What is the Goal? | S.11 Ep.3

Sometimes we aren’t sure exactly what “financial wellbeing” even looks like for our children (or ourselves). In this episode, the cohosts look at what the research tells us about this term, and what we can do now with our kids to help them have financial wellbeing in the future.  

Transcript

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Mackenzie Johnson: 0:01

Hey, Mackenzie Johnson here, coming to you with a special opportunity that the Science of Parenting team has going on right now. We are collecting feedback from you, our listeners and viewers, all about last season, where we were talking about kids and food. We have a short 10 minute survey that we are going to ask about what you thought about last season, what you learned the last season. You have a chance to kind of give us your thoughts on the overall podcast, as well as even an opportunity to submit a topic for us to consider in the future. So your feedback is going to help us make decisions about our podcasts and future content. If you are over the age of 18, if you are a parent or caregiver of a child, and if you've listened to any of the episodes from last season, that's right, even just one one of those episodes where we are talking about kids and food, you can find the survey link in today's episode description. Or you can also find it on our social media on Facebook or Twitter at @scienceofparenting. Thanks for listening, we hope you'll participate and enjoy today's episode. Welcome to the Science of Parenting podcast where we connect you with research based information that fits your family. We'll talk about the realities of being a parent and how research can help guide our parenting decisions. I'm Mackenzie Johnson, parent of two littles with their own quirks, and I'm a parenting educator.

Suzanne Bartholomae: 1:38

I'm Suzanne Bartholomae and I am an associate professor who strives to help people reduce their financial stress, increase their financial stability, and I'm a proud parent of a high schooler who still talks to me.

Mackenzie Johnson: 1:54

We love it. In today's episode, we're going to dig back in to this, you know, what we're talking about all season, kids, money, family. But this time, we're gonna kind of think about the end goal related to what we learned in the first episode of financial socialization or financial parenting. And so we are, we're gonna think about this end goal, right, Suzanne? This term of financial well-being.

Suzanne Bartholomae: 2:21

Yeah, financial well-being, that term that a lot of us don't sit down to analyze very often. We don't spend a lot of time on it. But people like me, the geeky researchers and people that are interested in what the concept means to people.

Mackenzie Johnson: 2:36

Yeah, I'll join you in the geeky realm. I'm joining you, right, we love a term. I love a term. I'm speaking for everybody. We collectively love a term. But yeah, so let's, of course, let's start there with that definition. What does the literature say? Like what guidance does it tell us. What is financial well-being? Because I feel like it could be a lot of things.

Unknown: 3:00

Yeah, yeah. And so the term financial well-being has really been built out a lot in the last, I'd say, decade. And that's with the help of the Consumer Financial Protection Bureau, which is a new federal agency that emerged from the financial crisis of 2007-2008 when a lot of consumers got into homeownership, and maybe shouldn't have been there. They weren't ready for it. They were in credit products that just got a lot of people into trouble. And so they are a new federal agency that really is there to help empower consumers, help enforce consumer finance laws, and just get bad actors out of the marketplace, and really get them to pay for what they're, they've given back like almost$15 billion to consumers since they've come on. Yeah. Yeah, for, you know, just being predatory lenders or too high of interest rate. And then the other key is that they want to educate people. So definition. A normal definition.

Mackenzie Johnson: 4:03

Good. Yeah. It tells us it's a credible, this is a credible source, right? Their goal is to educate, empower, protect, like, yes, yeah. Consumer Financial Protection Bureau.

Suzanne Bartholomae: 4:14

Exactly. They have great resources for parents. So I really recommend your listeners to get online and check out the resources, because education is a big part of it and research. And so they did some research with consumers and with practitioners and this is their definition. They define financial well-being as having financial security and financial freedom of choice in the present and in the future.

Mackenzie Johnson: 4:38

All right, yeah. And I love they specifically said in this report, which you shared with our team, right, real people really define it this way. Alright, even if we don't use those specific words or terms, These are a lot of times the concepts we're getting at when we're like, what is it to be financially well. Well, it's about security, and it's about choice, and I like that it also leads into that time aspect, right? Right now, but also down the line, because that's a big part of financial well-being is where we're headed and how our money can be used to protect us. And yeah, choice. I mean, choice and security in the future.

Suzanne Bartholomae: 5:15

Yeah, exactly. So many financial decisions that we make today are about our future, you know. So as an 18 year old saving for retirement, that's gonna, you know, it's really hard to think about the future. But hey, when you get your first job, and you get an offer from an employer that they're going to do some matched savings for retirement, you got to do it. You've gotta take him up on it but it's really hard to let go of that spending.

