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- [00:01]
Jean Chatzky
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- [00:30]
Melody Hobson
There is a difference between price and value. And having a child understand that very, very early is a big deal. Everything that is expensive is not valuable and everything that is cheap is not worthless. And so when they start putting value on things, that shapes their view of money in a fundamental way.
- [00:55]
Jean Chatzky
Hey everyone, thanks so much for joining us on HerMoney. I'm Jean Chatzky. We all want our kids to get a great education, but let's get real. The most important lessons our kids pick up don't usually come from the classroom. They come from us. They are watching how we engage with the world, how we spend our time, how we treat those closest to us. And they're picking up on how we talk about money, how we spend it, and how we stress about it. And here's the thing. Money isn't what it used to be. The cash and the physical credit cards that we still carry around in our wallets, they're being used less and less. Spending money can almost feel like a game to kids. We tap screens with no physical exchange. We dip. We swipe. That's why understanding money, what it is, where it comes from, how to use it wisely, has never been harder or more important. And learning about money, believe it or not, it can actually be fun. It's if we do it the right way. No one knows that better than my guest today, Melody Hobson. She is a trailblazer in the financial world, the co CEO of Arieyl Investments, former chair of Starbucks, and now the author of the new book Priceless Facts about money from the beginning of time to the coins in your couch. She is here to share some of the weirdest and wildest facts about money and why teaching kids about money early on is one of the best gifts you can give them. And by the way, if you want to hear more about Melody's incredible journey, my friend Karen Feinerman had a great conversation with her on how she does it, which exciting news Is coming back for season two. Melody, welcome to the show.
- [02:46]
Melody Hobson
Thanks for having me.
- [02:48]
Jean Chatzky
What made you want to write this book? Was there some weird series of facts about money that you have been collecting for years?
- [02:56]
Melody Hobson
I wanted to write this book because I really have been obsessed with this idea of financial literacy. And I thought the gateway for financial literacy for our society would be children, Because I thought the best way to do it is to start by basically teaching children the language of money so they become very, very familiar with it.
- [03:16]
Jean Chatzky
So you're trying to get parents to read this book to their kids so that everybody learns together?
- [03:24]
Melody Hobson
Correct. I thought that that would be the way to do it. Especially, you know, we don't learn about money and investing in school in America. Yes, we learn math, but we don't learn about a lot of the basics. Even when you talk about elite colleges, I make the statement all the time, you could take wood shop or auto in a high school today and not a class on investing. And it always leads me to ask people, who's whittling in their spare time, who's cleaning their own carburetor? No one. And so the idea of learning about investing or money, that only happens if you grow up in a home where the stock market is discussed, which isn't a lot of us.
- [04:02]
Jean Chatzky
Yeah. You credit your mom for teaching you about money when you were young. And she did a lot of things that parents, many parents, I think, would not dream of doing, like showing you the bills every month, telling you how much it costs to live in your apartment. Did you know that that unusual at the time. And why do you think she did that?
- [04:25]
Melody Hobson
I had a sense that it was unusual because I certainly didn't hear any of my other friends talking about it. I think she did it because she wanted to expose me to the realities of our life, which I could not escape, which was the fact that money was an issue for us, and we were often short on some of these things, and we would get past due notices and things like that. I don't think she was trying to cause me to be anxious or overwhelm me. And I think maybe she thought if she rooted me in the facts, I could try to process them. And oftentimes there was a trigger. So our lights would be disconnected, and she'd say, we didn't pay our light bill. This is how much we owe. We're this much past due. They don't turn them off immediately, but it's been a couple of months or several months. And she would explain it to me.
- [05:14]
Jean Chatzky
Did it make you anxious? Because I think, I think that is preventing a lot of parents today from talking to their kids about money. We are anxious ourselves. We feel like we failed, so we don't share.
