individuals that came from an upper family of origin income, they typically always had better cash management behaviors. However, if you came from a family with a lower family of origin perceived income, but you had a higher level of, I think I live in a society in which I can get ahead. Your cash management behaviors were actually probably better statistically than someone that grew up in a family that had higher income.
Chris Pratt: Yeah. And, and when you say the ability to get ahead, what exactly does that mean? Like, what does “get ahead” mean?
Dr. Julie Szendrey: That hard work equals success, that there are opportunities for anyone to go as far as they want, that society provides enough opportunities.
Chris Pratt: Yeah. This isn’t specifically like, uh, get ahead, meaning like becoming a multimillionaire or something crazy like that. It just means really being successful in doing well for, for yourself and your family.
Dr. Julie Szendrey: Exactly. Exactly. Yeah. What do you value and what’s important to you and that may change during the course of your lifetime. Um, going back to my own career, I remember, um, when I was first as an engineer and a newly married and I’m thinking, Oh, I want to, I want to climb the corporate ladder. Well, you know, soon after we were married, we were, um, blessed to find out, Oh, we’re going to have a baby. So, so, uh, you know, I have to get too detailed here, but that was a blessing to us. And, um, it kind of changed my career path and I decided maybe doing the corporate ladder thing isn’t really the direction I want to go. And that’s when I started thinking about maybe becoming a college professor instead.
Chris Pratt: Yeah. And I’ve noticed that young women, especially nowadays that are my age. So I’m 22. And a lot of my friends, they are very clear and focused on when they’re going to have kids, how they’re going to do it, how it’s not going to impact their career, but there are still some, uh, quite a few who aren’t really thinking about that. Aren’t worried about that, but it tends to be women who are thinking about those issues more. And I don’t want to get into, uh, you know, a huge conversation about gender, but I think that from a, a personal finance perspective, that’s something you can’t just ignore because it matters. Cause there’s, there’s almost an expectation that it’s only something that, you know, women have to worry about and they have to “give up their careers” to have children and to, and to raise kids. And so I think it’s, it’s an important issue to raise,
Dr. Julie Szendrey: Oh no, I, uh, this is something that’s really near and dear to my heart. I think it relates to who your partner is, who your spouse is and having that good communication in terms of, you know, everybody has their strengths. Everybody has their weaknesses and working it out as a couple. And the direction that you want to pursue does one person want to be more of a stay at home parent and have maybe more flexibility in raising the children or, you know, nowadays with us being able to work from home, that might be actually a combination of the, of the two parents.
Chris Pratt: You know, it matters with respect to personal finance too. And, and I think just ignoring it is leaving out an important component of personal finance, just because, you know, maybe we’re afraid to talk about it or are afraid of offending anyone. So I want to get back to something from this paper that you said this by the way, was a very well done paper from a statistical perspective, you did by varied analyses, regression analysis and different slices of cash management and credit management. So if you’re a big statistics person, I highly recommend you check out this paper, but then you, you, in the discussion section, you kind of break it down in layman’s terms. And you said that “an increase in an individual’s perceived economic mobility may help improve overall financial behavior, uh, and wellbeing. And this may be achieved by increasing financial management knowledge through the promotion of opportunity and education”. And this kind of goes back to something that you had talked about, where you said that it was important to educate people as a parent, especially to, to help your kids learn about finance. Could you tell me maybe from being a teacher and being a parent, how important is it for everyone, people from all walks of life to understand financial management and then what can be done from a societal perspective to increase awareness of financial management?
Dr. Julie Szendrey: Thank you. This is a great question. From the financial management behavior standpoint, if you want to look at it, there’s several different areas. There’s cash management, credit management, savings and investment and insurance, but the way we approach those different things relate really to how are we communicating in an explicit manner being, what are we actually telling our children? We’re telling our students, please learn this. Please do that. Versus implicitly, what are we doing? And that’s more from our behaviors actually, as a parent now, as an educator, you might not see that as implicitly, but as a parent, our children pick up on a lot of our behaviors just from watching us in our own households. And so, for example, if you have a bad day as a parent, are you the type of person that, you know, you can work through it and, you know, just be able to move on with the actions that you, um, convey to your children, or do you, you know, go on the internet and, Oh, I have to buy five pairs of shoes in order to, uh, work through this, uh, this downtime in my life.
Chris Pratt: And I’m glad you made that distinction kind of between explicit behavior and implicit behavior. And you mentioned schooling and education and how that can be different from parenting and how parents can help their kids. So I think a lot of people listening today are older and, you know, they’re probably beyond the point of their parents being a major influence on their finances. So I think for a lot of them, and that feels like a lost opportunity, the parenting part, the education part, I mean, you can learn every single day and you should be learning every single day. So what are some things people can do? Or what are some topics of financial management that people should educate themselves on? You talk a lot in this paper and the data is sliced between cash management and credit management and savings and investment.
Dr. Julie Szendrey: Yes. So if you’re looking at cash management specifically, um, do you stay within your budget or actually, do you have a budget to begin with? But one of the best things to do is to actually just actually write it out. Now I have to say, I’m not the best myself, but, um, I’ll do a little confession there, but, uh, yeah. So you want to make sure at least your, that you’re keeping track of things. And one of the best tools I try to enact is thinking about how much effort did it take me to make that money and is it really worth me giving up that money to buy that item? And so it’s a good way of processing and making sure you never, you never spend more than what you make. That’s very key. And I think, uh, we, you know, just having some sort of spending plan out there, I think it’s really good to comparison shop.
