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Helping Your Teen Become Money Smart

Who here wishes that they were better at knowing how to teach their kids how to manage their money?

Maybe you never learned how to budget your own money growing up and had to learn when you hit adulthood. 

If you’re like me, you weren’t all that good at budgeting and often had to learn the hard way. I remember signing up for a credit card in college, having no idea about being charged interest, and thinking it was so much fun to go shopping and buy a new outfit, only to find out later that I had to pay interest when you couldn’t pay the whole thing off. And I must admit that I bounced more checks than I want to admit because I hadn’t learned how to manage a checkbook. 

Wouldn’t it be awesome to raise financially empowered kids – where they understand the value of a dollar, are motivated to earn their own money and be responsible with that money to save, give and spend wisely? 

My special guests today are the authors of a fantastic book, “How To Money” – Jean Chatzky is a New York Times Best Selling Author and financial expert who has spent decades reporting on personal finance — including 25 years on the Today show. She is also the CEO and co-founder of HerMoney. And Kathryn Tuggle is Chief Content Officer and Gracie-Award-winning Editor-in-Chief at HerMoney.com and produces and cohosts the HerMoney Podcast. 

Let’s dive into how to empower your kids to take charge of  How to Money!

Scroll down to read the full episode transcribed.

What You Will Learn: 

  • How social media plays into our teen’s buying choices. 
  • Helping our teens become educated consumers.
  • Raising our teen’s awareness of how marketing works.
  • How to encourage your teen to save money.
  • Use allowance correctly with your kids to teach them about money.
  • How much allowance should you give your child?
  • How to set up a budget with your teen and get them excited about it.

Where you can find Carrie and Emily:

Find more encouragement, wisdom, and resources:

Sign up for our Moms of Tweens and Teens newsletter HERE

And here is the episode typed out!

Welcome to the Moms of Tweens and Teens Podcast. If some days you doubt yourself and you don’t know what you’re doing. If you’ve ugly cried alone in your bedroom because you felt like you were failing. Well, I just want to let you know you are not alone and you have come to the right place.

Raising tweens and teens in today’s world is not easy. And I’m on a mission to equip you to love well and to raise emotionally healthy, happy tweens and teens that thrive.

I believe that moms are heroes, and we have the power to transform our families and impact future generations. If you are looking for answers, encouragement, and to become more of the mom and the woman that you want to be, welcome. I am Sheryl Gould. And I am so glad that you’re here.

SHERYL: Jean and Kathryn, welcome to The Moms of Tweens and Teens podcast. I am so excited to have you both here with me. I am so excited about your latest book, “How To Money.” I can’t wait to jump into this. 

I get questions all the time from moms, parents, and caregivers about how to help their kids manage their money. So we have so much to talk about today. 

I love the book. I love the illustrations. And this can be a really emotional topic. So I just want to launch in and ask you, what led you to write this book? And can you tell a little bit about your own story?

JEAN:  Sure, I think both Kathryn and I wanted this book when we were younger. I made a ton of financial mistakes, not so much in my late teens, and I was actually a pretty good worker and saver. But once I got out of college, I made every mistake in the book. 

And it’s part of our goal at Her Money as we try to bring other women along financially, to save them from some of the pain that we went through, and to help them do it better. It’s interesting; money gets put in a corner as some sort of a secret language, a special set of skills. It’s just a life skill. It’s a life skill that every woman needs to have. Every person needs to have one. And so we wrote this book to really try to put it in plain English and eliminate some of the mystery. 

KATHRYN: To Jane’s point about writing the book that we wish we had. That is how we approached this from day one. I think that a lot of entrepreneurs say that they were inspired to start their business or invent their product because they needed it. And necessity is the mother of invention. 

I think that that’s exactly where we were with this book. We said okay, what are the basics that are not taught? And how can we convey them in a manner that is going to be compelling to a younger demographic? How can we explain “compound interest” in a way that is going to engage and not cause eyes to glaze over, which is really what we set out to do? I, like many women, was given the basics: don’t spend more than you earn. But the concept of investing. The concept of negotiating for a salary was never broached in my home. We really tried to give young women the keys to the kingdom of money.

