260. Money Mistakes That Cost Me Everything (And How To Avoid Them) with Nicole Lapin

22:54And this is a complex question where child care should not be this expensive. This is a systemic issue. How can parents navigate it?

23:02Nicole Lapin:It shouldn't be this issue for sure. And I think that it's really hard to navigate no matter what. It's a constant battle, especially for women. Am I basically just working for child care? So should I be the child care? And I thought that we had savings set up and we're really fortunate to be able to afford child care, especially in the early days. We actually had a baby nurse that we saved for and that was really important, especially to safeguard against postpartum depression for me. That baby nurse also lost everything that she owned in our home, which was a whole other situation. So we weren't prepared for that.

23:48Nicole Lapin:If you would have asked me the top 10 ,000 things that I was worried about, and I am a worrier, that was not one of them. And so there's no great answer to this. I don't have family to help take care of our daughter. So I needed to really come up with my own savings that could have gone somewhere else, but you make choices with it. It's a battle every single day to be able to think about justifying what should be taken care of by the government, but it's not. Well, and what you're kind of mentioning, there's this mom guilt when saying no to, you know, expensive activities, to like childcare options, you feel like you have to do it all yourself.

24:40How do you suggest parents set financial and emotional boundaries without feeling like they're failing their kids or taking it all on themselves?

24:51Nicole Lapin:Well, I mean, it's the idea of putting your oxygen mask on first is really great in theory, is really hard in practice where, you know, financial experts will say, of course, invest in your own retirement, invest in your own accounts before your kids because, you know, they can get loans. You can take out a loan for college. Right. Yeah. Right. You can't take out a loan for your own retirement. Yeah. Totally. End up on their couch when you're old and need them to take care of you. That's more of a burden than not contributing to a 529 or something like that. It's, you know, there's no easy answer to this.

25:30Nicole Lapin:It's, and it's also really colored by how you grow up. And there's a lot of pressure to like do it better or do it right or do it differently. Or, you know, even things like changing the way that I talk about money. My daughter can't talk yet. But, you know, I think about hearing for so long. we can't afford that or money doesn't grow on trees, right? How has that colored the way we look at money? You know, instead, perhaps could we say, instead of we can't afford that, you know, we're choosing to spend our money on something else right now or money doesn't grow on trees. Could we say, you know, my husband talked about this, money grows when we invest it or save it.

26:11Nicole Lapin:That's where money grows. It grows in a brokerage. It doesn't grow on trees. But, I think that that mindset shift is really important for parents to think about where they can see money as a tool and not a limitation. And it starts with just how you approach it. Because regardless of what you do, so you could do a custodial Roth IRA, you could do an Atma, an UGMA, you could do a 529, all these things that we're doing for our daughter to set her up to be in a better financial situation or have better financial background than we did. but it's really how we interact with money. It's they're watching everything you're doing.

26:48Nicole Lapin:So anytime somebody's like, how do I create millionaire kids? I'm like, well, how are you with money? Are you hoarding? Are you spending like crazy? Are you hiding purchases? Like they're watching everything that you're doing. Yep. I have spoken a lot about the financial education my parents gave me and it was because both of them, especially my dad, did not grow up with a lot. And so they were like, okay, we're going to teach her how to be good with money. And so I get asked like, okay, how can, what did your parents do? Or how can I, you know, give kids, my children, the financial education you had?

27:24And you're exactly right. One of the best things they did is they, it was showing, not telling. So it was, you know, okay, we are taking family vacations every year and that's a priority for us. And they would have conversations of like, we're taking this vacation. So we can't afford to go out to eat all the time. Or, okay, we are saving a portion of our income and teaching me how to do that and showing me that if I bought this thing, well, that was great, but that meant I couldn't have this other thing. And all of that was demonstrated to me, not just, you know, hearing one thing and then them doing another.

28:01That's amazing. Yeah, I'm very lucky. I love that. It was probably the best gift they gave me, to be honest. It was just so helpful. Okay. So another hard money lesson is around investing and saving. So in your new book, The Money School, you emphasize not just throwing money in, but actually understanding the stock market. For someone who is out of debt, has an emergency fund, and is ready to invest, what is that smart first step?

