Ep 18 | The Road to Financial Wellness with Danial Khan Stanford University

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This is Own Up, the Global Shares podcast about employee ownership and equity compensation. Answering questions and sharing with industry experts, here are your hosts, Chris Dohrmann and John Bagdonas.

Chris Dohrmann 00:24

Welcome back to Own Up.

In today’s episode, we’re tackling one of the most important financial skills you need to learn…and that is how to ensure your own financial wellness.

We have spoken previously about the challenges presented by grant or award recipients not understanding their benefits. In the same vein, companies commonly encounter difficulties when offering an all employee ESPP, as almost inevitably a large percentage of those eligible will have little to no experience with stock or the market in general. So, when an organization such as Stanford sets up a program to offer Financial Education to students, it should be recognized. You cannot appreciate the value of what is offered unless there is a strong foundation in place.

Our guest today is the manager of the Mind Over Money Financial Wellness Program at Stanford University. Known on campus as ‘The Financial Wellness Guy,’ Danial Khan you’re very welcome to the podcast!

Danial Khan 01:22

Yeah, I’m very happy to be here. Thank you so much.

John Bagdonas 01:24

Danial, why don’t you tell us a little bit about yourself, and your very interesting journey to Stanford and why you’re so passionate about this topic?

Danial Khan 01:32

Yeah, I’m Danial Khan. I’m from Buffalo, New York. And I’m kind of known as the financial wellness guy, on and off campus! We have a program. And I don’t know, maybe financial wellness is not a familiar term. But essentially, we try to align financial wellbeing with life aspirations.

A lot of that is blending personal finance with health promotion. And so trying to make financial education and wellbeing promotion more accessible to people, trying to cut through some of the jargon. We’ll get more into that I’m sure throughout this conversation, but my backgrounds in social work, business administration, and psychology. So I found this work to really well blend those worlds together. I also have background in non-profit consulting, and helping social workers promote their own financial wellbeing and to talk to their clients about personal finance in a more healthy way. And yeah, I’m just happy to be here.

Chris Dohrmann 02:31

Thanks Danial! I wanted to just say that John and I deal with, you know, executives and other employees of companies, and Palo Alto sits right in the middle of Silicon Valley, where equity compensation is a big part of their compensation package. And we tend to think about, you know, on one end of the spectrum, where people are getting more complex awards, and we’re eliminating 65% of the spectrum, where people are coming in, they’re either new to the workforce, they may be new to equity compensation. And what we’re disregarding and what we really should pay much more attention to is where you fill the gap. They need to have a basis in their educational wellness, I mean, their financial wellness, so they need to understand budgets, they need to understand a little bit about taxes. And I think that’s what you bring!

Tell me a little bit more about the fact that, I think this is an introductory offering, but you get people, you know, from all over the world that are taking courses at Stanford, and they come to you to try and get a sound basis in this, correct?

Danial Khan 03:40

Correct, yeah. And to be honest, I came into Stanford with some biases about the population of students I’d be working with. In our program, we serve students and alumni. So a lot of the people we talked to are starting the career after graduating, and they are trying to have those introductory conversations. But my assumption was that, well they’re at Stanford, what do they need help with personal finance about but that was, I was incorrect in that, you know. People are coming from a lot of different socio-economic backgrounds, different experiences with their family that weren’t financial experts. And a lot of times, they’re kind of starting from more or less Ground Zero, for how they want to learn about where personal finance plays a role in their life. So most of the conversations are just getting started. How do you manage your money, develop some awareness and intentionality around your spending, your saving? How do you actually start investing, and what does it mean to you? Setting financial goals, and a lot of those aspects of starting your career and navigating the benefits and getting paid for the first time on salary, getting bonuses and stock options, all that stuff really comes up, and more, it gets more complex sometimes, but a lot of times, it’s just starting off with the basics.

John Bagdonas 04:55

You know, I was going to say also from our previous conversations, that, as you say, so many of the students at Stanford, and obviously the alumni, come from so many diverse backgrounds, both economically and culturally as well and that here in the US, we tend to look at financial wellness more as, Chris and I are obviously trying to drive it as a necessity, something that you really had to be focused on, but I’m sure that there are people that come from other parts of the world where it truly is a luxury.

That the necessities in some of the places that they come from are truly you know, very basic and that financial wellness is really deemed as a luxury. It’s almost I can think back to my earlier sort of academic, early business days when you learned about like the Maslow’s Hierarchy of Needs like from a psychologist standpoint that is really very similar from a financial wellness standpoint, that there really is a hierarchy as well.

