Talking To Teens: Expert Tips for Parenting Teenagers

Kathryn: Thank you so much for having me. Good to be here.

Andy: This is cool. This is really exciting. You have this awesome book, How to Money and it's illustrated, and it's broken up into colored coordinated sections. Where did this come from? Or what inspired you to write this and put this all together in this way and create this book?

Kathryn: Yeah, it was really a group effort with our whole team at HerMoney. My co-author and business partner, Jean Chatzky and I, we really wanted to create something that could be the ultimate handbook for young women and young people of all genders looking to get their financial life started off right. We've heard so many people who have financial regrets, over the years at HerMoney. And the most common regrets involve some of the mistakes that people made when they were younger, failing to have a budget, getting in over their heads with credit card debt, taking on too many student loans, the list goes on. So we wanted to create the ultimate handbook that could really kind of guide young people through the pitfalls of what happens when you start your financial life and really how to build a successful financial future.

Andy: So much of the things that are so important are those big warnings, things to avoid and do. But a lot of times, young people don't like it when we harp on them with those kinds of warnings so much. So I like that your book actually has a lot of the positive side of things as well, in terms of just thinking about your career and ways to make more money, which I think also then counterbalance the warnings that come in there.

Kathryn: Thank you so much. Yeah. We tried to make it positive because so many of us, we learn our money habits from our parents. And we know that a lot of adults, their finances and their money lives are a real source of stress for them. They associate money with scarcity and money with debt and money with things not always working out. And if you're raised in a household like that, you might unconsciously absorb some of that anxiety around money. Even before you have a financial life, you might already be feeling anxious about money. So part of what we tried to do with this book was to really dispel some of those myths and just offer a more encouraging narrative. That you know what? Your money does not have to be a source of anxiety for you. Your money is actually pretty empowering and it can actually be the thing that helps you reach your life goals and not the thing that keeps you up at night worrying.

Andy: So why do you write in here sometime is more valuable than other time?

Kathryn: Part of what we tried to do with this book was to explain things like time is money and supply and demand. And we wanted to make it clear that if your boss is asking you to work overtime, or if your boss is asking you to work a busy holiday season, you can earn more money. And if you happen to be the only person who is 16 or over on your block, and that block is full of toddlers, you can probably command a little bit more for your babysitting services than in a neighborhood if there were more talented 16 year old around you. So we wanted to try to put those lessons forth in a way that would be easy to understand.

Andy: One of the big questions, I think always with teenagers and money, is around allowance and how allowance should work. What are your thoughts on just how we should set that up or how we should approach allowance, especially as kids get into the teenage years and they want to spend more money and are always arguing they should have more allowance. How do you think it should center around that conversation?

Kathryn: Yeah, it's a great question. And there's really no one size fits all answer because at the end of the day, your discretion surrounding allowance comes down to what your budget is. My co-author Jean Chatzky was giving her kids about $20 a week. I personally never received an allowance from my parents. My parents would buy me the essentials. If I was going to the mall with friends, then they might hand me $20 to $40 for an outing that would be once a month. And then I worked. I started working in high school and worked my way through college and earned an income. So I think it's really at the parents' discretion. Some parents like to tie it to chores. Some people like to tie it to grades. But if there's no room to spare in the budget, then I think it's just, it's perfectly acceptable to start having conversations around your child working rather than just giving them money.

Andy: How do you think we can help teenagers be really successful when they get a job and they start working or how can we prepare them for success or encourage or support them to be really successful?

Kathryn: I mentor a lot of young people. And over the years I have managed a lot of young people. And if I had to say one thing to parents, it would be, don't assume that your kid knows the basics. You can have a perfectly well mannered, intelligent, well spoken child, and they will not know the basics of career negotiation or professional attire or what is required to get a raise. In my last job, I had one of my younger employees who was about 23. He came to me and he said, "Hey, Katherine, my rent went up, so I'm going to need a raise." With a perfectly straight face. And I said, sweetheart, I love you. And you were doing great work, but it don't work that way. I would love to have a conversation with you about how we can make a case using all of your good work and all of your accomplishments over this last year, so that I can secure you a merit based raise.

Kathryn: But the only raise that is available in the real world is a merit based raise based on your performance. And while I sympathize that your rent has gone up, let's try to get you where you need to be via another avenue. And I'm sure his parents never told him, "Hey, in your first job, whenever you'd like to be eligible for a raise and make sure that you're documenting all the amazing things that you're doing." And likewise parents have to set the expectations. We heard from a listener to our HerMoney podcast the other day, who wrote in and said, "My child has been working since they were 16. And now they're heading off to college and I'm utterly dismayed that my child did not put aside 20% to 30% of their income for college expenses." And our question was, "Well, did you tell them that that was your expectation that they were going to be saving that money for college?" And the answer was no. So you, as the parent, have to set those expectations early on and don't assume that they know the basics.

