Eps 349: Teaching financial literacy with Jean Chatzky and Kathryn Tuggle

Episode 349

Today’s guests are Jean Chatzky and Kathryn Tuggle.

Casey, Jean, and Kathryn discuss how and why young people need to learn financial literacy. Jean and Kathryn share why they wrote their new book, “How to Money” and what gaps they see families missing when they teach their children about money (i.e. long-term savings and salary negotiations).  They discuss the disparity between what boys and girls are taught about finances and where adults can go to better educate themselves. Jean and Kathryn share when to start teaching teens about money and when teens should start paying for their own things. Casey shares the Positive Discipline philosophy surrounding tying allowance & payment to chores. They dig into what teens can learn once they have their own money and how to view money as a tool to accomplish goals.  Jean and Kathryn explain how to set expectations around your teen’s money like starting and using an IRA (and how to set up and open an IRA, for those of us who are learning along with our teens!).  They also share what teens must know before they leave the nest and tips for choosing majors & schools, student loans, and first jobs. 

Guest Description:

Jean Chatzky is the founder and CEO of HerMoney.com and the coaching program FinanceFixx. She is the host of the podcast HerMoney With Jean Chatzky and the co-host of the national radio show Everyday Wealth. The Financial Ambassador for AARP, she was the Financial Editor for NBC Today for 25 years. Jean is an award-winning journalist and broadcaster, a New York Times and Wall Street Journal best-selling author, and a fierce advocate for financial literacy.  Her latest book is How To Money, a guidebook for Gen Z women.

Kathryn Tuggle is Chief Content Officer and Gracie Award-winning Editor-in-Chief at HerMoney Media. She’s also co-author of How to Money alongside Jean Chatzky. Before joining HerMoney, she spent two decades in business journalism, where she helped launch The Fox Business Network, and wrote and edited for Fast Company, Inc. Magazine, and TheStreet, among others. Kathryn is actively involved with the Native American Journalists Association and enjoys teaching and practicing yoga.

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Takeaways from the show

  • How do young people learn financial literacy like short-term spending and long-term planning? 
  • What are families missing when they teach their children about money? 
  • Tracking spending, budgeting, & apps 
  • What resources can parents use to educate themselves to better educate their kids about finances? 
  • When to start teaching kids/teens about money 
  • Teens working & earning their own money 
  • Why or why not connect allowance/payment to chores 
  • How to help your teen set-up an IRA  
  • Tips for teens regarding choosing majors & schools, student loans, and first jobs

What does joyful courage mean to you?

To me, it means saying what I want to say, when I want to say it, which is a lesson I learned somewhere around my fiftieth birthday.  I decided I was not going to be scared anymore, and when I have these thoughts and express them, they inevitably make me feel happy or relieved, and those are both good things. – Jean Chatzky


In the context of what we do at HerMoney, for me, I think it is about embracing your seat at the table and embracing your power in money conversations, because for centuries, women have been shut out of money conversations, and now we’re not.  We have a seat at the table, we have the education, and we have the tools we need to change our financial lives.  We can do it with courage, and we can do it joyfully. – Kathryn Tuggle



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Kathryn, Jean, Casey O'Roarty

Casey O'Roarty 00:09
Hello hello my friends. Welcome back to joyful courage a conscious parenting podcast, where we tease apart the challenges and nuances of parenting through the adolescent years. I am your host, Casey over already positive discipline trainer, parent coach and adolescent lead at spreadable, where we celebrate not only the growth of children, but also the journey and evolution that we all get to go through as parents. This is a place where we keep our real, real stories real parenting, the teen years are real messy and there aren't many right answers. But the more we trust ourselves, and trust our teens, the better the outcomes can be. The Parenting we talked about over here is relationship centered you won't find a lot of talk about punishment, consequences or rewards. What you will hear is a lot of encouragement about connection, curiosity and life skill development. Our teens are on their own journey. And while we get to walk next to them for a bit, we don't get to walk for them. Their work is to learn from the tension of their life. Our work is to support them and love them along the way. I'm so glad you're here. Enjoy the show.

Casey O'Roarty 01:39
Hey listeners, I am so excited you're in for a treat. I have two guests on today. My first guest is Jean Chatzky, and she is the founder and CEO of her money.com and the coaching program, finance fix. She is the host of the podcast to her money, with Jean Chatzky, and the co host of the national radio show everyday wealth. The financial ambassador for AARP. She was the financial editor for NBC Today for 25 years. Jean is an award winning journalist and broadcaster a New York Times and Wall Street Journal best selling author and a fierce advocate for financial literacy. Her latest book is how to money a guidebook for Gen Z women. My other guest Catherine Tuggle is Chief Content Officer and Gracie award winning editor in chief at her money media. She is also co author of How to money alongside Jean. Before joining her money she spent two decades in business journalism where she helped launch the Fox Business Network and wrote and edited for Fast Company Inc. Magazine, and the street among others. Catherine is actively involved with the Native American journalists Association and enjoys teaching and practicing yoga. Hi, ladies. Welcome to the podcast.