Obviously there are the short term financial needs, budgeting and things getting by, just on a day to day basis, but then investing for the longer term, but then also having a certain level of comfort in the current day, you know, you’ve a certain amount of financial freedom currently. And then the obvious and long term objective is to which achieved that, that ultimate financial freedom, you know what, as you near retirement or later in life where you can do whatever you want, you can, you know, use your wealth for charitable purposes, for generational purposes. I know that’s one of the things we talked about as well. So, it’s just interesting to hear your perspective on people coming from such diverse socio economic and cultural backgrounds, how you get them, basically, to the same starting point from what we’re talking about.

Danial Khan 06:34

Yeah, I’ll provide a little bit of a definition that I’ve really liked that we use when we teach. The Consumer Financial Protection Bureau, the CFPB, they define financial wellbeing more or less as having some sense of security, and freedom of choice, currently, and in the future. And so you can kind of break that down a little bit. But I think that’s something that pretty much people around the world, no matter what perspective you have, I think that can resonate with most people, that you just want to feel like you can manage the day to day. But you can also feel like you have some sense of security in what’s coming down the road, expected and unexpected. And then the freedom of choice option, especially, you know, I like to work with students and with professionals who are in the fields of like social impact. And I used to do a lot of my work with social workers. And a lot of that was learning how social workers, they really wanted to do work that was meaningful, but perhaps felt like they had to sacrifice making a living for themselves or for their family, because they wanted to have work with some sense of purpose and to serve people. But that’s not true. You don’t have to choose between one or the other. And I think working on your financial wellbeing specifically can help you be able to make decisions, and have freedom of choice to do the work that you want to do. And not have to sacrifice the important things that you value most, whether it’s your spending or your career.

Chris Dohrmann 07:57

There’s so many areas I wanted to touch on, I’m going to try and just take them slowly. Because you and John have both mentioned a couple of them. One is the audience, the classes, you know, you’ve the students that are actually coming forward, what’s the mix? Because when we look back on the podcasts we’ve done, we’ve tried to pay attention to gender equity, and the fact that women and minorities need to be included and need to be offered this type of a service, because they need to have a stronger base and need to have the structure so that they can rely on that when they receive new benefits and new challenges when they’re talking about finances.

Danial Khan 08:42

Yeah, so I mean, a couple of the offerings that we have. One of them is a course called Wellness 183 – Financial Wellness for a Healthy, Long Life. I’ve noticed in that class, as well as in our one-on-one financial coaching, that most of the, based on gender, most

identify as women. So in coaching, especially the one-on-one conversations, it might be 60 to 70% of students that I talk to are women, a lot are international students, first generation low income students, who kind of had this feeling that they really want to take control of their finances and have some sense of guidance.

Because a lot of it is not even just trying to educate, a lot of students know more than they think they know, even if it didn’t have parents that were experts or had influences in their life. And a lot of us, most people don’t have a high school personal finance requirement either. And so a lot of students are coming into Stanford or into university in general, with little to no financial education. And so even just having those first conversations, and how do you make decisions, I think is an important place to start.

And a lot of students know, I like to say, you know, you are the expert in your life. And so, I’m kind of here to help just align how you already make decisions and to clarify what you already value and aspire to with some of the ways that you can manage your personal finance now and plan for the future. But yeah, a lot of it, mostly women are the ones that are reaching out and seem to have maybe greater needs around this, especially when you talk about gender equity.

John Bagdonas 10:18

One thing that I think cuts across genders obviously is student debt, it’s very interesting in terms of how you coach undergrads and alumni in terms of how do they manage that going forward, where obviously that is a bit of a long term, debt, long term objective in terms of retiring that enabling them to actualize their longer term dream. So I’m just curious in terms of how you sort of coach people based on, and actually also from the Stanford experience as well, because I think that maybe student debt is not as much of a concern as it is in other places because I think Stanford can be a very generous University, depending on your circumstances.

Danial Khan 11:00

I think just trying to put myself in the position of a student again, and being, let’s say, 18, you’re going into college, and imagining having to take out a student loan where maybe you never had even took out any debt before, maybe you’ve never even had a credit card and had to have experience borrowing money.