SHERYL: Yeah, I love that. I feel like if we didn’t get it growing up, I know for myself that I learned a little bit. I learned a lot from your book. It’s hard to give to our kids what we didn’t get. And so I even think parents and caregivers are listening to this to get the book and go through it. I think it’s a book that’s used for discussions.

JEAN:  I think that’s great. I think the other thing parents and caregivers need to realize is that their kids are getting a lot from you. Even if you’re not actively saying it, kids pick it all up. They pick up the anxiety around money, and they pick up the fact that you bring shopping bags home and hide the receipts. 

I have two kids, and they’re no longer sadly teens and tweens, but I do remember the experience of giving my daughter some mixed messages. 

At one point, she wanted money for something I don’t even remember what it was. And we were in a store, and I said, “Well, no, we don’t have money for that right now.” Which she knew was a lie. And she said, “we’ll just go to the machine and get some “

She didn’t really, at that point, understand while I was working to put the money into the machine so that we could take it out, and it was a choice. It made me more conscious about my language with her and made me more conscious of the fact that it’s a choice. It happens to be my choice because it’s my money. 

But what we want is for our kids to grow up to be good makers and have their own choices to understand that money is a limited resource that they have to choose which things are important to them today, but also in the future.

SHERYL: Oh, yeah. And that’s one of the things that I love so much about the book is how you bring this consciousness and raise awareness of even why we buy. I was like, “Oh, I relate to that.” 

Why do kids feel the need to buy? Kathryn, you can touch upon that because I think it’s helpful for our listeners to hear and to raise their awareness. Can you speak to the whole social media culture and how that feeds into it?

KATHRYN: I think that when we were growing up, we were, of course, being marketed to on television, billboards, and in stores, and I think social media has just put a magnifying glass on that and made it more pronounced by a factor of 10,000. Because you can’t scroll through any new source, you can’t check on the updates from any of your friends without being marketed to. 

And what we really tried to convey in this book is that you are being sold so that you buy things. And in some cases, the product being sold is because people want your information so that they can sell it. So we really tried to help create a sense of pride and what it means to be a consumer, that your dollars are valuable, that your time is valuable. 

And you can be an educated consumer, which is the most empowered possible position to be in. Because when you know that you’re being marketed to and when you know that you’re being sold to, then suddenly all your decisions get a little bit smarter, they get a little bit savvier, and you’re going to maybe take that 24-hour pause on an item before you buy it, you’re maybe not going to stop and buy three bags of caramel popcorn in the line at TJ Maxx, you’re maybe not going to just hastily add to cart without first thinking about it and doing some comparison shopping. 

And hopefully, we hope that the people who read this book will also see what influencer marketing really is that these people who you follow on Instagram are very often being paid to sell you these products. They don’t actually like the product, and they might not have even used the product other than for that one photo op that you happen to see in your feed. 

So, we’ve really tried to instill in the reader what it means to be a smart consumer in 2022. Because it’s very different than what it meant to be a smart consumer, even in 2012, it’s just radically changed.

SHERYL: I know. It’s like standing at Sephora, and you’re standing in line, you see that lip gloss, and it’s on sale. And it’s like, “oh, I think I need that.” Or, I was looking at dresses online, and now they’re all in my feed. And I’m like, “Oh, maybe I need that one.” And then I’m like, no, no, no. Just to become aware. 

Have you found that in the research that you’ve done for the blog, and with kids, just them knowing how they’re being marketed to and raising their awareness around that has changed the way that they look at their money?

JEAN:  I think it really does, and I think it’s not going to help them escape every single bit of their emotion. But a little bit of information goes a very, very long way. I had a discussion with my niece yesterday. She’s 17 years old. And she started a business during COVID. That is a fashion business; she’s silk-screening T-shirts and selling them and making quite a bit of money, actually. Quite a bit for a 17-year-old. 

And she called because she was thinking about maybe tapping into a credit card or a line of credit in order to buy supplies for her future products. I said, “Well, where is the money that you’re earning today going? Where’s that money going?” And she has been smart. Her father majored in accounting, and he’s got her putting away a third for taxes. But I said, “what about the rest? There’s a lot of money there. 

