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Pay It Forward

If the surveys of those most likely to visit a financial website are accurate, I know a thing or two about you. You're upwardly mobile, and you actively seek to improve your investments and are perfectly comfortable setting a budget that's to the closest hundredth or even thousandth dollar, not dime. You are above-average looking, have no problem picking out a decent bottle of red wine, and use your turn signal 83.6% of the time. (No, flipping it while making the turn does not count.)

I'm just guessing on those last three. However, when it comes to managing day-to-day money decisions, most of you reading this are likely take-control, take-charge, in-front-of-the-8-ball kind of people.

So why on these pages for the past decade have we Motley Fools harped on the topic of credit card debt? Why waste cyberspace preaching the value of a single dollar saved over a lifetime? Why detract from the stock news and analysis with budgeting lessons, retirement basics, and beginner investing coaching -- stuff that's rudimentary to you and your ilk?

Why? While credit card debt may be a burden you've already conquered or one you will never face, many of the people you see day-to-day aren't as lucky. Your retirement might already be in the bag, but look around your office and try to figure out which half of your co-workers has yet to contribute one dime to the company 401(k). You're set when it comes to college savings for the kids and can comfortably cover the costs of the annual family cruise. What about your poker buddies? Your neighbors? Your best pal from college?

Moneywise, you've got it goin' on. But chances are high, statistically speaking, that you know someone who's not so lucky.

Want to know what the other half is facing? Here's a list of cold, hard financial facts that illustrate the plight of the average American:

  • Three-fourths of workers age 55 to 64 have less than $56,000 saved for retirement.
  • Twenty percent of credit cards are maxed out.
  • Forty-two percent of workers cash out their 401(k)s rather than transfer (or "roll over") the assets to an IRA or a new employer's retirement plan.
  • One-third of "millennials" (those born after 1979) do not contribute a single dollar to their work-sponsored retirement savings plan.
  • Last year, the average household paid $1,000 in interest on the money it borrowed.
  • One out of every 73 U.S. households files for bankruptcy.

You and I may be comfortable with our financial situations, but we're in the minority. We're already here looking for answers, ideas, support. We already get it. So how about doing something to help other people get it, too?

How about paying it forward?

Six degrees of reparation
"Pay it forward" may sound like some pyramid scheme, and in a way, it is. But the rewards for the giver and the receiver are far greater than commissions on lotions, potions, soap on a rope, and Swiffer knockoffs. The idea is based on a movie of the same name in which a young boy's answer to a lofty social studies assignment -- to better mankind in some way -- is to perform an act of selfless kindness for three people. Instead of returning the favor as is customary, the recipients pay it forward. If his six-degrees-of-Kevin Bacon theory works (the game named for the idea that any actor is just six connections away from the Footloose star), then kindness gets paid forward ad infinitum. Simple. And brilliant.

Of course, it's not that simple. In the pay-it-forward movement I propose, writing a check to a charity or letting someone have that primo parking spot for a big shoe sale doesn't count. The "it" must be something that recipients cannot do for themselves (or thinks they cannot) and something that will truly improve a recipient's life. It's not always a cakewalk for the giver to deliver, either.

So how can you pay it forward? I won't ask you to give away your Jaguar or write a letter of forgiveness to a longtime nemesis. That's between you, your mechanic, and your therapist. But there's a lot you can do to help someone get his or her financial footing.

How about paying forward your financial knowledge by helping a friend plot out a retirement savings plan? Or how about paying forward your time by tutoring junior high school students in basic money math skills?

You don't even have to come up with a way to pay it forward on your own. Ask a worthy recipient what you could do to lessen their financial worries. Again, writing a check is the easy way out for both the giver and the receiver. (See also the "teach a man to fish and he'll eat for a lifetime" adage.)

  • Offer to review a co-worker's 401(k) choices and help select an appropriate place to invest that person's pre-tax dollars. Show him or her how simple it is to set up an IRA.

  • If it's debt that's got someone down, show that person the fastest way to pay it off and offer to lend a sympathetic ear whenever the urge to splurge strikes. Introduce this person to the online community of Fools who freely share advice, insights, support, and war stories about paying off mountains of debt and struggling with the plastic demons daily.

  • Over a home-cooked dinner, help someone figure out where his or her money's going, and why there are always more days than paychecks at the end of the month.

  • Is a family member nearing retirement age without adequate finances to last through the rest of his or her life? Show the retiree-to-be that there's a lot he or she can do, even as a late starter, to get on better long-term financial footing.

  • Is there a young person in your life headed for college or already on campus? If you haven't already had "the talk," or if this young person's parents feel ill-equipped to do so, show the person the money reality he or she is facing. Email this article and say, "It's not because I have all the answers. It's because I already made these boneheaded mistakes and I know you'll be much smarter than I was."

Have that thoughtful and frank conversation with someone you know is struggling with financial issues. Do more listening than talking, and make it clear that you are not judging the person. Trot out that list of sad statistics that shows how he or she is actually doing better than the average American. Simply sharing someone's struggles will begin to lift those nagging financial burdens. Offer your emotional support when times are tough.

If a face-to-face discussion is too daunting or inappropriate, there's a link at the top of this page for you to email it.

Do you know people who have resigned themselves to always carrying that $5,000 balance on their credit card? Email them.

Is there a family member who has struggled to save anything for retirement? Email that person.

Sending this article along is not a judgment or pronouncement to the recipient that you've got all the answers. It simply says that you care. And it asks that person to pay it forward, too.

Dayana Yochim owes mankind countless favors based on the generosity of Motley Fool readers who teach her money lessons every day. The Fool's disclosure policy has no pay-it-forward provisions. Yet. A version of this article ran in 2004. Have you paid it forward yet?


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