So I think it’s a very, it can be a very emotional, emotionally draining task to think about, not just having to do your school and focus on that, and then your career. But a lot of what students are talking to me about is just a little bit of that stress of man, I know I have this thing looming when I’m done with school. And I just want to have some sort of clarity and plan for how I’m going to manage it. And to just have someone to talk to about that, before even making a plan just to express that, yeah, this feels a little stressful, but it can be a lot more manageable.

I think around student debt, a lot of it is just knowing what your payment options are, or your repayment options are. When you go to studentaid.gov, you can see all the different plans that are available, whether it’s income driven, you can stick to the standard plan, if you want to pay it off in 10 years, there’s public service loan forgiveness, there’s so many different options from the federal level, depending on the types of loans you have. But starting off, what kind of loans do you have, and how much do you have to pay off because it’s very easy to want to push that away, and not have to deal with it or think about it, especially until after you graduate. But a lot of students want to be a little more proactive, even if initially in the conversation they didn’t. Throughout the conversation, it seems like just having the information you need.

John Bagdonas 12:46

I was going to say also, the further consideration that you know, over the last couple of years at least, is higher interest rate environment that those loans were at a higher interest rate. So depending on, as you said, the choices, the repayment choices, it could be a bigger, you know, sort of monthly amount if you want to do the traditional route as 10 years. But it’s a consideration as well, as you know, same thing with credit cards, any kind of credit or debt that is extended now, it’s typically going to be at a higher rate than traditionally it has been over the last, you know, whatever, 10 years or so.

Danial Khan 13:19

And it especially if you’re in graduate school, and you don’t have the subsidized loans, a lot of times you have to go unsubsidized loans, private loans, if you’re an international student, most of the time, you have to work with scholarships, grants, private loans. And so you have this big amount, especially being at Stanford, right. But no matter where you’re going, a lot of times it can feel like a lot that you have to manage. But, again, you can’t go bankrupt, or you can’t file bankruptcy on student loans either. So not to focus on the negative. And yes, except those things that is the state of where you’re at right now and where things are at.

But what can we do to make the best of the situation? I’ve worked with PhD students who are like PhDs in comparative literature, let’s say, and there’s like a very maybe specific career path that they’re looking at, maybe they want to be a professor, but they wanted to choose this focus area as a PhD. And they have hundreds of thousands of dollars in student loans that they have to pay off.

And there’s this one student, this was when I worked at University of Buffalo, but him and his wife had nearly $200,000 in student loans. And they came into coaching, just wanting to feel a little bit better, and to have some sort of clear plan. And so throughout our sessions, it was getting the information that you need the principal amount, what’s the interest rate? Who’s your servicer? Who can you talk to? And then what are the plans that might best fit with your, your life goals, because if you want to have a house, start a family, all these things, it’s more and more common that students will delay these major life decisions because of economic burden.

And while you’re in school too or let alone, when you’re working at your first job, it can serve as a distraction and kind of make it a little less like you can focus on your work, the most important things in your life as a student, as a as an employee. So yeah, a lot of it’s about making a plan, trying to feel a little bit more in control. And feeling like I got this even though yes, this might feel like a lot. I still have a plan of action, and I have someone to hold me accountable, which I think is underutilized. The idea of having an accountability buddy, whether it’s a coach, a friend and advisor. So that really goes a long way, yeah!

Chris Dohrmann 15:42

Perfect. I mean, I think you’ve hit on a number of different things that we wanted to address. One is it’s very gratifying that people are seeking help or seeking guidance, because you don’t know what you don’t know. I personally went to school with people that I guarantee were paying for the pizza they had on every Friday night for five years that could be classified as bad debt. There is good debt as far as a car or student loan or whatever and knowing the difference. And knowing that you have a plan to approach it, I think enables people to be in a much more grounded place, when they’re talking about wealth, and what they can get from a new job, and what’s going to what that’s going to bring them. So it’s very gratifying that people are seeking it out, and that you have people that are embracing this class. I wanted you to mention a couple of things that we’ve talked about, with people that come back to you, maybe a year later, because you talked about this has to be a continuing effort. Maybe if you can give us a little story about people that have come back and said, how this has worked for them?

