Ep 210: Essential Money Talks to Have With Teens

Kathryn Tuggle, author of How to Money, joins us to discuss the
essential money advice teens need for a financially independent
future. We talk about first jobs, saving for cars, and how teens
can avoid impulse spending.


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Full show notes


It’s time for the talk. You know, the big, nerve-wracking one
you’ve been putting off for years. The one you know you have to
have before kids reach a certain age, but you’re afraid it’ll be
awkward and you won’t say the right thing. The talk is essential
to your kids well-being and chance for a bright future…..the
money talk, of course!





Chatting with kids about money isn’t easy–there’s a lot to cover.
It can be uncomfortable, and kids don’t listen half the time
anyway. Plus, you might feel like you don’t know enough to give
teens the right financial advice to prepare them for adulthood.
But if you ask most people the thing they regret most in life,
it’s their bad money choices as young adults. If we don’t teach
teens how to handle money, they might end up making huge
financial mistakes that could have been avoided!





To help us raise money-smart teens, we’re talking with Kathryn
Tuggle, co-author of How to Money: Your Ultimate Visual Guide to
the Basics of Finance. Kathryn is the editor-in-chief of
herrmoney.com, an incredible financial resource for young women!
She produces the HerMoney podcast, and co-hosts its popular
mailroom segment, where she answers questions about finance.
Kathryn’s book is a rich mine of financial advice for young
adults, and she’s here today to share some of the highlights.





In our interview, Kathryn and I are discussing the basic
financial topics parents should be discussing with kids. Plus,
how to teach your kids to manage money and what we can do to help
them save for big purchases like cars or even college.





Finance 101 For Teens


No matter how smart and educated your teen is, they may not know
the basics of finance, says Kathryn. They don’t teach financial
literacy in the classroom, and most teens feel like a financially
independent future is so far off that it’s not worth thinking
about while they’re still in high school. Don’t assume your teen
will figure it out on their own, says Kathryn. Make sure that
you’re having conversations about how to earn, save, and invest
while kids are still living at home.





One way to do this is to implement discussions about money when
you and your kid are at the grocery store or a restaurant. If
you’re looking for an after-dinner dessert, have kids help you
pick one out, says Kathryn, and help them understand the
differences in pricing. When it comes down to choosing between a
generic or name brand box of cookies, she suggests you remind
kids what they could do with the extra three dollars you’ll save
on the store brand–along with all the accumulated money you’ll
have from buying that store brand every single week!





When it’s time for teens to get their own job, there are plenty
of ways parents can help, says Kathryn. In the episode, she walks
me through some of the tips parents can give to teens who have
their first job interview. We’re also covering whether or not you
should talk to your teen about income taxes this early in life,
and if kids should already start investing or putting money in a
Roth IRA to save for retirement.





Once teens make money, they’ll have to learn how to save it!
Kathryn and I are talking about how teens can develop responsible
habits now so they won’t be in trouble later.





Teen Money Management 


Kids love to spend money on clothes, video games, hobbies they’re
really into for a month before they lose interest…the list goes
on. But as adults, we know how smart it is to save! We can teach
our kids to keep their money in the bank, says Kathryn, but to do
so, we’ve got to embrace their spendy perspective! She suggests
asking teens about the pricier items they’re interested in–a new
keyboard, a nice dress, even an iphone–and showing them how to
save for it.





It’s not just naivety that brings kids to spend lots of money on
glitter eyeshadow or a trendy new hoodie. Social media companies
are marketing products to kids on an enormous scale, with
algorithms that track their activity to know just what
advertisements they’ll click on. Influencers are telling them all
day long that they NEED to purchase the latest jeans or
supplements in order to fit in, look good and be cool!





If you want to help your teen avoid spending lots of money on
things they don’t need, Kathryn suggests sitting them down to
discuss this social media advertising frenzy and why they should
be questioning it. Remind them that influencers are being paid
tens of thousands of dollars to promote products…and these items
are probably not as remarkable as influencers might make them
seem. She also recommends kids wait 24 hours before hitting
purchase on anything, which helps them curb impulse spending and
think critically about what they really want to spend their money
on.





Saving money is the path to lifelong financial prosperity, says
Kathryn. This is especially true for teens who are looking to
make their first big purchase. In our interview, we’re talking
about the process of saving for a car or even college tuition
during the teen years.



Preparing Kids for Big Purchases


For many teens, a car is the first big purchase they’ll make!
This is a seriously expensive transaction and won’t come without
quite a bit of saving. To motivate them, Kathryn suggests that
they use visual reminders of their goal. Some teens benefit from
putting a picture of the car they want on their bathroom mirror
or bedroom door. Others find it helpful to set a reminder of the
car on their phones on the weekend, when they’d typically spend a
lot of money! This motivates them to limit their spending so that
they can eventually make that big purchase they’ve been saving
for.





For other teens, college is the financial goal to focus on.
Saving for college starts with knowing exactly what you're saving
for, says Kathryn. Some teens want to become teachers, others
want to become doctors…and these two things require vastly
different financial plans. In our interview, Kathryn and I talk a
lot about student loans, and how easy it is for parents and teens
to get in over their heads. She drops some helpful tips for
keeping student debt under control, even after teens have left
college.





At the end of the day, the most important thing is not to skip
out on these money conversations, Kathryn says. There’s often a
harmful stigma around discussing money, especially in American
society–and only we can change that! Kathryn explains that kids
almost always pick up money habits, both good and bad form
parents. So while we have the chance, she recommends we help kids
start off on the right foot and build strong financial futures.



In the Episode…


There’s lots of great financial advice for teens in this week’s
interview! On top of the topics discussed above, we also talk
about…


Why teens should consider community college

How teens can ask for a raise

What teens should know about health insurance

Why women invest 40% less than men



Than...