# 12: Teaching Kids About Money: Why Hands-On Experience is Key - with Ashley LeBaron-Black
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[00:00:00]
Alec: Hello and welcome to Cents of Responsibility. I'm Alec Lindenauer, a certified financial planning professional, husband and chief allowance officer to two daughters. I'm also the creator of the Cents of Responsibility tools and how-to instruction parents need to raise their children into financially literate, money-savvy adults, even if they don't know much about finance themselves.
Ashley: I'm Julie Frans, a chef, entrepreneur at heart, wife and mother of two middle school children. I also curate the Cents of Responsibility community, so parents have a forum to ask questions, share success stories, and discuss their journeys. As a financial newbie myself, I'm also cultivating our group support system to help carve out my own family's path toward financial literacy.
Alec: Hey, money teaching parents and caregivers. Alec here [00:01:00] and I am looking forward to introducing you to a special guest today. Dr. Ashley LeBaron-Black. She received her PhD in Family Studies and Human Development from the University of Arizona and is now a Professor of Family Life at Brigham Young University BYU.
She's the chair of the Family Financial Wellbeing Focus Group for the National Council on Family Relations, and is an associate editor for the Journal of Family and Economic Issues. I love this part. Her research focus is family finance, including two key areas. First, how financial attitudes and behaviors predict relationship outcomes.
And second, which is right in our wheelhouse, how introducing finance during childhood and adolescence predicts financial, relational and mental health outcomes in emerging adulthood. I love that last part. Like I said, basically she's a professor whose research passion is [00:02:00] learning about the effects of parents teaching their kids about money.
Oh, I'm seriously gonna nerd out here with Dr. LeBaron-Black. In May, 2022, Ashley and her team released a study which found that the most effective money teaching techniques to use are those which provide children tangible experience. And interestingly, lecturing your children is the least effective method.
Of course, if some of this sounds familiar to you, it might be from the recent Cents of Responsibility blog where I wrote that post was called Following the Science to Teach Our Kids About Money. I'll put a link to that post in the show notes. All right, I'm really looking forward to getting into this study.
so you, our C.O.R. Parent or caretaker, can dig into how to most effectively teach your child about money. Let's do it. Dr. Ashley LeBaron Black welcome. Thank
Ashley: you Alec. Great to be here with you
Alec: And like I told you as we were having our little, uh, pre-recording chat, I am very excited to nerd out with you.
[00:03:00] And again, thank you for allowing me to call you Ashley versus Dr. LeBaron Black, because I know that's, that's easier on the tongue. I am being, be having the last name Lindenauer when someone says, you know, oh, Mr. Lindenauer, please, please, no, no, no. Alec. Alec is much better.
Ashley: So, yes, definitely.
Alec: Alright, so Ashley, first I want to tell you why I love this study so much and I'm gonna read this email that I sent to my team, to Julie.
My partner and Trina our marketing maven. So this is from September 26th, 2022, and the title is Jiminy Christmas with Ex three exclamation points. And it says, this is exactly in all caps what I'm trying to shout into the wind. The headline of this article is just makes sense. And that's c-e-n-t-s, just like Cents of Responsibility
So already in love there and it says BYU study shows children need hands-on experience to learn financial responsibility. [00:04:00] Yes. This is exactly the core of C.O.R. -- Cents of Responsibility. It's not about allowance per se, it's about ownership of money. That's the key. Whether they work for it, they're given it, whatever.
And then I say, this researcher might be a must have podcast guest and we need to use this and refer to this article and study. I'm gonna nerd out on the study.
Ashley: That's awesome. I love that.
Alec: So I, I wrote that in September and really this, the whole thing, it just, it resonates with our resources and our philosophy.
So whether it's, you know, the parents, the blog or podcast, the newsletter, the courses that we offer, if I had to boil down our philosophy into just a couple key points, I would say like, Don't tell me what to do, like tell me exactly how to do something. Right. That's one. You don't have to be Warren Buffet.
You don't have to be an expert for this because all we really need to do is just provide an experience for our children. And the best way to do that is whatever way you can make it work in your house, right? [00:05:00] Like mm-hmm. This is not complicated stuff. Yeah. And, and my why is my two daughters and all of the experience that I've seen as a professional with, with financial illiteracy.
So let's start with your why, Ashley, like, Why did you do this? Why are you doing this? And, and tell us about
Ashley: that. I, as an undergrad and then in a master's in a PhD program, I studied family studies in human development. And when I first, uh, started getting into research as a student, I, you know, I was trying to figure it out.
And my mentor, uh, who's, whose name is Dr. Jeff Hill, he was studying family finance and asked if I would be his research assistant. And my initial reaction to that was, Ooh, like money, doesn't it seem that like exciting or interesting? And so I was like, oh, but I like really wanna work with him. He's great. So I'll just work with him on this until I figure out what I like, actually wanna [00:06:00] research what I'm actually gonna be passionate about.
And the more I got into, uh, this family finance research, the more and more apparent it was to me how money it impacts families and individuals and relationships so much that, you know, Cause the thing that really drives me is, is relationships. I, I love families. I think they're so great and you know, I just try to do the little bit I can to help, you know, people know what they can do to have stronger, healthier family relationships.
I kind of started falling in love with looking at the financial aspect of that and how much money impacts couples, how much money impacts the wellbeing and all sorts of areas of life for emerging adults. Just became very apparent how important it is, and so then I became really passionate
Alec: about it.
What do you wanna do with all of this? I mean, so we'll get to the study. Um, obviously I wanna really get into some of those [00:07:00] weeds, but what's the goal with a study like this and some of the other ones that you've done?
