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- [00:02]
T-Mobile Representative
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- [00:31]
eBay Representative
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- [01:04]
Farnoosh Torabi
So Money episode 1766 the best of so Money 2024 kid friendly finances.
- [01:13]
You're listening to so Money with award winning money guru Farnoosh Torabi. Each day get a 30 minute dose of financial inspiration from the world's top business minds, authors, influencers and from Farnoosh yourself. Looking for ways to save on gas or double your double coupons. Sorry, you're in the wrong place. Seeking profound ways to live a richer, happier life. Welcome to Sew Money.
- [01:39]
Karen Holland
When you think about it like most family discord about spending between parents and kids stems from answering the question, what's the big deal, right? The kids are like, oh, what's the big deal? I just want to. I just want to go to the movies. So. Well, the big deal for most families is not the movie ticket. It's how do you get there and back safely and the fact that you need on average 2x the price of a movie ticket for popcorn and soda.
- [02:02]
Farnoosh Torabi
Welcome to Sew Money, everybody. I'm back and it's Christmas. Happy Christmas. Merry Christmas to everybody who celebrates. In our continuation of Looking back on the podcast, we're dedicating this episode to a topic that touched a lot of families this year. Teaching our children about money. Whether it's how to spend wisely, save consistently, learn how to budget, or just appreciate money. Installing good money habits early, we learned, can change the trajectory of their lives. And today we're going to go back hear insights from three interviews. First, Karen Holland, founder of Gifting Sense. Renee Campbell, head of youth and Family banking at Chase and Peter Bergman, head of starter segment banking for Chase. Each guest brought actionable advice for kids of all ages. We're going to talk about the kindergarten years all the way up to the young adult years. We're going to kick things off with Karen Holland, founder of Gifting Sends, whose focus is teaching kids how to think brain before they buy. She introduces to us the does it make sense score, the dims score. It's her methodology. It's simple but powerful, a tool to help kids as young as elementary school begin to evaluate their purchases. Here's an excerpt where Karen discusses why spending choices are the perfect gateway to teaching financial responsibility to kids.
- [03:28]
Karen Holland
In behavioral economics. The technical term is money script, but I call it a money personality. So these are all the habits and beliefs we have about money and they inform how we think and act with it our whole life. And your money personality, of course, is established right alongside your social personality, which means it happens during childhood. So if you think about the adage an ounce of prevention is worth a pound of cure, it's just so much easier to raise kids who are comfortable talking about, thinking about and using money than it is to help adults re engineer what might turn out to be for them unproductive approaches to earning, spending, saving, sharing and investing. And thinking before buying is just a really powerful, easy to teach and sticky life skill for kids.
- [04:22]
Farnoosh Torabi
Yeah. You chose to focus on the transaction piece, the buying piece, the shopping, spending piece, as opposed to like investing or, you know, credit. Why is this so foundational, this part of our financial education?
- [04:37]
Karen Holland
Think about it. What, what do children before high school really get to do? What's, what's practically achievable for them? Shopping.
- [04:46]
Farnoosh Torabi
Right, right.
- [04:47]
Karen Holland
I mean, and middle school is this developmental sweet spot because they have all sorts of capability and agency. You know, they can get themselves to and from school, they're starting to have a little bit of choice, maybe what they take. And they're also starting to earn a little bit of money. This is when allowance really comes to play. They start getting gifted money for holiday and birthday gifts. They can earn money. You 11 year old can take the Red Cross babysitting course. So if, if you want, you know, there's a dict, I'm sure, you know, there's a dictum in financial literacy that financial information has to feel relevant to feel helpful.
- [05:21]
Farnoosh Torabi
Yeah.
- [05:21]
Karen Holland
So those other things are important, but they're not relevant for children. Right. What's immediately helpful for children is being able to spend your birthday money, your holiday money, your allowance in the best way possible for you. Parents at home can absolutely do this. Their kids, the dim score calculator, that acronym as you said, stands for does it make sense Score. It's just, it's really a questionnaire and it gets kids into the habit of asking and answering simple questions about typical childhood purchases before anybody spends any money. And it takes minutes. But guess what happens? You, you answer those questions and you can avoid disappointment, reduce waste, improve family harmony, and protect the planet all at once for free for weeks, months, sometimes years. Like, not bad, right? For three or four minutes.