Mackenzie Johnson: 5:42

Yeah, it is. Well, not like, you know, one thing I'm geeky about is behavioral science, behavior economics. And we do talk about it with money that this idea of it's like, so far out, how do you like, you know, how do we even make it tangible? To think yes, this is what I want in 40 years, right? That's difficult to make tangible. But okay, but the things we do want. Let's talk, let's break down these two constructs a little. So one is about security. So what does it look like? Let's talk right in the present, what does it look like to have security in the present?

Suzanne Bartholomae: 6:18

So financial security in the present is having control over your day to day, month to month finances. So that means that a bill comes in, you can pay for it, you know, that you have some type of an organizational system in place that you're controlling your expenses. When you have income, you're allocating it whether it's to checking or savings or whatever your goals are that you've set for that

Mackenzie Johnson: 6:49

And I almost feel like a piece of that, yeah money. is just that, I mean, I want to use the word security. But like, the safety, the surety, the dependability almost of like, we have enough access to, our finances are in a place that I have enough access to take care of those things. Right? And whether it's month to month, you know, and I remember one of the reports you shared with me used that term financial shock. You know, and is that a part of security too, in the present? Right, is that idea of financial shock that you would be able to withstand an unexpected bill?

Suzanne Bartholomae: 7:27

Yeah, yeah. So yeah, that ability to absorb shock is financial security, but it means in the future.

Mackenzie Johnson: 7:34

Oh, I'm getting ahead. I'm cheating.

Suzanne Bartholomae: 7:36

Yeah, yeah. No, no, no, that's okay. That's Yeah, okay. I mean, because they are related, right? And so COVID came along, right? And so we've talked about this, it really put the light on the vulnerability of so many Americans in terms of their finances.

Mackenzie Johnson: 7:55

Absolutely.

Suzanne Bartholomae: 7:55

To know that all of a sudden, their income stopped, and there was no way to absorb that shock. I mean, the government stepped in with a lot of, you know, the American Rescue Act, and all sorts of provisions, but they were temporary. And now we're in a space where the effects are really being felt, I think.

Mackenzie Johnson: 8:12

Oh, yeah, like inflation. And I mean, even though, you know, for a lot of people who might say even like post-pandemic, arguably, right? But the effect is still felt. Because even though, I mean, we talked about present and future in the past. Right, but because they weren't necessarily ready or able to absorb that in that moment. Like, right, did we take on debt to do things? Were we forced to make really hard financial decisions because of that. So yeah, that idea of security.

Suzanne Bartholomae: 8:43

Yeah, yeah. So things like, you know, deferring or suspending student loan payments, you know, that's been going on. Mortgage lenders, also suspending payments temporarily, that happens. There was increased unemployment. So there were all sorts of things that we weren't used to. And actually temporarily, a lot of Americans were in better financial shape, and had increased financial well-being. There's a health survey that, you know, you can pretty much document people's feelings of financial well-being and you might expect, like, oh, yeah, after COVID they should really, because of the shock, as you mentioned, should be maybe having lower financial well-being but the actuality was that they weren't. Initially, but now it's started to decline again. Yes.

Mackenzie Johnson: 9:25

Yeah, that makes sense. That makes sense. I was gonna keep rolling on this, but I almost want to pause here. Okay, thinking about financial security in the present and financial security in the future, if we shift our hat, right? Of course, it's natural to think about our own finances, but think about our kids. Thinking about the goal with our financial parenting with our kids when we think about security in their present and in their future. What comes to mind for you, as you think of parenting related to financial security.

Suzanne Bartholomae: 9:56

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

Mackenzie Johnson: 9:58

I guess we'll talk about it.

Suzanne Bartholomae: 9:58

Yes, well, as you know, so this generation who has experienced the shock, and even the financial housing Yeah, they want to be sure that it's enough. That it's not going crisis and the meltdown that happened in 2007-2008. I mean, anecdotally, what my colleagues and I observed in some college students that grew up seeing their parents maybe struggling with the housing crisis and having financial challenges, they're more risk averse, meaning that they are, you know, wanting more security. to like disappear from under them. Sure, and you can really look at things like the depression, the housing crisis, you know, stock market crashes, you know, things that really impact a household and have a shock to the household has kind of a reverberating effect on the way someone's attitude is shaped. And so that's kind of a parenting thing, right? Like how you're reacting, is going to shape the attitude of your child.

Mackenzie Johnson: 11:00

Mm hmm. Yeah, well, like with this idea of reflecting in the last episode, about our values related to money and what we want to pass on and what we don't want to pass on, right? Like, debt, maybe, you know, but these things we do and don't want to pass on to our kids financially. So I think about that security piece of how can I think about passing on financial security as a part of well-being and my kids? And so, you know, I think my husband's, like I've said, a financial advisor so I'm like, Oh, investment plans is one option. Yeah, but there's more beyond that.