Ashley: Yeah, kind of, I guess my end goal ideally, would be for parents to understand how important it is to teach their kids about money well, and to know how they can do that.
So as a researcher, you know, I, I get to provide evidence of, of some of these, you know, concepts and ideas, and then I, you know, can help spread the word a little bit, like coming onto podcasts like this and ultimately just hope it, it gets out there enough into kind of the everyday language that people talk about and an important aspect of.
of parenting that, that parents think about. So, so yeah, that's, that's kind of my role I see is, is just providing some evidence that people can say yes. Like, see, this study found that this really matters. Yeah. And it mattered for kids like later in life too.
Alec: Excellent. And what was little Ashley like with money growing up?
What was money like in her house? Ooh, good
Ashley: question. [00:08:00] Um, my parents did a pretty good job teaching me about money. Um, several kinda lessons or moments come to mind. They did a good job of helping us be generous and more giving less selfless, uh, selfish with our money. I remember, uh, you know, we would donate 10% of our money growing up to our church and we understood that that was used to help our, you know, our neighbors who, who needed it or, you know, we'd.
take surprise Christmas presents over and drop 'em off on someone's doorstep when we knew, you know, a, a neighbor was going through a hard time or, um, you know, so, so my parents kind of helped involve me in ways, even with my own money to kind of get me in the habit of thinking about my money as something I could use to help other people.
So that was great. I also remember one time, I don't know if it was because my siblings and I were acting entitled or just asking for too many things, um, but they sat us down once and got out the Monopoly money [00:09:00] and they like literally counted out with Monopoly bills, you know, a, a stack of money and said, this is how much we make every month.
And at first I was about 10 years old and at first I was like, whoa, that's,you know, that's so much money. Then with that stack, they counted out a big portion of it and said, this is how much it costs to just pay for our house that we live in. And they like counted out more of it in a separate pile. Like, this is how much it costs to have running water and our fireplace.
You know, like utilities. They counted out how much our car costs, they counted out how much they paid on groceries. You know, they did, like, they went through all the needs and then it, they had like a little stack left and uh, they said, you know, this is how much we have left over after we pay for all those things that we need to survive.
And we're really lucky because we do have a little bit left over and some people don't. So we do get to, you know, do some fun things and get some things that we want, but it's not limitless. Like this is how much it is, so this is why we say no to things. And that was just a huge eye-opener [00:10:00] for me as a kid of how much life costs, just all the different expenses involved with.
Living and, you know, having a family and, and just, you know, yeah. Not being entitled to, to endless money. So, you know, just moments like that that were good, good teaching moments for me. They helped us set up our own bank accounts for us at one point, and, you know, so of course they weren't perfect, but, but they definitely taught me some things that were helpful later is a good, good starting point.
Alec: How old were you when you did that Monopoly exercise?
Ashley: I think around 10 years old. I'm not sure exactly, but old enough to understand.
Alec: Yeah. It's amazing what we remember as kids, right? I'm sure your parents, yeah. Were like, Hmm, let's just use the Monopoly set. It wasn't this grand plan and they just sat down and now here you are, however many years later.
Yeah. Talking about it. Right. It's some just amazing. Yeah, and and what a great reminder for people is they say, you know, you don't have to be Warren Buffet. Like, just like you don't have to be Lance Armstrong teacher kid to ride a [00:11:00] bike. I mean, you don't have to be the Monopoly guy to sit down and, and have that that interchange.
You just gonna have to wanna do it. That's pretty much it. Exactly. You said that when your mentor approached you, you thought, eh, money, that's boring. I'm curious why you chose that adjective.
Ashley: I think I just had this connotation like in, in family science, you know, I was all about like relationships and more like, not that it's all like fluffy lovey dovey stuff, but maybe I would've guessed that I would've, I would've gotten into research more like, you know, marital interactions and, you know, how like time use, you know, or, or maybe like attachment, you know, so some things like that that felt like they were gonna be more obviously relationship centered.
Mm-hmm. Um, and money just seemed like this. This thing that I wasn't interested in. Like, I'm not a huge, well, I end up doing a lot of statistics now and [00:12:00] took like, you know, 11 college level statistics classes, but I didn't, like at the time think that math was, you know, something that was interesting to me.
I was kind of a black sheep in my family by not doing business. Hmm. You know, I was, I was very adamant that I was gonna do something that I was passionate about, um, that I wanted my job to be something that was meaningful to me. And anyway, so I, so I just think I had this stereotype about money as, as being something boring.
Yeah.
Alec: Interesting. All right, so let's dig into the study. And you're not kidding with statistics. I mean, I dug into this and I was like, wow, there's a, I mean like, I'm not gonna say I'm the smartest guy, but I'm also not the dumbest guy, and there's a lot of stuff in here. I'm like, wait, what does that mean?
So tell us about the study. But Ashley, treat me like I'm fourth, fifth grade, anywhere in there works. So tell me about the study.
Ashley: Awesome. Okay. So, uh, we had found in some previous research we'd done that there's kind of three main ways [00:13:00] that kids learn about money from their parents. There's what we call parent financial modeling, which is just that, the example that parents set for their kids.
And this like isn't necessarily intentional, right? Like all parents are setting an example for their kids about money management, whether they're trying to be a good example or not, with the idea that that kids are always watching, you know, they grow up, you know, with around these parents. And that your attitudes and behaviors kind of just rub off on them.
Kind of the go-to for what kids are gonna do later when they're managing their own money is whatever they've seen modeled. So that's like one
Alec: method. So, so that's not necessarily like, oh, you're so good at balancing your checkbook, or you're, you're budgeting, or you're living within your means. It's as simple as, oh yeah, that's expensive.
It's just these little comments that you're talking about that all add up, right?