- [05:29]
Melody Hobson
And I think we think we're hiding something, but we're not. So I think it would be better to deal directly with a child. Yes, I had anxiety about money, but we used to get evicted. When you don't know where you're going to live, that's pretty dramatic. But I think I talk to so many parents who talk about how they don't want to expose their children to the facts, or they want to pretend that it's business as usual. You know, they'll talk about losing their job, but still they're going to take the trip to Disney World. I'm like, that doesn't make any sense. Because the kid knows, they know the parent's anxiety, they feel it. And so it may not be overt, but it is certainly there in a covert way. And I think it's better to be direct with kids and explain situations to them and try to help them to see what the path is to a better outcome. The one thing about these situations is, and my husband said this to me once, he said the thing about when you're a child, you have no advanced reasoning skills. You can't solve the problem yourself because as a child, you can't go and get a job. You know, there are very limited things you can do. So you're at the effect of all of the adults around you. That's why I wanted kids to have the language of money, so that they could be armed with good decision making. At the same time, you're at the effect of these adults. I think the least they could do is try to give you some context for the situation you're in.
- [06:50]
Jean Chatzky
From the discussions that you had early on with your mom and from the research that you've done, did you come away with a set of guidelines for the best ways for parents to have these conversations with kids that may be anxiety provoking, but in a way that would allow parents to calm the waters a little bit as well?
- [07:17]
Melody Hobson
So one thing I want to say, which is super important, is this avoidance of the subject occurs at all socioeconomic levels, because people at the lower end who are struggling, quite frankly, and I've been there, they don't want to cause that anxiety. People at the higher end who are well resourced, they don't want to raise kids who they think are spoiled or entitled. So both groups avoid the subject and the Child loses in the end. So the way I think there are healthy ways to have this conversation are first and foremost, with just pure exposure. My mom did that really well. Starting when I was very young, she had me handle money. So if we were at a restaurant, if we were at McDonald's, I was very little, she'd give me the money to pay the cashier. The cashier at a diner, the waitress at a restaurant, she'd have me give the money. As I got older, she had me count the change. So that was, you know, did I get the right amount of change back? Look at how much it was. Is this correct? Great for your math skills, but it also is giving you context. McDonald's is cheaper than a restaurant with a tablecloth. Then she had me calculate the tip. That again, honing your math skills, but also helping you to understand the total price. I was very recently with my daughter, it was actually a year or two ago, we were going through a McDonald's drive thru and the drive thru woman said, that will be $5.40 with tax. And my daughter looked at me and she said, what is tax? And it was just super interesting. She heard it. I explained tax to her. But I then started to think about it. I saw that on the bill and had my mom explain to me what tax was back then. So that was not an anxiety producing moment. Those moments that I handled the money, it was actually very empowering. And to this day, even with my daughter, who's very young, first of all, she got her first debit card yesterday. She's 11. But I want her to have the training wheels before we give her a credit card years from now when she goes to college. And we have no way of controlling how she is handling what some have called a weapon of mass destruction. So I want to make sure that that training starts very, very early and is very, very smart. But it's interesting. Even in having a credit card, when we go to a restaurant, if I'm not using cash, I had my daughter fill in the credit card receipts. So she fills in. I would tell her what the tip was when she was much younger. Now I'm helping her calculate the tip. She's 11, and then total it. And then I sign it. And now with her own debit card, I explained to her, I said, you're going to be signing it. It's a very finite and small amount of money that is directly attached to my account. But it is to get her both empowered and to get her to understand.
- [10:06]
Jean Chatzky
Yeah, I did the exact same thing. I Mean your stories, Melody, they're bringing back memories for me. We had a family piggy bank when I was a child. My parents would put half dollars in quarters in. My father was a college professor. So we grew up with definitely enough money, but not a lot of money. And I vividly remember sitting in a circle with my brothers and my parents and opening that pig. After years. It was the money that we were going to use for the ride tickets at Disney World. And we sat there and we counted it out together and it was such a, such a memorable but also valuable experience that this was a goal that, that we had talked about for years. My kids got their first debit cards at 12.