Suzanne Bartholomae: 11:38

Yeah, it is and so it's that capacity to absorb shock. And the only way we can do that is if we have savings, right? So we have some kind of a little nest egg, or some kind of emergency fund is what we typically call it or rainy day funds. So that when there is trouble, you know, or there's a shock, then you can face it with a little bit of extra money. Insurance is another thing, you know, like your choice of life insurance and house insurance, disaster. That is a way to protect risk. Right.

Mackenzie Johnson: 12:11

And so thinking about passing those, that knowledge of, I should have an emergency fund. And yeah, the knowing how to navigate that, right, knowing how to have a savings and those things. Those are skills and knowledge and capabilities we can teach to our kids. We can do that.

Suzanne Bartholomae: 12:27

Yes, absolutely, you can start young with the whole getting your child to start savings habits. And it's tough, you know, again, because we're getting back to that future versus current consumption. It's hard. It's very abstract, you know, to think about your future self, but introduce your child to their future self. Talk about their future self. I mean, we do that when we'll ask them like, what do you think you want to be when you grow up? That's probably about as concrete as we get when it comes to talking about, what do you think your, what do you see yourself doing? Right? But you know, what are their aspirations? And then, every aspiration typically will be tied to, okay, well, what's that aspiration going to cost? Yes. Right. And so yeah, how

Mackenzie Johnson: 13:15

Yes, whether that's education or leisure, or attainable it is will have to do with how realistic they're thinking about it. Right? even certain career paths, and things like that. Yeah. That's such a good point.

Suzanne Bartholomae: 13:33

Yeah, so I mean, the simple conversations about career and then career tied to income, and then income tied to lifestyle and then lifestyle having a price tag.

Mackenzie Johnson: 13:44

Yes, yes. So making some of these things concrete and helping our kids have that future orientation, regardless of their age. For whatever that makes sense for them. Right. And we're gonna get into this in our upcoming episodes based on their age, but whatever that looks like, those are things we can do to help us build their financial security is teaching them that content, modeling it for them, and all that stuff.

Suzanne Bartholomae: 14:11

And, you know, delayed gratification. That's a huge one, right? I mean, that's a skill, that's an attitude, you know. If a child has that then, if you can build that muscle, then you're doing very good work as a parent for their financial security.

Mackenzie Johnson: 14:29

Mm hmm. Okay, I'm taking notes on that one, like, ooh, I should work on that. As an adult, that's a skill I need to work on as well.

Suzanne Bartholomae: 14:42

Well, and then I think also as a parent talking to your child about trade-offs, and that's where delayed gratification comes in. Right? So you know, Mom, I want these pair of Nikes. Right? Well, okay, if we buy those Nikes what are we not going to do? First of all, I like to with my daughter, my high schooler, is say you realize that pair of sneakers costs like three hours, five hours, eight hours.

Mackenzie Johnson: 15:06

Quantify to the tangible thing.

Suzanne Bartholomae: 15:08

Yes, yes, exactly. You know, delayed gratification. And I have college students, I asked them about this and something that they do is they'll put something, they'll shop online, they'll put it in the cart but not buy it for 24 hours at least. They'll sleep on it. So that's kind of another way to model, you know. Because a lot of times you're hot about buying something, and then you wait 24 hours, and then you're like, okay, well, you know, I might have been in the moment there and I can probably live without this, you know, potentially.

Mackenzie Johnson: 15:39

Oh, I love that. Okay, so security as a part of financial well-being, right? That's one component. In the present, it's about that control over your day to day, month to month finances, and in the future, that ability to absorb that financial shock. I like that term, financial shock. Okay.

Suzanne Bartholomae: 15:57

Me, too.

Mackenzie Johnson: 15:58

So now let's talk about that other component, though. So this freedom of choice idea, can you help us dig into that a little more?

Suzanne Bartholomae: 16:05

Yeah. So financial freedom to make choices that you enjoy in life. The idea is that financial freedom, I think we also talked about this that one definition is, you know, your ability to quit your job if you're not happy. That's like, ultimate definition of financial freedom. Right? That's freedom. Yes. That's having a choice that you're not dependent on your income. I mean, that's huge, right? But really, in the definition that the Consumer Financial Protection Bureau describes in terms of freedom of choices, it's very simple. It's things like, I want to go out to dinner tonight, I don't want to cook. You know, I want to be able to enroll my child in an activity that might require some extra expenses, like equipment, or, you know, fees just for participating. That's a big one, right? Just wedding presents, birthday presents, and being able to have a party. I mean, they can be as simple as that. And for a lot of us, that's a feeling of freedom. Like, I don't have to worry about it if I want to do this.