28:27Nicole Lapin:I think that's smart first step. First of all, some of the accounts we talked about, one of the things that I see people do is fund the account, which is an awesome first step, but not actually allocate where that money is going. I talk about this all the time, Nicole. Put money into an IRA. Amazing. But not actually put that money to work. All of these are basically vehicles, right? So you actually have to determine where the money in the 529 goes, where the money in the IRA goes, where the money in your retirement account goes. So If you're starting a brokerage for the first time, I know it sounds basic, but make sure that money is allocated, that it's not just sitting there in your brokerage because that's not investing.

29:07Nicole Lapin:And so, yeah, if you're just starting out, I wish I could go back in time and put money in just a broad-based market index fund. And everybody talks about these low-cost S &P 500 index funds. There's two kinds of index funds, right? There's of the mutual fund family and of the ETF family. The ETF family is like VOO or SPY or IVV. Those types of ETFs are lower cost. And I think that paying attention to what those costs are will matter in the long run. So the mutual fund variety will just have a little bit of a higher cost and expense ratio. So if you're just starting for the first time, that's awesome.

29:52Nicole Lapin:you can put that money in there, but just make sure that that money is going to work. Yeah. And to say it a different way, I always give the example of it's like a gift card. Like I put$50 in the TJ Maxx gift card. I need to go buy the plants and candles and throw pillows now or else the money's just sitting there. And that's what happens is we think it's like a bank account. We put money in the Roth IRA, we put money in the 401k or in the general brokerage account, which is just a general investing account, not for any particular purpose. And you're like, cool, I'm done because I deposited money.

30:20You have to go choose your investments. So that's what Nicole's talking about of choosing something like an index fund, which includes a bunch of different companies as opposed to just trying to like cherry pick stocks. You've also said that like the order of operations of money often gets messed up. What is that order for you? And I'm interested to hear if it's the same order that I prescribe to.

30:42Nicole Lapin:The order for me has become paying myself first. It had not been that for many, many years. What's your order? Mine is emergency fund first. Always, always, always. I don't care how much debt you have. Like it has to be. And now it is a minimum three months of living expenses before you actually move on to any other goal. I think that that's, you know, really, really important to prioritize to make sure that you feel safe, whatever that is for you. So like three to six months, if you have more precarious job, maybe a little bit longer. this is really hard to put an emergency fund in place, of course, for somebody that is struggling to put anything away.

31:24Nicole Lapin:I would encourage having that pay interest too. So when you hear having that in cash, I grew up in an immigrant family where literally that wasn't cash. It was under the sink, behind the maxi pads, in green, wrinkled cash bills. And I think that even that is an opportunity to start accumulating interest, right? We work so hard for our money, Tori. I just wish it returned the favor earlier in my life. And so yeah, even with that emergency fund, it's something that you don't want locked up in like an exotic investment. But high yield savings account is the easiest thing you can possibly do. A money market account, easiest thing to start earning a little bit of interest on that money.

32:14And if you don't, we have inflation and it's going to eat into that regardless. Totally.

32:19Nicole Lapin:But I think even when I'm looking at how I'm going to parent or how I'm going to talk to my daughter about money, these basic things we don't learn in school. And so that's why I wrote that book. I was so tired after so many years of saying like, why isn't this not taught in school? And so as my fifth book, I just did something about it. And I think that right now, because it's not in curriculum, it's incumbent on us as parents to implement just some of these basic fundamental ideas of interest. Can you start a family bank where there's save, spend, share? By the way, this is not just a lesson for kids.

32:59Nicole Lapin:This can be a lesson for everybody. And see how interest works and see how compounding works. Yeah, I wish I would have learned that much earlier. But there are easy ways to try to think about what does investing look like for a child. It needs to be age-appropriate, of course. But it's a lesson for all of us. It's a reminder for all of us, I think, that the power of money is to use that to make more money for you. I wish I knew that much earlier because my order of operations was to spend that money. and not have it grow. When you think about the mistakes that you see people make when saving money or investing money, I think that one that it sounds like you and I both talk about a lot, which is funding the account, but not actually investing.