Ashley: Yeah. All of the above. Yes. Little comments. The, like, the one you just said would, would teach kids, you know, even maybe [00:14:00] accidentally like, oh, my parents don't always spend money on things they want. They like sometimes restrain themselves.
Yeah. Or it could be knowing that your parents have a budget, watching them budget, you know, anything where it's kids just watching what their parents are doing with their money. Okay. And then the second one is parent child financial discussion. So actually like talking to kids about money, and this is kind of the first thing most people think of when, when they, right.
You know, when we tell them, teach your kids about money, you know, is and sit down here. Yeah, exactly. But it can look like a lot of different things. It can be like sit down discussions, like we're gonna talk about credit cards, you know, sit down. Mm-hmm. Or it could be, you know, you're at the grocery store and you're like, Hey, let me teach you about like, price per ounce like, or you know, just any kind of dialogue between parents and kids about money.
And then the third method that is kind of new to research, that I gotta kind of be involved as this was coming out as something for researchers to be paying attention to, which is really [00:15:00] exciting. It's experiential learning. So this was our exciting
Alec: part too.
Ashley: Yeah, I know. I like, I, it's my favorite of the three methods and I, I'm nerdy enough to have a favorite of the three minutes.
Right. But yeah, giving kids hands on experience, practicing with their own money, that you know that it's not enough to see other people doing things or to be told how to do things. That we actually, to be able to internalize attitudes and behaviors and knowledge have to actually. Do it ourselves over and over again until it sinks in.
So those were the three methods and no study had yet looked at those three methods as three distinct different approaches and looked at outcomes from those three people had usually just kind of talked about it generally. So, uh, so,
Alec: so meaning all the previous studies said, Hey, if you teach your kids about money, this is what happens.
Yes. But nothing about the how.
Ashley: Yes, exactly. [00:16:00] Okay. Um, or at least not as, not as detailed and nuanced about the how. Yeah. Okay. Um, without getting too in the weeds, but, but yes. So then we, with those three as like predictors, so we, we asked emerging adults, um, it was over 4,000 emerging adults throughout the us so 18 to 30 year olds.
You know, we asked them how, you know, about how their parents taught them about money growing up, asked them questions that got it. All three of those different methods. And then we measured their financial outcomes. In, in one study, we've looked at financial distress, financial independence, and financial satisfaction, and then it's kind of like intermediary variables.
We also looked at financial behaviors and financial self-efficacy. So basically saying like, we know that, that it really matters that parents teach kids about money, but does it matter how they teach 'em about money? And what we found was that, [00:17:00] first of all, with kind of separating the three methods, the discussion method wasn't significantly related to anything when we were accounting for the other two, which is not to say that parents shouldn't talk to their kids about money, of course they should, but it seems like that's maybe just like a stepping stone to like the more important ways about teaching kids about money and it can't stop it just telling them what to do. So that was a really exciting finding, cuz again, previously, like the thing that researchers were talking about most was telling kids.
Yeah, yeah. Um, and then they, which is also what they do in
Alec: school,
Ashley: right? Yeah. That's kind of like the go-to approach. Yeah. Um, and apparently it's not the most important according to this study. Yeah. So then the modeling, uh, method was predictive of emerging adults' own financial behaviors. And then through that was related to all the, the other outcomes related to financial wellbeing.
So basically we found that [00:18:00] emerging adults whose parents were good at managing their money, these emerging adults also tend to be good at, at managing their own money. And so they're, they're doing well financially. I assume that wasn't
Alec: too much of a surprise on that part.
Ashley: No, but, but it was good to know, you know, like, um, but, but yes, like totally logically makes sense.
Right? And then the experiential learning part, that method was predictive of emerging adults financial self-efficacy. So basically, yeah. What is that exactly? Yeah, good question. Financial self-efficacy is like how confident they are at their ability to manage money well, so not their actual behaviors, but just how confident are you that you can do this?
And so emerging adults who growing up had been given opportunities to practice managing their money were confident that they could, they're like, yeah, I got finances. And financial self-efficacy then was really predictive of all the wellbeing outcomes. And [00:19:00] so those emerging adults were doing well too.
So basically, uh, modeling and experiential learning both really matter for different reasons. One of 'em really shows them what behaviors to do, and the other one kind of gives them the confidence to do it well.
Alec: So that's so interesting. So wait, so why is that confidence so important? I mean, look, if I'm confident, uh, that I can go, you know, on the balance beam and then I just really can't and I fall and I break my leg, that's not so good.
So there must be a reason that this confidence is so important and different from walking on the balance
Ashley: beam. Yeah. Yeah. I think you're right that, that they are different and I think they both matter. Like financial behaviors themselves matter. But financial self-efficacy seems to also matter too. But, and I think they kinda, the ideal would be for, to have both of them that you mm-hmm.
You know, you know what you should be doing. You're, you know, you're doing the right things. You're kind of checking the boxes. Like, yes, I budget, yes, I'm saving, yes, I'm avoiding debt. But people who feel [00:20:00] confident that they can manage money well tend to, well, first of all, those things are correlated, so they tend to actually then do the behavior.
Right. There's a reason
Alec: they feel good about
Ashley: it. Right. So that's good, you know? Right. Uh, we don't want them to be confident if they don't actually know, you know, what they're doing or if they're making dumb choices. Um, but self-efficacy is important for, for taking some of those financial risks. And I don't wanna say risks with like a negative connotation, but but yeah, like putting money in this, in the stock market, even if you cognitively understand how to do that. If you don't think that you're a person who is capable of, of doing that, then you won't actually pull the trigger. So the outcomes we were looking at again, were financial distress, financial satisfaction, just those like mental outcomes about finances.