Mackenzie Johnson: 17:13

Yes. And yeah, within reason, right? Yeah, and I do think that's also one of the great things about this definition that they offer is people can decide their own context, right? You can decide, yeah, my definition of freedom is not to like to be able to quit my job. Right. My definition is that, okay, if we feel like going out to eat that it's not a burden, right? That there's not too much opportunity cost on it. Right. So thinking about that, I like that as just choices to enjoy life. That your money is a means to help you enjoy life. I like that.

Suzanne Bartholomae: 17:51

Yeah, yeah. Yeah, it is. It is. It opens some opportunities for us and you don't feel, you feel a little stressed and out of control when opportunities are shut to you.

Mackenzie Johnson: 18:04

Yes, yes. When you feel like you can't choose this. Okay, so that's in the present and the present is to enjoy life. What about when we're talking about it in the future, choice in the future?

Suzanne Bartholomae: 18:16

Alright, so yeah, so choice in the future is that you're on track to meet your financial goals. And while all of us, you know, there's general goals that most families and households will have things like sending your child to college, maybe living in a certain neighborhood, driving a car, having a car. So that's one piece of it. But those choices, and this really kind of is, I think, integrated into the definition is that it's really everybody's choices are tied to values. Right. And that's, I think, where as parents and just even as consumers, we don't really become intentional about, is my spending tied to my values, and what I want for my child, right? So if I contribute to a charity or contribute to a faith organization, you know, I'm demonstrating that, okay, I value what this is providing to the community or providing to me, you know, so giving, right, is a value.

Mackenzie Johnson: 19:19

Well, and I can think of even just families that I know, friends that we have, you don't just, of course, center around my own experience and my own culture and race and all these things. But you know, I have friends who would say, financial goals, they invest if you will, in like, healthful food, right? Like that is something that is important to them to invest in, or I have friends that, you know, like travel is that's a family value is that time together. Or I honestly can say, a financial goal like value for the stage of life that my family is in right now is like ease and convenience. We are doing a lot of other things, just like in our personal and professional lives, that it's like, okay, a value that we have right now is, how can we use our money with choice to simplify our lives, right, to help us meet the goals, which some of them are financial, but some of them are. Right? Yeah. Yeah, I will say, and it's so different for different people. And like, that's what it says, whatever your financial goal is.

Suzanne Bartholomae: 20:29

Yeah, and I think it's like a fingerprint. So my fingerprint's very different than yours, and how I make my money choices are based on a host of different factors. My age, my parents, my financial socialization, and what my parents want to give me and what values we put there that they, you know, tried to instill in me, where I live, my neighborhood, my peer group who's influencing me in terms of choices. Yeah, I mean, moving to Ames, Iowa, which is where I am, moving from more of a metropolitan place, I was really happy to see that it's not a very status oriented place. So moving here with a five year old, I was really happy to move out of the neighborhood I was in where it was like the car you drove, the purses you carry. Those kinds of things were important to that community. And to me, I've never been a status oriented kind of person. Yeah. So I'm happy to be in a place where it's like, you're not judged by what you're driving.

Mackenzie Johnson: 21:38

Yes, and that aligns. It sounds like this is aligning more with your financial values, right? You're like the location, like culture? That makes sense. Oh, that's interesting.

Suzanne Bartholomae: 21:49

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

Mackenzie Johnson: 21:57

Okay, so let's dig in, right back into it with this idea of parenting. And when we think about choice, freedom of choice, and how we can help build and give this to our kids for their future financial well-being.

Suzanne Bartholomae: 22:13

Yes, so financial socialization and parent communication, very explicit communication, research shows that it's associated with different financial outcomes. It's even associated with, you know, your financial outcomes can be associated with your parent child relationships, interactions.

Mackenzie Johnson: 22:32

I saw that, right? I saw that.

Suzanne Bartholomae: 22:35

Yes, but that's an aside. Yeah. But the way we talk about money, the way we model money, whether we're arguing with the spouse, or maybe we're having a disagreement with the spouse, children are absorbing. And so to be very purposeful about your communication, maybe talk with them, like, what your budget is, or what you're planning if you're planning a family vacation. Involve them in the planning, and maybe even have them, plan it if they're the right age. You know, give them a pot of money and say, okay, I want you to find a hotel, airline. Okay, now, that's, you know, that's pretty big, but how about, okay, we want to go to the movies. How can you spend on the family $30 to send us all in the movie. Just let them get creative.