33:56What other mistakes are you seeing people make?

33:59Nicole Lapin:Oh, I think that around, I know that this feels like, you know, a sore subject, But I think around this idea of estate planning, I'm just really into it because of my daughter. I think basic things get missed. We do a lot of proactive, helpful financial hygiene. But sometimes a basic thing like a payable on death or transfer on death form at the bank or with your brokerage doesn't get filled out. These are beneficiaries. These are important. You know, we don't, we're going to live forever and ever at the end and live happily ever after. Hopefully that's for both of us and everybody listening. But if not, you know, I think it's, you know, it's the, it's the responsible thing to do, especially if you have kids to make sure those things are filled out.

34:57Nicole Lapin:And so some of the mistakes I see is like, okay, I had a will. I'm not going to go through probate, which is, you know, hell when you're grieving somebody that you love. And then you also have to deal with the court system. So that's, you know, those are one of the things that I see, you know, around taking care of your own estate planning, even in the most basic way. yeah so go to the bank and get a potter todd i think one of the most common mistakes i see is exactly what you're just talking about of not putting your money in a high yield savings account i talk about it so much because it's so easy it's the easiest thing you can do for your money that immediately makes it work harder for you as opposed to yeah keeping it in your mattress keeping it in the bank account your dad helped you open when you were 16 like it's so it immediately just helps with every other aspect of your money in terms of, again, the tangible of making you more money, but also like the momentum of like, cool, I did something easy and simple that it had a pretty immediate impact.

36:03I want to keep going. I want to keep thinking about how I can pay off my debt. I want to keep thinking about how I can save more money. And I think that's super important. Yeah.

36:13Nicole Lapin:It's the momentum. Yes. Right. And it's like the building of the smart financial habits, right? Just being like, okay, I know what to do now. Yeah. And I think the order of operations too with the debt. So I was in a bunch of credit card debt and this was also quite embarrassing because I was covering financial news at the time. So there you go. Sometimes Shoemaker walks barefoot. We're real people, everybody. We are. I think paying off debt in the wrong order too. you know I think that some of the momentum is really important when you think about like the snowball method versus an avalanche method for me as soon as I needed to tackle that debt I knew that I needed to at least tell myself what my interest rates were and you know I see that and I understand the catharsis that can happen like let's say you have a hundred dollars and And you have a$100 bill that comes in for debt.

37:13Nicole Lapin:And there you go. You're just going to get rid of that. It's cut it up, move on. But if it's not a higher interest rate, then it might not be the best thing to pay off next. And I was really surprised how rich people use debt as not a bad word. Forever and ever, you know, growing up as an immigrant. It is an asset. Family, yeah. I would always hear, like, if you don't have money to buy something, you don't buy a house, a car, anything, even big ticket items. And so once I realized that, that became truly powerful. Yeah. Debt is one of those things that is shameful for poor people, but smart for rich people.

37:57Right. And it even gets a rebrand. Debt is called leverage when a rich person's doing it. And it's why you see Adele take out a mortgage to buy her house, even though she could afford to buy that house outright. Right. And it's because she could be making more money in the stock market or in other investments than tying up that amount of cash in real estate. Right. So the debt ends up being cheaper than and can make her more money somewhere else.

38:25Nicole Lapin:Totally. And it's just a percentage game. And I started as a poetry major. So like, I don't know. I did not know that. You know, I majored in theater. Do you know this? gorgeous. We're both artistic nerds. Same, yeah. Artists trapped in the business world. But like, I am not a math person. And I hear this a lot. I'm not a math person or I'm too old. Right. I'm not good with numbers. Yeah, totally. Those are the most common three things I hear. I'm not a numbers person. I'm too old and I don't have enough money to start. And the numbers thing, I'm like, if I was a poetry major, if Tori was a theater major.