So, you know, we weren't measuring like how, like what's your net worth or what's your credit score? But, but how do you feel about how you're doing financially? Okay. And [00:21:00] people who are confident that they can do it well are feeling pretty good about how they're doing. And the other one we looked at was financial independence.
So, which makes sense too that, you know, if, if emerging adults are like, no, I have no idea what I'm doing financially, I can't do this, I'm done, you know, I'm not capable, then they're going to stay in their parents' basement, you know, they're gonna kind of stay close to home and not be willing to go out and actually make, take financial risks or be confident in just going out there and, and kinda getting into life.
Alec: Right. Because in a way, I mean, everything is a risk, right? You walk outside, you're taking risk, and anything new feels potentially even riskier. Exactly. You mentioned you work with 4,000 families, so I don't know much about these studies, you know, obviously I'm not in academia, so is that a lot? Is that a little, is that medium?
Ashley: Yes. Good question. It depends on the field. For, for family studies and human development, that's like a, it's a real good sample. Okay. If I was like a, [00:22:00] a sociologist or demographer, that would not be like, especially impressive. They're, they're used to dealing with like big data. Mm-hmm. They, they, yeah. It was, it was a very good sample for, for this.
Yeah.
Alec: Okay. I mean, how do you find these people who, who are, who are
Ashley: we talking about? So that was, uh, yeah. Not all samples are created equal, obviously, like the, the number of people in your sample matters, but how you went about sampling, you know, really matters in terms of who these findings are actually generalizable to.
Like how, um, yeah. These, you know, do you have a, a representative sample of the group, the population that you're trying to talk about? So yeah, we use Qualtrics panel because they have, uh, I mean, that's their job. You know, they have access to emerging adults all over the U.S.. They have these, you know, uh, research marketing panels that they have.
Our sample of 4,000 is not quite nationally representative of US emerging adults, um, because we intentionally oversampled some minority groups in [00:23:00] terms of race and socioeconomic status so that we could ask more specific questions about those groups anyway. But it's a pretty, it's like a diverse, good representation of 18 to 30 year olds throughout the
Alec: U.S..
One of the terms you use a lot in the study is financial socialization. That's something that I hadn't heard despitedoing this and helping parents for quite some time. So can you tell us a little bit about what that is and why it's so important?
Ashley: Yes. Good question. It's just a fancier way of saying how kids learn financial knowledge, attitudes and behaviors.
And we're talking about parent financial socialization. We're talking about how they learn those from parents and socialization, like more broadly, not necessarily specific to finance, but socializations. This, you know, this concept that we, you know, when we're born we don't come with all like the knowledge, attitudes and behaviors.
Those are learned throughout, well throughout life. But of course, childhood and [00:24:00] adolescence are really important for socialization of all kinds of things that then predict. How we behave and, and you know, how well we're doing later in life. So financial socialization just means, yeah. How, how and what are kids learning about money?
Alec: What was very surprising to you about this
Ashley: study? Probably most surprising was that the discussion method was literally not associated with anything. Once we were accounting for the other two methods. And again, you know, maybe some of that is because, you know, there's probably discussion involved in the other two.
So, so I guess it, it was just surprising that that in and of itself is not enough. But when discussion is used as like a tool to model and to, to, you know, help facilitate kids' own experiences, then it's beneficial. We thought that all three of 'em would. To be related to the [00:25:00] outcomes. So yeah,
Alec: I mean, look, I, I'm with you.
I thought that as I read through, I thought, I guess I always knew that that wasn't as effective, but certainly the level of which you're saying that it is not as effective is
Ashley: shocking, you know, based on other parenting research I see too on topics, not at all related to money. I think we're kind of just learning this generally in, in terms of parenting best practices that you know of.
Of course, kids, you know, don't. It's not, it's not enough to just tell kids what to do. Like for example, I've, um, a colleague who studies religiosity in families and parents who just talk to kids about, about, you know, religion and, you know, try to just tell them what re you know, religious, uh, values they want them to have.
That's not effective. What works with passing on the values and, and knowledge we want to instill in our kids is actually being just buying Christmas
Alec: gifts and delivering them with your family to other families that don't have stuff. Yes. Like young Ashley [00:26:00] did.
Ashley: Yes, exactly. So getting them involved, like, you know, people don't care about things unless they have some skin in the game. You know, we have to help them understand how, you know, why they should care and how this affects them. Otherwise, it just feels like we're being preached to, you know, even if that preaching's about money and how
Alec: to handle it. So when you ask these 4,000 families or 4,000 young adults about their experience that their parents provided, were you able to dig into what types of experiences they had?
Ashley: Hmm. In this study we asked them, it was actually 20, we asked 'em 20 different questions, like, on a scale of one to seven, how well did your parents this? And we asked 'em 20 different things about financial socialization and, but those, uh, those scales that we used to measure that were created based off of previous research we've done that was qualitative research.
So we did interviews of I think 153 [00:27:00] emerging adults, parents and grandparents about we asked more open-ended questions, asking them to just tell us how, how and what their, their parents taught 'em about money. And then based on that we kind of knew what type of survey questions to create. Got it.
Yeah.
Alec: So will we be learning from you and your group some of the different experiences to provide?
Ashley: Yes. Um, and those, we have different papers actually published about that too, if you, if you wanna read 'em. But, um, kind of the main, I've
Alec: got, I've got two more right in front of me. I've got
Ashley: two more. Nice.
Yes. That's
Alec: great. Yeah. Let's talk about that. Let's, so what else is coming from this, all of this data?
Ashley: Well, so from the qualitative, from those interviews we did, we wrote, um, yeah, several papers from that that kind of got in depth about where we're kind of sharing the, in participant's own words, some of these real experiences that they had had.