Jean 03:02
Thank you. Hi.

Kathryn 03:03
Thanks for having us.

Casey O'Roarty 03:05
Yeah, I'm so glad that you're here. I love talking about money. Start with telling me your motivation for writing how to money. Where did that come from?

Jean 03:16
I think Katherine and I were both looking for a way to help younger women not make the same stupid mistakes that we made. And I'm not speaking for her. By the way, I'm speaking for myself, because I made them all. You know, we were not really taught how to handle money. I know for me, I came out of college, I racked up about a half year salary in credit card debt. I botched my first attempt at a 401 K I spent more than I had. I mean, it was just it was an ugly period in my life. And as I watch young women coming out into the world today, when they've got so many headwinds facing them, I just like to help them along. It's not that hard. It's not rocket science, but somebody needs to teach you how to manage the basics so that you don't end up a complete and total ball of stress.

Casey O'Roarty 04:11
Yeah, what about you, Catherine?

Kathryn 04:13
You know, I think that your teen years and your early 20s are the moments when you have the most opportunity to make mistakes in a lot of ways because you don't know what you don't know. And I think about when I first got to my college campus, and I was approached by largely predatory credit card companies trying to get you to sign up for every card under the sun. I didn't know to negotiate for my first salary. I never asked to be paid more money than what I was offered. And I feel like we wrote this book as a guide book, not only to help women and young people, be more successful with their money, but really, to help them avoid making some of these mistakes that could cost you 1000s of dollars,

Jean 05:01
you know, we are asking young people these days to make decisions that we were not asked to make right before they graduate from high school, we're asking them, how many 10s or hundreds of 1000s in student loan debt Do you want to take in the next four years, right. And that is something that is going to stick with them for decades. If we can just get in the middle of that loop, if we can insert a conversation or two in the middle of that loop to help them make better decisions, it's going to make a big change in their adult life.

Casey O'Roarty 05:40
Yeah, when I think about student loans and credit cards, and totally relating to you, Katherine, and Jeanne, like, I remember being it took until my senior year of college to get lured in and I was like, oh, all I got to do is fill out this form, and you're gonna give me a little card that's going to let me spend whatever, quote whatever I want. And man that went quick, right, so much so that I got another card to pay off the first card. And it was just, nobody had talked to me. I mean, and it's interesting, too. I came from a family where there was wealth. And but there was no teaching at all. I had an allowance, and I had a certain amount of money that I could spend. And my you know, the biggest lesson was moderation. But what does that even mean? And how do I navigate that experience? And I'm watching my kids do the same thing right now of like, I have money. I want that. I want that right now. So I'm going to get that because I have the money to get it. And then you know, a few weeks later, oh, shoot, I was telling you before I hit record, I don't have enough money for gas before my next paycheck. It's like, huh, but damn, those shoes look good on your feet, babe. Okay, you know, so I'm really relating to this. And I feel like as I felt as a young person talking about loans, and credit cards, it felt like fake money, it felt like Monopoly money was such an abstract experience. And as a 20 year old, or even like a 16 year old or a 25 year old, you know, we aren't really good, really skilled in that age to look ahead at, well, how am I going to feel it? 3035 40 If I'm still dealing with this thing that I use, you know, in my short term mindset, that now is something that I'm continuing to pay off. So I'm excited about this conversation.

Jean 07:32
Yeah, and the thing Casey is like, we're not even good at it as adults looking ahead, right like that. We are such creatures of impulse. And I want it now. And, you know, we write a lot in the book, Catherine wrote these great sections about Instagram, and just this

Casey O'Roarty 07:51
Oh, my God, I'm such a sucker. Right? buying it for the grand How does Instagram know exactly what I want? Yeah, I know how

Jean 07:59
it's not, you know, it's not something that we're born to be good at. But by understanding a little more about how our brains are wired, we can help ourselves be a little bit better.

Casey O'Roarty 08:13
Yeah, well, even the last, it's been probably six or seven years, I've worked with a finance coach. And all we do together twice a month is look at my budget I use, you need a budget app. And just the fact of looking at the money on a regular basis has increased my ability to save to create buckets for different things. It's not that we now have more money, it's that I'm paying different kinds of attention to it. And it's such a small thing that's made a really big impact. Where do you see the gaps in families around teaching about money?

