Summer Blockbusters: Movies that Teach Rights and Wrongs of Financial Literacy
What are your favorite financial literacy lessons learned from classic movies? Sometimes you’ll discover important financial lessons where you least expect them. This applies to movies just like anything else. Of course, sometimes you’ll find those schoolings exactly where you’d expect them. Classic Hollywood movies run the gamut from romance to comedy, from drama to action, from epic tales to mindless fun. Regardless of genre, screenwriters often slip in their economic biases – whether intentionally or not.
There are plenty of other quotes, scenes, and themes from classic Hollywood movies that teach us both right and wrong lessons when it comes to financial literacy. It would make a fascinating study to see how the basic fundamentals of money and investing are treated in cinematic masterpieces through the many decades of entertainment Tinsel town has offered. Since this is the summer and folks only have time for a quick read, this will necessarily be a short scan. But let’s at least begin with the granddaddy of them all – what many in the know claim to be the greatest movie of them all – Citizen Kane.
The entertainment world declared Orson Welles a genius when he produced the frighteningly realistic radio drama War of the Worlds in 1938. He solidified his place on the Hollywood Pantheon when, at the age of 25, we produced, wrote, directed, and starred in the masterpiece Citizen Kane in 1941. In that movie we learned of the role of the trustee and the rich beneficiary. As the latter, Charles Foster Kane once explained to the former (Walter Parks Thatcher): “You’re right, I did lose a million dollars last year. I expect to lose a million dollars this year. I expect to lose a million dollars next year. You know, Mr. Thatcher, at the rate of a million dollars a year, I’ll have to close this place in… 60 years.” In one full swoop, Kane defines the real purpose of money – as well as an acumen for quick calculations.
Too often, Hollywood is quick to tag money with the “root of all evil” tag. Citizen Kane showed that money can’t buy the ultimate happiness in a tragic way. Howard Safer, Chief Executive Officer at Argent Trust Company located in Nashville, Tennessee offer the 2006 movie The Ultimate Gift as a way to experience the lesson in a more gratifying manner. In this film, a trust fund baby, rather than merely receiving his inheritance from his billionaire grandfather, must undertake twelve tasks – or “gifts” as his grandfather called them – before earning his bequest. Safer says it’s a “great lesson on the importance of money based on book of same title.”
Since we’re on the subject of trusts, Brian King, Director of Financial Planning at Plancorp, LLC in St. Louis, Missouri, likes the theme of 2011’s The Descendants. He says, “Matt King, played by George Clooney, is a descendant of Hawaiian royalty and missionaries. The family owns a significant tract of land on the island of Kauai which has been passed down through numerous generations. We learn that the land is now owned by a trust. Matt and his cousins are the beneficiaries of the trust and Matt also serves as the sole trustee. Due to Hawaii’s laws governing trusts, the trust must terminate in seven years’ time. As the sole trustee Matt is faced with the difficult decision of how to wind down the trust in an orderly fashion. He can sell the land to a developer and distribute the proceeds amongst his cousins or he can keep the land and figure out how to maintain it for future generations. The Descendants makes a strong case study in multi-generational wealth transfer.”
You don’t need drama to teach a great lesson in finance. Comedy can offer a more than adequate vehicle. Gregory P. Farrall, President and CEO at Farrall Wealth in Valparaiso, Indiana, brings up as an example the 1986 farce The Money Pit, starring Tom Hanks and Shelly Long. He says it “teaches that you always might want bring an umbrella with you when it comes to investing. Always have an emergency fund and unload an investment that is making you uncomfortable sooner rather than later.” His favorite scene from the movie occur when Shelley Long asks after the kitchen blows up, “What about the turkey?” and Tom Hanks replies “I don’t think that he can hurt us.” And then the ceiling of the bathroom collapses.
One of the best ways movies can teach how markets work is to tell the story of a business. Chuck Miller a consultant in financial services communications located in the Greater Chicago Area says, “The Social Network (2010) [is] Capitalism 101… you build the better mousetrap and money finds you. The modern way to get super-rich… invention and innovation. The way to actually get really ‘liquid.’”
Of course, some movies just go too far overboard in painting the markets as evil. Miller points to the classic instance of this in 1987’s Wall Street. Released only a few weeks after the October crash of that year, it played into the emotional fears still rife in the minds of the investing public. Miller says, “Greed makes you do stupid things and stupid always loses no matter how much money you have.”
More recently, 2013’s The Wolf of Wall Street starring Leonardo Di Caprio takes the cake when it comes to portraying the worst financial lessons. Safer says the movie has caused “recent surveys of millennials [to] reflect [an] ‘ugly’ image of money management.”
