The Power of the Success Sequence & Avoiding Poverty

The power of The Success Sequence and its role in avoiding poverty is undeniable. In this episode, the guys explore why this approach works, sharing stories and practical advice, including the valuable wisdom Austin received while growing up. With engaging discussions and final thoughts on how to implement the Success Sequence in everyday life, this episode is packed with insights and strategies to help listeners achieve financial stability and success. Tune in!

For the full transcript, show notes, and resources, visit theinvesteddads.com/217

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Transcript

Welcome to The Invested Dads Podcast, simplifying financial topics, so that you can take action, and make your financial situation better. Helping you to understand the current world of financial planning and investments, here are your hosts, Josh Robb and Austin Wilson.

Austin Wilson:

All right, hey, hey, hey, welcome back to The Invested Dads Podcast, a podcast where we take you on a journey to better your financial future. I’m Austin Wilson Co-Portfolio Manager at Hixon Zuercher Capital Management.

Josh Robb:

And I’m Josh Robb, Director of Wealth Management at Hixon Zuercher Capital Management. Austin, how can people help us with our podcast?

Austin Wilson:

We would love it if you’d subscribe if you’re not subscribed already, so you get new episodes when they drop on Thursdays. Leave us a review on Apple Podcast with Spotify, and always know you can check out our website for any questions you have. You can get in contact with us through the website. So, check out theinvesteddads.com. Today, Josh-

Josh Robb:

Yes.

Austin Wilson:

… we are going to be talking about the so-called sequence of success and how that sequence leads to reduced poverty levels.

Josh Robb:

Okay, buy a lottery ticket, win with the lottery ticket.

Austin Wilson:

And then you’re done.

Josh Robb:

The sequence of success.

Austin Wilson:

Although, we know the statistics of people who win the lottery-

Josh Robb:

Go broke.

Austin Wilson:

.. go broke. So, let’s talk about what to do to avoid living in poverty. Now, this is all highly debated, but factually also very true.

Josh Robb:

Okay.

[1:16] – Books & Studies: Creating an Opportunity Society 

Austin Wilson:

So William A. Galston, he was the former deputy assistant for domestic policy under President Clinton in the ’90s, he wrote extensively on how to avoid poverty and found some common themes among successful individuals and families. Additionally, Ron Haskins and Isabel Sawhill got the ball rolling with a book called Creating an Opportunity Society, which called for a change in social norms to bring back the success sequence as the expected path for young Americans. Now, this research actually comes back from someone named Wendy Wang and Brad Wilcox. There was a book written, they observe 90% of millennials who follow what has been called the success sequence, that is who get at least a high school degree, work, and then marry before having children in that order are not poor by the time they reach their prime young adult years, which is 28 to 34. So breaking those down, there are three things that all this research and all these researchers have found that matter and statistically reduce chances of poverty a lot.

Josh Robb:

Okay.

Austin Wilson:

So, those three things and sequence matters as number one, graduate from high school at a minimum, but graduate from high school. Number two, get a full-time job.

Josh Robb:

All right.

Austin Wilson:

Get a full-time job. And number three, wait until you are married to have children. Those three things in order, sequence, reduce your poverty chances very, very significantly. Now, some people would actually argue that just graduating high school alone and then working full-time is the only factors that really matter, right?

Josh Robb:

Because those two seem like … A high school diploma at least gets you the opportunity for certain things, and then getting a full-time job, that makes sense, right?

Austin Wilson:

Right.

Josh Robb:

If you hold a full-time job, you’re fine, but you’re telling me that that waiting to have kids until after you’re married is actually a big deal.

Austin Wilson:

Yeah, data actually backs this up. So, the results from all these studies indicate that after controlling for a range of different factors, the order of marriage and parenthood in millennials’ lives is significantly associated with their financial wellbeing in the prime of young adulthood. So boiling this all down, compared with the path of having a baby first, marrying before children more than doubles young adults’ odds of being middle or top income earners. Meanwhile, if you put marriage first, you also reduce the odds of young adults being in poverty by 60%, versus having a baby first.

Josh Robb:

Wow.

Austin Wilson:

So, the order actually matters, and this is something that has become more and more socially normal to not wait till you get married to have children, correct?

Josh Robb:

Yep.

Austin Wilson:

So, it’s more normal all the time, and it’s been trending that way for quite some time, but it’s statistically proven to not be the best financial thing.

