What Fewer Earnings Reports Could Mean for Investors and How to Teach Kids About Money (Video Episode)

15:15Elizabeth Ayoola:Yes. I feel like for the past two days or so that we've been here, I have experienced three different weather. So I don't know. But anyway, it's been a good experience so far. Now, my friends and family hate me because I am a deep diver and I love your question that you sent us. Thank you for your question. And it centers around kids. So I have a little deeper icebreaker for you. If you could go back to your younger self and teach her one financial lesson, what would it be? I thought that was my question for you guys. I wish that I was more curious about it. And I think if I had had some curiosity there, then I would have become more proficient earlier.

15:54But I just it was not something I was interested in. And so I don't know if that's necessarily a lesson, but if like there was a way to expose, you know, my younger self to this world before, then I think I'd be so much more adept at this point.

16:10Elizabeth Ayoola:And why do you think you weren't curious? What were your thoughts around money, I guess, for your younger self? Was it like, well, money is just going to make itself or it's not something I really need to think about or it's for someone else to think about? As far as like the basics, I got those. I got those down. Like I knew how to save. I hated being in debt, you know, and like when I was younger, my goal was to see the world. So I did not want a car. I didn't want a house. I just wanted to be debt free so I could pick up and leave anytime I wanted to. I think I was very good with managing that part of it, but I was not curious about making your money work for you.

16:47Sean Pyles:Investing. Yes. And actually, I do have one story. Right out of college, I had a coworker and he gave me an earful about how I should invest and that, you know, a mutual fund was a pretty solid way to go. And so this was a long time ago, so I might be missing some details. But eventually I did. I had some seed money and I put it into a mutual fund. And, you know, I was told, like, you just let it sit. You don't have to look at it. You don't do anything with it. And then not like six months or a year goes by. And then I was informed that my mutual fund had been sold to another company. And then now there was going to be a fee because it was such a paltry amount.

17:26And so I got completely jaded. And I'm like, well, I'm out. Forget this. This is too hard. I don't want to deal with this stuff. And so it was a bit short-sighted on my end.

17:39Sean Pyles:That's a common experience, I'll say. A lot of people, especially back, I would say, in earlier years where there were higher fees and it was less accessible, a lot of people would feel kind of shut out by the investing industry. So I'm sorry that you experienced that. But know that investing now is generally less expensive and a lot more accessible.

17:57Elizabeth Ayoola:Okay. Yeah. So thank you for sharing that. I'm sure that was pretty vulnerable. And I think that's a beautiful segue into why you wrote us. So tell us a bit about your kids and what you're trying to do for them in terms of financially or rather equipping them with the financial education they need to make their own decisions as they grow. I have two daughters and they are almost 15 and 10. And to date, they are kind of like me. They're good with their allowance and saving. And we have Greenlight set up for them.

18:26Sean Pyles:Greenlight's an app where you can manage their finances together. Yeah, like it, you know, we do all of their allowance through that. And then I did recently find out you can do savings goals. So, you know, there's some of that kind of built in already. And I'm, you know, pushing them to explore those a little bit more. We gave them an allowance pretty early on. And then immediately we're told them like half of this allowance is going to savings. And then my husband invests that along with some other, you know, money annually. How much are they getting for their allowance? And are there like chores they have to do or is it kind of a weekly, monthly thing?

19:03Elizabeth Ayoola:No, they have to do chores. I always find that interesting. Sometimes in the parenting world, that's controversial because people are like, you shouldn't attach chores because you're a team and, you know, two allowances. So that's interesting.

19:15Sean Pyles:Also, that's how you are earning money, too. Growing up, we had a chore wheel. And so my sisters and I would each tackle like, OK, you get the upstairs bathroom, you get the kitchen, whatever. And that's how we would earn our allowance. Do you have something similar in your house or how does that work out? Well, it's kind of a hybrid and I understand the controversy because you do want them to think of like, okay, we're all a team. We all have to work together. So we have it as we're a team, but it's also required. I love it. That's being in a family, right? Yeah. Like you can't, even if, you know, you're not going to get paid if you don't do your allowance, but you're also going to lose other privileges as well.