- [10:58]
Melody Hobson
My daughter will be 12 soon.
- [11:00]
Jean Chatzky
Yeah, we opened linked savings accounts at the bank to my account so I could watch the flows of funds and they got their allowance that way for a very, very long time. But we know that research actually suggests 12 is not soon enough. Right. Kids money habits are formed starting at around age 6, 7. So how do you start even younger to talk to them in a way that keeps them engaged?
- [11:30]
Melody Hobson
Well, that's why I wrote the book one. I wanted to make the book fun, funny, fact based and to really give them the knowledge. I show you how you can start really young. So my favorite way which you can start with a four or five year old is barter and the idea of having them assign value to something. So you're making a trade in the book. I trade, I'm trying to trade a drawing of an airplane for a cupcake and John has drawn the airplane. John Rogers, my co CEO is my sidekick in the book and I've made the cupcake and I'm trying to get his airplane drawing. And he says, but if I give you my drawing, you'll have the drawing forever and I'll eat the cupcake and it'll be gone. So he's starting to put a value on the drawing. That is exactly what I want kids to do at a very young age. And because there is a difference between price and value and having a child understand that very, very early is a big deal. Everything that is expensive is not valuable and everything that is cheap is not worthless. And so when they start putting value on things, that shapes their view of money in a fundamental way. And as I suggested, you can. Do you want a cupcake or a Barbie? Do you want. I mean I can tell you all the ways you can do it to create that choice, that dilemma for a child that ultimately starts them down a path of valuing their possessions or Valuing experiences and the like.
- [12:56]
Jean Chatzky
What were some of your favorite trade offs that you asked kids to value as you were doing this work? Because I think that money is always a limited resource, no matter how much or how little money you have, which means there are are always choices to be made. Whether you're four and you're choosing between wearing the red shirt and the blue shirt, or you're 40 and you're choosing between saving for college and saving for retirement. Right. I mean, there are always these choices. So is there a framework that you use to set this up for children at various ages?
- [13:32]
Melody Hobson
I think that you can start by thinking, I think food, candy, those things are one bucket. And you know, every child wants that. You counter that with, again, something that is more lasting. It could be a toy. So something that's immediate versus something that they're going to have for longer. It could be some kind of trade around time on a screen. So do they play a certain kind of game? Do they, Is there something that they want that is related to the screen that they trade for something else? And then again, they're starting to assess and put value on that. As a child grows up, I start to, especially in the teen years, I talk about valuing your day. And when I was very young, I did this when I was working at Ariel. I knew how much it would cost me to work to get something. So if I wanted to take a vacation, I'm like, wow, that's three weeks of work. Or if I wanted to buy a sofa, that's a lot, that's this much of work. Or if I wanted to buy a suit and it really started to again put value on that item because I was valuing my time and certain things just weren't worth my time. I'm like, wait a minute, that's a month. I don't want to work that hard for that. So you start at barter and you get to that. When you're 22, 23, 24, you start putting things in perspective.
- [14:59]
Jean Chatzky
Well, this is why I think it's so important that our teenagers work. I mean, I saw that light bulb come on. For my son when he was a teenager, he had been babysitting a bit. So he knew exactly to the dollar how much an hour of his time was worth in babysitting dollars. And we went into a sporting goods store and he wanted a jersey. And I said, you have money? And he very, very quickly made the decision that that jersey might have been worth several hours of my time, but it definitely was not worth several Hours of his time.
- [15:36]
Melody Hobson
Well, that's. That is so, so revealing when they have to spend their own money. That is where you learn so much. My daughter has all these gift cards for Sephora. She loves Sephora. Like all 11 year olds when we're in there, and I'm like, where's your gift card? I forgot it.
- [15:54]
Jean Chatzky
Right, right. If it's our money, it's limitless.
