After attending EAGxBerkeley last weekend, I'm thinking there needs to be significantly more emphasis on the basics of personal finance, particularly for student groups and other young EAs.
Rationale
It's in the best interest of the community to raise the overall level of financial literacy. This has the benefit of increasing the amount of money we can move as a collective. Plus, it avoids the serious risk of an individual overtaxing their finances by failing to set up a rainy day strategy or implement another common-sense personal finance best practice.
EAs have different financial needs than the general population. Balancing giving and saving is much less stressful if you have a reasoned plan about how to do so. I imagine it'd be pretty easy to get bad advice from a financial counselor who isn't familiar with philanthropic giving.
Context
At the EA Software Engineering meetup at EAGxBerkeley, the topic of earning to give came up, so we talked about some slightly advanced financial strategies. While some people were nodding their heads, others were scribbling frantic notes, which seemed to indicate the concepts were perhaps new to them.
Throughout the weekend, I had a couple conversations that revealed a lack of understanding of basic personal finance. This post is absolutely not intended to call anyone out. But before graduation, you really should have a solid understanding of checking accounts versus long term investments.
Implementation
I feel pretty strongly the next EAGx would benefit from a talk on personal finance, outlining the best strategies for that particular country's idiosyncratic financial rules.
For example, the first 80% of this presentation would walk through commonly cited strategies for setting up checking and brokerage accounts, investing for retirement, maxing out one's 401k, handling stock options, etc. Here's a useful article that breaks down saving and giving into stages.
Given that EAs should be open to the idea of spending money to save time, in the following 10% of the presentation, we would provide a framework for how to think about this, based on Clearer Thinking's Value of Your Time Calculator.
Then the remaining 10% would talk about strategies specific to maximizing donations. As far as I know, in the US, using a donor advised fund (DAF) to donate appreciated assets is the best strategy for tax advantaged giving. Here are a bunch more ideas.
So long as we caveat with "this is not financial advice" and don't specify which stocks attendees should purchase, my understanding is that this kind of financial presentation would be okay content for an event. Please correct me if this is not correct.
Our community has the fun Facebook Group Highly Speculative EA Capital Accumulation full of complex (/ questionable?) strategies. I think we need to cover the other end of the spectrum — i.e., personal finance basics — a little better.
Summary
The next EAGx should have a talk on smart ways to maximize giving strategies, geared toward the particular rules of the country in which the event is hosted.
EAs should be more open to taking on risk with the assets they intend to donate. EAs should invest to give with the mindset of maximizing expected value, knowing that the downside risks won't put their financial future in jeopardy. To this end, EAs might be underutilizing donor advised funds and missing out on the associated tax benefits.
It's also possible that EAs are underleveraging opportunities to spend money to save time.
Furthermore, EAs (especially student groups) may benefit from education about basic personal finance: maximizing 401k and ROTH IRA contributions, using low-cost index funds to invest, setting up and paying off credit cards to take advantage of perks and save on travel. With an appropriate rainy day fund, an EA should be in a better place to take more risks in their career, such as moving to a new city or holding out for a truly great job instead of being forced by their financial situation to take on a merely okay one. Putting these strategies into place should ensure that an EA's lifetime commitment to donating doesn't leave them in a difficult financial position.
If we make these financial literacy improvements in our community now, I expect them to pay off abundantly over time.
This is great. I’d love to have a talk on this at EAGx Cambridge (UK, March 17-19), which I’m helping to put together. If anyone reading knows someone (perhaps themselves) who would give a good version of this talk, please point them in my direction (DM me).
If you don't get any hits, maybe post in Highly Speculative EA Capital Accumulation?
The person who gives the presentation could use materials from the slides here and here.