to another sci -fi episode where finances and
psychology collide. And today we're going to
continue to examine how teenagers think, feel,
and behave with money, or at least how we would
want to encourage them to think, feel, and behave
with money. I'm going to continue the book review,
Personal Finance for Teens 101. The Ultimate
Guide to Budget, Save, and Invest for Early Financial
Independence. This is written by Freddie Grant.
And this book for parents, if you did not know,
if you didn't catch that in the first episode,
which I highly recommend that you go listen to
the first episode. There's a lot in there on
the very first part of this book review. But
this is also available on audio. as well so if
you're not normally a book reader this is something
you can listen to during your commute or while
you're working out or doing other things piddling
around the house but definitely something that
should you decide to get this book for your child
You want to read it so you can answer questions,
have discussions. And just to reiterate what
I said in the first episode, a cautionary note
that this book is a good book, but it will not
provide what your teen desperately needs. And
that involves ongoing discussion. And it also
involves your modeling. healthy financial practices
as well. And if you struggle with that, if you
are a team Redstone Arsenal member, you can call
256 -876 -6299 to reach me for individual financial
counseling. If you're not here at Redstone Arsenal
and you just enjoy listening, you could also
seek some education and coaching through your
bank. And a lot of times that's free, but That
comes with a cautionary note as well. Sometimes
they'll want to sell you products that you may
not need or may not understand. And all you have
to say is, I'm just here for the education. And
that's okay too. All right. So here we go. We're
now in chapter six. He talks about the savings
code. And he gives a wonderful quote by Warren
Buffett. Do not save what is left. after spending,
but spend what is left after saving. Oh, that
is so good. And I've actually started incorporating
some of the quotes that I found in this book
and some of my educational classes. So thank
you, Freddie Grant, for these wonderful quotes.
In this chapter, he says, I quote, we delve into
the essential skills and strategies for cultivating
a robust savings habit, end quote. And that's
what it's all about. If there's one thing that
I like to provide to adults with financial education
is getting into a habit of savings does take
time and effort. It's not always about the amount
itself. It's just about getting into the habit.
So let's say for folks that may have a negative
money mindset with a scarcity mindset, I don't
have enough. I don't make enough. Only individuals
who have a higher income has the luxury to save.
First of all, that's incorrect. It's a faulty
belief. And I'm not trying to make you feel bad
if that's something that you have experienced
because you might be angrily thinking, well,
Olivia, you don't understand my circumstances.
You don't understand what is going on. And you're
right. I don't. But let me empathize and validate
that it can be hard to find some. money to put
away for savings. But what we're talking about
here is even if you can just buy $5 or find $5
to put away every month, just getting into a
habit, what that does psychologically is if you've
saved $5 a month for five months and you see,
wow, I got $25 sitting in a savings account,
that does something for you. And it's motivational.
You start tapping that area of your brain where
you want to do more of what is working. And that's
all he's talking about here is getting that teenager
into a habit of savings. And he shows them throughout
this chapter how to do that. So setting a savings
goal. He even talks about why you even start
now. And it really is all about. getting into
that habit. And then he breaks down how to save
for something you really want. So maybe the first
part of this chapter, if they kind of gloss over
it and they're just like, okay, that is all good.
But once they get here, I noticed for myself,
it's like, oh yeah, I started listening for myself.
Okay, yeah, I want to listen to this too. And
maybe there's something I'll get out of this.
And I did, even for myself as an adult. So he
breaks it down. He states, know how much you
need to save. And here's what adults typically
do, and here's what we need to teach our teens
to not do, is we'll just have in our mind's eye
just a free -floating amount that is not tied
or tethered to anything. We think that we're
saving towards something and then we give up.
And part of the problem is that we never even
identified the amount that we really need. So
there's a start. What is the true amount? And
a lot of folks might get stuck. Well, I'm confused
with saving and investing. I'm confused with
nest egg versus what I need to save for short
term. So get nest egg out of your mind. Get long
term savings out of your mind. This is a short
term savings. goal. So asking yourself, how much
do I need to save? And then he goes further to
say, know what to set aside. So here's his quote.
Once you have your target number, break it down
into smaller manageable saving increments. For
example, and everyone's going to know this one.
That's not part of his quote, but parents listen
up. If you need 300 for a new phone, and have
six months to save, you'll need to set aside
$50 each month. End quote. That right there,
that simple sentence structure just breaks down
for them a more manageable goal. And so many
kids aren't getting this information. Now, some
high schools do provide some level of financial
education, but a lot of them are offered only
as electives. So a lot of kids are not getting
this information. Then he goes on to say, incorporate
this savings amount into your monthly budget.
