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Hey,

0:01

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0:03

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Thanks for listening, we hope

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today's episode.

1:22

Welcome to the Science of

1:22

Parenting podcast where we

1:25

connect you with research based

1:25

information that fits your

1:28

family. We'll talk about the

1:28

realities of being a parent and

1:31

how research can help guide our

1:31

parenting decisions. I'm

1:34

Mackenzie Johnson, parent of two

1:34

littles with their own quirks,

1:37

and I'm a parenting educator.

1:38

I'm Suzanne

1:38

Bartholomae and I am an

1:41

associate professor who strives

1:41

to help people reduce their

1:44

financial stress, increase their

1:44

financial stability, and I'm a

1:48

proud parent of a high schooler

1:48

who still talks to me.

1:54

We love it.

1:54

In today's episode, we're going

1:59

to dig back in to this, you

1:59

know, what we're talking about

2:01

all season, kids, money, family.

2:01

But this time, we're gonna kind

2:05

of think about the end goal

2:05

related to what we learned in

2:10

the first episode of financial

2:10

socialization or financial

2:13

parenting. And so we are, we're

2:13

gonna think about this end goal,

2:17

right, Suzanne? This term of

2:17

financial well-being.

2:21

Yeah,

2:21

financial well-being, that term

2:24

that a lot of us don't sit down

2:24

to analyze very often. We don't

2:27

spend a lot of time on it. But

2:27

people like me, the geeky

2:30

researchers and people that are

2:30

interested in what the concept

2:34

means to people.

2:36

Yeah, I'll

2:36

join you in the geeky realm. I'm

2:40

joining you, right, we love a

2:40

term. I love a term. I'm

2:44

speaking for everybody. We

2:44

collectively love a term. But

2:48

yeah, so let's, of course, let's

2:48

start there with that

2:50

definition. What does the

2:50

literature say? Like what

2:54

guidance does it tell us. What

2:54

is financial well-being? Because

2:58

I feel like it could be a lot of things.

3:00

Yeah, yeah. And so the

3:00

term financial well-being has

3:04

really been built out a lot in

3:04

the last, I'd say, decade. And

3:09

that's with the help of the

3:09

Consumer Financial Protection

3:11

Bureau, which is a new federal

3:11

agency that emerged from the

3:15

financial crisis of 2007-2008

3:15

when a lot of consumers got into

3:21

homeownership, and maybe

3:21

shouldn't have been there. They

3:23

weren't ready for it. They were

3:23

in credit products that just got

3:27

a lot of people into trouble.

3:27

And so they are a new federal

3:31

agency that really is there to

3:31

help empower consumers, help

3:35

enforce consumer finance laws,

3:35

and just get bad actors out of

3:43

the marketplace, and really get

3:43

them to pay for what they're,

3:48

they've given back like almost

3:48

$15 billion to consumers since

3:51

they've come on. Yeah. Yeah,

3:51

for, you know, just being

3:55

predatory lenders or too high of

3:55

interest rate. And then the

3:59

other key is that they want to

3:59

educate people. So definition. A

4:02

normal definition.

4:03

Good. Yeah.

4:03

It tells us it's a credible,

4:06

this is a credible source,

4:06

right? Their goal is to educate,

4:09

empower, protect, like, yes,

4:09

yeah. Consumer Financial

4:13

Protection Bureau.

4:14

Exactly.

4:14

They have great resources for

4:16

parents. So I really recommend

4:16

your listeners to get online and

4:20

check out the resources, because

4:20

education is a big part of it

4:23

and research. And so they did

4:23

some research with consumers and

4:26

with practitioners and this is

4:26

their definition. They define

4:30

financial well-being as having

4:30

financial security and financial

4:33

freedom of choice in the present

4:33

and in the future.

4:38

All right,

4:38

yeah. And I love they

4:40

specifically said in this

4:40

report, which you shared with

4:42

our team, right, real people

4:42

really define it this way.

4:48

Alright, even if we don't use

4:48

those specific words or terms,

4:50

These are a lot of times the

4:50

concepts we're getting at when

4:52

we're like, what is it to be

4:52

financially well. Well, it's

4:56

about security, and it's about

4:56

choice, and I like that it also

4:59

leads into that time aspect,

4:59

right? Right now, but also down

5:04

the line, because that's a big

5:04

part of financial well-being is

5:07

where we're headed and how our

5:07

money can be used to protect us.

5:10

And yeah, choice. I mean, choice

5:10

and security in the future.

5:15

Yeah, exactly. So many financial decisions that we make today are

5:17

about our future, you know. So

5:21

as an 18 year old saving for

5:21

retirement, that's gonna, you

5:25

know, it's really hard to think

5:25

about the future. But hey, when

5:28

you get your first job, and you

5:28

get an offer from an employer

5:32

that they're going to do some

5:32

matched savings for retirement,

5:36

you got to do it. You've gotta

5:36

take him up on it but it's

5:39

really hard to let go of that spending.

5:42

Yeah, it is.

5:42

Well, not like, you know, one

5:44

thing I'm geeky about is

5:44

behavioral science, behavior

5:48

economics. And we do talk about

5:48

it with money that this idea of

5:52

it's like, so far out, how do

5:52

you like, you know, how do we

5:56

even make it tangible? To think

5:56

yes, this is what I want in 40

6:00

years, right? That's difficult

6:00

to make tangible. But okay, but

6:04

the things we do want. Let's

6:04

talk, let's break down these two

6:08

constructs a little. So one is

6:08

about security. So what does it

6:12

look like? Let's talk right in

6:12

the present, what does it look

6:16

like to have security in the present?

6:18

So

6:18

financial security in the

6:20

present is having control over

6:20

your day to day, month to month

6:24

finances. So that means that a

6:24

bill comes in, you can pay for

6:30

it, you know, that you have some

6:30

type of an organizational system

6:35

in place that you're controlling

6:35

your expenses. When you have

6:41

income, you're allocating it

6:41

whether it's to checking or

6:45

savings or whatever your goals

6:45

are that you've set for that

6:49

And I almost

6:49

feel like a piece of that, yeah

6:49

money. is just that, I mean, I want to

6:53

use the word security. But like,

6:57

the safety, the surety, the

6:57

dependability almost of like, we

7:03

have enough access to, our

7:03

finances are in a place that I

7:06

have enough access to take care

7:06

of those things. Right? And

7:10

whether it's month to month, you

7:10

know, and I remember one of the

7:12

reports you shared with me used

7:12

that term financial shock. You

7:17

know, and is that a part of

7:17

security too, in the present?