Andy: How would you set an expectation with regard to saving money for college or something like that? Is that even realistic for a kid? Because they want to buy all kinds of apps, clothes.

Kathryn: I think it depends on the child. What we have heard from a lot of kids is actually that they're incredibly responsible. I think there are a lot of kids out there that know that college is on the horizon and that it does not come cheap. And they're already maybe not worried about it, but they're certainly thinking about it. They're really ambitious kids who might want to go to an Ivy league school or a private school. They know what that price tag looks like. And they are thinking about it. I think as a parent, no matter what your child wants to do after they graduate, you can help them set up a checking account and you can help them establish things like automatic withdrawals in that checking account that puts money straight in their savings account before they ever see it. So every pay day, you can help your child set up an automatic deposit into savings.

Kathryn: So they're just not tempted to see it. You can help them set up an IRA as soon as they have earned income. Now that's not going to help them for college, but it'll help them for retirement. Kids tune their parents out about a lot of stuff. I will be the first to admit, but money is one area where statistically, we know that kids want to listen because they have no idea where to start. So again, I think just having those conversations, going with them to the bank, showing them how to set up a savings account. It makes all the difference.

Andy: Money is just one of those things they get such little education on. What do you think about taxes or what we need to teach or what teenagers need to know about regard to taxes?

Kathryn: I mean, that's a complicated topic. It depends on whether or not they have earned income and how much they're earning. And if you collectively, as a family, feel that they need to file taxes for jobs that they may be being paid for in cash, like lawn maintenance around the neighborhood and babysitting. Once a child has a proper paycheck with earned income, then I think it's always nice to have a conversation about what taxes are. In our book, we actually have a paycheck explainer where we dissect what your paycheck looks like. And we say, this is social security. This is FICA. This is going to go to your healthcare. This is going to be your income tax. And we kind of explain the difference between gross income and net income. Because when we're talking about the basics, a child may think initially $15 an hour for me. Oh, I'm going to have that's all take home pay. So they don't understand the difference between take home pay and net pay.

Andy: Yeah. Yeah. It can be a big difference. The biggest portion of the book is the red section on managing the money. You got to make it, then you got to manage it. And that seems like the biggest part of the process. How do you approach that or think about the landscape of what you need to know about that.

Kathryn: That's the area that we spent the most time on just because that's the area with the biggest question marks. Statistically, we know that women overall invest 40% less than men. So we really wanted to double down on why investing is an essential step to ensure that you're going to have enough money to live on for the rest of your life. We wanted to double down on why saving money is going to be the pathway that you need to take to get to a house and a car and a trip around the world and a college education. Managing money is really everything. As soon as you earn it, you have to learn how to manage it and put it away so that it is there for all of life's goals. And we tried to frame this book from the perspective of goals. Why do you need to learn about money? And so that you can do all the things you want to do in life. Because as much as we wish some of our big life goals were free, they're not.

Andy: I see. So it's really important getting our kids, just thinking about what their financial goals are or just goals related to their life and what those things will look like financially and how those will play out as a really important part of a process or activity to engage in.

Kathryn: Exactly because a child might not necessarily care about money in the abstract, right? Dollars, cents, investing, retirement. These are words they've all heard, but why should they care? They will care once they realize.

Andy: It's so far away that when it would matter or something.

Kathryn: Yeah, exactly. We use the term in the book future you. Yeah, because we try to make it clear that this isn't some abstract other person or other life. This is you who's going to benefit from what you've saved and invested in the future. And that's a tough concept even for adults. We know that the statistics around retirement saving in this country for adults are abysmal because it's very hard. It goes against human nature to put off enjoying our money today so that it'll be there for us tomorrow. I think as a parent coming from that, from the perspective of what you know interests your child, will make all the difference. You don't say, "Hey, let's go down to the bank to set up a savings account." You say, "Hey, those ballet classes that you've really been wanting to take, or that keyboard that you've been asking us for the last few months, we would love to help you get there. We would love to be able to buy that for you. We would love for you to be able to afford that. So why don't we work together to get you to that goal?"

Kathryn: And as your kid gets older, that's going to change. If your kid already knows they want to be a brain surgeon, it's perfectly acceptable to say, you know what? That's amazing, but that's going to take a lot of school. And lot of school, it's going to take a lot of money. So let's figure out how we can start saving for that goal now.