- [15:57]
Melody Hobson
And then she. I say, well, you're gonna have to pay me in one of your gift cards. And you could just see, like, she's starting to move things off the counter because she knows she's gonna have to pay for it. It's a very simple thing. And she starts to think about it. It's like, well, maybe I'm gonna not get this. And I'm like, okay. Cause I said, you're just gonna give me the gift card for the equivalent of it. And, you know, she has racked them up over a couple of Christmases and, you know, suddenly she became more discerning. That's a good thing.
- [16:27]
Jean Chatzky
Are you pro allowance or con allowance?
- [16:30]
Melody Hobson
You know, I think it's whatever is right for you and your family. I actually, I don't take a hard line on that. I think that some parents don't like it because they think this is your privilege and your. This is your cost of living in the house. And I totally understand that. I had that mother. Not only did you not get an allowance, when I started working, I owed her, so I had to give her part of my paycheck. I literally did. When I was in, like, I had a summer job. Oh, yeah, for sure. But I mean, we lived on not a lot, so everyone had to contribute. This wasn't like she was an overlord, but I would say that the parents that give allowance, I also see the benefit and the motivation. You know, I've had some parents say I had an allowance and the kid stopped doing the job, my child, and they just went on strike. In my family, that wouldn't have been acceptable. You know, like, that wouldn't have happened. So I've, you know, I've done both with my daughter. And I didn't find that the allowance was particularly motivating for her. And so that wasn't something that I found to be something that made a difference. Not because she was indifferent to the money. And she certainly was. It was $2 a week, so it wasn't a lot. And she was very much like, where's my $2? But if we forgot or she didn't, she would do the job, which was loading the dishwasher and it was just the silverware. You know, she was very little, she was four or five years old. And it was both, you know, motor skills and organization skills, which is why I had to organize the tray of the silverware. It gave her a lot of creative insights about how to fit things together. But at the same time, there were lots of times when I said, you always have to ask for it. You have to remind me to pay you. And there would be a lot of times she'd forget, which let me know it wasn't something that was looming big in her, her life.
- [18:19]
Jean Chatzky
Yeah, it's interesting that there are some kids who are very motivated by the actual paycheck and there are a lot who aren't. And for those if you want to try to use allowance as a teaching tool, it often, it often doesn't work, at least in my experience. We're going to take a very quick break. When we come back, Melody, I want to talk about the way that money is not taught in our schools, what we could be doing differently and hone in a little bit on how you think we should be teaching kids about investing. Back in a sec. Hey everyone, it's Jean Chatzky. And this spring, I have been all about refreshing my routines. Closet cleanout check, budget rebalancing, you betcha. Meal Prep. That's where EveryPlate comes in. With EveryPlate, I'm getting vibrant, healthy meals like the Banh Mi style chicken lettuce wrap with pickled veggies and Sriracha mayo. It's light, it's flavorful. It's exactly the kind of boost that my week needed. I spend less, eat better, and most importantly in my house, avoid the dinner rut that I fall into so often. Thanks to their rotating weekly menu, every meal takes 30 minutes or less. So what are you waiting for? Dig into these flavor packed meals your household will love. New customers can enjoy this special offer of only $1.99ameal. Go to everyplate.com podcast and use code HERMONEY199 to get started.
- [19:51]
Melody Hobson
You can.
- [19:52]
Jean Chatzky
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- [20:52]
Melody Hobson
That's.
- [20:53]
Jean Chatzky
That's 25 cents back for every gallon on your first tank of gas. Using promo code hermoney. We are back with Melody Hobson, author of Priceless Facts About Money. You mentioned investing earlier in our conversation, and I'm wondering how you think we should start to teach kids that.