And she said, “Well, I’m a teenager, and if you give a teenager money, they’re going to spend it. I was like, “we got to get in the middle of that feedback loop, we’ve got to figure out a way so that maybe you spend some of it, but not all of it.” 

And we had a whole discussion with her about how she would be opening another savings account for future business expenses, socking away money that she wanted to use for additional supplies, or together into this extension that she wants. And she could spend the rest. But she didn’t know how to put those training wheels on herself. And now that she does, I’m fully confident that she will actually do it. 

I think a lot of teams, once they have the information about what’s happening, once they understand, I think, and what Kathryn said about the Instagram and TikTok stars and their products, not a lot of them get paid money. They just get paid stuff. Pulling back the veil a little bit and exposing that truth to this audience of teenagers with money is it’s really important, particularly as you grow into an adult with money, because the goal is that once you have additional resources, you’ll be able to manage them.

SHERYL: Yeah, I hear that. So often, working with parents about how their kids will blow through money, they’ll get a summer job, they want them to save for the school year, or when they go back to college, and they end up spending and not thinking about it. And then they go to school, and they’re like, “well, we’re not going to give you money,” and then the kids don’t have money, and then maybe they end up caving in. What would you recommend to parents that are listening? How how do you think you can help your kid navigate that?

KATHRYN: Well, first, I would say if the expectation is that your child is going to be saving, and they don’t, then that’s on you. Because that was your expectation that they were going to be saving, and you maybe helped them get that job. But if you then didn’t take those follow-up steps to ensure that they were putting it in a savings account or putting in an IRA. That’s your responsibility. 

I think, starting with those tough conversations to act as if there is no other option than a third of it goes into savings, or whatever ratios you would like your child to be spending versus saving for college versus saving for retirement, you got to figure that out. 

And then lay those expectations out. And you can introduce your child to the beauty of automation. So they are never tempted to spend that money. That money just immediately comes out of their checking account and goes into savings before they have a chance to spend it. I think that there is going to be a certain level of hand-holding that you have to do with these first financial conversations if you want your child to be successful.

JEAN:  I also think that allowance can be a really good teaching tool to help with this if you do it correctly, if, as a parent, you set up an allowance, even if you do it before your kid is old enough to work. So that allowance has to be used for things that used to come out of the parent’s budget but now come out of the child’s budget.

If the goal is as your kids get more in the way of resources, they have to use that money to make the choices that an adult would make only with smaller amounts and smaller obligations. So if you decide, hey, I’m going to give you my child an allowance and previously I have paid for you to buy birthday gifts for your friends, I’ve paid for your snacks after school when I have food in the fridge, I’ve paid for you to get that manicure every once in a while. I’m going to give you enough money to get some but not all of those things, and you’re going to have to make choices. 

Then kids absolutely have to work because there is a big difference between what they’re willing to buy with their money and what they’re willing to buy with their parent’s money. Once it’s the hours of their time that have been spent to earn money that could be used to buy that T-shirt, they may not want that T-shirt all that much. I’ve had conversations with my own kids. “I would like to buy it with your money. I don’t want to buy it with my money. So now you make a choice.”

SHERYL: What I hear you both say, and that’s why I love the books so much, is thinking through these things ahead of time. This book it’s geared towards teens and young adults, but I really think it’s good for parents as well because it gets you thinking about how you can talk to your kids about these things. 

And allowances, and what you were saying, Katherine too is just having that conversation, when they get that job, how much money they’re going to be saving, and that part of that money is going to go into saving. 

Otherwise, you’re just reacting. I just had a mom that asked the other day, and her daughter was 12. And she wants to get Starbucks, and she wants to get her nails done with her friends and all these things. And she’s like, “how much allowance should I give her because she’s breaking the bank here? I can’t continue spending this money.” So what would you say you think is a reasonable allowance for a 12-year-old?

JEAN:  I think it’s completely and totally dependent on how much of that stuff your listener, your community member, believes that her daughter should be buying. If she thinks that one manicure every two weeks or a month is fine and Starbucks twice a week or once a week is fine, then she should give her enough for that and tell her if she wants more, it’s time to start babysitting.

SHERYL: Yeah, I love it. That’s so good. It’s time to start babysitting. So what are a few of your budgeting tips? Can you share just a few of those that you share in the book?