Farrall agrees. He says, “The Wolf of Wall Street glorifies everything that is wrong with a business that should be about helping people.”
Sometimes it not just the movie, but a scene in the movie that stands out. King talks of this scene in The Descendants when he says, “On his last visit to the land with his family, Matt reminisces about camping trips on the beach with his wife and older daughter. When his younger daughter points out that she has never had the opportunity to camp on the beach, you can see the wheels begin to turn in Matt’s head. A few days later Matt announces to his family that he has decided not to sell the land. He is going to figure out a way to maintain and protect the land because it was what they were meant to do. I think it sheds some light on an area of financial planning that is sometimes overlooked. As advisers and clients we often focus on the math of financial planning (rates of return, estate taxes, etc.) While the math is important, the impact of financial planning decisions can be felt for generations to come. If future generations of your family are not educated about the plans you have made and your reasons for making them, the math can go out the window in a hurry.”
Farrall likes the scene when Miles says to Joel in 1983’s Risky Business, “Freedom brings opportunity. Opportunity makes your future.” He says the lesson is “If you do not take the chance and invest, you will never make more money. Money does not have to be invested with extreme risk it just has to be invested somewhere. Time is on your side.”
Robert R. Johnson, President and CEO of The American College of Financial Services in Bryn Mawr, Pennsylvania, says, “Now, I don’t know what you consider a classic movie, but one of my favorite financial literacy scenes was a two minute scene from Trading Places, the 1983 movie starring Eddie Murphy, Dan Ackroyd, Ralph Bellamy, Don Ameche and Jamie Lee Curtis. The movie was based up Mark Twain’s novel The Prince and the Pauper. The scene in particular I am referring to is Billy Ray Valentine (Murphy)Learns Commodities. I actually used this scene when I taught an introductory investments course at Creighton University. I think it takes a very esoteric topic — commodities trading — and brings it into simple terms that anyone can understand. It shows that in a commodities trade there is someone on one side of the trade and someone on the other side of the trade. It illustrates that the commodities market is a zero sum game — that is, one side (the long side) is betting that the commodity will rise in price while the other side (the short side) is betting that the commodity will go down in price. What one side wins the other side loses. The lesson that Billy Ray understood was that the commodities broker (in the movie the Duke brothers) serves as a middleman and wins no matter which direction the commodity moves, as long as there is action. That is, the broker takes a cut (commission) on every trade. Billy Ray says ‘sounds like you are bookies.’ Essentially, he is right.”
Farrall also like the scene in 2007’s American Gangster where Denzel Washington says, “The most important thing is business is honesty.” Here, Farrall says of the lesson: “Without honesty, you lose the most important thing in helping people with their money, their trust.”
When it comes to memorable scenes, there’s always room for James Bond. Miller likes the scene at the horsefarm in Goldfinger (1964). He says, “Goldfinger explains to Bond why nuking Fort Knox is smart… reduces world supply and makes his holdings worth much more… basic econ.”
Again, some movies offer scenes which provide example of what not to do. In 1992’s Glengarry Glen Ross, Farrall, points out the scene “about pressuring people into something they don’t want just to win a gold watch.”
Likewise, Miller brings of the conference room scene in 2000’s Boiler Room. He says, “Ben Affleck makes money but has lost how to determine value… and parents and friends can’t be replaced like cars. And determining what is and isn’t valuable is key to real financial success.”
Sometimes it’s not the movie and it’s not the scene. Sometimes it’s the quote. Even from an overall negative movie we can find insightful dialogue. Farrall revisits Wall Street for the Michael Douglas quote “The Public is out there throwing darts at a board, Sport. I don’t throw darts at a board. I bet on a sure thing.” For Farrall, the lesson is “Do your homework! The odds are more in your favor with the more information you uncover.”
King returns to The Descendants when he says, “Matt lived by his father’s philosophy that ‘You give your children enough to do something, but not enough to do nothing.’ Matt preserved his inheritance from the trust by living off his salary. Matt and his children do not need the land proceeds to secure their financial future. More than 90% of inherited wealth evaporates after the third generation. Often the missing links that prevent this erosion of wealth are education and communication. If Matt, and his cousins, understood the intentions of previous generations, would Matt have been as conflicted in his decision to keep the land? Would he have enjoyed some of his inheritance? Would his cousins not have squandered theirs?”
Finally, we can even mine quotes from action-adventure movies to uncover hidden nuggets of financial literacy. Farrall says, “Aliens (1986) [when] Vasquez says ‘Alright, we have seven canisters of C and 20. Say we roll them in there and kill the whole nest?’ Lesson: You might want to invest a little at a time, rather than putting your entire eggs in one basket.”
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