Mackenzie Johnson: 23:22

Yes. Well and I think of, you know, that I'd given the example of a value that we have just at this current stage of parenting and life that we're in, is this value of ease and convenience. Now those are the choices we're leaning towards right now. And it even has been like taking pause like, oh, that's not necessarily the long term value that I have. But that means for me, okay, but I can make an informed decision, like a conscious choice that this is what makes sense for us right now. And I need to communicate why that is to our children if I don't want this to be the long term thing. I think it it's important. It honestly it brings more joy and more sanity to our lives to sometimes do paper plates. I've said that a lot. So paper plates are the thing that we're doing. But explaining to them how we've come to this choice, how we hope it's not the long term choice, or whatever it is, so that we can, again, going back to those values. I want to give thought because I don't want that to always be what we do and sometimes that modeling right? Sometimes what we do is more important than what we say, but we can kind of help clarify that decision. Sure.

Suzanne Bartholomae: 24:31

So maybe you should just like blow them out of the water and get out all your china if you have china or your nice regular plates that you normally would, your normal plates and be like, guess what, if I had time this is how I would choose to always do it. But you are keying off of that idea of time. And time is the one resource we cannot buy. Yes. And so I think that how we use our time is tied to the choices that you're making is because you want to free up your time to have more quality family time or just more interaction with your

Mackenzie Johnson: 25:09

Those are the terms I wanted to use to explain children. Right? it to my kids right now, like that exact term of yeah, I'm not necessarily just choosing convenience. I'm choosing those things to get to that time availability is spent with my kids in quality time instead of with dishes. And sometimes it's literally like week to week. It's like this week is a paper plate week. You know? Yeah. Because we want to prioritize our family value of quality time.

Suzanne Bartholomae: 25:40

Yeah, exactly. Even if it's just time together. So yeah. And that gets again to the trade offs. Right. But truly time, I mean, I think time in my field, time orientation, you know, whether it's future or present. And then again, it's in this definition, right? But the time we spend working for a job for hourly pay, you know, translating that to, okay, this is a pair of sneakers, or instead of paper plates is gonna free up my time to be with you. Mm hmm. Oh, yeah. It's really breaking it down, I guess.

Mackenzie Johnson: 26:20

And that's the goal, right? We're like, okay, this huge concept of teaching our children about money. It sounds like, okay, we're talking about the goal of helping them be financially well, whatever, right? We have these kind of concepts to help us understand it a little further. We did, we want to kind of get to the nitty gritty. You know I love a framework. That's really what this whole episode is, is this framework that the Consumer Finance Protection Bureau, still practicing that. Did I get it right?

Suzanne Bartholomae: 26:50

Yes, you did.

Mackenzie Johnson: 26:51

Okay, I was like wait, was that right? Yes. Okay. Thank you. And yeah, breaking this down of

Suzanne Bartholomae: 26:54

Nice work. how do I help them get there? How do I keep that end goal in mind? Yeah. So, you know, we've talked about it a little throughout with how do we do this, you know, with security in our parenting. How do we do this with choice in our parenting. But I also liked within this report, they really dug into kind of four key areas that can help improve financial well-being. And so it was like, okay, how do we make this right? This is kind of abstract, what are the things we can narrow in on and they had these like four verbs these, like four action words in that report. That was like, okay, that. That is where it gets concrete. These are the things that I can help pass on through my financial parenting, like financial socialization. Yeah. Will you walk us into those four areas? Sure. So I'll tell you what they are

first: 27:44

balance, ask, plan, act, BAPA. Okay, there it is. So balance, balance is number one, living within your means. And so I have a colleague who says that, you know, if you spend more than you take, this is not what they say.

Mackenzie Johnson: 28:05

Paraphrasing, we're paraphrasing.

Suzanne Bartholomae: 28:08

Happiness is when your your income is more than your expenses. But that truly is when it comes to measuring financial well-being. And this is just one definition, and there are several that scholars have have come up with, but you've got to spend less than you make. Because that's balance, and then it frees up, you know, money for you to save. So then that impacts your ability to absorb shock, because you have extra money, right?

Mackenzie Johnson: 28:35

Which is the P in BAPA.

Suzanne Bartholomae: 28:37

Plan. Yeah, so we have to live within our means. And if we're not happy, you know, I mean, with where we are with our means, then that might mean taking on an extra job or, you know.

Mackenzie Johnson: 28:52

Yes, or education or changing fields.

Suzanne Bartholomae: 28:55

Yeah, if that's possible, yeah, yeah, definitely.

Mackenzie Johnson: 28:59

So. Okay, so balance is the first one. What's our next one?

Suzanne Bartholomae: 29:04

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

Mackenzie Johnson: 29:06

Yes, please.

Suzanne Bartholomae: 29:07

You know, a big part of financial security that's not part of this definition is being able to access resources that are non-financial, many things like even just like benefits, public benefits, whether it's food stamps, or tax credits, or energy assistance, help from a sibling or a friend when it comes to child care. So reducing expenses and taking advantage of social benefits, public benefits, can help us live within our means and achieve that balance. If we don't have options like, oh, I'm going to go back to college. But you know, not everybody has that option.