39:04Nicole Lapin:Like anyone can figure it out. But really, it's like it's a percentage game. So if you're getting around 7 % historically in the stock market year over year, if you're paying less than that on debt, you can take that spread or fancy word for like the difference between that and actually earn more money. So when people talk about cheap money, they just mean that they're borrowing at very low interest rates and they're using that. So like, for example, you know, I borrow money and I'm looking at like SBA loans right now and the types of percentages there. So if I borrow money at 2 % and I take that, you know, for easy math, it's$10 ,000.

39:43Nicole Lapin:I borrow at 2 % and I put that in the market and I get... Well, right now it's rocking 10%, let's say. Then, you know, 10 minus 2 is 8 % overall. And that's all it is. That's what... it. That's what we talk about when we're talking about leverage on big scales.

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41:06One of the things that you have been very transparent about in your experience was another hard lesson about imposter syndrome. Growing up in this financially unstable household, you have already mentioned today that you've carried a ton of shame around money. How did you go from wearing shoulder pads and hiding maxi pads under your arms at your first big girl job, which iconic, by the way, to becoming like the confident person who owns the room, owns your story.

41:33Nicole Lapin:Oh, what a journey. Lots of therapy, I think. Yeah. I still wear maxi pants under my armpits sometimes. There are slightly fancier ones that are like armpit guards. I do have hyperhidrosis, so might be TMI, but I do sweat quite a bit, especially when I'm nervous. But yeah, I was looking for a job when I was 18 and just needed a job. And the only one that I was offered was in business. And I needed a job. So I thought I could figure it out. And the truth is, we have figured out harder things and all this finance stuff. And so I was on the floor of the Chicago Merc when I was 18. I thought the Merc was a mall.

42:20Nicole Lapin:It was not. It was the stock exchange in Chicago. and figured it out just in the school of hard knocks. And at some point, I went from being an imposter and not being able to speak the language, having it all sound like Chinese to me, to speaking to the world and teaching other people. I'm the least likely person to do it. And so I think it was an important journey for me to trust myself to ask basic questions, which I think a lot of people hide behind right now. You know, trying to sound fancy or trying to sound important or smart when they're asking questions. So when I continued into the business news world and was, you know, anchoring on CNBC and Bloomberg and talking to a bunch of old rich white dudes about money, a lot of times, you know, people wouldn't stop and say like, what does that mean?

43:17Nicole Lapin:And so I knew that I had finally gotten close to the other side of imposter syndrome when I could say to a CEO or a politician, like, what does that mean, basically? And trust myself that, like, if I didn't know and I was a smart enough person, then other people watching or listening wouldn't know either. Yeah. I think that's one of my biggest issues with financial journalism and also with so many people talking about money, especially men talking about money, is it's like they withhold the gatekeeping so that they seem smart, they seem sophisticated, and that you give your money over to them.

44:03because if they speak to you in a way they don't understand, it makes all of this sound very complicated. And it's really not that complicated. But the jargon and the gatekeeping is there so that they can make money off of making you feel like you're too stupid to understand. And you now are building your own money network, I think probably because you were tired of trying to fit into somebody else's model of what success looks like. So what was that turning point for you where you're like, I'm going to do this on my own?

44:35Nicole Lapin:I was 27. And at that point, I was already on network news for a decade. And at that point, I didn't see anybody that was... Susie Orman was the only one at the time. And this was almost 15 years ago. I just felt like nobody was talking to women like me or my former self about money in a way that wasn't like Dave Ramsey or full of shame or like yelling at you not to buy a coffee or all of these types of things. And so I tried to jump into that space when everybody told me at the time that I would kill my career. I got into major fights with my agents at the time they were like okay nice knowing you you were on this great trajectory at this network news stuff to go on to you know the today show and then go to the white house and then go to the nightly news this was like the news anchor trajectory back in the day I was like that's not how it's gonna work anymore um and so yeah I burned my corporate bra and I never looked back when we're talking about all of these lessons, these hard lessons that you've learned, that I've learned about money, you mentioned that the feeling of shame is there, right?