Kathryn 08:52
I mean, I'll start with my own gap, which was that I was very well educated on how to get a bargain, how to navigate a thrift store, how to grow your own food and a garden, and how to budget and really how to make that day to day flow work. But when it came to investing, and the concept of compound interest, and the concept of starting early, the concept of saving for retirement or negotiating for a salary, those topics were never discussed for me. And I think that a lot of parents, I'm from rural Alabama, and I think that particularly in the rural south, I think there is a lot more emphasis on your personal day to day economy. And what that looks like to be a good steward of your money day to day to not live frivolously and I love that. I love that guidance. But I think that a lot of women in particular are not taught to step back and look at the bigger picture and look at okay, well this is fine day to day I got my $8 thrift store dress and I'm going to kill In my interview with my $8 dress, but what about an IRA? What about a 401k? What about demanding to be paid what I'm worth? So, you know, those are the topics that we really tried to double down on in the book, while also still giving a nice overview of the budgeting basics, and not spending beyond your means basics.

Jean 10:23
There's still this bifurcated way that I think we look at money when it comes to men versus women, right, even surveys of how parents are teaching their boys differently than their teaching their girls that have come out in the last couple of years continue to just drive me up a wall, because they show that, yeah, we are teaching our girls how to manage a budget, and not always very well, right. I mean, to your point, Casey, the very first thing I do when I'm coaching somebody is do what your coach did with you, you know, I make them track their spending. And they have that amazing eureka moment where they like, Oh, my God, look at how much I'm spending on pets. And I'm not going to do that anymore. And now I have back control. And that feels incredible. But to Catherine's point, saving money is not going to make you rich, it's putting the money that you save to work and growing it and investing it and taking the amount of risk that you're going to take that you need to take in order to make that happen. Those skills are still being taught to boys more than they're being taught to girls. And that really has to change. And so we really put an emphasis on that.

Casey O'Roarty 11:50
Well, and when I hear you say things like compound interests and IRAs and 401, K's like full transparency, I would not be able to sit down with my kids and explain what those things are. I mean, I know that I My husband has retirement like we have things that I can't explain. And I'm guessing that I'm not the only parent out there who's like, oh, shit, I'm supposed to be explaining that to my kids, I don't even understand it. Where are places that so your book is an amazing resource. I'm guessing your podcast probably is a really good resource as well. Where are places that parents can go to educate themselves, to better educate their kids around, stuff like that? The hard stuff,

Kathryn 12:33
we actually just had a guest on our podcast discussing this very topic, Bobbi rebell. She is a certified financial planner. And she is the author of raising financial grownups, which is a book that dives into this exact topic on how to make sure that you're raising kids who know how to adult, that you're instilling in them the right expectations and the right instructions. And Jean, and I had a question the other day that said, you know, what do you do if your kid gets a summer job, but then they don't save any of that money for college? And their answer was like, Well, did you tell them that that was your expectation that they're saving for college, because you know, you can't take anything for granted as a parent. And I think that most parents know this, but you can't assume that your kid has the skills or the knowledge or the understanding to be looking three years ahead or five years ahead. And that's where you got to sit down with them and have those conversations.

Casey O'Roarty 13:32
So funny. You said that because I feel like I'm constantly being reminded by my 16 year old, like, how I use language is not useful to him like suggesting, I think I come at things like suggesting, hey, you know, the dishwasher is full, and you've had some time before you go to work. And he looks at me he's like, so do you want me to empty the dishwasher? Just say that, right? I think there's a lot of places where we make assumptions that our kids know, what we think or what we expect. And if we haven't been explicit, like you're saying, you know, we can't be frustrated in the end that they didn't get the memo. Right. So I really appreciate that.

Jean 14:11
I think to that your comment Casey about I couldn't have this discussion with them about an IRA. That scares me to write a little bit because what if something happens to your husband? Right? Do you know where everything is? Do you know where the documents are? Would you know who to call to get a handle on that?

Casey O'Roarty 14:33
Well, in my house, I'm in charge of all of it, even though I don't always understand the fine print. So in our relationship, I'm this much better, like two inches better at the money stuff than my husband. So it falls on me but still with a lack of understanding. Right?

Jean 14:47
Right. And I think that, look, there's no shame in this. Nobody taught us how to do this. And I've been a reporter like Katherine has been a reporter long enough to get over any smidge of embed argument that I ever had about asking any question, right? I mean, I will sit on the phone with a source and you know, I come at this, I was an English major, right, I will sit on the phone with the source and say just back it up three steps, because I don't understand, you're gonna have to explain it to me in English, you're going to have to take it again. And let's take it again, because it's my money that you're talking about, that's really important, I need to get this. And so if your listeners, if some of them are in that position, where they're not understanding, you know, their own financial lives, that's a problem that needs to be solved to, in order to help bring kids along. And, you know, if you've got a partner who's handling everything, then try to handle it with them for a month or two, so that you just are in the loop.