And, and some of the papers we wrote about that, like one. We wrote one paper each for the three methods of like, [00:28:00] here's how modeling has looked for some people. Here's stories about, you know, from that people have shared about discussion with their, with their parents. Here are examples of experiential learning.
So we have qualitative data about that and those papers. And then as far as like the, what that parents taught, you know, getting, going from how to, what kind of the, the four main categories that people's experiences were kind of grouped under were financial planning, really like kind of having a financial vision, goal setting, that kind of stuff.
Understanding time, value of money, those things. And then financial management, classic like budgeting, saving, avoiding debt, working hard for money. Kind of this, the link between working and money. You know, that money doesn't grow on trees. You have to like, Do something for it for most of us. Um, and then the fourth was this, the idea of financial giving and, and that was ended up being one of [00:29:00] the big things that people talked about learning from their parents was, you know, kind of the more, uh, moral financial attitudes that they had learned.
And, and so yeah, paper that shares stories about, about
Alec: those. One of these that I have in my hand, it says, from piggy banks to significant others: associations between financial socialization and romantic relationship flourishing in emerging adulthood. So meaning if you teach your child about money, there's more potential for them to have healthy relationships with their partner.
Ashley: Yes. So yeah, this was with the, it was with the same data of 4,000, you know, US emerging adults, and we used those same predictors of how their parents had taught them about money. You had said that the other kind of half of my research deals with couples and how couples handle money. You know, obviously finances are really important for couple relationships and, and so, you know, we wondered, we're like, well, you know, is there kind of then this link from how they learned about money from their parents [00:30:00] when they were growing up, and then how successful their relationships are, the romantic relationships in emerging adulthood.
So yeah, that's what we were studying in, in that paper. And we did find those links that emerging adults whose parents had taught 'em about money well while they were growing up, that they had more successful romantic relationships currently as emerging adults. Wild.
Alec: This is amazing. Uh, actually this weekend I was with a parent who was on the podcast in an earlier episode, and they went through our Elementary Starter Course, which is all about how do you sit down, talk about allowance, how do you do that?
What does it look like at at the table, that one hour per month? Make it a monthly thing so you can stick to it. And then the second module of that is, okay, well what do you do the other 29, 30 days of the month? How do you, mm-hmm. What's the socialization like? How do you talk about that? What happens when you're, when you're out to dinner?
You know, how do you integrate all of that into conversation? And [00:31:00] interestingly, what she told me, as I've heard from other parents who've done it or are teaching their kids about money, they've said that now that they're doing it monthly with their child, their relationship with money is changing, and their relationship with their spouse in regards to money is changing all because they're giving their eight year old, you know, $40 a month.
Ashley: Love it. That's so cool. And again, like the this connotation that I used to have of like, money is this boring thing that, you know, is incorrect and money actually like, is so related to some of the things that are most important to people in life, right? Not only do do the most important things in life, cost money, you know, but that money is, you know, symbolic of, of deeper things.
Like how couples manage their money together says a lot about their relationship dynamics and, and, uh, you know, how much respect and trust, uh, you know, and intimacy they have with each other. And, you know, just how we spend our money says a lot about our values. And [00:32:00] anyway, so, so that's, that's why money is so fascinating is because at the end of the day, money's not the most important thing in life, but how we manage our money, you know, what we do with it.
Impacts a lot of things and is reflective of much deeper things, I
think.
Alec: Agreed. So I was listening to a podcast the other day, and this is what they said. They, they were citing a survey, a thousand kids, and what they found was the number one topic that kids wanted to avoid more than sex or death was money.
And they said that it's, it's because it's a source of in-home stress during regular conversation. Mm-hmm. And when they said stress, it was the, the simple commentary like we were talking about earlier where, oh, we can't afford that. Or go ahead and check the price. So I was curious just your thoughts on that very brief introduction to what it was I was listening to.
Ashley: Yeah. That's so interesting. Yeah. From some of the research we've done, like thinking back to those interviews, it [00:33:00] seemed that overall like. The more open parents were about talking about money with their kids, the less financial stress kids seemed to feel. And of course that needs to be done well. But kind of, I'm thinking of like a few worries that parents have when we, you know, when we tell them like, be open with your kids about money.
Tell 'em about your financial situation. Like, talk about money. Um, one thing parents are worried about is that they will, like, their financial challenges, will stress out their kids. But what we found from the interviews was that kids are picking up on all of that anyway. And it actually makes it worse by not just talking about it.
I think it can go a long way for parents to say, okay, here's our situation. Like, times are a little tight, but we're the parents like, you don't have to worry about this. Like, we've got this as a family. Like here's what we can do. Get a cheaper car. You know, like we're, we're probably gonna have to say no to some things, you know?
And so just helping kids, those are really important. Learning lessons them for kids and Yeah. And keeping them informed [00:34:00] can, I think kind of de, de-stress them a little because, and that just, you know, that's with anything in life, it's like when things aren't talked about, but like, we're all feeling it, like that just makes it worse.
It's just so much better to just, to just talk about things, get them in the open and cuz then kids can understand how like that it is gonna be okay. Cause right now they're feeling the stress, but they don't know that it's all gonna work out. Right. You know? So that's one thing. Parent, you know, parents are worried about.
I think parents are also worried about their kids sharing financial information with other people, which, you know, a, a few things with that is, first of all, maybe tell kids certain information when they're of appropriate age and maturity. Ask them not to share it with other people and why that would be something that we don't wanna do.
But then honestly, worst case scenario is really, it's really not that bad. And would you rather run the risk of your kid accidentally saying something embarrassing in front of somebody? Or would you? But if you don't, then you risk them not [00:35:00] being prepared for financial adulthood. The rewards outweigh the risks and, you know, to just be smart about it.