7:21

Right, is that idea of financial

7:21

shock that you would be able to

7:25

withstand an unexpected bill?

7:27

Yeah, yeah.

7:27

So yeah, that ability to absorb

7:30

shock is financial security, but

7:30

it means in the future.

7:34

Oh, I'm

7:34

getting ahead. I'm cheating.

7:36

Yeah, yeah.

7:36

No, no, no, that's okay. That's

7:36

Yeah, okay. I mean, because they are

7:39

related, right? And so COVID

7:43

came along, right? And so we've

7:43

talked about this, it really put

7:48

the light on the vulnerability

7:48

of so many Americans in terms of

7:53

their finances.

7:55

Absolutely.

7:55

To know that all of a sudden, their income stopped, and there was no

7:56

way to absorb that shock. I

7:59

mean, the government stepped in

7:59

with a lot of, you know, the

8:01

American Rescue Act, and all

8:01

sorts of provisions, but they

8:05

were temporary. And now we're in

8:05

a space where the effects are

8:11

really being felt, I think.

8:12

Oh, yeah,

8:12

like inflation. And I mean, even

8:15

though, you know, for a lot of

8:15

people who might say even like

8:18

post-pandemic, arguably, right?

8:18

But the effect is still felt.

8:23

Because even though, I mean, we

8:23

talked about present and future

8:27

in the past. Right, but because

8:27

they weren't necessarily ready

8:31

or able to absorb that in that

8:31

moment. Like, right, did we take

8:34

on debt to do things? Were we

8:34

forced to make really hard

8:37

financial decisions because of

8:37

that. So yeah, that idea of

8:42

security.

8:43

Yeah, yeah.

8:43

So things like, you know,

8:47

deferring or suspending student

8:47

loan payments, you know, that's

8:51

been going on. Mortgage lenders,

8:51

also suspending payments

8:55

temporarily, that happens. There

8:55

was increased unemployment. So

8:58

there were all sorts of things

8:58

that we weren't used to. And

9:01

actually temporarily, a lot of

9:01

Americans were in better

9:03

financial shape, and had

9:03

increased financial well-being.

9:07

There's a health survey that,

9:07

you know, you can pretty much

9:10

document people's feelings of

9:10

financial well-being and you

9:13

might expect, like, oh, yeah,

9:13

after COVID they should really,

9:16

because of the shock, as you

9:16

mentioned, should be maybe

9:19

having lower financial

9:19

well-being but the actuality was

9:21

that they weren't. Initially,

9:21

but now it's started to decline

9:25

again. Yes.

9:25

Yeah, that

9:25

makes sense. That makes sense. I

9:28

was gonna keep rolling on this,

9:28

but I almost want to pause here.

9:31

Okay, thinking about financial

9:31

security in the present and

9:35

financial security in the

9:35

future, if we shift our hat,

9:38

right? Of course, it's natural

9:38

to think about our own finances,

9:42

but think about our kids.

9:42

Thinking about the goal with our

9:45

financial parenting with our

9:45

kids when we think about

9:48

security in their present and in

9:48

their future. What comes to mind

9:52

for you, as you think of

9:52

parenting related to financial security.

9:56

Yeah, we should get back to the parenting thing, shouldn't we?

9:58

I guess we'll

9:58

talk about it.

9:58

Yes, well,

9:58

as you know, so this generation

10:02

who has experienced the shock,

10:02

and even the financial housing

10:02

Yeah, they want to be sure that

10:02

it's enough. That it's not going

10:07

crisis and the meltdown that

10:07

happened in 2007-2008. I mean,

10:12

anecdotally, what my colleagues

10:12

and I observed in some college

10:17

students that grew up seeing

10:17

their parents maybe struggling

10:21

with the housing crisis and

10:21

having financial challenges,

10:26

they're more risk averse,

10:26

meaning that they are, you know,

10:31

wanting more security. to like disappear from under

10:36

them. Sure, and you can really look at

10:38

things like the depression, the

10:42

housing crisis, you know, stock

10:42

market crashes, you know, things

10:46

that really impact a household and have a shock to the household has kind of a

10:47

reverberating effect on the way

10:52

someone's attitude is shaped.

10:52

And so that's kind of a

10:54

parenting thing, right? Like how

10:54

you're reacting, is going to

10:58

shape the attitude of your child.

11:00

Mm hmm. Yeah,

11:00

well, like with this idea of

11:03

reflecting in the last episode,

11:03

about our values related to

11:07

money and what we want to pass

11:07

on and what we don't want to

11:11

pass on, right? Like, debt,

11:11

maybe, you know, but these

11:15

things we do and don't want to

11:15

pass on to our kids financially.

11:17

So I think about that security

11:17

piece of how can I think about

11:22

passing on financial security as

11:22

a part of well-being and my

11:25

kids? And so, you know, I think

11:25

my husband's, like I've said, a

11:29

financial advisor so I'm like,

11:29

Oh, investment plans is one

11:34

option. Yeah, but there's more

11:34

beyond that.

11:38

Yeah, it is

11:38

and so it's that capacity to

11:42

absorb shock. And the only way

11:42

we can do that is if we have

11:45

savings, right? So we have some

11:45

kind of a little nest egg, or

11:50

some kind of emergency fund is

11:50

what we typically call it or

11:52

rainy day funds. So that when

11:52

there is trouble, you know, or

11:56

there's a shock, then you can

11:56

face it with a little bit of

12:00

extra money. Insurance is

12:00

another thing, you know, like

12:03

your choice of life insurance

12:03

and house insurance, disaster.

12:07

That is a way to protect risk.

12:07

Right.

