Stop thinking of money as a taboo topic and talk about it openly with your kids.
That's the argument that author Beth Kobliner is trying to advance in her new book, "Make Your Kid a Money Genius (Even If You're Not)." She suggests that you start teaching them about finances at an early age — even if you think you have some financial baggage of your own.
Kobliner stopped by to talk with host David Brancaccio about the ways you can broach the subject, the income gap between men and women, and the age you should get your first credit card. Below is an edited transcript.
David Brancaccio: I can see, reading this, that you don't think money skills are innate — that these are teachable. I don't know, there's always that kid. Three kids, same parent. Kid B is a genius, with the money. He's got the knack to buy stock at age 13, writes into Marketplace with questions about the Fed. And then the other two are like, "What?" But you think you can actually move people forward.
Beth Kobliner: Absolutely. I feel like we're seeing more and more research showing that there are things we can teach kids. We just have to do it in the right way. For example, my most favorite thing in the world was I got to teach Elmo about money on Sesame Street. We got to do, "Yeah, this is how you save, this is how you spend." And we had a good time, Elmo and I.
Brancaccio: You know he's a puppet, right?
Kobliner: We really had a moment, Elmo and I. But then they actually did an impact study. People who watched the show with their kids and people who didn't watch the show. And they found that when families watched the show and worked on the materials that they were given with the show, they were more likely to increase savings. Sometimes delivering the message in a powerful way can really have an impact on a kid. And I think we have to sort of figure out the best ways to do that.
Brancaccio: And I gotta say, looking through early in your new book, your list of how to talk to your offspring about money — many of the rules also seem to apply to talking to them about sex.
Kobliner: Yeah, I mean, I guess that's true. And surveys are now showing that parents are more likely to talk to kids about sex; they're more comfortable.
Brancaccio: Well, rule No. 1 is start earlier than you think you might need to start.
Kobliner: Well, yeah, and keep it age appropriate. If your kid says, "Where does money come from?" You don't have to go into, "Oh, the Federal Reserve —." You don't have to go into that, but you can say, "Well, I work." Take them to your job, let them see. Say, "I work and I make money. And from this money, we get to buy things, and we get to buy things we want and things we need. And let's go through the department store and figure out, you know, chocolate milk is something we would love to have. We want it, but milk is something we might need." And going through that lesson with kids, I think, in an age-appropriate way. When they're older, you can talk about, for example, in ninth grade, starting to think about college and financial aid. And I have a whole chapter on that. I think the one important thing — and that is very true with sex — is that parents are the ones who the kids will be going to for the most part. I mean, I don't know if kids are, like, talking in the schoolyard about, "Hey, this is the truth behind, you know compound interest rates." Not in my school, but I grew up in Queens. But I think that now, it is incumbent on parents to be talking to kids about all kinds of topics — including money, even if they don't know it themselves. I think that's the key: People are scared. They're terrified about their own money habits. They're like, "I'm bad at this, why would I be able to help my kid?" But I really think the most important thing is, in the book, to learn more about this. Whether it's, like you said, tax-free compounding or how to get out of debt and then how to translate that in age-appropriate ways to your kids.
Brancaccio: Don't lie about your money, identify your own financial baggage, leave it behind. Don't go on about, "Oh, I'm just so awful when it comes to saving!"
Kobliner: Yes. If you feel overwhelmed, and you really think you messed up or you took your credit card and you maxed it out and went to Paris and had a great time, don't go on and on about that. Like don't make it seem exciting. You should be honest, they now say, but keep it age-appropriate and keep it brief and don't go into wild details about what happened. But I meet so many parents who say, "Oh, my parents were so bad about money and I'm bad about money." Or, "My parents were so great with money and frugal. I want to have fun with money." Whatever your baggage is, no matter why you think you're not good about money, that's not the issue right now. You have to sort of go through methodically with your kids, in a day-to-day way. It's not like huge, hourlong talks every day, but sort of make sure they understand how to handle money smart.
Brancaccio: Here's a crucial one that you highlight. Watch out, avoid creating the money gap. This is, what, a gender issue?