Andy: That's so important to talk about things that are important to our kids. Cause so often we phrase things in terms of what's important to us or what we think they should want, but really they have their own wants and plans for their life. And we just kind of tune into that and help them to achieve those things. Maybe those will change later on, but at least we'll start getting them thinking about their future and planning for their finances. And one of the hardest things is just getting teenagers to care about things. And I think that's struggle with a lot of this stuff. Because some of these just seem like boring or abstract topics. Accounting, money doesn't feel that exciting or something. Yeah.

Kathryn: Yeah. Definitely approaching that from your child's personal goals and meeting them where they are in the moment. When they are 12, those goals are going to be vastly different than when they're 16 and they might even be vastly different again at 17 and 18. As your kid sort of starts to get their eyes on the prize of what they want to do with the rest of their life. And even if they don't know, that's fine too. You might want to use these conversations to encourage a gap year. You might want to use these conversations to encourage how they can travel the world. It's like, oh, you don't know what you want to do. That's great. It's going to actually take money to go find yourself. So let's start saving for that.

Andy: I see. Yeah. Yeah. Really it's hard to come up with anything that wouldn't cost money that they could possibly want.

Kathryn: Unfortunately.

Andy: There's these profiles of different people throughout the book.

Kathryn: Yeah. We profile 13 female leaders, all who have great advice around personal finance, spending, saving, investing. Nine of those women are women of color. We wanted to offer a diverse perspective and they really tell us their biggest money mistakes, their biggest money successes, the best piece of money advice they ever received. So throughout the book we're saying, you know what, here's the roadmap for living a successful financial life, but don't take our word for it. Here are 13 amazing other women who have done it, who have walked this path, who have made mistakes, and who have found success. And you can learn from them too.

Andy: What about spending? You have a whole section on spending in the book as well. Why did you think that was such a major concept to build an entire section around?

Kathryn: Yeah, we wanted to do that. Not just because of the age of the kids reading this book, but because of the way that our kids are now being marketed to in 2022, because it is everywhere. Social media has put the level of marketing to children at new proportions, never before seen. They are being influenced by the people they follow. They are being influenced by the brands they follow. The fact that the algorithms now know exactly the kind of things we like and the kind of things we're shopping for and can recommend products that are ready made for us. I didn't encounter that growing up in the eighties. People didn't encounter that growing up in the nineties. We are in new uncharted territory with the way that our kids are being sold to. And we wanted to try to create informed consumers. We wanted to try to educate kids that you know that influencer who you follow who's recommending that new skin cream or those new leggings, they're being paid for that. They receive that product for free and in some cases they are being paid hundreds of thousands of dollars to tell you it's the best thing that they've ever tried.

Kathryn: So, it's time to take a step back, get educated, take a 24-hour pause on all purchases, add it to cart. Let it sit there. Think about it, mull it over, but do not pull the trigger because so much of what we buy on the internet these days is emotionally driven by a want instinct. It is not a need.

Andy: Having some of those bigger roles also helps with not making those smaller purchases because kind of something bigger that you're thinking about or looking towards, or that's driving, you propelling you to move in that direction or think about it. Always some of the big changes are saving for a car. That's a popular one. Teenagers want to buy a car a lot of times. Is there anything we need to know or think about specifically if we have a kid who's working on saving for buying a car?

Kathryn: Yeah, it's a great question. It's probably going to be their first big expense. Visually, what we've heard from a lot of parents is having those reminders to your child, that they have a bigger goal is important. So for example, their phones lock screen could be an image of the car that they want. On the back of their bedroom door, they could have a picture of the car that they want. They might have a little reminder that pops up on their phone on Friday nights when they usually go out with friends, that's like, Hey, don't forget tonight. You're still saving for your car. So maybe skip that extra appetizer and maybe avoid buying that new pair of jeans because you've got bigger goals. So having this visual reminders around can be really helpful. Going back to your question about allowances, maybe as a parent, if you are going to give an allowance, you keep that allowance in reserve for them.

Kathryn: And you say like, I'm not going to be giving you an allowance for this next year. But what I am going to do is I'm going to put that into a dedicated account for your car. Or if your child is responsible and you feel that you can trust them, go ahead and give them that money and say, but this has got to go in your savings account for your car. There's all kinds of ways that you can do that as a parent. Maybe if it's in your budget, you can match their dollars in the same way that a future employer might be matching their 401k contributions. For every $5 that you're able to save towards your car. I'm going to give you $2.50 or whatever it is. You can incentivize your child in all manner of ways. And it's not just about the car. You are going to be helping them build these good habits for a lifetime.

Andy: Yeah. Yeah, because there's something about the planning and long term thinking that are required to do something like that and pull something like that off. And I think, yeah, it's good for kids. And so we can encourage that, support that. Interesting to think about.