19:53so and honestly like because we started it so young i think it's just they get it like they don't love it but i have seen a transformation in them in like the amount of angst you know

20:07Sean Pyles:you know that the less huffing over it now yeah they're just okay how much are they getting so we have done the um dollar equivalent to their age okay um and that's you said weekly yes okay yeah But then they only get half of that, right?

20:24Elizabeth Ayoola:Yeah. To spend. Do they know where the other half is going? Because I know you said you invested. I don't think they do. I think that that's something we need to peel back the curtain on so that they can see that and see what's been happening since they were, you know, three or four.

20:41Sean Pyles:So are there any other kind of formal ways that you've been teaching your kids about money besides the chores and the allowance? Just this past year, we started doing a clothing allowance. And so they each get about$200 a year and they have that for the year. So they can buy everything they want at once. Like my daughter just dropped$118 Hot Topic the other day. And I was like, boo. Yeah, I was going to say you could buy one juicy track suit. Maybe just a pair of pants from Juicy Couture. And it's hard for me because I'm a thrift shopper, you know. I'm like, let's go thrift shoppers. But that's the lesson, you know.

21:19I'm eager to see how that plays out.

21:21Sean Pyles:Have they ever run into a situation where they spent all the money, but they actually needed like maybe a new pair of shoes or a new jacket and they spent that money and they couldn't get it? That's all part of the process. They can, but they can use their allowance to, you know, supplement their clothing if that's what they want to do. So that's happened to on occasion. We also did a room decorate this past year. We've been moving around quite a bit in the last four or five years, and they've never really had their own space that they wanted it. So we gave them a took a change and we said, here you go.

21:52And, you know, start searching. We went to consignment stores for a lot of the furniture and whatnot. And then they, you know, we broke things down in Excel and said, well, if you buy this mattress, this is how much you're going to have left over versus you buy this one. So I think that was really, you know, good. But it probably, well, I don't know. I know it. My oldest daughter is probably more able to digest some of the lessons.

22:19Sean Pyles:I was going to ask how they responded to that. Did their eyes just glaze over when they saw a spreadsheet or were they engaging with the numbers? They engaged with them when they saw how quickly it went. You know, we did a lot of online searching at first and then they saw how quickly it dwindled. I think it was really informative. The final one, which is a departure from maybe what most parents do is, so I have for the last 18 months been tracking all of our expenses. The credit card makes the way your expenses are, you know, output into Excel and makes it very easy to do, but you have to do some cleaning up of the data.

22:52And so I had her do there about four, I had my oldest daughter do about four months of that. So she could see what we were, where we were spending and which, you know, how much is that is needs and how much of it's wants and how much of it goes into our savings and whatnot. And so I would really like her to adopt something like that. I know it takes time every month, but it's been really helpful for me to get a grasp on like what, where our money is going. Yeah.

23:22Elizabeth Ayoola:So I'd like to ask at a higher level, what are the primary goals? If you had to break out maybe two or three goals that you have for your kids in terms of their financial education, what would they be? Like I mentioned before, I'd like them to stay curious. I understand I'm not going to be able to teach them everything. But if they can, you know, recognize that there are resources out there that they can take advantage of, like I would, I feel like they would be ahead. If they recognize that there are people that they can talk to that know more about it, if they don't, you know, have a sort of innate interest in it, then I think that would serve them well as well.

24:00And then I also want them to realize that, you know, knowledge is power. And, you know, in my situation, I was very fortunate to meet my partner and he was just off the charts. He's very good with money. He's a little older than I am. He had kind of it all figured out. And so I just kind of jumped on his coattails for the last 20 years. and I don't necessarily think that's an approach I want them. I don't want them to rely on luck, you know? So if they get into a relationship, I want them to be able to, you know, recognize, you know, where there could be red flags, you know, or, you know, help their partner or, you know, that kind of thing.