Kobliner: One company did a study on looking at how parents talk to boys and girls. And in fact, they talk to boys about investing much more than they talk to girls. And not surprisingly, they also say — these parents — that they feel boys have a better sense of the value of a dollar than their daughters. So many really smart dads that I know say, "You know, when I think about it, I do talk to my son more about investing. And I kind of do riff my daughter a lot about, 'Oh, you're such a shopper.'" And I think that it's a realization on the part of parents. First of all, there's this income gap between men and women, which seems like it's still hanging around. It's getting somewhat smaller, but it's still there.
Brancaccio: It's very much still there, yeah.
Kobliner: Very much still there. We better be talking to our girls about how to save and invest smart, because they're going to have to make up for that income difference that they're not getting. So I think that is a wake-up call to talk to our daughters about everything from how to save money, how to invest money and how to negotiate for salary at a job. I think those are really big issues that came out of this.
Brancaccio: How do you deal with this — this is for older kids, I think — but a lot of helicopter parents are constantly worried about their kids getting into the right college, succeeding. And therefore, some of the parents think that work for money just kind of gets in the way and the kid might not have that much work experience.
Kobliner: I worked part-time in high school. I'm sure you worked part-time in high school.
Brancaccio: On the radio.
Kobliner: Right. And I think that while that's great, research does show that when you start getting above 10 hours or 15 hours a week for work during school, that really can cut into your ability to do homework. And if you spend less time on homework, your grades will be lower. So the point is it's OK and maybe good for a kid to work 10 hours a week. But also, it depends upon the family. It depends if the family need the kids to chip in. Or is it that kind of thing where the kid just really likes making some extra spending money, and that grocery store owner might ask your kid to work 20, 30 hours because he's a good worker. I think in college, it shows that as long as you work under 20 hours a week — and weirdly, if you work on campus, it actually seems to improve your GPA a little bit. So work makes sense, but you have to balance it with everything else that a kid has to do.
Brancaccio: You and I could do a 12-part series on debt and credit cards for young people. I've got a one-word question: When? When's a kid supposed to get a card?
Kobliner: Well, I would say junior year in college.
Brancaccio: Oh my, really?
Kobliner: Yeah, I am such a hard line on this. And because I saw back in the day, when kids were getting credit cards in college — I know one girl's, like, "Yeah, walked into a frat party, I signed my name and got a credit card." So in 2009, the rules changed. The CARD Act under Obama said you need to be 21 to get a credit card, or have income, or have a parent cosign. So one mistake is parents are now cosigning credit cards with kids, and that means, in many cases, your kid isn't building up a credit record of his own. And if they make a mistake, they're going to mess up your credit score. So that's a problem. Look, I have two kids in college now. Freshman year is a busy time. They have a lot going on. They don't need a credit card on top of it. One great thing about the millennial generation: We're seeing that they have less credit card debt when they graduate. They have plenty of student loan debt, but a lot less credit card debt. Partly is that because they're afraid; they saw their parents have a lot of debt and get into trouble. But partly, I think it's because they can't really get it as easily as they could when I was a kid.
Brancaccio: Before we go, I gotta ask you about something that you tell parents perhaps not to talk about when it comes to money. Your salary. Really?
Brancaccio: You think that opens up cans of worms.
Kobliner: I hate to sound like my grandmother, but it's sort of not appropriate when your 6-year-old says, "Mommy, how much do you earn?" And you give them a figure, because that figure — for even a 10-year-old — doesn't really have context. I think as kids get older, it's definitely important, especially in ninth grade, starting to have those conversations about college. We're in this as a team, but you know the idea of, like, throwing out a bunch of dollar bills on the table and saying, "This is how much money we have." You explain it; you can tell a kid what the median income is. "We make, you know, quite a bit more than that," or "We make quite a bit lower than that." Give them context so they understand it. But I think throwing out numbers really just confuses the kid.
Brancaccio: I mean anything with five zeros after it is going to look huge and therefore makes the other lesson about, "Gee, we should be careful with money," a little bit hard to swallow.
Kobliner: It makes it harder, and also: "Gee, I just want a candy bar; it's just a dollar." "Yeah, OK." And every time we give in, as research shows, if we give in a lot of times at that checkout line, our kids will be more prone to have debt, credit card problems in the future.
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