Two parents debate how to teach their kids about money, Newlywed Game-style
I recently gave a talk to a group of Silicon Valley-area parents, and something amazing happened. After I showed my new video on kids and money, starring SNL’s brilliant Kate McKinnon, I gave the crowd pointers on talking to their own children about this touchy subject (something I can’t get enough of). But the best part of the day—for me, anyway—happened when I opened up the floor for questions.
That’s when I met Michelle Conrad and Dr. Tracy Robinson.
Michelle, who works for a software company, stood up and said she was having a problem with their daughter Mia. The 13-year-old just wasn’t completing her weekly updates on the spreadsheet Michelle had created for Mia to keep track of her income (babysitting money, allowance, birthday cash) and expenses.
At that, Tracy, an anesthesiologist, took the mic and shared her own—equally vexing—problem. She thought Michelle’s idea of a spreadsheet for a young teenager was a little, um, extreme. (Okay, that wasn’t the word she used.)
Over the years, I’ve thought a lot about how we discuss money—with our kids and our friends, our parents and our partners. Because knowing the facts about finance? That’s only half the battle. We also need to learn the most effective ways to talk openly about these complex and sometimes awkward issues. When we start talking, we stand a much better chance of tackling the financial challenges in our lives successfully. (Teamwork, people!)
The conversations we really dread most with our kids are the ones about money. Seriously—we’d rather explain the birds and the bees. So when Tracy and Michelle began a real-time, real-life money conversation about Mia and her brother Gabe (15) right in front of their fellow members of the Addison-Penzak Jewish Community Center, I was all ears. They didn’t settle their differences on the spot, of course. Money conversations are always plural. But the cat was out of the bag.
After I’d flown back home to New York City, my curiosity got to me: How would Tracy and Michelle resolve their spreadsheet dilemma? Instead of asking them outright, though, I wanted to get a window into how they each thought about money and their kids.
I asked them to play a little game—based on a childhood fave, The Newlywed Game. (For this Queens kid, the show was required after-school viewing!) Remember how the dapper Bob Eubanks would pose the same questions to each member of a couple separately—and then compare their answers? If they were in sync, the contestants would walk away with (announcer voice) a brand-new living room suite or an all-expense-paid getaway to…exotic Hawaii!
The questions were always ratings-grabbers (today’s clickbait), like “Who snores louder?” or “Who’s the most romantic?” But Bob never seemed to ask about financial literacy. (Weird, right?) So I posed five money questions to my contestants (by email, something Bob never did either), and then we compared notes.
Let the game begin.
How should your daughter keep track of her money?
Michelle Conrad: Using the spreadsheet and reconciling her new bank account, which Tracy opened for her in February. If she maintained her spreadsheet like she’s supposed to, the reconciliation would be easy. The intent of the dreaded spreadsheet is to track everything that she’s earned or received as gifts and everything that she spends so she can ensure that she’s spending her money on what really matters to her and saving at least 10%. We want this to become a habit so that when she starts working somewhere with a retirement savings plan, she will automatically think, “I need to contribute 10% of what I make.”
Tracy Robinson: Mia now has her own bank account and we are teaching her to deposit 10% of her earnings. The rest she can keep in a cash fund at home (an old cigar box). In reality, she deposits closer to 50% of her earnings from babysitting, dog-walking, and other neighborhood chores.
Hmm. Not a word from Tracy about the controversial spreadsheet. No worries, though: They’re on the same page about saving. Opening a bank savings account (find one with no fees) is supersmart. And I love their 10% rule. This should prime her for saving at least 15% of her monthly pay as an adult—and for maxing out her 401(k).
How should you teach your daughter to save money instead of spending it impulsively?
TR: Her cash fund at home is for “impulsive” spending on non-big-ticket items. She knows she’s not allowed to touch her savings unless it’s an absolute emergency or if it’s something worthwhile that she’s been saving up for a great while. We talk to her about the importance of having savings for emergencies when she’s an adult.
MC: I would say that I am stricter on that than Tracy. I basically have said to our kids, if they talk about wanting to buy something big for more than two months, then that tells me that they really want it. We also try to explain that unexpected expenses pop up all the time—perhaps you need new tires on your car, or if you have a pet and it gets sick, that costs money. Or house repairs. (We have had a water leak the last five months.)
Two different approaches here. I like Michelle’s two-month tactic. Delayed gratification is a trait all good savers need to develop. And one of the best ways to fight the urge to splurge is to step away from that tempting purchase. They are on the same page with the emergency cushion, and that’s huge. I recommend aiming for six months of living expenses. This is the first time I’ve heard a parent use it to discourage impulse buying, but whatever gets the message across to your kid—that’s what you use.
What money skill can Michelle teach your daughter better than you can?
TR: Michelle’s had great investing success and knows quite a bit about the markets, short-term and long-term gains, various options that pay dividends, etc. As Mia grows older, Michelle can impart some of this knowledge to her.
What money skill can Tracy teach your daughter better than you can?
MC: Probably that it’s okay to just treat yourself. If you have worked hard to earn your money, it’s okay to indulge sometimes.
Here’s a case in which two differing points of view can actually add up to a money-healthy kid. It’s important to find the yin-yang balance of saving and spending—of discipline and fun—and it seems like Tracy and Michelle have.
What money skill is most important for a kid to learn?
TR: I don’t know if there’s one that’s most important, but one that is up there would be the value of saving early in life. She’s still a little young to fully understand this concept, but we discuss it at home nonetheless.
MC: You can’t spend more than you make, minus at least 10%. 🙂 Really what I try to emphasize is that having money provides opportunities and can really make life easier down the road. Not having money restricts your opportunities and can cause a lot of stress.
The correct answer is…all of the above. These are two parents who know the value of passing smart saving, spending, and budgeting values on to their kids. Because not having financial security as an adult is—as Michelle points out—one of the biggest sources of worry.
What would you do if you won the lottery?
MC: This is actually something that Tracy and I disagree on. She would want to pay off the mortgage, but given we have a 3.25% mortgage rate, it would make more sense to invest the money with a 6% to 7% return and have the tax advantages of the mortgage interest write-off. I don’t have a chance of getting Mia to understand this until I can get Tracy to understand this. 🙂
TR: If I won the lottery I would be forced to follow Michelle’s money management advice, and save and invest. What I would want to do is pay off the house, invest, buy a luxury vacation home, and square up on the children’s college savings accounts. I’d probably book a top-notch vacation somewhere exotic and start working part-time, too.
Working out your money disagreements behind closed doors before you present a plan to your kids is critical. (Not that a Powerball windfall is likely for any of us.) Researchers have found that college kids whose parents routinely battled over money when they were younger were almost three times more likely to owe $500 or more on credit cards. As far as balancing investing with paying down debt, Michelle sounds like she has her financial priorities in order. Then again, going part-time sounds pretty sweet, too!
Okay, final score: pretty good! Michelle and Tracy might not have won a second honeymoon in Hawaii—but Mia and Gabe probably would be lounging around on a new living room suite if Bob Eubanks had his way. The great news is that these parents are killing it when it comes to discussing money with their kids. And that’s better than winning any game show.