Josh Robb:

Interesting.

[3:47] – Why Does the Success Sequence Work? 

Austin Wilson:

And the real question is why, right?

Josh Robb:

Yes, that is a great question.

Austin Wilson:

So, aside from you may have philosophical or moral objections to that, which I can understand, but –

Josh Robb:

We’re looking at data here.

Austin Wilson:

Right, the biggest difficulty is single parenthood, hard to work full-time.

Josh Robb:

Oh, my goodness. Being a single parent is just-

Austin Wilson:

If you’re not married-

Josh Robb:

Yes.

Austin Wilson:

So if you’re married, you can split the kid time, and do what you need to do. Someone in the house can work full-time, or you can both work part-time, and make enough to be a full-time earner or whatever, and be okay, right? If you are not married, you have a much less likely chance of being able to do that. So, that’s really why that part of the sequence is so important.

Josh Robb:

That makes sense. Because if you have a single income, and a kid, you’re either needing to work less to take care of the kid, or you’re paying for childcare, which is not cheap.

Austin Wilson:

Not cheap.

Josh Robb:

And with only a single income, it makes it a lot harder for that to be successful.

Austin Wilson:

Exactly.

Josh Robb:

Okay, I got you.

[4:39] – Understanding Facts & Poverty Statistics

Austin Wilson:

You want more numbers?

Josh Robb:

I do. I love numbers.

Austin Wilson:

I got more numbers. So, some of these numbers are like bookends. 94% of young adults from lower income families who followed that three-step sequence are historically not in poverty level, right?

Josh Robb:

Yeah.

Austin Wilson:

94%.

Josh Robb:

So, they come out of poverty level, they’re from low income-

Austin Wilson:

– from a low income background.

Josh Robb:

Yes, and if they make those decisions, they can get themselves up out and be 94% of the time-

Austin Wilson:

Out of the poverty.

Josh Robb:

… out of the poverty level.

Austin Wilson:

Yeah.

Josh Robb:

That is incredible.

Austin Wilson:

If you come from someone from a middle- or high-income background, those numbers are even better at 99% if you follow that sequence.

Josh Robb:

Oh, wow.

Austin Wilson:

So, that sequence works. So, there are a couple other ways to look at this numbers, but directionally it does differ between lower income backgrounds and middle or higher income backgrounds. People who come from a lower income background have a lower success rate across the board, and there’s a lot of reasons for that, but still, this sequence really, as we just talked about, really benefits them as well, but obviously people from a middle or higher income background, that’s even a little bit better. So, here are a couple more numbers.

Josh Robb:

Because they kind of have a cushion, safety net of family with a little bit of help or wealth there.

Austin Wilson:

Exactly.

Josh Robb:

Okay, I get that.

Austin Wilson:

So, here’s a couple more statistics, and they kind of flow through three-step process. So, 54% of lower-income young adults who missed all three steps were living in poverty. That’s over half who did not do any of those three things, and 38% of those with a middle or high-income background were living in poverty. So again, a little bit of a disparity there. 35% of people coming from a lower-income background who failed to graduate high school were in poverty versus 22% for those with middle or high-income backgrounds. That goes down to 13% of lower-income young adults who graduated high school and had a full-time job were in poverty, so only 13%, and that was 8% from a middle or high-income background.

And then the inverse of those numbers I just talked about, only 6% of lower-income young adults who followed the entire sequence, all three steps, including getting married before having children, in addition to the other two, were in poverty, and that was only 1% of those with a middle or high-income background. So what that means is, again, there is statistically a 94% chance that if you follow those three steps, you will be out of poverty if you started in poverty or not in poverty still if you weren’t, and a 99% chance if you’re coming from a middle or high-income background. So, the sequence works, the numbers work. It’s really common sense, and that’s something that I think is not talked about enough is this is the way society has been built.

Josh Robb:

Yes.

[7:19] – Dad Joke of the Week 

Austin Wilson:

And when you don’t do it in this order, things don’t work right. So, that’s why the numbers work out the way they do, but very interesting. Lots of data to back that up, but Josh, before we talk a little bit more, let’s have a dad joke.

Josh Robb:

Okay, and so my daughter got a knock-knock joke book the other day, so her and I were reading a couple of those, and so I’m going to give you a knock-knock joke-

Austin Wilson:

Knock-knock.