What's the other, I'm trying to think of the other main thing that, that parents usually say. Oh, the other, the thing is that parents are like, oh, I, I shouldn't be the one who teaches my kids about money because I don't know enough about money. Like, I'm not that good with money. They'll, they'll just learn it later
Alec: answers that, right, that's the perfect example.
Your parents didn't need to know anything about money to put Monopoly money in your hands.
Ashley: Exactly. Yeah. Like, you don't have to be perfect at finances yourself to teach your kids really important things. And yes, financial literacy classes in high school or college or whatever, like, can be really helpful, you know, taking them to the next step.
But what, you know, we found in, in studies is that kids learn more about money from their parents than they do from. School work experience, peers and media combined. You just can't replace Wait, wait,
Alec: wait. Say that again. I end a little bit louder maybe. And slower. And shout
Ashley: that one [00:36:00] again. Okay. From the rooftops, kids learn more about money from their parents than they do from school work experience, peers and media.
Combined. Combined, combined. It's crazy. Like parenting matters so much and like I, you know, I know this as a family studies person, like, you know, parenting matters so much, but like, even with money, it, it's, you just can't replace the daily influence over 18 years of parents. And so, so that's, you know, it's just so important for parents to just be a little intentional about it, little effort, try to do a good job and it'll, it'll, you know, benefit your kids so much in multiple areas of life.
As you know, we've
Alec: talked about. I need to get you a megaphone, the biggest megaphone ever.
Oh boy. Wow. So that is amazing. Okay, so here's the next one that I'm holding. Like I said before, you're gonna have to talk to me like I'm in, you know, fourth or fifth grade, especially for this one. [00:37:00] So Finances and Fate: Parent Financial Socialization, Locus of Control, and Mental Health in Emerging Adulthood.
What's that like about Yeah, translate that one.
Ashley: So it's, it's just yet another reason for parents to try their best to, to teach their kids about money. Well, so, so this one we were looking at, so the same, the same methods of teaching kids about money as the predictors, and we were seeing whether that impacted.
The mental health of emerging adults. So we asked these emerging adults about, uh, like depressive symptoms, anxiety symptoms, and life satisfaction, trying to get at, you know, the overall mental health. And then this, there's this thing in social science called locus of control. And that just means whether you view your life as basically in your control primarily or totally out of your own control.
But like you're, so that's where like the title came in, finances and fate, you know, is your life up to fate and like you have [00:38:00] no control of what happens to you. Or like, are you, you know, what's that great quote? You know, I'm the captain of my fate or, you know, whatever that great, you know, that, that my destinies primarily in my own hands despite, you know, life throwing curve balls.
And so we asked emerging adults questions that that could help us measure that too, how internal versus external, their locus of control was. And so the, our main findings were that emerging adults whose parents, uh, taught them about money, well tended to have a more internal locus of control. They thought that their life was in their own hands, and people with higher internal locus of control tend to have better mental health, which makes sense, right?
Like if you think that your life is out of your control, like that's not gonna feel good. Like, that's a classic thing associated with depression and anxiety is, is feeling out of control. Um, and like that you can't actually do anything about your situation. Again, another reason to teach kids about money well is that kids [00:39:00] who have learned, you know, about money, well, can manage it.
Well feel confident about managing it well, are going to feel like they have control of their lives, and that's gonna be good for their mental health.
Alec: But I just can't stress enough. And it sounds like you're stressing the same thing when you say teach them. Well, that really just means provide experiential opportunities and good modeling again, doesn't necessarily mean that you have to be great
Ashley: at it.
Yes, exactly. Just, just try your best to be a good example for your kids. Just give them some hands-on experiences with money. Like Yeah, you do not have to be perfect for it to to be, you know? Well, yeah.
Alec: What about across different. Income socioeconomic statuses that you said earlier. Mm-hmm. Um, look, we, a lot of our C.O.R. Parents, there's some who, you know, a trip to Starbucks is a complete luxury or might not ever happen.
Mm-hmm. And then there's some who, you know, they're grabbing [00:40:00] their latte every day. That's a wide disparity, as I'm sure were the 4,000 people. So what does that look like? What do those experiences look like and how are they different yet? Mm-hmm. Potentially just as effective for people.
Ashley: I love that question because I think sometimes a, an incorrect assumption that people have is that if they're wealthy, this will automatically happen.
And if they're low income, that this is impossible. And that really couldn't be further from the truth. I think often low income families, by necessity end up teaching their kids these things really well because they have to, like, the kids learn about budgeting, they can't afford to waste, there's no other option.
Yeah. Like low income families are often the best budgeters because they have to be. Yes. I think some of the hands-on experiences with money, like having an allowance might be more possible for more wealthy families or whatever. So there are, you know, some things that might be challenges for some [00:41:00] that, different challenges for others, but, but we really did see like across socioeconomic status, across like different family, you know, income situations that.
It's, it's possible for anybody to do these things. Well, it just might look a little different, but, but yeah. You can have good financial behaviors, whether you're barely getting by, whether you're doing really well, you can have conversations with your kids about money in either situation. You can involve your kids in some of their own financial decisions and practice regardless.
And actually, you know, some low income families, their, their kids as teenagers end up being really involved financially because they have to, like, help contribute and start helping to Yeah, contribute and help support the family. So, so unfortunately in, in some instances, it's almost like, you know, they, they almost get too much responsibility right, than, than we wish they had to have.
But, but they end up learning a lot of great lessons about money. So, yeah, I, I just wanna like empower families, like of all [00:42:00] situations that this, you can do this no matter what your situation
Alec: is. I have
a friend who, Has three children, and each time a child turns 13, they sit down with them and they like an open book.