Casey O'Roarty 15:53
Yeah, I love that. I think there's an I know, for me for a long time, because it was overwhelming. You know, it was really easy to just stick my fingers in my ears and lalalalala I don't understand it. So I'm not going to deal with it, and then doing the work that I've done with my coach, it's actually really exciting. It's not as complicated as we all think it is. And then it becomes exciting, because you the possibilities open up with understanding. So I love that. So, you know, I mentioned to you before we hit record that my people are parents, mostly parents of adolescents. And so you know, I'm sure some people are listening who, you know, have started some many conversations with them when they were little while others are, you know, looking at their 15 1617 year old and their summer jobs or lack of desire for a summer job and recognizing Oh, my gosh, they don't know the value of money. They don't appreciate all the things that we're paying for. And so where do you start? Where do you start with this teaching, where's a good opening? With our teens,

Jean 16:59
I don't think kids understand money until they have money to manage, I think they have to be put in a position where they've got some money, that's theirs. And they have to make choices about how they're going to use this limited resource of theirs. So if you're talking about younger teens, you're really talking about an allowance, or the ability to do chores around the home that you pay your kids for. Be careful there, because you may have a kid who is not really motivated by money, and you want to make sure that you get the money into their hands. So you know, your son could decide, I don't really want to empty the dishwasher, because I don't care about the five bucks, or whatever it is, and you may have to tie it to something else. But we start by putting money into their hands along with a list of things that now have to be paid for with their money. So if it's video games, if it's manicures, if it's gifts for their friends, because boy, when they get to mid teens, they want to buy their friends, a lot of stuff. If it's, you know, gas for the car, I mean, the amount should go up as they get older. But it should never be enough to cover so much of everything that they don't have to choose, it should be, it should only be enough to force them into the position that adults are in every single day where we have to decide, am I going to go on vacation or am I going to renovate the kitchen, we have to choose constantly, and then they have to work, you know, you said your son is going off to work, that's awesome, because I'm sure you've had this experience where their money is so much more valuable than your money. And what they're willing to use their money for is completely different than what they're willing to spend your, you know, free money on. And so those two things combined will help your kids become better managers of money as adults.

Casey O'Roarty 19:08
I have a funny story about paying for chores, which I wasn't planning on doing. And I'm a positive discipline trainer. And it's, you know, part of our philosophy is like we do chores because we live together and everybody gets to be in contribution. And so when we started in allowance, my daughter, my daughter connected it with chores, she was like, Oh, good. We'll do our chores, and you'll pay us and I'm like, oh, let's explore that. And so we did that for a while. And my son, he was little at the time. I remember being like, Hey, babe, you know, you got to clean your room because Sunday night is allowance night. And he looked right at me right at me gene and said, It's okay mom, you don't have to pay me. I don't really want to clean my room and I realized all right, that's why we don't connect allowance to chores. Now as they got older, there were extra things that if they wanted to earn extra money that they could do but as far as like household contribution, that was just what we did. And we created routines around that. And yeah, and now he has both my kids are working. And my daughter just started paying some bills. And I feel like I'm a little late to the game on that. But we're getting there. And it is it's that tension. I want them to feel that tension of choice and of thinking, spending now versus will I have what I need later. And you're right, the only way they learn is when they have it to play with when they have it to spend when they have those moments of buyer's remorse, rage or just realizing like, Darn it. Now I can't do the thing that I want. And I think there's something there, listeners, I know you're with me on this, there's something there for us as well, to be willing to sit with that with them without being like, oh, yeah, you know, you were really looking forward to this, I'll just give you 40 bucks so that you can go be with your friends. So I think it's also a big practice for parents to allow for that disappointment, that discomfort as our kids are learning to be with that tension. And sometimes in that place of regret or disappointment.

Jean 21:15
Yeah, you bail him out,

Jean 21:17
it's over. Right now.

Casey O'Roarty 21:18
It's so hard, it can be so hard. So we start with, you know, making sure that they have something useful to play around with. And then so I know to another thing that shows up and not even in the context, just the context of money, but in lots of different places of life, as our kids move through adolescence, it's very challenging for parents not to tell them how they're going to feel if they do a certain thing like, oh, you might not want to do that. Because here's what could happen, really robbing them of the experience of living through what can happen, what tips do you have for parents around, you know, the unfolding of kids in the tension of having money and spending it as they do and making mistakes?

Kathryn 22:04
I mean, one thing that, I think is a good way to approach this is by entering into money conversations, from the angle of what you know, your kid wants, and likes, and is into and appreciates. You know, a lot of kids are little activists, you know, maybe your best inroad is to talk about the philanthropic power that their money has. And you guys can start working together to do donations, maybe your kid wants to start a jewelry selling business on Etsy. So you can have that conversation with them about what it's going to cost to buy raw materials and how they're going to market their business and the money that it's going to take for them to get that business off the ground. A lot of kids also have very lofty goals of going to an Ivy League school or going to their dream school, and they are very well aware of the price tag on that school, I think we shouldn't just assume that all kids are immediately going to be bad with money, because I know a lot of them who are extremely conscientious with their dollars. So I think you find that thing that you know that your kid is really passionate about. And you go from there, and you make them see that, you know, we say or her money, life is the topic money is the tool, you make them see that money is the tool through which they are going to accomplish all their life goals, and that it's not scary. It's not bad, but you earn it and you use it. And here's how you can use it in a way that is going to make you happy. Do you have