Josh Robb:

… for the dad joke of the day.

Austin Wilson:

Yep.

Josh Robb:

Knock-knock.

Austin Wilson:

Who’s there?

Josh Robb:

Mikey?

Austin Wilson:

Mikey, who?

Josh Robb:

Mikey doesn’t work. Can you let me in?

Austin Wilson:

Ah, Mikey.

Josh Robb:

Yeah.

Austin Wilson:

That’s good, that’s good. I think knock-knock jokes are kind of … They’re going to come back.

Josh Robb:

They’re fun.

Austin Wilson:

They’re classic. I almost forgot what to say when you said knock-knock.

Josh Robb:

The who, yeah.

Austin Wilson:

Yeah.

Josh Robb:

Who’s there?

[8:00] – Advice Given to Austin Growing Up

Austin Wilson:

I haven’t had a good knock-knock joke in a while. All right, so something that is interesting when I was growing up is that without even realizing it, my dad instilled this to me at a young age, this kind of thought about a sequence of what you should do before things happen.

Josh Robb:

Right.

Austin Wilson:

Graduating high school, waiting to have children until I was married, that was kind of always assumed, but he always told me, “Don’t get married until you have a good job. Don’t have a baby until you have a place to raise them.”

Josh Robb:

That makes sense.

Austin Wilson:

And then he always said, “Just go to work every day and you won’t want for food. You’ll be fine.”

Josh Robb:

Yes.

Austin Wilson:

“You’ll have food, you’ll have all your needs met if you just go to work every day.” And that kind of really just changed the way that I viewed life from a very young age and kind of set me and my siblings up for success.

Josh Robb:

You know what all this sounds like?

Austin Wilson:

What?

Josh Robb:

If you simplify, break this all down, is to plan ahead, and be more proactive than reactive.

Austin Wilson:

Sure.

Josh Robb:

Don’t get married until you have a good job, right?

Austin Wilson:

Yeah.

Josh Robb:

You make sure you’re thinking through and setting yourself up with a plan. Don’t have a baby until you have a place to raise them, same idea. It takes nine months for that baby to develop and grow. So you do have some time, I guess, if you don’t have a place yet, but the idea being … Just prepare, plan ahead, don’t be so sporadic, but just have … And then show up every day, which is again, planning ahead. Make the right decisions, so that the day before you’re not doing something dumb where the next day you don’t want to go to work.

Austin Wilson:

And be consistent.

Josh Robb:

Consistency –

Austin Wilson:

Consistency compounds, right?

Josh Robb:

Yeah.

[9:23] – The Success Sequence: Final Thoughts & Advice

Austin Wilson:

So, just go to work every single day. So, I always believed outside of those things, that’s where trouble can really occur. And one thing that I’ve really got to think about as I was doing a little bit of research and putting together notes for this podcast is that this so-called success sequence, that was three steps we talked about earlier, this was once common sense. It was really how the majority of people lived, and what that did was it made an economy, and specifically here in the United States, a nation that had growth, it had financial stability, and that’s becoming a little less normal today. Population growth, not so good. We got lots of impoverished people around the country and stuff like that. And I think that young people around the country, and potentially around the world are just not being taught these things about how to plan, how to think ahead when they’re thinking about having a family, thinking about becoming an adult, thinking about having a life, and not being a resource drag, but a resource contributor to the economy, and society as a whole.

Josh Robb:

And to be clear, we both grew up in a very comfortable lifestyle, both of our families. We weren’t, I would say, you or I in the lower income side of the world.

Austin Wilson:

Right.

Josh Robb:

But I did for a handful of years work in the nonprofit world and I worked with families that were like that. So, I get it, and I know you do as well. We’re not making this sound easy.

Austin Wilson:

No.

Josh Robb:

These are simple ideas, but they’re not easy to obtain. For instance, graduating high school. That sounds like, “Oh, that’s common sense.”

Austin Wilson:

Right.

Josh Robb:

Well, when let’s say for instance your family has a hard time putting food on the table, and you have the choice between going out and getting a job to earn some money, so that you and your siblings can eat, or pay the electric bill, so you have heat versus going to school, I get that. I’ve been around and been with families that had to make that hard decision. So again, we’re not making light of that situation, but if you can say, “Hey, 94% of the people who do this get out of that lifestyle,” I know that a lot of people that I worked with, if you gave them, and showed them that opportunity, they’re hard workers. They’ll find a way to finish high school and do those things, right?