12:11

And so thinking about passing those, that knowledge of, I should have

12:13

an emergency fund. And yeah, the

12:18

knowing how to navigate that,

12:18

right, knowing how to have a

12:21

savings and those things. Those

12:21

are skills and knowledge and

12:25

capabilities we can teach to our

12:25

kids. We can do that.

12:27

Yes,

12:27

absolutely, you can start young

12:29

with the whole getting your

12:29

child to start savings habits.

12:33

And it's tough, you know, again,

12:33

because we're getting back to

12:38

that future versus current

12:38

consumption. It's hard. It's

12:41

very abstract, you know, to

12:41

think about your future self,

12:45

but introduce your child to

12:45

their future self. Talk about

12:49

their future self. I mean, we do

12:49

that when we'll ask them like,

12:54

what do you think you want to be

12:54

when you grow up? That's

12:58

probably about as concrete as we

12:58

get when it comes to talking

13:02

about, what do you think your,

13:02

what do you see yourself doing?

13:06

Right? But you know, what are

13:06

their aspirations? And then,

13:10

every aspiration typically will

13:10

be tied to, okay, well, what's

13:15

that aspiration going to cost?

13:15

Yes. Right. And so yeah, how

13:15

Yes, whether

13:15

that's education or leisure, or

13:19

attainable it is will have to do

13:19

with how realistic they're

13:23

thinking about it. Right? even certain career paths, and

13:27

things like that. Yeah. That's

13:32

such a good point.

13:33

Yeah, so I

13:33

mean, the simple conversations

13:35

about career and then career

13:35

tied to income, and then income

13:40

tied to lifestyle and then

13:40

lifestyle having a price tag.

13:44

Yes, yes. So

13:44

making some of these things

13:48

concrete and helping our kids

13:48

have that future orientation,

13:52

regardless of their age. For

13:52

whatever that makes sense for

13:55

them. Right. And we're gonna get

13:55

into this in our upcoming

13:57

episodes based on their age, but

13:57

whatever that looks like, those

14:02

are things we can do to help us

14:02

build their financial security

14:06

is teaching them that content,

14:06

modeling it for them, and all

14:10

that stuff.

14:11

And, you

14:11

know, delayed gratification.

14:15

That's a huge one, right? I

14:15

mean, that's a skill, that's an

14:19

attitude, you know. If a child

14:19

has that then, if you can build

14:25

that muscle, then you're doing

14:25

very good work as a parent for

14:28

their financial security.

14:29

Mm hmm. Okay,

14:29

I'm taking notes on that one,

14:33

like, ooh, I should work on

14:33

that. As an adult, that's a

14:38

skill I need to work on as well.

14:42

Well, and then I think also as a parent talking to your child about

14:43

trade-offs, and that's where

14:46

delayed gratification comes in.

14:46

Right? So you know, Mom, I want

14:51

these pair of Nikes. Right?

14:51

Well, okay, if we buy those

14:55

Nikes what are we not going to

14:55

do? First of all, I like to with

14:58

my daughter, my high schooler,

14:58

is say you realize that pair of

15:03

sneakers costs like three hours,

15:03

five hours, eight hours.

15:06

Quantify to

15:06

the tangible thing.

15:08

Yes, yes,

15:08

exactly. You know, delayed

15:13

gratification. And I have

15:13

college students, I asked them

15:16

about this and something that

15:16

they do is they'll put

15:18

something, they'll shop online,

15:18

they'll put it in the cart but

15:22

not buy it for 24 hours at

15:22

least. They'll sleep on it. So

15:25

that's kind of another way to

15:25

model, you know. Because a lot

15:30

of times you're hot about buying

15:30

something, and then you wait 24

15:32

hours, and then you're like,

15:32

okay, well, you know, I might

15:35

have been in the moment there

15:35

and I can probably live without

15:38

this, you know, potentially.

15:39

Oh, I love

15:39

that. Okay, so security as a

15:45

part of financial well-being,

15:45

right? That's one component. In

15:47

the present, it's about that

15:47

control over your day to day,

15:50

month to month finances, and in

15:50

the future, that ability to

15:53

absorb that financial shock. I

15:53

like that term, financial shock.

15:57

Okay.

15:57

Me, too.

15:58

So now let's

15:58

talk about that other component,

16:00

though. So this freedom of

16:00

choice idea, can you help us dig

16:03

into that a little more?

16:05

Yeah. So

16:05

financial freedom to make

16:07

choices that you enjoy in life. The idea is that financial freedom, I think we also talked

16:09

about this that one definition

16:19

is, you know, your ability to

16:19

quit your job if you're not

16:22

happy. That's like, ultimate

16:22

definition of financial freedom.

16:25

Right? That's freedom. Yes.

16:27

That's having a choice that

16:27

you're not dependent on your

16:30

income. I mean, that's huge,

16:30

right? But really, in the

16:34

definition that the Consumer

16:34

Financial Protection Bureau

16:38

describes in terms of freedom of

16:38

choices, it's very simple. It's

16:42

things like, I want to go out to

16:42

dinner tonight, I don't want to

16:46

cook. You know, I want to be

16:46

able to enroll my child in an

16:50

activity that might require some

16:50

extra expenses, like equipment,

16:54

or, you know, fees just for

16:54

participating. That's a big one,

16:58

right? Just wedding presents,

16:58

birthday presents, and being

17:02

able to have a party. I mean,

17:02

they can be as simple as that.

17:06

And for a lot of us, that's a

17:06

feeling of freedom. Like, I

17:10

don't have to worry about it if

17:10

I want to do this.

17:13

Yes. And

17:13

yeah, within reason, right?

17:16

Yeah, and I do think that's also

17:16

one of the great things about

17:19

this definition that they offer

17:19

is people can decide their own

17:23

context, right? You can decide,

17:23

yeah, my definition of freedom

17:27

is not to like to be able to

17:27

quit my job. Right. My

17:32

definition is that, okay, if we

17:32

feel like going out to eat that

17:36

it's not a burden, right? That

17:36

there's not too much opportunity

17:39

cost on it. Right. So thinking

17:39

about that, I like that as just

17:44

choices to enjoy life. That your

17:44

money is a means to help you

17:48

enjoy life. I like that.