Mackenzie Johnson: 29:46

That access is not, we don't know, I always like to talk about the baseline, right? We're not all starting at the same financial baseline even as we come into adulthood or, I mean, heck, as we come into life. Yeah, so access is different.

Suzanne Bartholomae: 29:58

Yeah, yeah, it definitely does. So just to backup that yeah, you know, what our means are looks different for everybody. But there are ways to come up with strategies to help increase our means. Yeah, yes. Awesome. Okay. So Ask is the second of the four elements. And so that means to gather information and evaluate results. So I told you that the CFPB, Consumer Financial Protection Bureau, is all about empowerment. And so, you know, a rule as a consumer is that, you know, you just don't walk in off the street and purchase something unless, okay, you're at the grocery store. You've shopped there enough to kind of have a, you've looked at all the different.

Mackenzie Johnson: 30:37

Past experience.

Suzanne Bartholomae: 30:38

Yeah, past experience maybe. But yeah, let's say you're buying, you're getting your house sided. You're getting a new roof. You're looking for a place to rent. You know, we're just talking about home, you know, housing. You should at least check out three, get three quotes, right? Yeah. So if you're taking a loan out, go to three lenders, and see if you get the best, because there's such a variation in what people charge in terms of prices. So gather information, evaluate results, and just empower yourself with that

Mackenzie Johnson: 31:08

We can do the balancing, right? We can teach knowledge. that with our kids about the income versus expenses. And the same thing with Ask, teaching them the skills to like how do you gather information. Even just the knowledge to know to get more than one. Like, instead of just like, well, they told me this? I don't know. It's like, okay, we can compare, that ability to ask, for sure. Right? Or is it like, I'm getting the information from the

Suzanne Bartholomae: 31:28

Yeah, exactly. Well, and you know, and person who wants to sell it to me. Yeah, yeah. Right. Exactly. that source of information is a huge one, too. And it's

Mackenzie Johnson: 31:31

I would like to sell you this product so I'm specifically as having a high school student, knowing that there are actually paid influencers who are set up in gonna tell you how good this product is. houses with certain wardrobes and different objects that are

Suzanne Bartholomae: 31:43

Exactly, exactly. And so there might be a all put there by marketers, you know, just to influence my 15 year old, so that she wants what that influencer wants. So product that's always going to have a cost, but there's always knowing what the source of information is, but that's more of a, that's not quite the same as being an informed consumer in the sense of, are you going to a website and getting information from someone that is non-biased and not looking to get into your wallet. going to be variability in how much cost? So all right, so that's Ask. Yes. Yeah. So Plan is the third focus on the future. Right. So planning, so all of us need to have a roadmap, right, in terms of what our financial goals are, what our aspirations are, and we need to have a way to get there. And so ways to focus on the future is like that saving for emergencies. Right? Yeah. So in case, you know, inevitably, everybody has either life event or some structural thing in the environment, like COVID-19 housing crisis, that will create a shock. And so we need to be ready for it. And so that's focusing on the future, that just in case, you know. And I always tell my child and her friends, that's my job as a parent is to look at worst case scenarios. So when I tell you not to do something, it's because that's my job. That's what I'm always doing.

Mackenzie Johnson: 33:16

I'm supposed to see those risks and help you not get into them.

Suzanne Bartholomae: 33:20

Exactly. So let's take it back a little further and think about it financially and say, okay, you know, so what are the financial risks if I lose my job? Right? How am I in trouble? And so focus on the future, planning for larger purchases and life events? Right? So planning. You want to buy a car? Okay, let's look at smart to set a goal to buy the car, well, how are we going to get there? Make a plan.

Mackenzie Johnson: 33:48

I love that one and one more, a trickier Yeah. one.

Suzanne Bartholomae: 33:53

Setting ourselves up for success, right? And it's, again, having that roadmap, having a plan, but things that we can do is, you know, put your savings on automatic so you don't even think about it. Put your bill pay on automatic so that you never miss a bill and get charged a late fee, right? Pay off your credit card fully every month. These are things that you can do to set yourself up for success. Don't ever take on more debt than you need. You know, like, do you really need to get a gigantic Jacuzzi? You know.

Mackenzie Johnson: 34:32

Taking on debt to go do that.

Suzanne Bartholomae: 34:33

Yeah, you know, I mean you really have to be strategic about your choices. Yeah. So things like saving consistently.

