• Insights Into Teen Financial Literacy And Finances For Families | Carrie Schwab-Pomerantz | Episode 60

  • Parenting means teaching our teens many important skills, including financial literacy. It’s our job to make sure our kids know how to save money, spend responsibly, and stay out of debt. But, are they currently learning those skills? Do parents even have the skills ourselves to teach them? What can parents do to ensure their teens have a strong financial foundation? Mighty Parenting podcast hosts Judy Davis and Sandy Fowler have a candid conversation with financial expert Carrie Schwab-Pomerantz about young adults’ financial behaviors and ways to improve finances for families.

     

    A Favorite Quote from the Show:

    Young people who have jobs are more likely to be stellar savers, they understand what money is and place more value on saving.

    High Points of Insights into Teen Financial Literacy and Finances for Families:

    Managing money becomes important and teens and young adults can start building their financial security at ages 16-25.

    A survey of 16-25-year-olds that looked at financial literacy had some good news:

    • Around 80% of the young people surveyed witnessed their parents’ experiencing financial hardship, essentially during the Great Recession. Yet, they are still optimistic about their future and financial success.
    • Parents are talking more to their children about money than ever before.

    It’s important to start teaching kids about money early. Don’t view it as burdening your children with money but rather educating and empowering them.

    As kids grow, add in more sophisticated concepts. You can even include them in family financial decisions on an age-appropriate level. Take them to a financial institution to open a savings account and, when older, a checking account. Around 16 get them a credit card and teach them how to use it responsibly and pay it off every month.

    The survey also had some bad news; our kids have some not-so-great money habits such as not paying off credit cards on a timely basis. These bad habits can start with what parents are modeling for our kids so be sure to get your bad habits in check and foster good habits.

    • Stop living beyond your means
    • Create and use a budget
    • Save

    20-year-olds should save 10-15% of their income. They can set up a budget that includes saving then build their life around that.

    If 2 people save for their retirement, one saves $1000/year for 10 years starting at age 20 and the other saves $1000/year starting at age 30 and continues through age 65, the person who started at age 20 will have more money even though they put less into the account. This is the miracle of compound growth.

    Girls showed much more determination in having financial independence yet they have less savings and investing. We are not teaching our daughters to save and invest as much as we are showing our boys.

    In this survey, 50% fewer girls had investment accounts vs. boys. The girls spend less and were more likely to have a second job yet they had 60% less in savings than the boys. We need to show our daughters the power of saving and investing.

    Social and cultural differences in how we raise our children are affecting our girls. Things like, we pay our daughters less for the same chores than we do our boys. We talk to our daughters differently about money. To our daughters we talk about saving and budgeting and household basics. We talk to our sons about investing and borrowing. While we are not doing this on purpose, we need to be cognizant of this and bring our girls along into the wealth creating side.

    As a society we don’t fully understand investing but it’s important to our long-term well-being.

    If you don’t have the skills yourself but need to teach your child, learn. Learn on your own and pass it on or learn together with your child. https://www.schwabmoneywise.com/ has resources for novice investors. You can attend a financial workshop, listen to podcasts, or read books. You can also get financial help from a professional. There are many institutions who can help you invest in a diversified way.

    Our kids don’t understand good debt vs. bad debt nor do they understand that debt of any kind should not total more than 36% of our income.

    Many parents tap into our 401K or retirement savings to pay for college. This is seriously detrimental to parents. We discussed the emotional and financial side of this in Episode 45

    Everyone needs an emergency fund. This has enough money to cover 3-6 months of essential expenses in an easily accessible account.

    Carrie’s work with underserved populations shows that families from every socio-economic background can find ways to save. There are non-profits that help with learning to budget and how to get creative.

    Our kids value their money very differently than they value yours.

    Young people who have jobs are more likely to be stellar savers, they understand what money is and place more value on saving.

    Resources Mentioned in this Episode:

    Schwab Money Wise

    How To Prevent The Double Whammy Of Your Kid’s Money Failures And Your Retirement Fail | Lucas Casarez | Episode 45

    Our Guest:

    Carrie Schwab-Pomerantz, CFP®, is a leading advocate for financial literacy and one of America’s most trusted sources for financial advice. She has devoted her career to helping men and women from all walks of life achieve financial security. In addition, she oversees Schwab’s corporate philanthropy and employee volunteer programs, which aim to strengthen the communities where Schwab operates.

    Schwab-Pomerantz has served two White House administrations on financial capability policy. In 2010, she was appointed by President Obama to the President’s Advisory Council on Financial Capability, where she chaired the Partnership Committee until early 2013. She also advised the Council on Financial Literacy under President George W. Bush.

    Under her leadership, Charles Schwab Foundation has made important strides in promoting financial literacy. Through its national partnership with Boys & Girls Clubs of America, the Foundation created Money Matters: Make It CountSM, a best-in-class financial education program that has been completed by nearly one million teens nationwide. Schwab-Pomerantz speaks and writes extensively about personal finance. Her latest book, The Charles Schwab Guide to Finances after Fifty (Crown Business, 2014), was described by The New York Times as “overwhelmingly appealing” and “an excellent personal finance book.” With her father, Charles R. Schwab, she co-authored It Pays to Talk: How to Have the Essential Conversations with Your Family about Money and Investing (Crown Business: 2002). She also writes a weekly column, Ask Carrie, which appears on schwab.com and schwabmoneywise.com, and is syndicated through Creators News Service, Business Insider, and Parade. She is on Facebook and Twitter (@CarrieSchwab), and is a LinkedIn Influencer, offering insights on personal finance, leadership and philanthropy to a worldwide audience.

    Schwab-Pomerantz earned a BA from the University of California, Berkeley, and an MBA from George Washington University. She holds FINRA Series 7, 23, 63 and 8 securities registrations, and is a CERTIFIED FINANCIAL PLANNER™ certificant. She lives with her husband, author Gary M. Pomerantz, in the San Francisco Bay Area. Together they have three grown children.

    To learn more or connect with our guest visit https://www.schwabmoneywise.com/

    Photo Credit: Brooke Cagle

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