24:44Sean Pyles:Yeah. Well, sharing your household expenses with your older daughter, I think is a good step in that direction. Something I'm thinking about too, and I want to hear a little bit more about your goals, but something else I'm thinking about is how a lot of what we learn about money, we aren't even really aware of what we're learning. We're learning it kind of through osmosis of seeing our parents and our families do things through the way that money is described in the household, whether it's something that's really scarce, even things that aren't talked about around money and sort of the subconscious things that are going on in the home.

25:10Sean Pyles:What do you think your kids might be getting from how you and your husband have been managing your finances and how you've talked about it amongst yourselves and even with them? What do you think kind of lessons they might've learned or even the values they might have absorbed from you. I'm very open with like the way that we shop. You know, I tell them what our monthly budget is for groceries, you know, and then, you know, I update them. Yeah, not all the time, but I'm like, oh, we have to wait till the next grocery trip because we've used all our money this week. And then, you know, like I say, I'm very frugal shopper.

25:43I don't buy a lot of stuff. I tell them like, you know, what I do is I make a list of my wands as they come up And then I keep an eye out for them at the thrift store or consignment store. And then sometimes I just forget about them. We also, you know, kind of have this money powwow about the allowance and their clothing allowance. They can pipe in and give us their thoughts, you know, as well.

26:10Sean Pyles:So you're teaching them to have open dialogues around money. Yeah. Maybe that wasn't something that you had before. So you want to emphasize that. Right. The harder stuff, like the investment, you know, that that conversation doesn't really happen. And I don't know. I'm not sure how we would tackle that.

26:28Elizabeth Ayoola:OK, so tell us a bit where we can help you in terms of questions that you have in terms of maybe how to start having that conversation with your kids about investing. I know you wrote to us and mentioned maybe having discussions around saving for a 401k. Is it too early to do that? So can you go ahead and ask us what you want to ask us around that? I kind of like as I was distilling this down in my head, I'm like, is this really a conversation to have with an adolescent psychologist? You know, because it's like, how do you make them want to do to do something? I want to say I don't think especially coming from someone whose mom didn't talk to her much about investing, but my mom was investing.

27:06Elizabeth Ayoola:I don't necessarily think it's about making them do it right because they're going to make their own financial decisions when they grow anyway. I think you're doing a wonderful job in terms of equipping them with the information. but had I known these things, I could have applied them when the time was right to apply them, if that makes sense. And I know that you mentioned one of your daughters is 14. So that's four years away from potentially going to college and living out on her own, maybe another eight years away from getting her first job. And I think, you know, depositing those seeds now is not a bad idea, even if it's in small doses, even if she doesn't fully understand it, just having the concept of it, gives her something in her toolbox to use later.

27:44I don't know if I'm worrying too much about like those things that you get after you get a job, you know, like how to negotiate your 401k plan with your employer and matching funds and health insurance and investment plans and that the credit card thing is coming up on the horizon. And I'm not really worried about, especially my oldest, abusing that, but I still want to give her a taste of it. And I also want her to understand why it is important to build credit, which was not something that I was aware of when I was younger.

28:23Elizabeth Ayoola:I know that you wrote and said that you didn't necessarily want to make her an authorized user on one of your credit cards. So can you talk to us a bit about that? Because that is one way that she can learn in real time about credit. You seem to be excellent about doing things with her alongside her versus just preaching at her. So it sounds like there's an opportunity there for you guys to do that together. So what are your reservations? I mean, I could show her what we do, but I was kind of hoping that we'd have like some sort of simulation where she would actually be required on the 30th of the month or whatever to make a payment.

28:58You know, even if it's like some pretend payment, it's like, I don't know what the equivalent of SimCity is today.