Danial Khan 16:43

Yeah, so some examples. I mean, that’s really important, because I mentioned that, that one intervention is only going to go so far and promoting someone’s sense of financial wellbeing and promoting their circumstances. So one example that often comes up is a lot of the students that just want to have the foundations for investing. A lot of it is, I’ve heard about a Roth IRA. And I do want to plan for the future. And I feel like this might be the best place to start. And so a lot of our conversations and coaching are just opening the account, automating some contributions, and just choosing an index. And I don’t recommend anything specific, but going the route of low cost index funds, and just choosing one or a couple that resonate with how you want to manage your risk and your time horizon. So they might choose an index fund, and they just buy one, one share of it right. And then they’ll follow up, maybe like a year later. And maybe they’re coming with a different topic like now, it’s like I’m trying to prepare for tax season right now. And it’s the first time I’m doing it on my own, versus doing it through my parents’ accountant or whatever it is.

And they’ll mention that. Now I’m like, fully funding my Roth IRA each year. And they have like a concrete plan of like, this is how much I’m actually going to have for retirement, it feels really good just to know that I have a little bit more sense of security in my future, where, because I like to tie in this idea of your future self. And we often don’t have this solid relationship with our future selves. It’s almost like it’s a stranger. And so how do we right where we’re at, think about how will my future self be feeling about the way that I made decisions today. And I think that can be pretty powerful.

So yeah, investing, and just getting those first steps, and also paying off debt. I feel like that’s something that means a lot, because I had my family and I had an interesting relationship with debt. I feel like I learned a lot about how you have conversations about money, and how that can produce some conflict, specifically around debt. And that’s something that I really want to learn more about, because relationships and money is very important to me, but also not having to feel like you have this monster on the other side, which can often be high interest debt from a credit card that is very easy to just let go by. And when I get to hear back from a student after they’ve had coaching, or been in the course, and they say that, you know, I started off feeling like this is unmanageable, and I wasn’t willing to do something about it in the moment. But just after our conversations and having those first steps to work on, and now automatically paying off my credit card debt, I already have like one credit card paid off or two, and now I’m focusing on my student loans, or now I can actually start investing. So those are some of the examples that I really like to hear when they come back.

John Bagdonas 19:53

You know, I was going to add to that one thing that’s very, you know, important from the standpoint of wellness is that wholeness and completeness, a person that we’re talking about financial aspects, but, and I remember you bringing up this point when we first talked about the difference between financial literacy and financial wellness, and sometimes people think that those are synonyms, but they’re absolutely not.

And in fact, I know you don’t even like to use the term financial literacy because it could be a put off to people that are not from a financial background or have any kind of financial savviness. And that there’s really financial literacy, just understanding the concept really, there’s no necessarily choice or any kind of emotion that’s associated with it. There’s no wholeness, it just basically the tools of potentially how you can achieve financial wellness, and that I think you bring up such a really, really good point about how finances is so fundamental to human relationships. Whether that’s, I mean, in a utopian state, it wouldn’t be but in reality it is and that so many relationships go sour because of the fact that there’s not communication about, you, you’ve brought up your own personal example and how it drove you to learn or to want to understand so much more because the on your own sort of family adventure but or voyage I should say.

But it’s very interesting and I think from particularly from a social worker standpoint, your background that to integrate the two, it’s just so important terms of being successful, because you can understand the concepts, but if you don’t integrate it into your whole experience and in your game plan for life, you’re not necessarily going to succeed, particularly as things change. You know, that’s one of the things we talked about a lot is how things are changing how, you know, banks are changing how, you know, cash is going to be a thing of the past.

But back to the point about that wholeness, maybe just talk a little bit more about that, beyond just financial in terms of, I know, you touched on a couple of the success stories about how you ground the person into making them actualize their future, and you know, their future happiness by being in control of it.

Danial Khan 22:06

Yeah, really, my passion and the place where I see my role in this field, as well as the stories that have felt the most satisfying to hear. And I know feel the best for students are the ones that students just feel healthier, they feel more in control, they feel less stressed, they feel more confident in making decisions. And, you know, I don’t use the term financial literacy very often because I just see my role in this space to be more focused on promoting health. And, yes, promoting education as well. So yeah, like, I don’t think there’s anything wrong with the intent behind financial literacy, it’s more that I think it’s used as a term, as a catch all. And I think this wellness focus really is powerful because it represents the whole person, like you mentioned. And it makes it more accessible to learn about personal finance and more relevant to people. Because, I mean, we’ve talked about this in a past call, but it Stanford for our mind over money program, their financial wellness program, we use these reframes, which we call financial capability, focus areas. And so instead of the budgeting, credit, debt investing, we use terms like spend mindfully, earn enough, borrow with intention, grow your money. And I think for anyone, those things seem a lot more relevant or personal.