Treat it like a fixed expense, similar to how
you would handle a bill or a subscription. end
quote I love this so he's like don't treat a
savings goal every month like a variable expense
like oh if I don't get to it it's fine I didn't
have to have it no treat it like a fixed expense
so you see where I'm going with this this is
good stuff even for adults say and here's another
one save without thinking about it and he talks
about setting up automatic transfers and then
the one I love the most making the necessary
sacrifices. We can't build up something in our
children's minds that it's going to be easy to
save. We can't build up a notion that you'll
be able to save your money without any sacrifices
whatsoever. Go ahead and talk about the things
that would... lure them away from saving or the
dangers once they have savings set up what would
what would be a danger in them veering off of
their savings goal so it might be a vacation
where a friend invites them to go on vacation
they need so much money they can say no to that
vacation to continue with their savings goal
that might be a sacrifice they need to make So
that they could reach that savings goal. And
what our culture, because remember, our culture
and societal influences heavily influence our
money mindsets. Even your teenagers. What our
culture is telling our kids, oh, if you don't
have the money, just put it on credit. You don't
have to sacrifice anything. And is that what
parents are modeling, possibly? to their kids
as well, that's not healthy financial management.
That's learning how to spend credit, not learning
how to spend cash. We want to help our children,
and this is what Freddie Grant reveals in this
book, we want to help these kids learn how to
spend cash, not credit. Now, granted, he goes
into understanding credit, and if you will be
using credit, how to use credit wisely, but saving...
And good financial practices and learning how
to spend cash does come with some level of sacrifice.
I like how he gives it to them. In reality, it's
not sugar -coated. And our kids need to hear
this from folks other than parents. Okay, next
chapter, chapter 7, savvy spending. Here's a
Swedish proverb that he quotes. He who buys what
he does not need steals from himself. So good.
I'll let you soak that in. Let me say it one
more time. He who buys what he does not need
steals from himself. So wise. I really like that
quote. Gets to the heart of this chapter. So
again, how are you going to be a savvy consumer
and how are you going to be a savvy? spender
and here's where he really gets into the weeds
with tracking weekly expenses and he really underscores
the importance of tracking everything number
one identify unnecessary expenses set a goal
Track your progress and reflect at the end of
the week. Not only are you tracking, but he's
encouraging reflecting. And that's such a great
practice and a habit to get into. And I think
adults could use that information as well. Chapter
eight, build your future fortune through investing.
And he breaks down this chapter in investing,
again, validating for teenagers that there are
teens. that are investing. There are teenagers
who do have a leg up and understand markets,
understand stocks, understand different investment
principles. And so why not go ahead and learn
yourself? And he goes into understanding the
benefits of compound interest, and he provides
an example for folks. And the examples that he
provides, I mean, these are other teenagers that
he's providing examples on and really the difference
that it can make. I want to read through this
long paragraph because I think this is beneficial
for the parents to hear as well. Because this
is actually found on page 80. you look at the
book, if you wanted to follow along and go over
this with your teenager, this is a powerful example.
I quote, suppose you had $1 ,000 and put that
in a savings account where it wasn't gaining
any interest. You then continued to save an additional
$100 every month in that account. At the end
of 10 years, you'd have $13 ,000 in the account.
Not bad, but If instead you invest that $1 ,000
in stocks at an average annual rate of 8%, which
he states is a reasonable average return, and
contribute an additional $100 every month by
the end of 10 years, you'd have a total of $20
,514. That's a big... And thanks to compound
interest, the longer you keep the money invested
at that rate, it will continue to grow exponentially.
At the end of 20 years, it would be $63 ,829.
At the end of 30 years, it would be $159 ,972.
That's pretty good for starting out with just
$1 ,000. End quote. So he breaks it down. So
teenagers can put enough away. Let's say they
don't get to $1 ,000, but let's say they get
to $500. That's doable. I've seen it. I mean,
even when I was living in poverty, I could have
come up with $500. I had a job. And if someone
had told me... at a very young age, that that's
how you do it. And now granted, I did meet my
husband when I was 18 and we didn't get married
for three and a half years later, but he started
teaching me these money principles and I started
learning. But had I learned earlier, I would
have done different things with my money as well.
So he talks about how early investment is not
just about the money, but how it also instills
financial discipline. And that is a key skill.
And wouldn't it be nice if you were doing like
a little book club with your teenager and you
were having these discussions and you both were
each other's accountability partners? That could
be some awesome QT or quality time. He goes into
talking about with investing how patience is
a virtue, talks about sticking to long -term
commitments, being consistent, investing with
the mind and not the heart, balancing their portfolio,
and maintaining diversification, and even understanding
their investment philosophy and their risk tolerance.
He talks about it all. These are all the things
that I talk to adults about, but again, in this
book, it's written at their reading. level and
it's really good to digest as well so again parents
if you're one of those that you're listening
you're like man this actually does sound like
a good personal finance book don't be too ashamed
to buy one for yourself and and use this for
your own financial education as well so chapter
nine he talks about getting credit wise he provides
a quote by tyler gregory if you don't take good
care of your credit then your credit won't take
good care of you. End quote. Ugh, I love that
quote because that is what I see day in and day
out. So many folks who have great incomes but
horrible credit scores. They just did not manage
their debt. Well, but it doesn't mean the end
of the road. And again, that's not an insult.