29:07Sean Pyles:Great game. So that she could feel like the real time sort of consequence, like, oh, you know, I didn't pay and now I have this extra interest that's been applied. so because we are very good with our credit like I don't know that she would see the repercussions of you know not staying up on it well before I tell you like a couple of maybe potential

29:33Elizabeth Ayoola:games or simulations as you mentioned that she could or you guys could consider doing together what do you think is her money personality now at 14 almost 15 oh man she is what's a nice way to say tight like she's very tight like she often will negotiate like um i i think this is something that you pay you should pay for because it's you know x y and z and so it took me a while to like kind of catch up to that because you're so used to as a parent just paying for everything that

30:02Sean Pyles:they do right but she can still spend her money at hot topic so she's willing to have some fun with her money well so that was my youngest oh the youngest i see my oldest she goes to she goes Goodwill and she goes to Ross. Like those are her big, you know, where she likes to shop for clothes.

30:19Elizabeth Ayoola:Yeah. So for context, if you added her as an authorized user, each credit card issuer is different in terms of the age that you could do that. So it could be anywhere between the ages of 13 and 15. You're right. There is the risk that she could affect you guys' credit if she didn't pay on time. But I think there are so many guardrails you could put around that, like checking how much she's spending weekly. And like you said, she's very tight. So it doesn't sound like there's a high risk of her overspending. But aside from that, if you don't want to go that route, which is understandable, you could use the Bite of Reality app.

30:48Elizabeth Ayoola:There's also the NextGen personal finance platform. You have the Uber game by the Financial Times. And there's also a platform called EverFi, which offers resources and games as well that she can use. And the good thing about all these resources is they give you real life scenarios where she could see what happens if she overspends on a credit card. And maybe they give her a budget and she has to work through it and, you know, pay off some debt and do other things. So these are some activities that you could do with her that will give her some kind of real life experience of what it looks like to pay down debt and stay on budget.

31:18Sean Pyles:And one note on the authorized user thing, you can add her to your credit card and just not give her a card at all. But that would help her build a credit history, which is one of the most important things in terms of establishing your credit. My former co-host on Smart Money added her daughter to her credit card and the daughter actually had a credit history older than she was. So you can do things like that. So you can set your daughter up for success without the risk of them spending money and maybe not paying it on time. So that's an option too. Yeah. So I'm confused. So you put, you put their, they're on our same account, but they have like their own credit profile tied to their social security number.

32:01Elizabeth Ayoola:So it helps them to start building credit yeah oh yeah okay good to know so what are your thoughts on that are you still maybe not or is something you'd be open with open to yeah no i think that would be certainly something we could consider i do like the idea of the still like the simulation game of

32:20Sean Pyles:course and we will follow up with some more information around those different tools that you can use but another thing that you might want to consider as your daughter gets closer to 18 is a secured credit card. And with this, you have to put down a deposit and the deposit is basically the credit limit. And so this is a smart way to build credit and to make it so that they can't spend too much money. They're not going to be getting like a$10 ,000 credit limit unless you put down all that money. But that way they can manage it in real time themselves. You could do a bit of handholding for the first couple of months saying, okay, when's your bill due?

32:53Sean Pyles:Here's your statement. Let's look at this together. That might be a nice way to actually do it with a real credit card, but have it still with some guardrails on it.

33:01Elizabeth Ayoola:Yeah. I started a secured credit card, not as a teenager at 20 something when I moved back to the U.S. And it was really helpful because I had to put down my own money as the deposit. So it really helped me to learn how to use credit cards responsibly. Okay. And those are issued by all the banks? By several.

33:18Sean Pyles:Yeah. The NerdWallet has a roundup and articles about this. So you can look into that on the website too. We've talked about a few different options so you can help your kids learn more about their finances and actually be more proactive and hands-on managing their money with a secured credit card or other options. What do you think would be maybe the most effective for them? And what would you like them to get out of this? I essentially want to prevent them from getting into credit card, deep credit card debt once they leave the house and we are no longer looking over the shoulder all the time.

33:54So I'd like them to experience that so that they're aware of how it works and they aren't surprised by anything.