Casey O'Roarty 23:34
any? So like I mentioned earlier, I use you need a budget? I use that app? I love it. Do you have other apps that are more geared toward what I mean? It's pretty neutral. But are there apps that are geared towards younger people as far as learning about saving, budgeting giving all of those things

Jean 23:55
there are but I have to say so we have a big private Facebook group at her money. And our her money community is obsessed with you need a budget. They just love it. They just love it. Now, there's a price for YNAB as the insiders call it, right? It's not very, it's not expensive, not expensive, but some are you know, Mint is free. I mean, quite frankly, you can use your bank's online interface to keep yourself honest. That's what I do on a day to day basis. I look at my money all the time. And watching it that way helps me monitor my flows of funds and my budgeting mechanism is just to save first right so I do it backwards. I save for all my bucketed goals first and then whatever's left is really mine to do with as I please. So there are different ways to get yourself into this digit I think is also a not free but what I like about It particularly for younger people, is that it gets you to the wins fast digit is an app that actually saves for you. You link it up to your accounts and it goes into checking and moves money to saving for you using a smart algorithm that doesn't allow you to overdraw your accounts. I had my kids using that for a little while. And they were like, Oh, my God, look at what a great saver I am. And they were not really doing it. The app was doing it for them. And so that might be helpful.

Casey O'Roarty 25:31
When I'm realizing I'm thinking about what you mentioned, Katherine, growing up in rural Alabama, which sounds pretty dreaming, grown your own food, hit the thrift stores down with that, and I'm realizing this conversation is we're talking about budgeting. And what you had mentioned was those bigger ways of using money from the start. So let's shift into that. And I admitted to my own ignorance here. So you know, thinking I have a 16 year old and an 18 year old, my 19 year old went to trade school, and she's a working esthetician trying to move out which again, like you can talk about Ivy League school tuition, or you can talk about the cost of rent, you know, both of which are like pretty mean where I live, we live in Bellingham, Washington, and it's pretty expensive cost of living. And so, you know, she is feeling that tension. And so, so how do I start talking about investing in compound interest with the kids? I really am curious about that. Because I feel like, yeah, I can even create their own, you know, because I do pay for YNAB, they can have their own budget on my YNAB. You know, I can show them how to use that. But what you're talking about really keeping the eye on the prize, while the prize, I don't know if it's a prize, but keeping your eye on the long term. What does that conversation sound like with our teens?

Kathryn 26:48
Yeah, I mean, I would go back to what I said about those initial conversations, trying to find something that your team loves, and is passionate about with money. I think that that is exactly the case here. I also think that they're learning from you. They're starting from zero. So whatever you tell them is the default, is what is needs to be done is hopefully what they will do. You know, it's like, just like the standards that you've set for them over the years with chores, do they have to make their bed every day? Do they know that Friday, they have to take the trash out, in the same way that you've established those rules and parameters as the adult in the household, you get to do the exact same thing with their money, you get to say, and you know that 15% of that paycheck has to go into an IRA, right? You don't give them another option, you keep that dialogue open. But you act as if like, this is just what smart people do. And we're going to make sure that you do it. And I'm going to help you set up that first IRA, and you're going to see really soon how your money in the market is going to be working for you. And the move that you just made today is going to ensure that you can retire early, and I am so proud of you for taking that step to take care of your financial future. You know, you shower them with praise when they do it. Right. But you know, it's up to you to set that out for them.

Jean 28:07
And it's interesting, because there's a lot of research on who kids listen to about different things. When it comes to money. They listen to their parents, right? The parents are the people

Casey O'Roarty 28:20
they try say that again, say that, again, for the people in the back. They listen to their air and the listener

Jean 28:28
that they listen to. And so I think the problem is with us that we don't have the confidence to give the messages in the way that Catherine is saying, right that we need to understand we can just say this is the way you do it. Because we know this is the way you do it. And if we don't know that this is the way you do it. That's when you just take five you read a story on her money or in the Wall Street Journal and then you say, Oh, this is the way you do it.