It's just, hey, this is reality, but there's
always something that you can do about it. But
before these kids even get to that place, they're
given early intervention. They're given early
education by Freddie Grant. Here's a quote from
his book. The truth is that credit can be a powerful
tool if used wisely. It can help you achieve
major financial goals, like buying a car or financing
your education. However, mismanagement of credit
can lead to debt that hampers your financial
well -being, end quote. And that's the message
that I try to get across to so many folks. This
isn't something that has to continue. But again,
he's saying that credit, it's not that credit
is bad. It's what you do with it. It's how you
respect it and use it wisely. Parents, this is
amazing. He will spell out for you how to help
your child Build. Credit, that's probably the
number one question that I get from parents who
are finally working with their teens on money.
And I would venture to say that a lot of times
helping them with their tax return or talking
about building credit is usually the first time
that they're talking about financial planning
with their kids. And I'm not saying that's bad.
I think if you're helping them with those things,
that's wonderful and that's a great start. But
there's so much more. than just building credit
and tax planning. And again, it's all covered
here. He talks about authorized users on a parent's
account, trust, and all those things that teens
can do to build that trust with their parents.
You can co -sign for a credit card. There are
some other options that are listed here as well
with the different types of cards. So there are
so many ways that you can look at this. And as
I even think of my own teenager, we're going
to start her off with a gas card based on our
own agreements with her and how she's helping
us with her. Sister, we are paying for all of
her gas because it helps us out and it costs
us less money for her to do these things for
her. So we're paying for all of her gas, so we'll
get her a gas card, but we will put the money
in her account for her to pay it off monthly.
So that will help her build her credit. And if
for some reason we can't find a gas card, we're
actually going to be looking at that soon. If
we can't find those anymore, then we'll be going
with the authorized user. But know, parents,
if you go with the authorized user credit card,
you are responsible for that debt. So if you
have a security clearance, make sure you trust.
your child, have lots of discussions, no cash
advances, nothing like that, talk about those
things, those cautions, have a contract with
them, what will happen if they misuse, and also
keep a look on that credit, maybe even daily,
to make sure that it's being used in the manner
it's supposed to be used. And then showing them
even how to monitor their credit report. There
are so many adults that don't even know how to
do that. And then it goes into debt management.
What is the difference between secured debt,
unsecured debt? What's the difference between
bad debt versus good debt? And he talks about
only using debt for needs and not wants. What
a great quotable quote. Only use debt for needs.
and not once. So when you are, if you do take
out an educational loan, getting that loan in
such a way where it's actually meeting needs
and not wants, where it's actually paying for
tuition, where it's paying for books and lab
fees, but not for a lavish lifestyle, not for
you to live off campus and rack up. $2 ,000 rent
monthly payments and things of that nature. Now,
I do understand some folks have different needs.
Maybe there are special needs that are involved.
But again, if you use that rubric, only use debt
for needs, not once, you can't go wrong. Okay,
and then he also gives the best advice that I
think is in this book. If you can't afford it,
don't use a credit card to buy it. I think that
should be on marquees everywhere, just reminding
folks daily. And have an emergency fund to fall
back on. And he even asked, and he has several
questions for parents and teens to go over, are
you even ready for a credit card? And then chapter
10, planning for the long game, major purchases.
So buying your first car, planning for college,
how to look for scholarship money and other resources.
And if you're paying for your own college, how
to do that. Moving out of the house. He talks
about those things because we know we have teenagers
that that's their goal. I want to move out and
I want to be able to live on my own. And finally.
He talks about vision boarding. And one of the
reasons I love this book is because, one, he
talks about the financial mindset, which is a
therapist's dream. But he also talks about vision
boarding, which follows the solution -focused
therapy method, where visualizing what you actually
want. Not visualizing what you don't want, but
what vision boarding does is it helps you visualize
what you actually want in life. And he talks
about all the materials that you need, how to
put it together. And what a gift if your child
does this and then talks about it with you, what
their goals in life are. You gain access to a
part of your child's brain that was otherwise
inaccessible. helping draw out for themselves
something that was inaccessible before this activity.
A lot of folks will just mentally account for
what they want to do or talk about what they
want to do, but to actually put it down on paper.
And then to be able to explain it to somebody,
it solidifies that vision for their lives. It's
extremely psychologically grounding and powerful
and helps with goal setting. So I hope you enjoyed
this book review for Personal Finance for Teens
101, The Ultimate Guide to Budget, Save, and
Invest for Early Financial Independence, written
by Freddie Grant. And use it wisely. Have some
discussions. And if you found this helpful, please
remember to rate and review the pod wherever
you listen. Thanks for listening.