34:03Sean Pyles:Something else I'll encourage you to talk with your daughters about is the idea of financial goals. And I think viewing money as a tool to get what you want out of life can help encourage them to, as you were saying, stay curious about money and think, OK, maybe your daughter wants to move abroad for a year. What amount of saving is it going to take to have that be possible? what's the right tool to use to save. There are all sorts of different savings vehicles that they can use. So by starting with, here's what I want out of life, money is going to help me get that. What kind of tool can I use to get there?

34:32Sean Pyles:It begins to sort of have this spiral of, okay, there are all these different questions that come from just this one thing I want to accomplish and money will help me get there. So that would be something to talk about too, is longer term, beyond college, maybe what's money going to do for them? Well, that's good. Actually, just this morning, I was talking with my oldest about that because she's turning 15 in a couple of days and she's going to be driving, you know, in a year. And so I have said, okay, well, so I looked up the average, you know, price of adding a child to insurance. Expensive.

35:05Yeah. So you need to start saving now. And so I talked about, and I have been talking about the spending goals on Greenlight. She's just been kind of like, Oh, can we do it later? But now I'm like, okay, now you have something that you know, you're going to want in a year.

35:22Elizabeth Ayoola:Let's look at how you're going to get there. I love that. And it's something that she wants versus something you want for her. So there may be a bit more of a driver there. I was also going to say, I know you said earlier about kind of making them more curious to want to learn about personal finances. I took a Khan Academy course during my early days of personal finance. It's a free course and it teaches you all the fundamentals. So that's budgeting, saving, debt, retirement, and kind of all those foundations. So maybe that's a course that you guys can do together. It's interactive. You have videos.

35:52Elizabeth Ayoola:You know, you can answer some questions just as a way to kind of incorporate family learning as you're already doing such a great job with. Okay. Yeah. Yeah, I am actually taking that course. You see, you're on it. Well, I know what I'm on, like unit two. The podcast is just a really nice way for me to, because it just fits into my life so well when I exercise or I'm walking the dog. You know, the course, the online course, I have to sit down and go through it. So that's a little harder, but I'm working on it. Yeah. Good job, mom.

36:25Sean Pyles:So what do you think your next step will be in terms of talking with your daughters and setting them up? Where are you going to go from here? So next steps, I think I'm definitely going to push the savings goals for both of them. I'll have to talk a little bit more with my youngest about what that might be. It might be another trip to Hot Topic. um so that's one thing i would like to say expose them more to like the investments that we've done so they can see how that works and um you know how my husband manages that and then also to show them like you know you put this much money away every week it doesn't sound like you know seven bucks doesn't sound like much but look where you are after you know 10 years yeah yes and people you can use to really bring that to life is NerdWallet's compound interest calculator.

37:22Sean Pyles:You can put in, oh, I'm putting in seven bucks a week or however much a month. What's that going to look like with the average rate of return over 10, 15, 20 years? There's a nice graph on that page too, and it really shows the power of compound interest. So that can help make it a little bit more tangible. Okay. That sounds good. I also feel like, you know, now that we're talking about saving in the hundreds of dollars like maybe getting her hooked up with like a high interest savings account um at this point so that she could see you know kind of how that works yeah yeah and then like i say i think she has the savings down i think well i'm gonna try and get her to track her expenses yeah you know i've got the whole excel spreadsheet set up yeah we'll see how that goes.

38:07Sean Pyles:And there are other tools that might be more friendly to your daughter's style. Yeah, like using an app of some sort. There are all sorts of apps that are even kid oriented too. So playing around with those might make it less of a hurdle to be entering something into a spreadsheet. It can sync with a bank account and that way it's just automated too.