46:04And even for you now, that feeling of shame is there. This is the number one thing I encounter with our 5 million people in our community, our 5 million women, which is I feel shame about my past choices. I feel shame that I don't know enough. I beat myself up about decisions that I made, even if I didn't know better. How can we work through that shame in a productive way?

46:25Nicole Lapin:So Brene Brown says that there's a difference between shame and guilt, right? Guilt is I made a mistake. Shame is I am a mistake. And I think that understanding that we all would have done better with more information is so powerful. Forgiving your former self for what she didn't know, but understanding that moving forward, now you have the tools and all these women that are listening to you have the tools to do better. So I think it's a combination of forgiveness and tough love and saying, yes, I forgive my former self, but it's not okay anymore. I can do better moving forward. That's how I've approached it.

47:12Nicole Lapin:The best antidote to shame is truth. And to be really, really honest and look at those numbers, finally, because they're not as bad as you probably think. I'm into stoicism too, where we suffer more in imagination than in reality. And I would do this all the time. I would just be like, oh my God, I'm not opening my credit report because I'm going to jail. Like, I'm just going to jail. Like, I think the letter is going to say you're arrested. You're going to die in jail. We come up with crazy stories. We all do. Our imaginations are so wild and powerful. The thing I have started telling the women in my community is like, you think I feel stressed about money, so I'm not going to look at it.

47:59Like, you think the money is the thing that's stressing you. The thing that's stressing you is having no idea or control about it, right? It's like getting in a car and driving without having a gas gauge. It's like the stress is not, oh, I can see that I don't have a lot of gas. The stress is I could break down at any time with no cell phone reception in the middle of the night and a place I don't know on the side of the road. That's the stress. So when you're trying to prevent yourself from feeling stressed about money by not looking at it, that's actually the thing that's causing you the stress and the anxiety.

48:32Nicole Lapin:it's like the second arrow idea it's it's not the first arrow i mean we all have the bad things that happen to us it's the thing that we add on top of that and that's the choice right it's like the bad thing sucks but how much do we add on top of that um that we can that that's in our control because the the first arrow whatever that bad thing is is not in our control but how we respond to it is and it's hard. Trust me. Like I say this and it's so easy in theory, like when something, when you're not in the thick of something. And then when you're in the thick of something, you're like, yeah, I heard Nicole and Tori talk about this.

49:13Nicole Lapin:I understand this in theory, but not in practice. It's the hardest thing you could possibly do. But yeah, the thing that has worked for me is that it's actually not as bad as I imagine it to be, especially with finances. Yeah, I mean, I think that's a perfect way to sum up the conversation, which is like, you do things proactively so that when you're in the moment, again, that doesn't have to be something you're stressed about or concerned about, right? It's like, you know what, I did something that felt really hard when things were more normal so that the hard thing, I can be 100 % present for the hard thing as opposed to wondering how I'm going to navigate it.

49:53Nicole Lapin:Totally. And like, it's hard to navigate, you know, curveballs that come your way. Like I said, I tried to plan for a thousand different things that could go wrong. And, you know, worrying never prevented the bad thing that ended up happening. And I am such a worrier. Like I worry, it doesn't matter what's in my bank account. Like it really, it still doesn't. My biggest fear has always been, And I've said this many times, like being broke alone and homeless and dying in the gutter. And it's irrational. It's completely irrational. It makes no sense. And what's helped me is like making the videotape go forward.

50:35Nicole Lapin:So, okay, let's assume that I am homeless, which I was this year. So my biggest fear came true. So what happens then? You know, before I was married, I would say like I'd live with my best friend, Tracy. Like I'd move in. And then what would happen after that? Like I would wear her clothes or, you know, I would figure it out. And so I think like really sitting in those fears are the way to say like, okay, that thing could happen for sure. I could be homeless, even though I thought it was the most farfetched thing on the planet. It happened to me and we were okay. so no matter what that thing that's yours we all have like the greatest hits of fears and I think it's unrealistic to say like well just don't worry about them you are like no but it's like recognizing I think of it as a stream kind of with a bunch of logs coming down with these thoughts of rumination like oh hey like fear of being broke alone and homeless and dying in the gutter nice to see you like hey you know thinking about your ex or something like that okay I see you that's a thought and it can continue down the street yeah that's right my final question for you how do we take these hard moments in our lives and actually learn from them