JEAN:  So I don’t really believe that you can front to back. I don’t think it’s really possible to sit down with a sum of money and say, “This is how much I want to spend on rent. This is how much I want to spend on my car. This is how much I want to spend on food.” 

I think you have to know what you are spending. And then you can make changes in those numbers. And, tweaking what’s already happening is a lot easier than trying to project in a vacuum. So, my backward budget is basically that you got to figure out where your money is going today. 

If you are 15 years old, and you have a job after school and an allowance. It’s also true if you’re an adult and you get a paycheck, or you have a freelance income, take a really good hard look at where your money’s going. There are a lot of apps that can help you do this. But you can do it with a pencil and paper. It’s not hard. It’s tedious, but it is not hard. 

And then once you have the information, and it’s good to get a couple of weeks’ information, then you look at it, and you say, and everybody has the same experience of looking at it and thinking, “oh my gosh, I had no idea. I was spending that much money on Uber. I had no idea. I was spending that much money on my dog,” whatever it happens to be. But once you know, then maybe you can change it. And maybe you can’t. 

I tell this story in the book because I think it was an important lesson for me; my son, when he graduated from college and got his first job, said I need a budget. And I was just like, “Oh, thank you. Yes.” Cheering. 

I had him go through this process of tracking his spending for a couple of weeks. And then we sat down to actually pull it together. And he said to me, “I need $250 A month for Uber.” And I said, “That’s ridiculous. You have a car.” And he said, “Well, on the weekends,” he lives in Los Angeles. He said, “on the weekends, we drink, and when I drink I don’t drive.” 

And I said, “you need $250 A month for Uber,” so let’s find it. And we went through the budget, and we found it from other places because that was non-negotiable. He was going to not drive when he was drinking, and I was fully supporting that. And so we found the money in other ways.

SHERYL: Yeah. You’re like, “That’s ridiculous.” But then when you think, “well, safety is so important. So we need to pull from other areas.” Come up with a plan with your kid to be able to do that. Any lessons that stood out to you, Kathryn, from the book that you feel would be helpful to parents?

KATHRYN: We hear a lot from the younger generation that they want their dollars to make an impact. Whether that is through charitable donations, or whether that is through causes that they support, or investing in companies that are doing good.

I think that when you’re trying to make these money conversations more interesting, and you’re trying desperately to get your kid excited about a budget or about saving for college or that first job. Tune into what they love, tune into what they have expressed an interest in, and talk to them about the internships that they might want to have. 

If that internship is going to be unpaid, then that’s your gateway into a conversation about saving for college. And suddenly, now they’re not just saving for boring textbooks; they’re saving so that they can have their dream internship in New York City. 

If they’re interested in making sure that 10% of their paycheck goes towards charitable contributions, have a dialogue with them about their favorite charities. Do they want to support women’s rights? Do they want to support the environment? And then you can go back into earning as a way to show them that your money is the pathway to living the life that you want. So now let’s talk about how to make sure that your money is working for you so that you can get there.

SHERYL: The book is really empowering. I love that you’re sharing that because you say in the book, what is the change that you want to make happen in the world? Like, what’s your part in that? I think that that’s such an empowering way for our kids to think about money too, and how they can make a difference. So thank you for coming on. I would love for you to share where they can find you, and I’ll share all the links. Tell them a little bit about Her Money, so they can find that as well.

JEAN:  Sheryl, thank you for having us. First of all, this was so much fun. They can find us at hermoney.com Kathryn and I share hosting duties on “The Her Money” podcast, so they can listen to us there as well. If they have any questions, we have a mailbag segment on “The Her Money” podcast, and they can send us questions, and we are so happy to answer them.

KATHRYN: Yeah, the book is “How To Money” you can find it on Amazon or from your local bookseller. And you can find Jean at Jean Chatzky almost everywhere, and you can find me at Kathryn Tuggle almost everywhere as well.

SHERYL: Well, thank you, thank you both for all that you’re doing and how you’re empowering women and now teens and those that are adulting. We need that support. So thank you so much.

JEAN:  Thank you as well. Thanks, Sheryl.

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