Mackenzie Johnson: 34:41

And so that's really like the behavior, right? So like the Balance and Ask and the Plan, right? I almost feel like those are skills and the Act is kind of living those out. Like are you actually making the choices that align with the plan with the information you had? It is, like that is an important part of it. I can tell my children till I'm blue in the face that we should save. And if I am always like tossing money around and not saving, right, and so like, yeah, we can model that. They're gonna learn from it.

Suzanne Bartholomae: 35:15

Yeah, so whatever the goal is for your family and again, yeah, let them know what what your goal is and why you're making your choices. And that's something that colleague of mine likes to say is, it's not that I can't afford it, it's that I don't choose to afford that particular thing. Right.

Mackenzie Johnson: 35:32

That's not the priority.

Suzanne Bartholomae: 35:33

Yeah, exactly. And so having those discussions again, back to that explicit communication and socialization. It's really that communication piece.

Mackenzie Johnson: 35:46

Absolutely. All right, so our four key areas that we can kind of help pass on, Balance, Ask, Plan and Act. So yeah, so much good stuff. Honestly, this idea of like, the beginning with the end in mind, right? Thinking about raising kids who become financially well, adults. Is that how I would say that? Right they're well, financially. Those things, financial well-being.

Suzanne Bartholomae: 36:11

Financial well-being and then that's the goal. It's the goal. But the other goal that we're not talking about is financial independence.

Mackenzie Johnson: 36:19

Ooh, but we're gonna get there. We are.

Suzanne Bartholomae: 36:21

Parenting in every area is about independence. Right? Yeah.

Mackenzie Johnson: 36:26

That's really a value of our culture in the U.S. Absolutely. Yes. Like raising kids to become financially independent. So we are, we are.

Suzanne Bartholomae: 36:33

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

Mackenzie Johnson: 36:36

Awesome. Okay, well, this is old hat to you by now. We're ready for our Stop. Breath. Talk. space where our producer Mackenzie DeJong is gonna come in and ask us an off-the-cuff question about our topic this week. What do you got, Kenz?

Suzanne Bartholomae: 36:50

So nice to see you, Mackenzie.

Mackenzie DeJong: 36:53

Hello. Um, so you're talking about financial well-being? You're talking about like doing all of these things. But what if I'm at a point in my life where I feel like I'm too late? Is it ever too late? Is it ever too late to start working on financial well-being?

Suzanne Bartholomae: 37:16

No, never, never, never. It's never too late to start. I would say, like I've said in the last two episodes, what I strive to do is to help people reduce their financial stress and increase their control, right? And so part of that definition is I have control over my day to day, month to month finances. And so if you can start simple by just assessing where you are and then breaking it down, you know, there's always room to move to it. Let's say you're thinking about debt, right? I have too much debt, I just want to stay under a rock and not think about it. So the idea is, you've got to assess your situation, what is my debt amount, okay, and then I'm gonna list the amounts, and I'm gonna list the interest rates that, you know, from the highest interest rate I'm being charged on the money I'm borrowing to the lowest amount. And some people might pick that small dollar amount, like, Oh, this one's only like 75 bucks, you know, on this credit card. I can do this, and I'm gonna just crush it. And so, you know, that's one approach. Now the economic decision is to pay the big one. But there's, you know, so I think people who are feeling despair, feeling like, oh, it's too late for me, is maybe because they're just not feeling in control, right. And so you gotta get, you got to start by getting in control, breaking things down, and really thinking about what your goal is. And there's all sorts of community resources that can help you get there too, and help you with the conversation. Nonprofit, like credit council, counselors, or debt counselors can help you.

Mackenzie Johnson: 39:01

Well, and I thought, I just assumed you meant like, is it too late to talk to my kids about money?

Suzanne Bartholomae: 39:06

Oh, my gosh, oh, sorry. No, no.

Mackenzie Johnson: 39:09

And I think it really is both of, is it too late to talk with kids about money? And no, I think like, even if your kids are adults, you know, they of course have their own freedom of choice and hopefully, financial independence and those things, but that there are still opportunities to talk about how you made decisions or even passing on the mistakes, things you wish you hadn't done financially or, you know, there's still opportunities to share the experience that you have if you've got adults. If you've got kids who are kids or teens. Yeah, even think like, okay, I have an 18 year old. Is it too late? I've never talked with them about money. I mean, my opinion would be no. Don't you think, Suzanne, there's opportunities for input and growth and sharing and learning?