38:25Elizabeth Ayoola:Okay. And also it might be nice for your daughter to help her feel empowered in the process to show her different types of budgeting systems and see what resonates with her most, right? So that she can feel like, you know, she's doing it in her own way. I haven't raised a teenager yet, but I hear that they're very opinionated and assertive and want to do things their way. So this might be a way to make her feel more enthusiastic. And it's just been lingering on my mind, the 10 year old with the hot topics. I once had a friend who the way that they would get their kids excited about investing and they were pretty young was by letting them buy a stock in the company that they really like.

38:59Elizabeth Ayoola:So if she is a hot topics lover, it could be, hey, let's put I don't know how much the stock is. If it's 10 bucks, let's take some of our allowance and put 10 bucks on that. And now we get to invest in a company that we really like versus just consuming. So, OK, yeah, that sounds intriguing. Yeah. And that sounds like a good father daughter bonding. Yeah. As well. What about all the other stuff that comes after college? You know, they're not in the home anymore. They're not 14 anymore. They're now 20, 21. Is that something like we just plow through when, when, when, as it arises? I'm going to give you another real life scenario that an ex of mine did that I thought was very clever.

39:42Elizabeth Ayoola:So what he would do is he would match whatever his kids invested. So if they invested$10, he would match them$10. And I think that's such a great entryway to teach them about 401k matches, right? So if you contribute this, if you, you know, your employer might contribute that. So I think just introducing them, maybe that's another thing for you and your husband if you do 401k matches, just talking them through how that works. So I think it's about introducing it first, right, in a way that they understand at their age level, and then they can apply it later when it becomes more relevant. Okay, I like that.

40:14I think my husband will like that too. Yeah.

40:16Sean Pyles:That's a great tip. Yeah. Yeah. Okay. Well, Esa, thank you so much for coming on and talking to us about teaching your kids about how they're going to be managing their money. I know that there are going to be some ups and downs over time. And at a certain point, the kids got to make their own mistakes, too. And that's a valuable lesson to learn. But it seems like you're doing all the right things and setting them up for success. Yeah, that's encouraging to hear. Thank you. You're doing a great job, Mom. Yeah. Keep us posted. We can't wait to hear how this goes.

40:41Elizabeth Ayoola:If you enjoyed our conversation and you're interested in getting a financial strategy tailored specifically to your needs, then you may want to consider working with a financial planner. You can get Match with a financial advisor for free using NerdWallet Advisors Match. You can find a link to that in today's show notes.

40:58Sean Pyles:And that's all we have for this episode. Remember, listener, to send us your money questions. You can call or text us on the Nerd hotline at 901-730-6373. That's 901-730-NERD. You can also email us at podcast at nerdwallet.com.

41:11Elizabeth Ayoola:And of course, we would love for you to join us next time to hear about whether it makes sense to quiet quit your job. Until then, we want you to follow us on all of the platforms where you listen to your podcast, whether that be Spotify, iHeartRadio or Apple Podcasts to automatically download new episodes.

41:29Sean Pyles:Here's our brief disclaimer. We are not your financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

41:38Elizabeth Ayoola:This episode was produced by Tess Vigeland and Anna Hawoski. Hilary Georgie helped with editing. Nick Karisimi mixed our audio. And a huge thank you to all of our editors for all of their help.

41:50Sean Pyles:And with that said, until next time, turn to the nerds.

42:00Every Tuesday, we talk security on Security Now. Hi, this is Leo Laporte inviting you to join me and Steve Gibson And as we talk about AI, the new agentic adversary, actually fixing bugs. We'll also talk about hundreds of bugs that were fixed in the newest version of Chrome. And the new chat control may come to the EU. That's scary. All of that this week on Security Now. You'll find it at twit.tv slash sn or wherever you get your podcasts. Your team just added its 67th AI tool and also your 67th security blind spot. The good news? The Vanta agent works like a GRC engineer in the background, finding every app your team uses, scoring the risk, and drafting fixes for you.

42:42Vanta is the platform used by over 16 ,000 fast-moving companies like Ramp, Cursor, and Harvey, who are shaping the future with AI and staying ahead of AI risk. Get started at Vanta.com.