17:51

Yeah, yeah.

17:51

Yeah, it is. It is. It opens

17:55

some opportunities for us and

17:55

you don't feel, you feel a

18:00

little stressed and out of

18:00

control when opportunities are

18:03

shut to you.

18:04

Yes, yes.

18:04

When you feel like you can't

18:08

choose this. Okay, so that's in

18:08

the present and the present is

18:12

to enjoy life. What about when we're talking about it in the future, choice in the future?

18:16

Alright, so

18:16

yeah, so choice in the future is

18:20

that you're on track to meet

18:20

your financial goals. And while

18:23

all of us, you know, there's

18:23

general goals that most families

18:26

and households will have things

18:26

like sending your child to

18:29

college, maybe living in a

18:29

certain neighborhood, driving a

18:33

car, having a car. So that's one

18:33

piece of it. But those choices,

18:40

and this really kind of is, I

18:40

think, integrated into the

18:43

definition is that it's really

18:43

everybody's choices are tied to

18:48

values. Right. And that's, I

18:48

think, where as parents and just

18:52

even as consumers, we don't

18:52

really become intentional about,

18:55

is my spending tied to my

18:55

values, and what I want for my

19:00

child, right? So if I contribute

19:00

to a charity or contribute to a

19:05

faith organization, you know,

19:05

I'm demonstrating that, okay, I

19:09

value what this is providing to

19:09

the community or providing to

19:14

me, you know, so giving, right,

19:14

is a value.

19:19

Well, and I

19:19

can think of even just families

19:25

that I know, friends that we

19:25

have, you don't just, of course,

19:27

center around my own experience

19:27

and my own culture and race and

19:30

all these things. But you know,

19:30

I have friends who would say,

19:35

financial goals, they invest if

19:35

you will, in like, healthful

19:40

food, right? Like that is

19:40

something that is important to

19:43

them to invest in, or I have

19:43

friends that, you know, like

19:46

travel is that's a family value

19:46

is that time together. Or I

19:51

honestly can say, a financial

19:51

goal like value for the stage of

19:55

life that my family is in right

19:55

now is like ease and

19:59

convenience. We are doing a lot

19:59

of other things, just like in

20:03

our personal and professional

20:03

lives, that it's like, okay, a

20:07

value that we have right now is,

20:07

how can we use our money with

20:11

choice to simplify our lives,

20:11

right, to help us meet the

20:15

goals, which some of them are

20:15

financial, but some of them are.

20:19

Right? Yeah. Yeah, I will say,

20:19

and it's so different for

20:25

different people. And like,

20:25

that's what it says, whatever

20:27

your financial goal is.

20:29

Yeah, and I

20:29

think it's like a fingerprint.

20:33

So my fingerprint's very

20:33

different than yours, and how I

20:36

make my money choices are based

20:36

on a host of different factors.

20:44

My age, my parents, my financial

20:44

socialization, and what my

20:49

parents want to give me and what

20:49

values we put there that they,

20:53

you know, tried to instill in

20:53

me, where I live, my

20:56

neighborhood, my peer group

20:56

who's influencing me in terms of

20:59

choices. Yeah, I mean, moving to

20:59

Ames, Iowa, which is where I am,

21:06

moving from more of a

21:06

metropolitan place, I was really

21:13

happy to see that it's not a

21:13

very status oriented place. So

21:18

moving here with a five year

21:18

old, I was really happy to move

21:20

out of the neighborhood I was in where it was like the car you drove, the purses you carry.

21:22

Those kinds of things were

21:26

important to that community. And

21:26

to me, I've never been a status

21:31

oriented kind of person. Yeah.

21:31

So I'm happy to be in a place

21:35

where it's like, you're not

21:35

judged by what you're driving.

21:38

Yes, and that

21:38

aligns. It sounds like this is

21:42

aligning more with your

21:42

financial values, right? You're

21:44

like the location, like culture?

21:44

That makes sense. Oh, that's

21:48

interesting.

21:49

The whole status orientation is a whole other episode. Yeah, okay. Maybe

21:51

a bonus episode? Yes.

21:57

Okay, so

21:57

let's dig in, right back into it

22:00

with this idea of parenting. And

22:00

when we think about choice,

22:05

freedom of choice, and how we

22:05

can help build and give this to

22:08

our kids for their future

22:08

financial well-being.

22:13

Yes, so

22:13

financial socialization and

22:15

parent communication, very

22:15

explicit communication, research

22:21

shows that it's associated with

22:21

different financial outcomes.

22:24

It's even associated with, you

22:24

know, your financial outcomes

22:28

can be associated with your

22:28

parent child relationships,

22:31

interactions.

22:32

I saw that, right? I saw that.

22:35

Yes, but

22:35

that's an aside. Yeah. But the

22:40

way we talk about money, the way

22:40

we model money, whether we're

22:43

arguing with the spouse, or

22:43

maybe we're having a

22:45

disagreement with the spouse,

22:45

children are absorbing. And so

22:49

to be very purposeful about your

22:49

communication, maybe talk with

22:54

them, like, what your budget is,

22:54

or what you're planning if

22:58

you're planning a family vacation. Involve them in the planning, and maybe even have

23:00

them, plan it if they're the

23:04

right age. You know, give them a

23:04

pot of money and say, okay, I

23:07

want you to find a hotel,

23:07

airline. Okay, now, that's, you

23:11

know, that's pretty big, but how

23:11

about, okay, we want to go to

23:13

the movies. How can you spend on

23:13

the family $30 to send us all in

23:18

the movie. Just let them get

23:18

creative.

23:22

Yes. Well and

23:22

I think of, you know, that I'd

23:25

given the example of a value

23:25

that we have just at this

23:28

current stage of parenting and

23:28

life that we're in, is this

23:31

value of ease and convenience.