Suzanne Bartholomae: 39:56

Absolutely. And they never stopped really. Well, I mean, it depends on you as a family and as a parent, but a lot of times our financial purse strings extend over the lifetime, you know, in a sense. Just through gift giving or help when we need it, you know, like that capacity to absorb shock. One of the social resources is family and friends, right? And so, like, you're in trouble, and you can go to a family member for a loan, you know, to get you across a threshold or something. Right, then that's something that yeah, again, it's a tie that's still there. But in terms of talking to your kids about money, yeah. I mean, when they buy their first car, you know, shopping with them. When they buy their first house, maybe if they buy a house or when they're looking for housing. Yeah, I mean, there's just all these financial decisions, having a child, having their first child, you know. There's the expensive hospital like having a child, right? The bill, right. Yeah. All the stuff you need for a new baby. That's why we have showers, you know, yes. Yeah. So I mean, the financial ties really don't stop. And so there's always an opportunity for conversation like, hey, okay, I'm gonna buy you this stroller but let's also start a college fund. Or let's also start, you know, whether they're going to trade school or, you know, isn't a value or yeah, whatever.

Mackenzie DeJong: 41:25

Yeah, absolutely. I probably talk to my parents more about that kind of thing, maybe if they're not giving, you know, not lending me money or giving me money that I'm definitely like, I talk to my parents about purchases and advice now more than I ever did as a teenager. I was probably like, heck with you, I want to spend my money how I want to spend my money. But now I'm like, should I buy this chair? Should I buy that decoration for the wall? And you know, those little things that? Yeah, we've talked about this a lot too of like, parenting doesn't end when you're.

Suzanne Bartholomae: 42:09

Exactly. Right. Well, some of the bigger financial decisions happen once you hit 18. Right. And so whether you go to, whether or not you go right into the workforce, you know, you're gonna become financially independent quicker if you go from high school into the workforce, but you still need help managing your paycheck. And you know, what are the benefits in evaluating a job, right?

Mackenzie Johnson: 42:34

I have that like phone call that I always had, like, what number am I supposed to put on this? W...I don't even know the numbers, Suzanne. W-4, W-9.

Suzanne Bartholomae: 42:41

W-2?

Mackenzie Johnson: 42:41

W-2. When you get a new job, you're like, oh, what do I put here? How many?

Suzanne Bartholomae: 42:52

Oh, in terms of withholding and all that?

Mackenzie Johnson: 42:55

I would still need to make that phone call if I'm honest. So it's never too late.

Suzanne Bartholomae: 43:01

Yeah, right. And then if you don't jump right into the workforce, and that's kids that maybe go to community college or a four year college, that extends out even longer in terms of like, financial independence doesn't come until maybe your mid-20s. Maybe your late 20s. Right?

Mackenzie Johnson: 43:19

Ewww emerging adulthood. Emerging adulthood.

Mackenzie DeJong: 43:25

In other words, as a parent, no, it's not too late. And as a child, no, it's not too late.

Suzanne Bartholomae: 43:34

Good summary.

Mackenzie Johnson: 43:35

Thinking about it. Yes.

Mackenzie DeJong: 43:37

No matter which generation, it's not too late to think about your own kids and for yourself.

Mackenzie Johnson: 43:41

Yeah. Good summary. All right. And good question. Yeah.

Mackenzie DeJong: 43:46

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

Mackenzie Johnson: 43:50

Awesome. Thanks, Kenz. So that wraps us

Suzanne Bartholomae: 43:51

Mm hmm. That's right. And just you know, up today. We really just kind of took this moment today to dig into like, what's the end goal? What are we talking about? Why are we talking about financial socialization? You know, in the next few episodes, we're gonna get into some fun stuff. But for knowing that the financial well-being, this idea of your today, we really did just like, okay, slow down, what do we want? What does financial well-being look like in the long term and in the present for our children? And how can we parent in a way that's going to align with those things? So we learned a lot about security and choice as components of financial well-being today. And, of course, got those four key areas that we can tap into. child having financial security and financial freedom when they become financial independent, yes, that is the goal. This dual goal as parents, we want our financially independent children to have financial well-being. So it's that pairing of the two. And so because we don't want our children to have stressful lives.

Mackenzie Johnson: 45:03

Awesome. Such good stuff coming here. So thanks for joining us today on the Science of Parenting podcast. Remember, if you are a regular listener to the audio, don't forget that you can also watch our episodes on video each week. Sometimes Mackenzie DeJong even pops in some fun visuals that you can look at and look for. So find our videos on YouTube, Facebook, or on our website @scienceofparenting.org

Suzanne Bartholomae: 45:34

Yeah, so come along. We're going to tackle the ups and the downs, the ins and the outs, and the research and the reality all around the Science of Parenting.

Anthony Santiago: 45:43

The Science of Parenting is hosted by Mackenzie Johnson, produced by Mackenzie DeJong, with research and writing by Barbara Dunn Swanson. Send in questions and comments to parenting@iastate.edu and connect with us on Facebook and Twitter. This institution is an equal opportunity provider. For the full non-discrimination statement or accommodation inquiries go to www.extension.iastate.edu/diversity/ext.