Casey O'Roarty 29:02
Hey, jumping in here on this Monday as the relationship reset begins. Did you get signed up? Did you catch today's mini workshop? Don't worry if you are registered, you can catch the replay. If you aren't signed up what are you waiting for? Get in there get in there the reset is an opportunity to build your self awareness and interpersonal relationship skills and focus on nurturing connection with your teens is a little taste of the work that I do with parents. I know that you know that I'm a parent coach and that I teach classes about being a positive discipline parent. Did you also know that I have a membership program for moms of tweens and teens. It is called Living joyful courage and it's my favorite. You're going to hear me talk about it a lot this month because doors are going to open for new members in January. I'm not sure yet how many spots will be available because a lot of the moms stick around for another year, but they there may be a space for you. Living joyful courage is a safe community where vulnerability is embraced. And realness is celebrated. This is a place you can bring whatever is currently going on with your kiddo to be held and heard with no judgement. It's a space where we see ourselves in each other and lean into the journey mark your calendar for January 1, that's when the enrollment doors will open or don't miss it by getting on the waitlist you can get on the waitlist now, just go to www dot beasts ratable.com/l J. C again, get on the waitlist so you don't miss the doors opening at B sproutsocial.com/ljc. So just a quick question on the whole Ira conversation. Let's just get nitty gritty with this. So if I'm going to have a conversation with my kids, well, one part of my brain is saying like, well, this would be a great thing to be side by side and say let's figure out how to open an IRA for you. Is that something they do with their bank that they're already using? Is that something separate? Do we have to shop around? Like what does that look like? For those of us who might not know, myself included,

Jean 31:23
they can do it with any brokerage firm. So it's not something that they're going to do at their bank, but it is something that they could do at a fidelity. And they can sometimes do it at a bank if they have a brokerage window but a fidelity of Vanguard a T Rowe Price, an L Avast, if you're into a firm that is dealing with women and helping women, a Wealthfront, or Betterment or robo advisors, it's so easy, you sit down, you don't have to go anywhere, let's open this account, we sit down in front of the computer, all of the sources that I just mentioned, are low cost sources. So you go online, you pick one, you open an account, and you say and, look, you are getting paid this much on a regular basis, every month, you're making $100, how great is that we're saving 15%. So every month, Betterment is going to reach its little electronic hands into your checking account and pull out $15 and move it over here and invest it in this portfolio of generally stocks that they're picking for us based on this questionnaire that we just filled out in the last five minutes. And then your money is going to grow over time. And it may go down a little bit before it goes up. And then it may go up for a while and then down a little bit. But historically, we know this money is going to keep growing. And as you get paid more, once you're making $200 a month, we're going to tell it to take 30. And once you're making 300, we're going to tell it to take 45. And we're just going to do this forever. And the kind of IRA that we're opening for you, because you're so young and you've got so much time is called a Roth IRA, where you pay the taxes on your money first, and then you never have to pay taxes on this money again, as long as you live. That is it

Casey O'Roarty 33:15
something where they need to have a base amount to start, they need

Jean 33:19
to have an income to start, okay, they have to be earning money, you can contribute up to about 6000 A year into an IRA. And you need to be making as much as you're contributing now, you know, they're not going to want to put in the whole 6000 If that's what they're making, but a lot of these firms have no minimums.

Casey O'Roarty 33:40
Well, that's good to know. I'm just thinking about the conversations that I get to have with my kids. This is great. So how does compound interest fit into this just because you brought it up earlier? And I'm limited in my understanding?

Kathryn 33:55
Yeah, I mean, so this is a trickier one. And we spent a lot of time noodling over how to showcase this and the book. But I think, then a really good way to approach it is to show them bad interest and good interest and how it accrues over time, you know, so at the same time, you're telling them about how the value of their investments in the stock market will continue to grow over time, you can also talk about how their credit card balances, if those are not paid off in full are also going to grow over time. So interest is a very fascinating thing. And depending on which side of the equation you're on, it can be a very good thing, or it can be a very bad thing. And you want to be on the good side, you want to be on the side that has an investment that is earning money. You just set it forget it and you just watch it grow over time. And ideally, you'll have an employer sponsored plan or an IRA yourself and you can pull out a statement and say, you know, look at what I put in last year, look at what my employer matched and look at how much money I have earned over time. And I haven't even had to think about this. It's just happened hang in the background, my money has been earning money while I sleep. And I think you know, kids love a shortcut. Kids love to hear that something can be easy that something can be just happening in the background that they don't have to think about.

Casey O'Roarty 35:13
What I'm really appreciating about all of this, that both of you are sharing is that it's really normalizing, we're normalizing conversations around money. And I think that some of us maybe were raised where we didn't talk about money, whether that was because there was limited amounts, or because there was abundant amounts does, you know, either or conversations around money, and even out in the world, like, I mean, in the circles that I run in, there's not a lot of conversations about money. And it's almost like demonizing to speak into, like, I want to make some money, like, I'm ready to make some money, right. And I want to save and I want to, you know, invest and grow and our wealth. And I love that starting with our teens, we really get to change the conversation for them and make it something that they don't have to have any shame around striving for, and asking for and working towards. So I'm really appreciating that as well. In your work around this book, did you find that there? Was this kind of hidden, we don't talk about this vibe going on around money or even in your work with the podcast? I mean, you're blowing it up, right? This is your work. It's normalizing this conversation. What do you notice about the people that you're talking to? When it comes to talking about money,