- [21:17]
Melody Hobson
Well, I love the idea, investing in what you know and understand. I think it's fundamental to children really taking to this concept. And so you look around, you look at things that they like and make them an owner of the company as opposed to the possession. And they're more literally invested in it because of their attachment. And these days, it's so easy to buy fractional shares and things like that where you can do it in a very affordable way. Not breaking your own bank in exposing a child, then giving them the opportunity to watch that investment over time. It doesn't have to be every day. It could be they check in on once a month, once a quarter, once a year. But they recognize that as part owner of that business, they share in both the good and bad outcomes of that company. So for my daughter, again, I told you, she loves Sephora. Sephora is owned by lvmh, so I bought LVMH shares in that example. She loves all things cosmetics, not makeup, but skin care. And so the other one that I bought was Estee Lauder, which has been a more challenged name. And so she's had to look and see that stock not do so well, that's not the worst thing. So then teaching patients and long term, do you feel differently about it? What's going on that has made this happen? Should we sell it or should we continue to hold it? And I'm encouraging her not to sell as it's down and to continue to hold it.
- [22:47]
Jean Chatzky
And explaining why for the first time in years since the pandemic, we've actually made some headway, a little bit of headway in the number of states that have mandated financial education. I live in Pennsylvania. Pennsylvania has a newly enacted mandate. It's not countrywide. I wish in this respect we were Canada and had a national financial education mandate or what do you think it's going to take for us to get one and what should we be doing in the interim?
- [23:20]
Melody Hobson
I don't see a national mandate coming. I think it's state by state. The educational system has just been. That's the way it works. It works. It's been decentralized at the state level, so it has to be at that level. I think there are more than 30 states now that have those financial literacy curriculums or mandate financial literacy. The issue is, I don't think a lot of states have cracked the code on the actual curriculum. I think they lean more towards home ec, you know, how to read a utility bill, how to read a light bill, how to write a check than what I'm talking about, which is investing, understanding The Dow, the NASDAQ, the S& P, a mutual fund, what options will you have when you get your first job and you are selecting your 401k plan options, which is going to be essential to your ability to retire comfortably? All of these things that are big decisions that people have to make often very early on without a lot of knowledge. I want the curriculums geared more towards those issues.
- [24:19]
Jean Chatzky
One of the interesting thing is, and I think social media is largely to blame for this, but maybe just the media in general. A recent study showed that Gen Z's benchmark for financial success is earning $600,000 a year. I mean, it's just baffling. Why do you think this disconnect exists? And what do you think that parents can do to explain to our children the real world? I mean, should we do as your mother did and open the books and show them the bills, or are there other ways to go about it?
- [25:02]
Melody Hobson
I have to tell you, I think that is the only way. If you know what it costs to live and you have a sense of what the median income is in this country, which is something that can explain, be explained over time, you then have a context for how ambitious $600,000 is or how easy it will be. And so I think these are things that are not and that might be tied to what profession you choose. There might be a whole host of things that make that more likely than less likely. And so I think the only way you can do that is you have to know. And the only way you can know is you have to be exposed. And it's all around us. The one thing about money is it is essential to every single person's life. If you are in an African village or you're in Chicago, you still have to deal. It's like oxygen. It is an essential component of living. Now, there are varying degrees of amounts. One person might be living on $2 a day, and the other person might be living on 250. But the point being that no matter who you are, you have to pay for things to live. And so understanding what things cost is fundamental to me. It's like people saying reading is fundamental. It is. But understanding what things cost is fundamental to being a person who lives in our society. The earlier you can get that perspective, you will be better informed to make the choices that will lead to the life that you want.
- [26:31]
Jean Chatzky
I want to wrap up this conversation with just a few of the fun and interesting and funny facts that you peppered your book with. What are your favorites? I mean, what is your blow your socks off money trivia? Money facts that sort of made you chuckle or laugh out loud as you were putting this book together?