23:31

Now those are the choices we're

23:34

leaning towards right now. And

23:34

it even has been like taking

23:37

pause like, oh, that's not

23:37

necessarily the long term value

23:41

that I have. But that means for

23:41

me, okay, but I can make an

23:45

informed decision, like a

23:45

conscious choice that this is

23:47

what makes sense for us right

23:47

now. And I need to communicate

23:50

why that is to our children if I

23:50

don't want this to be the long

23:55

term thing. I think it it's

23:55

important. It honestly it brings

23:59

more joy and more sanity to our

23:59

lives to sometimes do paper

24:03

plates. I've said that a lot. So

24:03

paper plates are the thing that

24:06

we're doing. But explaining to

24:06

them how we've come to this

24:11

choice, how we hope it's not the

24:11

long term choice, or whatever it

24:15

is, so that we can, again, going

24:15

back to those values. I want to

24:19

give thought because I don't

24:19

want that to always be what we

24:22

do and sometimes that modeling

24:22

right? Sometimes what we do is

24:26

more important than what we say,

24:26

but we can kind of help clarify

24:29

that decision. Sure.

24:31

So maybe

24:31

you should just like blow them

24:33

out of the water and get out all

24:33

your china if you have china or

24:37

your nice regular plates that

24:37

you normally would, your normal

24:41

plates and be like, guess what,

24:41

if I had time this is how I

24:44

would choose to always do it.

24:44

But you are keying off of that

24:49

idea of time. And time is the

24:49

one resource we cannot buy. Yes.

24:55

And so I think that how we use

24:55

our time is tied to the choices

25:01

that you're making is because

25:01

you want to free up your time to

25:03

have more quality family time or

25:03

just more interaction with your

25:09

Those are the terms I wanted to use to explain children. Right? it to my kids right now, like

25:10

that exact term of yeah, I'm not

25:16

necessarily just choosing

25:16

convenience. I'm choosing those

25:19

things to get to that time

25:19

availability is spent with my

25:24

kids in quality time instead of

25:24

with dishes. And sometimes it's

25:30

literally like week to week.

25:30

It's like this week is a paper

25:32

plate week. You know? Yeah.

25:32

Because we want to prioritize

25:37

our family value of quality time.

25:40

Yeah,

25:40

exactly. Even if it's just time

25:43

together. So yeah. And that gets

25:43

again to the trade offs. Right.

25:46

But truly time, I mean, I think

25:46

time in my field, time

25:50

orientation, you know, whether

25:50

it's future or present. And then

25:55

again, it's in this definition,

25:55

right? But the time we spend

25:59

working for a job for hourly

25:59

pay, you know, translating that

26:03

to, okay, this is a pair of

26:03

sneakers, or instead of paper

26:10

plates is gonna free up my time

26:10

to be with you. Mm hmm. Oh,

26:15

yeah. It's really breaking it

26:15

down, I guess.

26:20

And that's the goal, right? We're like, okay, this huge concept of

26:21

teaching our children about

26:25

money. It sounds like, okay,

26:25

we're talking about the goal of

26:32

helping them be financially

26:32

well, whatever, right? We have

26:35

these kind of concepts to help

26:35

us understand it a little

26:38

further. We did, we want to kind

26:38

of get to the nitty gritty. You

26:41

know I love a framework. That's

26:41

really what this whole episode

26:43

is, is this framework that the

26:43

Consumer Finance Protection

26:47

Bureau, still practicing that.

26:47

Did I get it right?

26:50

Yes, you did.

26:51

Okay, I was like wait, was that right? Yes. Okay. Thank you.

26:54

And yeah, breaking this down of

26:54

Nice work. how do I help them get there?

26:57

How do I keep that end goal in

27:01

mind? Yeah. So, you know, we've

27:01

talked about it a little

27:04

throughout with how do we do

27:04

this, you know, with security in

27:08

our parenting. How do we do this

27:08

with choice in our parenting.

27:11

But I also liked within this

27:11

report, they really dug into

27:13

kind of four key areas that can

27:13

help improve financial

27:17

well-being. And so it was like,

27:17

okay, how do we make this right?

27:20

This is kind of abstract, what

27:20

are the things we can narrow in

27:23

on and they had these like four

27:23

verbs these, like four action

27:26

words in that report. That was

27:26

like, okay, that. That is where

27:30

it gets concrete. These are the

27:30

things that I can help pass on

27:34

through my financial parenting,

27:34

like financial socialization.

27:38

Yeah. Will you walk us into

27:38

those four areas?

27:41

Sure. So

27:41

I'll tell you what they are

27:44

balance, ask, plan, act,

27:44

BAPA. Okay, there it is. So

27:51

balance, balance is number one,

27:51

living within your means. And so

27:55

I have a colleague who says

27:55

that, you know, if you spend

28:00

more than you take, this is not

28:00

what they say.

28:05

Paraphrasing, we're paraphrasing.

28:08

Happiness

28:08

is when your your income is more

28:12

than your expenses. But that

28:12

truly is when it comes to

28:16

measuring financial well-being.

28:16

And this is just one definition,

28:19

and there are several that

28:19

scholars have have come up with,

28:22

but you've got to spend less

28:22

than you make. Because that's

28:28

balance, and then it frees up,

28:28

you know, money for you to save.

28:31

So then that impacts your

28:31

ability to absorb shock, because

28:34

you have extra money, right?

28:35

Which is the P in BAPA.

28:37

Plan. Yeah,

28:37

so we have to live within our

28:41

means. And if we're not happy,

28:41

you know, I mean, with where we

28:46

are with our means, then that

28:46

might mean taking on an extra

28:49

job or, you know.

28:52

Yes, or

28:52

education or changing fields.

28:55

Yeah, if

28:55

that's possible, yeah, yeah,

28:59

definitely.

28:59

So. Okay, so

28:59

balance is the first one. What's

29:03

our next one?

29:04

Yeah, let me just say one more thing about living within our means.

29:06

Yes, please.