Jean 36:33
it's getting better. It's definitely getting better. And I think it's getting better. With every younger generation. My daughter knows how much all her friends make. And I think you know, that's great, right? That is like the last layer of secrecy, salaries, right? And the internet is helping us to do if you wanted to know how much somebody paid for their house, you'd have to ask them, now you just go on Zillow. And it's right there and you know, under your fingertips, so it is getting better. It's getting more democratic. I think even this idea that it's okay to say I'm ready to make some money. Now, I'd like to make some money. Now I want to get paid what I'm worth, it doesn't have to be shameful, particularly because the only way that we can change the world, you know, whether we want to do it by starting companies, or whether we want to do it by giving money away, is by having enough money to do those things. So I like to say that getting paid is good. And getting paid more is better.

Casey O'Roarty 37:37
Yes, I love that. I'm so excited to listen to your podcast on the regular now. Thanks. So some of us have kids that are getting ready to leave the nest, whether that's, you know, going to college or moving out and living on their own and being, you know, employed, or both? How do we set them up? You know, what are some tips you have for setting them up for financial success?

Kathryn 38:02
You know, we've covered a lot already with discussions about retirement and budgeting. But something that always comes to mind for me was an experience that I encountered my first time as a manager, one of my employees right out of college comes to me and says, Hey, Catherine, I'm gonna need a raise, because my rent just went up. And I had to tell him, sweetheart, it don't work like that. I love you. And I appreciate you. And I'm so sorry that your rent has gone up. But you know, let me show you how we can together work to make a case for all the amazing work that you've been doing, because raises are merit based. And this goes back to what I was saying about how as parents, you can't take anything for granted that your kid knows that it's a good idea to save or that your kid knows that it's a good idea to opt in to the 401k in their first job. They also don't know that they have to start writing down their accomplishments in their first job, that they have to make a record of all the good things that they're doing and the change they've been able to affect. Even if that job is menial, even if they are a lifeguard or a nanny, they need to keep a running record of all the amazing work they're doing so that when it comes time for them to earn more, they are able to present a factual eloquent case for why their earning power should increase.

Casey O'Roarty 39:22
My son is a lifeguard This is his first job. So I'm excited to point out and help him discover all the skills that he's building in that position. I love that. Anything else that you would add Jean, as kids leave the nest?

Jean 39:38
I think going back to that where is my money going? is really important as they leave the nest because their money is so much more invisible than our money was when we left the nest. When we left the nest we would pull cash out of the ATM, maybe use our credit card and that cash went very quickly.

Casey O'Roarty 40:00
it was already too ugly for some of us. Yes, very quickly,

Jean 40:03
it was hard to recreate a sense of where it actually went, it would be gone. And you would be like, how do I no longer have that money. But now, they're Venmo going, they're tapping, they are swiping, they're just holding up their phones, and the money is vanishing as quickly as that. And that makes it really harder to control the flows of their funds. And so they can do it on pencil and paper, they can do it with an app, but they should be paying really good attention, especially the first couple of months to where they're spending.

Casey O'Roarty 40:40
And I love and you know, you cover this in the book. And I'm excited to talk a little bit about this, as well. I was a sociology major. I don't really know what that means. And I didn't even declare it till I was nearly a senior. But that was my major. Those were the classes that were interesting to me. There was no thought in my mind back in the early 90s, around like, what am I going to do with this? Or how is this going to serve me, it was really, again, that present moment, this is what's interesting to me, this is what I'm going to study, mostly just to get to the point of being done with college, and then I was going to, you know, travel and go be a bartender, what do kids need to know and parents in their conversations with their kids about college majors, and how to connect that with potential job searches after or during college, if it's an internship or something like that, to bring

Jean 41:31
it back to that student loan discussion, because most kids do borrow for college. As I said, I was an English major, and I kind of knew I wanted to be a journalist, it took me a little while to get there. But I think kids probably have some sense of, I'm gonna be a computer person, engineering person, finance person who makes a lot of money, or I'm going to be an marketing journalist, kind of person who doesn't make a lot of money, or makes relatively less. And that's something that's really important to know, when you think about how much you're going to borrow and where you're going to go to college. The choice of a college in and of itself, is a huge financial decision. Because if you can choose a college that wants to have you and is willing to give you some sort of merit aid, you're going to end up borrowing a whole lot less, and your life is going to be a lot easier when you get out. And so there are just a couple of metrics that I think are really helpful to keep in mind. One is that you shouldn't borrow more than you expect that you'll earn in your first year out of school. Right? Wow. So it's a very different number for somebody who's going to work on Wall Street, then for somebody who's going to come work in journalism, or a teacher or a teacher. Exactly. Yeah. The second is that for every $20,000, you borrow, you're going to have to pay back $250 a month for the next 10 years. So right now, on average, kids are borrowing close to double that, on average,

Casey O'Roarty 43:10
so 40,000. So they're paying $500 a

Jean 43:13
month, right? So think about $500 a month. And that's after tax, right? That you have to pay back. How much money are you going to have to earn to both repay that loan and not live with your parents? Right. So these are the sort of reality checks that parents need to be having with their kids in order for their kids to be able to launch effectively after college?