And especially nowadays with, uh, the beauty of the internet and being able to actually, you know, do price analysis, uh, all at your fingertips on your, you know, your phone or your computer just like comparing prices.
Chris Pratt: You mean just comparing prices?
Dr. Julie Szendrey: Right? Exactly. And then just making sure we pay off our credit card balances in full, you know, each month, that should be a goal. And also maybe not even having credit cards or if we have credit cards, making sure we keep it down to a one or two the max, making sure we have an emergency savings fund set up in case of a problem that happened maybe with your vehicle or, um, other unique situations that we may run into saving each month from every paycheck that you, you have. Um, all of that adds up. Time value of money, uh, you know, start saving when you’re early, it grows. Making sure you, uh, contribute to some type of retirement account. And everybody’s thinking like, well, why are you thinking about retiring when you’re age 22? But those, those who start early, it can, it can really pay off in the long run. Those are some suggestions
Chris Pratt: And it’s hard. Like I invest for retirement. I’ve talked about this before. Retirement, I think it’s really hard when I think, it’s easy to explain to someone why you should save for, I don’t know, your dream car or even a house, right. But retirement is hard because it’s just so far away.The way I view it. It’s one of those things that many people, many generations before me have learned that it’s the right thing to do. And as a young person, we kind of have to just have faith that maybe these older folks, know what they’re talking about, and this is just a good thing to do. And of course, there’s, you know, we’ve had tons of guests on this show that shows, you know, data and statistics that prove that it’s a good thing to do, but you know, emotionally, sometimes you just have to have faith in the process and, uh, listen to your, to your elders, uh, about some things, speaking of credit, you were talking about credit credit cards and, you know, keep your credit levels low. There was a finding for your paper where you said that “while perceived economic mobility was not significantly associated with credit management, the interaction with current income level was significant when comparing middle income to lower income”. And you say that “it’s explained by the variables in combination, as opposed to individuals” can you explain what that means and where that finding comes from?
Dr. Julie Szendrey: Yes. So, um, this was quite interesting for, um, that perceived economic mobility factor that we were talking about earlier for those individuals that have at least a middle or upper level current income, their credit management was actually better. The more of, faith they had and the ability to get ahead in the society in which they live in. However, what’s really crazy is that if you currently have lower income, you actually have lower credit management skills. If you do have the perception of being able to get ahead more. And so that’s one of the concerns that somebody who maybe is working as a financial counselor, or is in that situation themselves, they should really pay attention. That if they have lower income, but they have a high level of perceived economic mobility. Like they, they think they can really get ahead, which is great. Be careful that they don’t overdo it on the credit management such that they’re using too much credit or they’re not paying off their credit card bills because that could be very detrimental and not a good thing in the long run.
Chris Pratt: Yeah. A lot of personal finance, moguls, pundits, celebrities, if you will, if you want to call them, they accumulated a large amount of assets in, in dollar amount, through real estate and through leveraging on real estate. Um, and so what that means is that you, you, they took out mortgages and they bought homes or, you know, even commercial real estate, right. Those apartments that people can rent out. And they were able to do that because the home or the real estate, the property is an asset, but the risk when your debt to asset ratio gets really high. So when you have a lot of debt and not a lot of cash on hand, is that for instance now with COVID, if the market goes south and people aren’t renting, you’re out your apartment, people aren’t renting out your homes, then you can’t pay the bills on the debt that you owe. And then you go bankrupt. Dave Ramsey, who’s actually, you know, number two or whatever on radio. That’s how he went bankrupt.
Dr. Julie Szendrey: I listened to Dave Ramsey many times. Yes. I know he told that story and it’s a, it’s a good, it’s a good example though. You’re right.
Chris Pratt: There’s YouTubers doing the same thing now. Graham Stephan is, I think he’s like 28, 29. So a lot of younger kids are looking up to him for his advice. I will say he is much more responsible than a lot of people. He talks a lot about asset ratios and making sure you’re not too leveraged on your debt. So I do recommend you check him out. He also talks about credit cards and saving and investing, but there are some others out there. I won’t name names. There’s a guy in Florida who, uh, is just leveraged up to his eyeballs and he, you know, has all these fancy cars. He has a jet and this plane, and now that COVID has hit, his business has gone very south and he’s not talking about it. Obviously he’s not disclosing anything anymore, but, uh, he got hit pretty hard. So there is no easy money, at least without great risk. So..
Dr. Julie Szendrey: Yes, and protecting your credit score is the key. So that’s the thing. If you’re going to play the credit game, you gotta be careful and make sure you pay off your credit cards because you don’t want to have that credit score start to plummet. It’s not worth it. I always tell my students, yeah, your Grade Point Average matters, but in the long run, your credit score really matters.
Chris Pratt: This has been really great. We’re out of time now. Thank you so much for coming on. This is Dr. Julie Szendrey, she’s the author of the paper, “I Think I Can Get Ahead; Perceived Economic Mobility, Income, and Financial Behaviors of Young Adults”. Thank you so much for coming to the show, Dr. Szendrey.
Dr. Julie Szendrey: And thank you very much, Chris. I truly appreciated this opportunity.