- [06:17]
Farnoosh Torabi
Can you give us an example? Yeah.
- [06:20]
Karen Holland
So when you, when you first click on the dim score calculator, we have two silos. So it's an item or an experience. And then in items you choose, there's another six silos under that, like electronics, toys, clothes, sports equipment, all the standard stuff. And it's literally like the first question is, how much does it cost? How much does sales tax and shipping add? Right. I mean, in the case of inexperience, when you think about it, like most family discord about spending between parents and kids stems from answering the question, what's the big deal? Right? The kids are like, oh, what's the big deal? I just want to, I just want to go to the movies. So. Well, the big deal for most families is not the movie ticket. It's how do you get there and back safely and the fact that you need on average 2x the price of a movie ticket for popcorn and soda. So when kids are given a tool that lets them quickly but not arbitrarily, lay bare the facts of a purchase, well, all of a sudden they know what the big deal is as well. So that's how it improves family harmony.
- [07:18]
Farnoosh Torabi
Fun fact. I met Karen at a live event for sew money last year. I hope to do more of them in 2025. She came up to me, longtime listener, pitched herself as a guest. It was a no brainer. Obviously her approach to teaching kids about money is practical and actionable. And what I love is that she teaches kids to calculate a purchase based on its true cost. Like, if you're going to ask for movie tickets, think about the extra money for popcorn, for transportation. And then we give the kids the tools to evaluate if it's worth it. Next up, Renee Campbell, a mom of triplets and head of youth and family banking at Chase. We sat down to talk about her experiences teaching her three kids saving and allowances and what her work is informing her about how to teach kids of all ages. Specifically, we Focused on the younger set where she talks about starting simple, being consistent, and using everyday moments as teachable opportunities. Beginning as young as kindergarten. You know, in covering this, this space for many years, even before I had children, I was learning from experts. And now that I have kids in practice, I think this, this is, this has really been helpful to us, is just realizing that kids learn through observ. So I think a lot of parents and families put stress on themselves to go, what am I going to tell my kid about money? How are we going to start these conversations? But do you agree that so much can just be. Can be taught as you are consciously, you know, shopping, grocery list making? I remember when my kids were even, just like three, four years old, we go to the grocery store and there are opportunities, you know, they want to grab for things that maybe we already have. So, right, then, no, we're going to pass on this. Because why? Because we already have it. Right. It would be excessive. Let's wait. So you're teaching delayed gratification. You're teaching the importance of finishing what you have before you buy something again and just raising that consciousness level. It can be as simple as that. Sometimes just, you know, taking them along a shopping trip.
- [09:22]
Renee Campbell
You are exactly right. And that's what we do in our household. It's the natural, everyday moments that matter. And that's what I want to reinforce, is that you're not looking for something complicated or challenging. You're just helping them understand how this is ingrained into everyday life. So, like you, we do the. Well, if we're at the cash register and you're in the checkout aisle and you saw all that candy and you say you want something, can you afford that candy? That's the moment that you're using to remind them, setting a savings goal. If you want something and how can you work towards getting it, those are all right for kids at this age. And it's a healthy, happy way for them to learn those core basics. Before we get into the big feelings that some of us adults have around money, we're able to set our kids up with a very solid foundation by making it super normal. My husband and I just bought a home, and so our kids got to hear our conversations about choices that we were making about things we might not do because we were saving for the down payment. And now that we're in the home and some things have broken and those are unexpected expenses, how are we going to address them? What we do is just try to bring them in on the conversation. This might mean that we won't do the extra takeout meal this week because we had an unexpected expense. And this is how we're addressing it. Normalizing those conversations and finding ways to include your kids is a fantastic way to introduce the concepts without being overwhelming.