Austin Wilson:

Well, that’s just it is if you’re off track, if you haven’t maybe checked those three boxes or whatever, done it in the right order, it’s not too late.

Josh Robb:

Right.

Austin Wilson:

You can jump on track and do that starting today or work towards it-

Josh Robb:

Yes.

Austin Wilson:

… heading that direction. Yeah, we are not here to talk about how there aren’t people who have hard situations. There are people who have hard situations. There are people who made mistakes. A lot of this is just making mistakes, and okay, we all make mistakes, but there is a chance to get back on track and statistically help you and your family in the future, right?

Josh Robb:

Yes.

Austin Wilson:

No one is … Unless they’re very close to the end of their life, there’s time to turn it around.

Josh Robb:

Right, there always is, yep.

Austin Wilson:

There’s time to turn it around and make choices to get on the right track. This is not making light of people in tough situations, but we now know, and if maybe you didn’t hear any of … Maybe until today you haven’t heard any of this, but we know some very basic things to get you moving in the right direction.

Josh Robb:

Correct.

Austin Wilson:

This is also encouraging for those who are on the right track. So, maybe you did graduate high school, you’re working full-time.

Josh Robb:

Check.

Austin Wilson:

You got married and you thinking about having a baby or you had kids, whatever, you’re on the right track and you just keep doing what you’re doing, and planning ahead, being responsible, and you won’t be in poverty. Life might not always be easy, but just keep going to work every day, and you’ll be all right.

Josh Robb:

Yes, yep. So that is … Again, when you look at these things, two of the three can be accomplished at any point in time. If you haven’t, you can always graduate high school, and you can always get a full-time job. You can’t undo a baby that shows up, and that’s … Again, but going back to it though, and again, as you walk through some of those things, just those top two give you a really good chance of success, and that kid who’s special and unique and awesome, it’s fine, that’s not a regret at any point, but talking to somebody who hasn’t done that yet, that’s the point to say, “Hey, here’s the plan to give you the highest chance of success.”

Exciting. Thank you, Austin, for putting that together as you talk through … Those are the steps. Those are the beginning points, right? Next then would be to go and look at some of our suggestions on how do you start saving once you have that full-time job, because this gets you out of poverty, but for a lot of people, their goal is to set their next generation up, those kids that you have to help them get even farther along than you were.

Austin Wilson:

I was thinking, everyone one knows kind of the Dave Ramsey Baby Steps, right? This is like pre-Baby Steps.

Josh Robb:

Yeah, this is like toddler-

Austin Wilson:

This is like-

Josh Robb:

Like the crawling, rolling.

Austin Wilson:

This is like baby inside belly steps. This is before you even get to Baby Steps.

Josh Robb:

Yep.

Austin Wilson:

This is just like general life advice to set yourself up before you can do the Baby Steps-

Josh Robb:

That’s right.

Austin Wilson:

… And all those things, but yeah.

Josh Robb:

Or you could avoid all the Baby Steps if you graduate high school, get a full-time job, and wait to have kids, you may not be in debt. Don’t even worry about Baby Steps.

Austin Wilson:

You just start shoving money away and planning for the future. Well, thank you for listening. You had someone asking about something like this, “Hey, I just see a lot of poverty. What can people do?” Well, here’s some ideas. So, share this episode with them, email us any ideas to hello@theinvesteddads.com, and join us for our next episode. And until next time, have a good one.

Josh Robb:

All right, talk to you later.

Austin Wilson:

Bye.

Thank you for listening to The Invested Dads Podcast. This episode has ended, but your journey towards a better financial future doesn’t have to. Head over to theinvesteddads.com to access all the links and resources mentioned in today’s show. If you enjoyed this episode and we had a positive impact on your life, leave us a review. Click subscribe and don’t miss the next episode.

Josh Robb and Austin Wilson work for Hixon Zuercher Capital Management. All opinions expressed by Josh, Austin, or any podcast guest are solely their own opinions, and do not reflect the opinions of Hixon Zuercher Capital Management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Hixon Zuercher Capital Management may maintain positions in the securities discussed in this podcast. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. Securities investing involves risk, including the potential for loss of principle. There is no assurance that any investment plan or strategy will be successful.