Casey O'Roarty 43:42
Yeah. Yeah. Thank you for that. Well, we covered a lot. As we wrap up, I'm looking at the time, I have million questions. I've totally 100 personal questions that I won't ask you. But I'm gonna listen to the podcast and continue to read your book. As we wrap up. By the way, everyone the book is written for the kids. The book is I just want to make that clear. For all the listeners, the book that Katherine and Jean wrote, which is how to money is written for adolescents, young adults. But as we wrap up, is there anything else you want to make sure to leave listeners with, as they kind of consider all that we've covered today?

Kathryn 44:23
So, you know, to your point, Casey, I would say that this book is really for anybody who needs the basics. And we have heard that teens are reading it. But we have also heard that 20 year olds, 40 year olds, 50 year olds are reading it. And in some cases, parents are going back for a refresher before they try to teach their kids. And I really think that to your question about how the dialogue around money and the mood around money is changing in this country. I think one of the ways that it's changing that I'm most encouraged by is how there's no longer any shame in asking these questions. And I also think that there's a real A new perspective from parents. Like just because I wasn't born with the trust fund, just because I don't come from wealth doesn't mean that I can't set my kid up at 19 with an IRA, that is going to turn them into a millionaire, by the time they are 60. Just because I wasn't born with a silver spoon in my mouth doesn't mean that I can't ensure that my child knows what a brokerage account is, and knows how to pick stocks and knows how to watch the markets. So you know, I think more people are looking at money from a holistic standpoint. And I'm very encouraged by what I'm seeing from parents who are giving their children the tools that they never had. And I love to see that.

Casey O'Roarty 45:45
That's very encouraging. And I think what I hear when I listen to you talk about that it's really about broadening who gets to be in possibility, right like that, who gets to create wealth and who gets to build their financial foundation? And yeah, there doesn't have to be barriers to that. That's what I'm hearing there. So thank you. And I love, love your focus to on really uplifting and encouraging women and their financial literacy. Like I said, I'm encouraging all of you listening to check out her money podcast, I will be doing the same, because we can all get better around this. So I have one last question that I asked all of my guests, and that is what does joyful courage mean to you in the context of the work that you do?

Jean 46:34
To me, it means saying what I want to say when I want to say it, which is a lesson that I learned, somewhere around my 50th birthday, I decided I was just going to not be scared anymore. And when I have these thoughts, and I express them, they inevitably make me feel either happy or relieved. And both of those are really good things.

Casey O'Roarty 46:59
Yes, I'm right around the corner from 50. So I'm already feeling that like, Oh, I like this. Yeah, thanks, Jean. What about you, Catherine,

Kathryn 47:09
in the context of what we do at her money? For me, I think it is about embracing your seat at the table and embracing your power in many conversations, because for centuries forever. Women have been shut out of money conversations. And now we're not we have a seat at the table. We have the education we have the tools that we need to change our financial lives and we can do it with courage and we can do it joyfully.

Casey O'Roarty 47:41
Beautiful. Thank you so much. Both of you, where can people find you and follow your work?

Jean 47:46
I am at Jean Chatzky on social Catherine is at Katherine Tuggle on social. You can find us both on the her money podcast as well as at her money.com

Casey O'Roarty 48:01
Awesome. And your book is there. We can get your book there.

Kathryn 48:04
Yes, you can find links to our book How to money. And we also do two newsletters a week where you'll get personal messages from me and Jean, if you go to her money.com backslash, subscribe, we would love to have you there as well.

Casey O'Roarty 48:17
Yay. Yay. Well, thank you so much for spending time with me today. This was really informative and fun. I appreciate you. Thanks for having us. Thank

Kathryn 48:26
you so much, Casey.

Casey O'Roarty 48:36
Yay. All right. Thank you again for listening in to a another show. Please check the show notes for any links mentioned in this episode. If you liked what you heard today, will you do me a favor and share it? Screenshot the show plastered all over your socials so that other parents know that we are creating value over here for them. If you really want to earn a gold star, head to Apple podcasts and leave us a review this does so much for the show for the exposure. It's a great way to give back. Thank you to my team at Sprout double for all your support. Alana Juliet, I love you so much. Thank you to Chris Mann and the team at pod shaper for keeping the show sounding so good. And you listener, thank you for continuing to show up. This is hard work that we're doing. I encourage you in this moment. In this moment to gather let's take a deep breath in and follow that into your body. Hold it for a moment, exhale. And with that exhale, release the tension. And I invite you to trust trust that everything is going to be okay. I'm so happy to support you So glad to have spent time with you today. I'll see you next week.

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