- [10:47]
Farnoosh Torabi
With our family right now. We just started doing an allowance system. You know, in a perfect world we would have started sooner. But again, going back to what I said earlier about readiness, it's not just even my kids being ready. It was me and my husband being ready because there requires from us a stick to itness, right? Mom's got to have her money in cash every week to give to them, or now we use an app, but making sure that I'm also on top of them because they forget to do their chores because they're still learning. So in the beginning, it was really hard for both mom and child, parents and child to kind of get this, this system down around the allowance. Also the kids are 7 and 10, so there's an age difference. And I really wanted them to both be ready at the same time. That was important to me because I wanted them both to be able work together. And, and here's the here. So here's what we're doing briefly and I'd love to get your take on an allowance system on the edge of my feet. So I know because your kids, your kids are seven. So first of all, it wasn't this well thought out plan. I'm just, just preface with that, okay? Like it was just me reaching a point of frustration where my kids, I felt were asking me for everything around the house, you know, and I was, and I was doing everything and my husband were doing and like they had no idea what was going on behind the scenes. Like their beds would magically get. Laundry would magically get made. Water. Here's your water. So I kind of reached my, my point, my, my max for that. And I said to my kids, I said, okay, allowance is $15 a week per kid, which is above, which is, I mean they're 7 and 10. The normal recommended I've read is like $1 for every year of age per week. So a 5 year old gets $5. A 10 year old gets $10. Both kids, 1 7, 1 10, they get 15. A. And one rule is that you have to do your chores every day. If you miss a chore, you get nothing. And that's not to say that if you get sick or we're traveling or we had our housekeeper that day. Clearly there are exceptions to this rule. But in the beginning I wanted to make an all or nothing rule because I wanted them to get into the habit of it. Okay, this is how they get into the habit of it so far. People were like, oh, that's just recipe for disaster. Farnoosh. Because if they skip a chore one day and they know they're not getting paid and they're not going to do the chores for the rest of the week, and, you know, I'm fine with that because then I'm also saving $15, you know, like, I also bet everywhere I'll just keep the money. That's fine, you know, but they love. I know my kids, and that's important. Like, they are motivated by the money. And because they're working together on their chores, I see them negotiating with each other. Hey, let's do this together. Let's do that. Even though my son, his job is to do the dishes one night, they know they want to get to watch the movie, and then there's only so many hours left before bedtime. Hey, why don't we do the dishes together? Or we'll do all of our after dinner chores together and so we can be done earlier and we can get to watching the family movie sooner. I see that's happening. The other thing that's happening, and this is kind of ridiculous, but my son said to me the other day, he said, mom, I don't want to do my chores. Can I just pay dad do my chores? Because he's making money. The other thing is that they cannot spend all the money all the time. So with the $15, $10 gets saved, and they cannot touch it for a minimum of, I think, three months. So we started this in August. I want them to wait so that when it's Christmas time and holiday time, they have money to buy gifts for themselves and for their. For each other and the other $5 they can spend. But I also recently implemented a new rule. I go. It's. I'm making this up as I go because what was happening? My son, who cannot delay gratification, who has impulsivities. My. My daughter is way more chill. But my son, every time he has that $5 out of the 15 to spend, he wants to spend it. And I said to him, look, if you save all these $5 until the end of camp, I will match you dollar for dollar so that by the end of camp, you won't have $25, you'll have $50, and then you can actually get something substantive. Anyway, that was a long story, but this video that I did on my allowance in on Instagram, 4.2 million views. Okay, this is it. People just want to learn about the allowances. So tell me how you're thinking about allowance, if at all. Not everyone has to do this.
- [15:22]
Renee Campbell
It is a fraught topic right now in our household. And so I may not have seen it, but I am taking strong mental notes on all of your application because you baked in some really like, important concepts in there. There's delayed gratification. There is the exchange of one thing for another. There is a consistency, like you're hitting on all of the core concepts that we are talking about. But it's also, I think one thing that struck me about what you said is you're learning about your kids behaviors with their money by doing this. And that's why we say start early because now you know where your son needs support and where your daughter might not. And she'll give you another tidbit at some point that lets you know how you should engage with her more appropriately. And that's really what this is about. We are not of the same mind yet around allowances, but what we are doing in my house is our kids each have their bank accounts and when we get money for them, they do the same thing. Their money gets deposited into savings. We choose a predetermined amount that they're allowed to spend. We don't weigh in on how they choose to spend it. And that has been pretty eye opening for us because again, people have different money personalities. One kid is making it rain and is buying everything to their heart's content. But we actually had a moment recently in Target where we were in checkout aisle. Everyone picked up some candy and I said, are you sure you can afford it? Two of them knew their balances. In their head, they're like, yep, I'm good. One person wasn't so sure. So I logged into the app, I showed how much money they had and they did not have enough to afford the candy. So natural conversations. What are your options? Either you don't get it. Is someone willing to buy it for you? There were no takers on that proposition. So my son had to put the candy back. We get into the car and we have, unprompted by me, a whole conversation about what business they're going to start because they want more money for news. This is parenting goal. We're looking for natural, organic moments for them to work through the concepts on. How do I get money? How much money do I want to have? What am I willing to do? It was me just like grinning ear to ear because them having their bank accounts let them know how much money they had. I could respond to each kid's money personality appropriately. And then they were making their choices and they were pretty solid choices. I mean I didn't think the candy was worth it, but you know, if that's what makes you happy and that's where you wanted to spend your wants money, that's on you.