And just if it’s enough to get a student or an early career professional, to just get their foot in the door, when before they may have had these scripts in their head that investing is not for me, but I do want to grow my money. I think that that can be, especially for certain, you know, like, with women, it can be often that there is this stereotype that like investing is not for women, right? And I think that’s something that is definitely changing. Where, no, that’s not true at all. And I think interventions like ours that are focused on not just how do you navigate the financial world? But also how do you make it personal and relevant to you, because everyone has their unique situation, and life goals? So how do we line what you do about your money, how you feel about your money, and what you’re planning for, with the things that are most important in your life? So we don’t start with budgeting. We start with what are your values and your aspirations? And how do you clarify those in a way that’s going to set you up for these next things in your financial life that can best promote that.

So yeah, I come from philosophy, psychology and health promotion background, as well as my social work and MBA. And I like to think of these first steps as just developing mindfulness and intentionality in your financial life. So it just makes it a lot more approachable and accessible for majority of people who don’t have a financial background, maybe.

Chris Dohrmann 25:07

I’m so impressed with the positive spin that you and the program seemed to put on this, I just want to wrap up with maybe two things that are very topical for this generation. University is probably when you’re most idealistic in the world. And that is, if it can be sustained as long as possible, is life changing. So it’s really something that’s very helpful going forward to have a positive mental attitude.

So I wanted to talk about this generation is probably going to be the recipient, and maybe the next. So generation Y and Z are going to be the recipients of some of the largest transfer of wealth in history, you know, from baby boomers. It’ll happen over a period of 20 years, but the likelihood that’s already started, and back to my point about idealism, does philanthropy and you know, trying to carve out a piece of your budgets or your thinking, do you talk about giving coming into play as well?

Danial Khan 26:08

Yeah, this was actually an important topic for me over the last, in my early 20s, especially, I had this like social media page and this movement, I was trying to start called One for All. And it was just about trying to make the world a bit better. And how you can start

now with the little things that can best promote this state of giving that makes it more important to you throughout your rest of your life. So for example, starting off, if you don’t have much, how can maybe giving me a motivation for a savings goal where let’s say, by the end of the year, you have this giving goal in your budget, or in your saving plan, so that you can contribute to like a meaningful cause in your life. So I don’t know, I think, right now, it might philanthropy might seem like a very distant thing that’s only for maybe like corporate foundations or for like, very, very wealthy people.

But I do feel like I want to help encourage younger people to even try to give and doesn’t have to be with actual donations like monetary donations, it can be with your time, like sweat equity, and I just having some state of giving while you’re trying to grow your wealth, and especially when we have this wealth transfer. I think getting clear on that, about what are the little things you would do now without having a lot of wealth, that might be able to scale down the road, when you actually do have greater resources.

Because I think sometimes people, they get this influx of capital that they can decide what they want to do with and they hear like, oh, you should be putting it towards philanthropic efforts. But if you don’t have that practice, you might just be solely relying on someone else to like, handle it for you. And that it doesn’t go to something that’s like, values driven, I suppose. So yeah. I don’t know if that answers the question. But I think the things that you can start with today, and the little ways that you can develop that giving mindset and practice, I think is probably the best way to inform how you might give when you start to scale your wealth, and have more resources to share with the world.

Chris Dohrmann 28:16

I think it’s perfect! Thank you!

John Bagdonas 28:18

Danial, this has been great! This has been exactly what, you know, Chris and I have talked about from the standpoint of being proactive in financial wellness and completeness in a person and we thought this was going to be a great session. And it really has been and we want to thank you so much for your thoughts, your insights, the anecdotes you’ve shared and best of luck to you and your program at Stanford. And I know you’ve already been successful. I’m sure you’re going to continue to be successful with everything you do at Stanford. Thanks again.

Danial Khan 28:50

Thank you. I really appreciate the time!

Chris Dohrmann 28:53

A huge thank you to our guest, Danial Khan, Manager of the Mind Over Money Financial Wellness Program at Stanford University. It’s been great talking to you!

And that’s it for another episode! Thank you for listening to Own Up by Global Shares. If you found our podcast helpful, I hope you’ll consider sharing or recommending us to your peers. Until next time, from me Chris Dohrmann, and my colleague John Bagdonas, thanks for listening and take care!