29:07

You know, a

29:07

big part of financial security

29:09

that's not part of this

29:09

definition is being able to

29:11

access resources that are

29:11

non-financial, many things like

29:16

even just like benefits, public

29:16

benefits, whether it's food

29:18

stamps, or tax credits, or

29:18

energy assistance, help from a

29:26

sibling or a friend when it

29:26

comes to child care. So reducing

29:30

expenses and taking advantage of

29:30

social benefits, public

29:34

benefits, can help us live

29:34

within our means and achieve

29:38

that balance. If we don't have

29:38

options like, oh, I'm going to

29:42

go back to college. But you

29:42

know, not everybody has that

29:44

option.

29:46

That access

29:46

is not, we don't know, I always

29:48

like to talk about the baseline,

29:48

right? We're not all starting at

29:50

the same financial baseline even

29:50

as we come into adulthood or, I

29:53

mean, heck, as we come into

29:53

life. Yeah, so access is

29:57

different.

29:58

Yeah, yeah,

29:58

it definitely does. So just to

30:00

backup that yeah, you know, what

30:00

our means are looks different

30:04

for everybody. But there are

30:04

ways to come up with strategies

30:08

to help increase our means.

30:08

Yeah, yes. Awesome. Okay. So Ask

30:13

is the second of the four

30:13

elements. And so that means to

30:16

gather information and evaluate

30:16

results. So I told you that the

30:19

CFPB, Consumer Financial

30:19

Protection Bureau, is all about

30:22

empowerment. And so, you know, a

30:22

rule as a consumer is that, you

30:28

know, you just don't walk in off the street and purchase something unless, okay, you're

30:30

at the grocery store. You've

30:33

shopped there enough to kind of

30:33

have a, you've looked at all the

30:36

different.

30:37

Past experience.

30:38

Yeah, past

30:38

experience maybe. But yeah,

30:40

let's say you're buying, you're

30:40

getting your house sided. You're

30:42

getting a new roof. You're

30:42

looking for a place to rent. You

30:46

know, we're just talking about

30:46

home, you know, housing. You

30:50

should at least check out three,

30:50

get three quotes, right? Yeah.

30:55

So if you're taking a loan out,

30:55

go to three lenders, and see if

30:58

you get the best, because

30:58

there's such a variation in what

31:01

people charge in terms of

31:01

prices. So gather information,

31:04

evaluate results, and just

31:04

empower yourself with that

31:08

We can do the balancing, right? We can teach knowledge. that with our kids about the

31:08

income versus expenses. And the same thing with Ask, teaching

31:10

them the skills to like how do you gather information. Even

31:11

just the knowledge to know to get more than one. Like, instead

31:12

of just like, well, they told me

31:18

this? I don't know. It's like,

31:18

okay, we can compare, that

31:26

ability to ask, for sure. Right? Or is it like, I'm

31:28

getting the information from the

31:28

Yeah,

31:28

exactly. Well, and you know, and

31:29

person who wants to sell it to me. Yeah, yeah. Right. Exactly.

31:30

that source of information is a

31:30

huge one, too. And it's

31:31

I would like

31:31

to sell you this product so I'm

31:34

specifically as having a high

31:34

school student, knowing that

31:38

there are actually paid

31:38

influencers who are set up in

31:40

gonna tell you how good this

31:40

product is.

31:41

houses with certain wardrobes

31:41

and different objects that are

31:43

Exactly,

31:43

exactly. And so there might be a

31:45

all put there by marketers, you

31:45

know, just to influence my 15

31:50

year old, so that she wants what

31:50

that influencer wants. So

31:53

product that's always going to

31:53

have a cost, but there's always

31:54

knowing what the source of

31:54

information is, but that's more

31:57

of a, that's not quite the same

31:57

as being an informed consumer in

32:02

the sense of, are you going to a

32:02

website and getting information

32:06

from someone that is non-biased

32:06

and not looking to get into your

32:10

wallet. going to be variability in how

32:24

much cost? So all right, so

32:29

that's Ask. Yes. Yeah. So Plan

32:29

is the third focus on the

32:34

future. Right. So planning, so

32:34

all of us need to have a

32:37

roadmap, right, in terms of what

32:37

our financial goals are, what

32:40

our aspirations are, and we need

32:40

to have a way to get there. And

32:44

so ways to focus on the future

32:44

is like that saving for

32:48

emergencies. Right? Yeah. So in

32:48

case, you know, inevitably,

32:52

everybody has either life event

32:52

or some structural thing in the

32:56

environment, like COVID-19

32:56

housing crisis, that will create

32:59

a shock. And so we need to be

32:59

ready for it. And so that's

33:03

focusing on the future, that

33:03

just in case, you know. And I

33:06

always tell my child and her

33:06

friends, that's my job as a

33:10

parent is to look at worst case

33:10

scenarios. So when I tell you

33:13

not to do something, it's

33:13

because that's my job. That's

33:15

what I'm always doing.

33:16

I'm supposed

33:16

to see those risks and help you

33:18

not get into them.

33:20

Exactly. So

33:20

let's take it back a little

33:22

further and think about it

33:22

financially and say, okay, you

33:27

know, so what are the financial

33:27

risks if I lose my job? Right?

33:31

How am I in trouble? And so

33:31

focus on the future, planning

33:35

for larger purchases and life

33:35

events? Right? So planning. You

33:39

want to buy a car? Okay, let's

33:39

look at smart to set a goal to

33:44

buy the car, well, how are we

33:44

going to get there? Make a plan.

33:48

I love that

33:48

one and one more, a trickier

33:48

Yeah. one.

33:53

Setting

33:53

ourselves up for success, right?

33:56

And it's, again, having that

33:56

roadmap, having a plan, but

34:00

things that we can do is, you

34:00

know, put your savings on

34:05

automatic so you don't even

34:05

think about it. Put your bill

34:09

pay on automatic so that you

34:09

never miss a bill and get

34:14

charged a late fee, right? Pay

34:14

off your credit card fully every

34:18

month. These are things that you

34:18

can do to set yourself up for

34:22

success. Don't ever take on more

34:22

debt than you need. You know,

34:26

like, do you really need to get

34:26

a gigantic Jacuzzi? You know.

34:32

Taking on debt to go do that.

34:33

Yeah, you

34:33

know, I mean you really have to

34:36

be strategic about your choices.

34:36

Yeah. So things like saving

34:40

consistently.