- [18:06]
Peter Bergman
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- [19:16]
T-Mobile Representative
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- [19:45]
eBay Representative
You're halfway through a DIY car fix, tools scattered everywhere and boom. You realize you're missing a part. It's okay because you know whatever it is, it's on ebay. They've got everything. Brakes, headlights, cold air intakes, whatever you need and it's guaranteed to fit. Which means no more crossing your fingers and hoping you ordered the right thing. All the parts you need at prices you'll love. Guaranteed to fit every time. Ebay Things People Love this episode is.
- [20:16]
T-Mobile Representative
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- [20:40]
Farnoosh Torabi
An important takeaway from our conversation is that kids have different money personalities. As I'm learning in our house, one kid might save everything, another can't wait to spend. And so interacting with our kids around money at a young age will give us that insight and will teach us how to better teach them about money and the power of saving. Finally, Peter Bergman, also from Chase, helped us shift our focus this year to tweens, teens and the college students and how to teach them about financial principles. At this stage, Peter says kids are gaining independence and they're ready for bigger money lessons including earning, budgeting and even protecting themselves from scams. Now with the autonomy that comes with growing up and you're out and you're socializing, you're going out with your friends, you want for things that you didn't necessarily want when you were a kid because you didn't know any better. And now the things are expensive. Whether that's like Taylor Swift tickets or school trips, summer camps, clothing, brand labels. If you've been at the mall lately, you know the lines at Sephora, I don't even have to tell you what what is going on. That's a whole other episode. As kids become more independent and influenced by their friends and the media, they don't just want little, you know, five dollar toys, they want cars, they want brand name items, they want concert tickets. What are some, what's your advice for parents on that front? You know, whether that's boundaries or systems they can implement so that the kids learn to implement some, some reason and some budgeting as they're thinking about all the things that they want.
- [22:15]
Yeah, it's a great question and I like you. So I have an 8 year old daughter and then a 5 year old son so I'm not quite there with my own family. But something that's really important is having discussions with your family about your values and how you as a family choose to spend your money, what you're savings for as a family and kind of democratize those conversations so that they feel part of it, particularly as they grow in age, and they may have, you know, a bit more of a say and a part of that dialogue. And for, you know, your young, younger siblings, they'll kind of start to learn that vocabulary and that mindset for your family. So that's really something that you can teach younger. And as they grow to kind of set their mindset for how they manage their finances. And then as they get older, it's important to, as parents to ask the questions on the fl. Ask them what's important to them. Ask what they're looking to save for. Ask them to reflect on how they've spent the money that they've earned, what they're saving up their money for. Just verbalizing their intention can have a dramatic effect on the choices and the decisions and the behaviors that they make. And so really my encouragement is just to make it a kind of family dialogue and one where it's a discussion. Discussion and not a parent kind of telling their kids what to do.
- [23:53]
Yeah, I like that. I like the idea of kind of bringing them into the family's values. It reminds me of a story a friend of mine who does have teenagers was saying where her daughter wanted to go to a concert. The tickets were expensive, but one of their family values is experiences. They value experiences. They invest in experiences. But it wasn't just like, okay, so we like experiences. Here's all the money for the concert tickets. Tickets. There was a plan. They, like, found ways to cut costs. They may have converted, you know, points into, you know, they. There's still another layer to this which I think kids don't know about. They don't know that maybe you can, like, find a coupon or find an alternative way to spend or save. Like, they think the price is the price, and maybe they feel like it's a dead end, but maybe it's just, okay, this is hurdle number one. We need to get over it and, like, find. Get creative. I think parents, this is where we can really show them, open up their world.