52:00Nicole Lapin:it's a brilliant question for me it has god I'm gonna cry um I don't mean to Barbara Walters you. I'm sorry. Thank you so much. I have a tattoo that says there will be time. And I remind myself that there is time for all the things you want to do, to build, to destroy, to create, to love, to all of the things that you want, there will be time to do them. And, you know, there are seasons and the thing you can't rush is the time to heal through whatever has happened to you. So I wish you could rush that time. I wish I could get to the other side of this ick right now. I'm like still in the thick of it coming back to life.

52:50Nicole Lapin:Of course you are. But I remind myself that there will be time and I remind myself that, you know, hopefully I'll do better the next time. I might not. But it'll do a little bit better. But also just give yourself grace. It's like, yeah. I mean, you were in a literal perfect storm. Like you could have checked off every box for like stressful scenario in your life. And then God, the universe, whatever you want to call it was like, have a little more. Let's give you a little more. That's a lot to handle. and um i love what you said earlier about just like there's there's no use in beating yourself up for past mistakes i always say like if shame works it would have worked by now like it would have worked by now if making yourself feel like a piece of shit for your previous choices or your previous mistakes would have worked to change your behavior it would have worked by now.

53:49And so it's like, what if you offer yourself mercy and grace? And then you say, okay, I know better. I'm going to do better now. Yeah.

53:57Nicole Lapin:I love that. And, you know, really trying to talk to yourself like your friends would. Yes. Yes. Or you like you would to your partner, your daughter, your favorite person. Yeah. Yeah. I'm really, really, really sorry. I can't say that enough for everything that's happened, but I'm also so excited for the birth of your daughter and excited for a phoenix to rise from the ashes in a really, really difficult moment. You have this new book out. Please plug away. Tell people where they can find it. Thank you, Tori. Anywhere you can get your favorite books, you can get The Money School. And it's everything that I wish I learned in school and we all wish we learned in school, but didn't.

54:44Nicole Lapin:And it's how to gain financial independence so that when bad things, not if bad things happen, because they will, you'll be able to take one issue off the table. And if you have some bit of savings to grow, I think that in the worst case scenario, having your own back is one less thing you have to worry about when you have to worry about everything else. Yeah, I love it. Thank you. Thanks, Tori. Thank you to Nicole for joining us and for her vulnerability. There's something about hearing these personal stories, even if you've just heard them on the news, that just hits you in a different way. And I'm so thankful both for her work and also for her sharing her story.

55:37You can get her brand new book, The Money School, wherever books are sold. And thank you for coming on the show, Nicole. Thank you as always, Financial Feminist, for listening to this episode. If this is an episode and a conversation that sparked inspiration for you, that you want to use to spark conversation with others, please feel free to share it. And if you're watching on YouTube right now, I would love for you to subscribe so you don't miss a future episode. Thank you for being here. We'll talk to you soon. Bye. Thank you for listening to Financial Feminist, a Her First 100K podcast. For more information about Financial Feminist, Her First 100K, our guests, and episode show notes, visit FinancialFeministPodcast.com.

56:14If you're confused about your personal finances and you're wondering where to start, go to HerFirst100K.com slash quiz for a free personalized money plan. Financial Feminist is hosted by me, Tori Dunlap. Produced by Kristen Fields and Tamisha Grant. Research by Sarah Shortino. Audio and video engineering by Alyssa Midcalf. Marketing and operations by Karina Patel. and Amanda LeFue. Special thanks to our team at Her First 100K. Kaylin Sprinkle, Masha Bak-McGieva, Sasha Bonar, Ray Wong, Elizabeth McCumber, Daryl Ann Ingman, Shelby Duclos, Megan Walker, and Jess Hawks. Promotional graphics by Mary Stratton, photography by Sarah Wolfe, and theme music by Jonah Cohen Sound.

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57:05Thank you.