34:41

And so that's

34:41

really like the behavior, right?

34:44

So like the Balance and Ask and

34:44

the Plan, right? I almost feel

34:47

like those are skills and the

34:47

Act is kind of living those out.

34:52

Like are you actually making the

34:52

choices that align with the plan

34:56

with the information you had? It

34:56

is, like that is an important

35:00

part of it. I can tell my

35:00

children till I'm blue in the

35:02

face that we should save. And if

35:02

I am always like tossing money

35:06

around and not saving, right,

35:06

and so like, yeah, we can model

35:10

that. They're gonna learn from

35:10

it.

35:15

Yeah, so whatever the goal is for your family and again, yeah, let them

35:17

know what what your goal is and

35:20

why you're making your choices.

35:20

And that's something that

35:23

colleague of mine likes to say

35:23

is, it's not that I can't afford

35:26

it, it's that I don't choose to

35:26

afford that particular thing.

35:32

Right.

35:32

That's not the priority.

35:33

Yeah,

35:33

exactly. And so having those

35:36

discussions again, back to that

35:36

explicit communication and

35:42

socialization. It's really that

35:42

communication piece.

35:46

Absolutely.

35:46

All right, so our four key areas

35:49

that we can kind of help pass

35:49

on, Balance, Ask, Plan and Act.

35:55

So yeah, so much good stuff.

35:55

Honestly, this idea of like, the

35:59

beginning with the end in mind,

35:59

right? Thinking about raising

36:02

kids who become financially

36:02

well, adults. Is that how I

36:06

would say that? Right they're

36:06

well, financially. Those things,

36:10

financial well-being.

36:11

Financial

36:11

well-being and then that's the

36:14

goal. It's the goal. But the

36:14

other goal that we're not

36:17

talking about is financial independence.

36:19

Ooh, but

36:19

we're gonna get there. We are.

36:21

Parenting

36:21

in every area is about

36:24

independence. Right? Yeah.

36:26

That's really a value of our culture in the U.S. Absolutely. Yes. Like

36:27

raising kids to become

36:31

financially independent. So we

36:31

are, we are.

36:33

We're heading there. We're heading there.

36:36

Awesome.

36:36

Okay, well, this is old hat to

36:39

you by now. We're ready for our

36:39

Stop. Breath. Talk. space where

36:42

our producer Mackenzie DeJong is

36:42

gonna come in and ask us an

36:45

off-the-cuff question about our

36:45

topic this week. What do you

36:49

got, Kenz?

36:50

So nice to see you, Mackenzie.

36:53

Hello. Um, so

36:53

you're talking about financial

36:59

well-being? You're talking about

36:59

like doing all of these things.

37:04

But what if I'm at a point in my

37:04

life where I feel like I'm too

37:10

late? Is it ever too late? Is it

37:10

ever too late to start working

37:15

on financial well-being?

37:16

No, never,

37:16

never, never. It's never too

37:21

late to start. I would say, like

37:21

I've said in the last two

37:27

episodes, what I strive to do is

37:27

to help people reduce their

37:30

financial stress and increase

37:30

their control, right? And so

37:34

part of that definition is I

37:34

have control over my day to day,

37:37

month to month finances. And so

37:37

if you can start simple by just

37:43

assessing where you are and then

37:43

breaking it down, you know,

37:49

there's always room to move to

37:49

it. Let's say you're thinking

37:53

about debt, right? I have too

37:53

much debt, I just want to stay

37:57

under a rock and not think about

37:57

it. So the idea is, you've got

38:02

to assess your situation, what

38:02

is my debt amount, okay, and

38:05

then I'm gonna list the amounts,

38:05

and I'm gonna list the interest

38:08

rates that, you know, from the

38:08

highest interest rate I'm being

38:12

charged on the money I'm

38:12

borrowing to the lowest amount.

38:16

And some people might pick that

38:16

small dollar amount, like, Oh,

38:20

this one's only like 75 bucks,

38:20

you know, on this credit card. I

38:23

can do this, and I'm gonna just

38:23

crush it. And so, you know,

38:27

that's one approach. Now the

38:27

economic decision is to pay the

38:30

big one. But there's, you know,

38:30

so I think people who are

38:35

feeling despair, feeling like,

38:35

oh, it's too late for me, is

38:39

maybe because they're just not

38:39

feeling in control, right. And

38:43

so you gotta get, you got to

38:43

start by getting in control,

38:46

breaking things down, and really

38:46

thinking about what your goal

38:51

is. And there's all sorts of community resources that can help you get there too, and help

38:53

you with the conversation. Nonprofit, like credit council,

38:56

counselors, or debt counselors

38:59

can help you.

39:01

Well, and I

39:01

thought, I just assumed you

39:03

meant like, is it too late to

39:03

talk to my kids about money?

39:06

Oh, my

39:06

gosh, oh, sorry. No, no.

39:09

And I think

39:09

it really is both of, is it too

39:13

late to talk with kids about

39:13

money? And no, I think like,

39:16

even if your kids are adults,

39:16

you know, they of course have

39:22

their own freedom of choice and

39:22

hopefully, financial

39:25

independence and those things,

39:25

but that there are still

39:28

opportunities to talk about how

39:28

you made decisions or even

39:30

passing on the mistakes, things

39:30

you wish you hadn't done

39:34

financially or, you know,

39:34

there's still opportunities to

39:37

share the experience that you

39:37

have if you've got adults. If

39:40

you've got kids who are kids or

39:40

teens. Yeah, even think like,

39:45

okay, I have an 18 year old. Is

39:45

it too late? I've never talked

39:48

with them about money. I mean,

39:48

my opinion would be no. Don't

39:51

you think, Suzanne, there's

39:51

opportunities for input and

39:54

growth and sharing and learning?

39:56

Absolutely.

39:56

And they never stopped really.

40:01

Well, I mean, it depends on you

40:01

as a family and as a parent, but

40:04

a lot of times our financial

40:04

purse strings extend over the

40:08

lifetime, you know, in a sense.

40:08

Just through gift giving or help

40:13

when we need it, you know, like

40:13

that capacity to absorb shock.