- [24:51]
Yeah, no, that. I think that's a great example and one where I'd encourage parents to ask questions and to kind of show those different tricks and just talk through scenarios. So, you know, asking questions around, oh, like, how much? How much does that cost? I might say the ticket. Oh, is that the all in cost? Well, no, we got to get there in terms of transportation. We might buy food, we might buy some merchandise. Okay, okay. How much is it going to cost, really? You know, in aggregate, it. What are the different options? How might you pay for it? How might we earn some money? I also love, particularly as kids get older, you know, them to put some of their own skin in the game. So we may not necessarily feel like we can ask them to pay for their whole concert ticket, per se, but maybe they, if they want to buy a T shirt like they're going to buy to buy it themselves, or they want to buy some food or pay for half of the ticket or whatever it is. And to your point, for noose, like them being part of that journey and part of that planning process, particularly if you can connect it to their earning, then it'll motivate them to do that work and just gets into this really healthy financial habit of, you know, having intention with your money and kind of building your money engineering towards things that you want, your aspirations.
- [26:16]
Right. All the extras. When your colleague Renee was on the show Monday, we were talking about the younger set and she gave a story when she was younger, which I thought was really powerful. This image of her getting access to her mother's checkbook. Her mother wanted her to balance the checkbook. And that is something that I actually hear repeated now. And experts tell me about how to sort of raise money. Savvy kids, especially the teens, getting them close to the money. Family money may not work for every family, but I think there's some value in that. I can't. What do you think and how can parents, like create an experience out of this that they feel like, you know, you don't want to over share sometimes?
- [26:57]
Yeah, yeah.
- [26:58]
But I guess it all depends on your kid too, if your kid's mature enough.
- [27:02]
Yeah, I, I think you're spot on there first. I mean, managing and balancing a checkbook is, is a little bit of something.
- [27:12]
Maybe that's not exactly what the exercise is in 2024, but maybe it like, here's our spreadsheet of last month's expenses that you, you know, you can get that from your bank.
- [27:22]
That's exactly right. So, so the first part, I think is helping to introduce having their own account, their own kind of responsibility of that debit card of a, of a balance, of a savings goal, et cetera, as they're younger, as they age, and perhaps get their own first job, then you. That's a key milestone of being able to talk about o. Okay, you know, what are you going to do with that money that comes in? How much is going to go for savings? How much are you going to kind of set aside for your spending? The budget is a little tricky with Tweens and teens. Because on the one hand, there are opportunities for the right children, the right families to start kind of introducing aspects of the family budget with them. And you can also think about kind of micro budget. The most important piece is being able to set a budget and stick to it and being able to kind of reflect on how you did. So it might be, I know some parents set a budget for, for lunch over the course of a week or a month and, and give that to the child and see how they do. And they have to kind of, you know, plan it out. It might be in, you know, online gaming, you know, setting a budget of, of intention of how much they want to spend their own money, money on that and tracking if they actually do that. And being able to kind of reflect with parents, I think as they get older than being able to expose them to, you know, aspects of the family finances. It might start with just, you know, a grocery store trip. Okay, we're gonna spend, you know, sixty dollars, a hundred dollars, whatever the number is. Let's think through what do we really need and how do we spend against that and what actually shows up when you reach the counter. It's a starting point. But, you know, as they age, exposing them to family kind of finances, of how much does it cost to maintain our house, getting into things like, you know, insurance, streaming services, groceries, etc. As well as if you separated from the family and go to, maybe it's cousins or a neighbor, someone that is, you know, going to college or recently graduated that's responsible about their finances and asking them to kind of show your child's, you know, how do they approach budgeting? What does their budget look like so they can kind of see ahead another step on what it looks like later on that might be a little bit more tangible.
- [29:58]
What I loved about Peter's advice was that he emphasized the ownership piece of your financial life and giving kids real life practice. When teens manage their own money, successes and failures included, it helps to set the them up for lifelong financial success. And that's a wrap. From Karen Holland's think before you buy tool to Renee Campbell's lessons on allowances and saving goals and Peter Berkman's advice for giving teens real world experiences, we learned some strategies this year we can all start using today. Money lessons don't need to be complicated. And as our guest reminded us, the most important thing is to start early and keep it relevant and let your kids learn through experience, your experience. Next, we have even more in store. We're going to revisit our guests who taught us how to break barriers to wealth and the guests who brought science to the show teaching us science backed habits to help us get better with money. I'll also be back here on Friday with an episode of AskFarnouche. Thanks for tuning in and I hope your day is so money.
- [31:21]
Karen Holland
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- [31:46]
Farnoosh Torabi
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