They go through every account, every statement that they have, their family budget, their credit card statements, everything. Wow. For me, that was a little bit of oversharing. I wasn't quite comfortable with that. If my child, one of my daughters, if they say, you know, how much do you make, you know, I, I give them an answer in context, but then if they, if they are trying to drill down in a particular thing where it's just too uncomfortable to say, you don't need to know that now, but when the time comes in the future and it's appropriate, then I'll tell you that, but you can ask me other things.
Mm-hmm. Any thoughts on either of those approaches? I
Ashley: think kind of what you said earlier in the podcast of just like whatever works for your family. Yeah. I think a important principle is being open enough that kids get like a sense what a certain job [00:43:00] would make, what kind of income would result in a certain kind of lifestyle, or how much do different things in life cost.
Like just being aware of things I think requires some level of openness, but, but no, I don't think that kids would need to see your full statements to get that information and they might. Yeah. Yeah. As a kid, I would feel pretty burnt out from that, I think. Yeah. Especially
Alec: right at 13 for sure. Yeah. You mentioned when we were talking before we hit the record button, that you provide some experiences for your.
Nieces and nephews or nieces and nephews or nieces and nephew wasn't your one? All of the above.
Ashley: Nieces and
Alec: nephews. Thes. Yep. Got nephews. So tell us some specifics. What works well for you that you've seen hands-on with your family. They say, oh yeah, this is a good one. Well,
Ashley: I'll kind of, I guess, brag about my, my sister a little instead of myself cuz she, um, I saw her do this with her kids and I thought it was so great.
So [00:44:00] I have a nephew named Johnny, his mom's my sister. And she, from the time he was little, like maybe two, she had, he, well yeah, she had given him a elevated piggy bank meeting that it was like a piggy bank-like thing that had three different slots and he couldn't even read at that point. And so they were like three different colors.
And so even as like a, a little toddler, he knew that, um, you know, I'm just making this up, but that like green meant saving. There was like a save slot, that blue meant spend. There was a spend slot and then that red, have I said that yet, that red is um, means give a, give slot. And so, you know, when he would get little money from doing an extra little chore or for his birthday from his grandparents, you know, whatever, whenever he'd get a little bit of money, he knew and started doing this as like a little toddler that, yes, that he had to put some of that money [00:45:00] in each slot.
So just from that one thing that she decided to implement with him, he is learning, like budgeting, that like money goes into different categories. He's learning, saving. Yep. To like that. Some of that money he just doesn't see for a long time. He's learning, spending in the sense of saving up for something he wants.
And when it got like enough money in the spend slot, he got to go to the store and pick out whatever he wants, you know, that was exciting for him. And you know, if he wanted something at the store, he's like, Hey mom, can I have this? You'd be like, well how much do you have in your, in your spend jar right now?
You know? And so just, you know, recognizing, oh I need to have like a certain amount of money to buy things. And then he's learning generosity too. Like you know that some of the money you give away to help other people. So I thought that was so great. And then, you know, because he was learning this in early childhood at about eight, how old is Johnny now?
He's now seven. And when he was five or six maybe he was, got super into Legos and really wanted this [00:46:00] big Batman Lego set. And. My sister's like, well, how much do you have in your spend jar? And he did not have nearly enough. And she said, well, what should we do about it? Like, how should we get more money?
Great question. So that you can afford it. And he, his idea was to, because they have a dog and she would sometimes pay him to go around the yard picking up the dog poop. And so he said, can I pick up more dog poop? And so she helped him. They made like flyers that were, um, they had like a picture of him in his cute little sunglasses and it said the do do dude.
And he like, like put him around the neighborhood that, that people could call him to come up and clean up their dog poop for like a couple bucks. Oh my God.
Alec: What a crappy job. Yeah,
Ashley: that's, um, yeah. So. Um, you know, and some neighbors wanted him to and his grandparents who like, you know, like, thought it was so cute, would like, have him like, [00:47:00] come over more than they needed, paid him, you know, tipped him a lot, you know, so it was like not quite a legit entrepreneur entrepreneurial experience, but, you know, he is getting there for a five year old.
And anyway, he, he finally saved up enough from this endeavor to buy his Batman Lego set. And so then she took him to the store, um, and he's holding like a little bag with his own money in it that he's so proud. He saved up, she let him hand the money to the cashier and he walked out of the store with, with the, you know, his, his big Lego set in, in the bag that was like, as heavy as he was, you know, that Lego set was like his pride and joy.
He appreciated it so much. So anyway, like all the financial lessons kind of in that whole story of, of working hard for money, saving up for something. So she's done some great things with Johnny. Yeah.
Alec: That's fantastic. It's interesting hearing you talk about those three slots because that's the one that the, the three that I hear the [00:48:00] most.
Mm-hmm. The one that I find that gets ignored is the investment slot. Mm-hmm. Right? Mm-hmm. Which there's no slot that's more important than the other. They're just have all different reasons why they're right. They're so critical. So what I did with my kids, and this is, you know, part of that elementary starter course because tried and true in my house what I did when, and now I feel like a slacker.
Right? I started with my kids in kindergarten in third grade. I should have been doing it at two
Ashley: years old. Hey, that's great.
Alec: But what I started doing was, They, I said, okay, it's mandatory. You must put some in each of the slots because there were slots, it was a piggy bank at the time. And then they went to buckets and eventually, and then accounts.
But anything that was in that investment slot, I would say, okay, here's your allowance and but before you divvy that up, I'm now gonna pay you interest on what's in your investment slot. So we would take it out if there were, if there's $10 in there, pay 'em 10%. And so they wound up getting super excited and [00:49:00] learning about compound interests, you know, that certainly wasn't gonna be able to say, this was compound interest and you know, show them the math.