40:16

One of the social resources is

40:16

family and friends, right? And

40:20

so, like, you're in trouble, and

40:20

you can go to a family member

40:23

for a loan, you know, to get you

40:23

across a threshold or something.

40:27

Right, then that's something

40:27

that yeah, again, it's a tie

40:32

that's still there. But in terms

40:32

of talking to your kids about

40:35

money, yeah. I mean, when they

40:35

buy their first car, you know,

40:40

shopping with them. When they

40:40

buy their first house, maybe if

40:43

they buy a house or when they're

40:43

looking for housing. Yeah, I

40:47

mean, there's just all these

40:47

financial decisions, having a

40:49

child, having their first child,

40:49

you know. There's the expensive

40:54

hospital like having a child,

40:54

right? The bill, right. Yeah.

40:59

All the stuff you need for a new

40:59

baby. That's why we have

41:03

showers, you know, yes. Yeah. So

41:03

I mean, the financial ties

41:07

really don't stop. And so

41:07

there's always an opportunity

41:10

for conversation like, hey,

41:10

okay, I'm gonna buy you this

41:12

stroller but let's also start a

41:12

college fund. Or let's also

41:17

start, you know, whether they're

41:17

going to trade school or, you

41:21

know, isn't a value or yeah,

41:21

whatever.

41:25

Yeah,

41:25

absolutely. I probably talk to

41:29

my parents more about that kind

41:29

of thing, maybe if they're not

41:31

giving, you know, not lending me

41:31

money or giving me money that

41:35

I'm definitely like, I talk to

41:35

my parents about purchases and

41:40

advice now more than I ever did

41:40

as a teenager. I was probably

41:45

like, heck with you, I want to

41:45

spend my money how I want to

41:48

spend my money. But now I'm

41:48

like, should I buy this chair?

41:52

Should I buy that decoration for

41:52

the wall? And you know, those

41:59

little things that? Yeah, we've

41:59

talked about this a lot too of

42:05

like, parenting doesn't end when

42:05

you're.

42:09

Exactly.

42:09

Right. Well, some of the bigger

42:12

financial decisions happen once

42:12

you hit 18. Right. And so

42:17

whether you go to, whether or

42:17

not you go right into the

42:20

workforce, you know, you're

42:20

gonna become financially

42:22

independent quicker if you go

42:22

from high school into the

42:25

workforce, but you still need

42:25

help managing your paycheck. And

42:29

you know, what are the benefits

42:29

in evaluating a job, right?

42:34

I have that

42:34

like phone call that I always

42:37

had, like, what number am I

42:37

supposed to put on this? W...I

42:40

don't even know the numbers,

42:40

Suzanne. W-4, W-9.

42:41

W-2?

42:41

W-2. When you

42:41

get a new job, you're like, oh,

42:50

what do I put here? How many?

42:52

Oh, in terms of withholding and all that?

42:55

I would still

42:55

need to make that phone call if

42:57

I'm honest. So it's never too

42:57

late.

43:01

Yeah,

43:01

right. And then if you don't

43:03

jump right into the workforce,

43:03

and that's kids that maybe go to

43:06

community college or a four year

43:06

college, that extends out even

43:11

longer in terms of like,

43:11

financial independence doesn't

43:14

come until maybe your mid-20s.

43:14

Maybe your late 20s. Right?

43:19

Ewww emerging

43:19

adulthood. Emerging adulthood.

43:25

In other

43:25

words, as a parent, no, it's not

43:29

too late. And as a child, no,

43:29

it's not too late.

43:34

Good summary.

43:35

Thinking about it. Yes.

43:37

No matter which generation, it's not too late to think about your own

43:38

kids and for yourself.

43:41

Yeah. Good

43:41

summary. All right. And good

43:45

question. Yeah.

43:46

Pat on the back for good summary. Okay. Bye. Thank you for the Stop.

43:48

Breathe. Talk.

43:50

Awesome.

43:50

Thanks, Kenz. So that wraps us

43:51

Mm hmm.

43:51

That's right. And just you know,

43:52

up today. We really just kind of

43:52

took this moment today to dig

43:56

into like, what's the end goal?

43:56

What are we talking about? Why

44:00

are we talking about financial

44:00

socialization? You know, in the

44:04

next few episodes, we're gonna

44:04

get into some fun stuff. But for

44:04

knowing that the financial

44:04

well-being, this idea of your

44:08

today, we really did just like,

44:08

okay, slow down, what do we

44:12

want? What does financial

44:12

well-being look like in the long

44:15

term and in the present for our

44:15

children? And how can we parent

44:19

in a way that's going to align

44:19

with those things? So we learned

44:23

a lot about security and choice

44:23

as components of financial

44:27

well-being today. And, of

44:27

course, got those four key areas

44:30

that we can tap into. child having financial security

44:40

and financial freedom when they

44:44

become financial independent,

44:44

yes, that is the goal. This dual

44:51

goal as parents, we want our

44:51

financially independent children

44:54

to have financial well-being. So

44:54

it's that pairing of the two.

45:00

And so because we don't want our

45:00

children to have stressful

45:03

lives.

45:03

Awesome. Such

45:03

good stuff coming here. So

45:07

thanks for joining us today on

45:07

the Science of Parenting

45:09

podcast. Remember, if you are a

45:09

regular listener to the audio,

45:14

don't forget that you can also

45:14

watch our episodes on video each

45:16

week. Sometimes Mackenzie DeJong

45:16

even pops in some fun visuals

45:20

that you can look at and look

45:20

for. So find our videos on

45:22

YouTube, Facebook, or on our

45:22

website @scienceofparenting.org

45:34

Yeah, so

45:34

come along. We're going to

45:37

tackle the ups and the downs,

45:37

the ins and the outs, and the

45:39

research and the reality all

45:39

around the Science of Parenting.

45:43

The Science of

45:43

Parenting is hosted by Mackenzie

45:46

Johnson, produced by Mackenzie

45:46

DeJong, with research and

45:48

writing by Barbara Dunn Swanson.

45:48

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45:52

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