- [26:54]
Melody Hobson
Oh, my gosh, I have so many, but they are all over the place. And the facts that I love so much, I mean, some of them are just like. I had no idea that bankrupt came from Italy. And it had to do with each family having a bench. And if you couldn't pay your bills, they would go and break your bench. And that became the acronym. The idea of being bankrupt or where all the money slang came from. Like the bacon. Bringing home the bacon was because of grease pig contests at country fairs. And the person who caught the grease pig brought home the bacon or bucks, which were a. The concept was you couldn't make change for a deer. And so when you tried to trade, you couldn't treat a leg or so you start to treat the skins and the strands. Skins got to be smaller. And that's where we had the concept of a buck or cheddar, which is tied to World War II, where people were given care packages who were financially distressed. And the cheddar cheese was the most expensive thing or valuable thing in the food care package that people received after the war. So cheddar became a nickname for money. Or when you talk about. People say they talk about dead presidents. All the people on money are not presidents. So it's a misnomer. I mean, there are so many things that I just found to be so fascinating. Crane, the paper company, is the sole source supplier of both paper and ink to the US Government for our money. Sole source supplier. If you walk into a bank and you take more than half of any bill, they will Replace your bill and give you a new one?
- [28:35]
Jean Chatzky
Yes.
- [28:36]
Melody Hobson
Why more than half? Because if it were just half, people would cheat the system and try to get take half of a bill to two different institutions and end up with double the money. So you have to have more than half and any bank will replace the bill that you have.
- [28:50]
Jean Chatzky
Since you've been diving into these facts for such a long time, I just want to know, what do you think about retiring the penny?
- [28:59]
Melody Hobson
Okay. Why retire the penny? And I talk about this in the book. The $0.01 is less than it actually costs to make a penny because of the metal component and how much metals have gone up and the penny hasn't been reformulated. So many people say the penny is a nuisance. People don't like it and it's expensive. That's hilarious, right? The penny is expensive. I guess I am old school, so I'm good with the penny.
- [29:28]
Jean Chatzky
I'm good with the penny too. And if you haven't seen it, you should Google on the website. Houzz. H O U Z Z. There is. There's a floor that was tiled in pennies and it is so beautiful that they should not retire the penny for that reason alone. Melody Hobson, the book is Priceless Facts About Money. Thank you for being with us.
- [29:52]
Melody Hobson
Thank you so much for having me. You know I'm a huge fan of.
- [29:54]
Jean Chatzky
Yours, Jay, as I am of yours. Right back at you. It's always nice to see you. If you love this episode, please give us a five star review. On Apple Podcasts. We always value your feedback and if you want to keep the financial conversations going, join me for a deeper dive. HerMoney has two incredible programs. Finance Fix, which is designed to give you the ultimate money makeover, and Investing Fix, which is our investing club for women that meets bi weekly on Zoom. With both programs, we are leveling the playing fields for women's financial confidence and power. I would love to see you there. Her Money is produced by Hayley Pascalides. Our music is provided by Video Helper and our show comes to you through megaphone. Thanks for joining us and we'll talk soon.
- [30:48]
There are some departments that if you go into them, you have to have really thick skin and HR is one of them.
- [30:59]
Melody Hobson
Here we go again.
- [31:00]
Karen Feinerman
I know, here we go again, right? But ear licking. Everybody had to attend a mandatory Bible study because that supervisor was a minister and it was approved by hr.
- [31:14]
Jean Chatzky
Her picture was also on there and her nickname was Do Me Decimal.
- [31:19]
Karen Feinerman
Oh my God. I also had a college librarian. Her nickname was big tits. McGee, have you ever worked the full day with your kids hidden under your desk?
- [31:31]
Melody Hobson
No.
- [31:32]
Jean Chatzky
No.
- [31:32]
Karen Feinerman
Allow yourself. Give yourself the privilege to be human. That's what it is. Just. Just feel it so that you can go through it.
- [31:40]
Jean Chatzky
Yeah.
- [31:41]
Karen Feinerman
And come out the other side mic.