Yeah. So there was a, you know, doing it with the two of them and one of them, my younger one was mm-hmm. You know, the kindergartner super into just spending and buying all this nonsense. My older one, just by her nature, was far more judicious. She was putting a quarter of everything, you know, evenly distributed.
Mm-hmm. Well, my youngest one, when she ultimately, after about six, seven months, saw how much she was getting. She's like, why is that? She's like, I want some of that. Then she started putting money into the investment bucket. So she was learning from, from watching her. Yeah. So I'm curious, what tools, what other tools have you seen people using, you know, why does the investment bucket sort of get, uh, I don't wanna say ignored, but mm-hmm.
Why does it get, why isn't it as represented as the others in conversation and teachings like, like the
Ashley: rest? Yeah. First of all, I absolutely love what you did. I think that is so great, um, to help them, you know, understand at such an [00:50:00] early age that they want to be earning interest, not pain interest.
That's so, um, that's so great. And I actually, my, uh, my mentor I was telling you about, uh, Jeff Hill, he did a similar thing. He had like a Hill Family Bank with his kids and they could either save it and he would pay them interest or if they ever wanted to borrow money, like if they're like, Hey, I wanna buy this, and they didn't have enough.
He's like, well, you're welcome to borrow some money from me that he would charge them interest. Absolutely. And they learned really fast that they did not wanna do that anyway, so I love that. But I, maybe why it gets overlooked is because investing and is an interest or seen as more like high level financial topics.
And so parents think they have to wait until much later to start teaching their kids about that. But, but I think more basic, you know, you, yeah, maybe when they're a teenager you, you know, you actually help them be involved in like their own mutual fund management, you know, help that you go them read their statements from Vanguard or whatever.
Maybe that's not [00:51:00] for a, for an eight year old, but, but I think more basic ways of teaching them the exact same principal are possible. Like exactly what you did.
Alec: Yeah. I mean, my goal was by the time you're done with middle school, sorry, by the time you're done with elementary school, you're gonna pick a couple companies with all this money that's accumulated, you're picking a few companies.
Mm-hmm. And now on that monthly allowance day, we sit there and we look at a performance report and we just say, okay, well how did it do since you, since you first bought it, how have you done this year and this month? And oh, have you heard anything about the company? Like, that's it. It's, it's just an exercise in comfort.
Have them feel the ownership of the money, have them talk about it, get into a routine of just looking at things on a monthly basis. They don't have to do anything more than that. They don't, again, no. Warren Buffet
Ashley: here. Yeah, I love that you're like getting them in a habit, so you're like helping them, uh, make those financial behaviors, and I'm sure you're, that's building their financial self-efficacy, right?
Like helping them be confident like, yeah, [00:52:00] I've done this before. I can do this. Like, I'm familiar with this type of thing. So I love that.
Alec: Ashley, I can't tell you how many people come into my office, you know, as a financial planner and just really have represent everything that you said. They're not comfortable.
They don't know. I just want that, that confidence and yes, okay, I, I could do this. I've done this before. It feels like routine. That's, that's all I'm striving for. Yeah.
Ashley: I love that. That's so awesome. And, and I think we want our, we got our megaphones out. We want parents to, to do a good job of this. But you know, for people who just really did not receive good parent financial socialization when they were growing up, like yes, that's probably hurt them a little.
Like, I'm sorry to them. But, um, at the same time, it's like not all hope is lost. Like, there's financial planners, there's financial literacy classes you can take, there's financial therapists to help you think through why you have financial
Alec: therapists. I
Ashley: haven't heard of that. Ooh, okay. Financial therapists are awesome.
It's kind of like a new, a new field. It's [00:53:00] kind of like a combination of marriage and family therapy, more psychology, clinical therapy, and like financial planning. It kinda like combines all three. Um, Kansas State has been like one of the big institutions like making this a, um, you can be like a certified financial therapist now and everything.
They're training.
Alec: I, I'm not for my kids. Yeah, I'm an, I'm an uncertified financial therapist. Yeah.
Ashley: And probably not getting paid for it. Not very well, you know. Yeah. It's like, uh, so they combine the, like, psychology aspect is helping you realize like what scripts or automatic attitudes you've developed about money and just how you think about money and how that's impacting you financially.
And like if you come in as a couple, how maybe like both of you have just learned different. Things about money, and that's actually causing a lot of the, uh, conflicts they have about money. And then yeah, they're trained like marriage and family therapy, so they can deal with like the kind of any relationship, uh, problems happening with couples in money.
Um, and then [00:54:00] financial planning, you know, outside, obviously they, they can help people develop more effective, like healthy financial attitudes and behaviors. So anyway, yeah, so we're in whatever, yeah. Aspect people, people get help. Like, there's so much help out there, like, anyway, so again, with the empowering, like if, if you didn't get it from your parents, you can, you can do it now.
You get it. You can compensate for that. You can get it. Yeah.
Alec: Yep. All right. So Ashley, what's next? You have all of this data, these 4,000 people, you're probably gonna be talking to thousands more, but what's in store from, from you? Like what, what do we look forward to now?
Ashley: I still have a bunch of papers that I have planned, but that I just, you know, it takes a long time to, to run the stats and write them also.
I'm working on three right now this semester. And between you and me I have the next six years of research papers planned out. Cause I have all these papers I wanna write six years. Yeah. Oh my god. I'm like a big, I'm a [00:55:00] big planner. I like organizing anyway, but so yeah, so lots of studies that like we actually already have the data for.
I just have to actually run them and write it up. So just different research questions that we just wanna add a little bit of knowledge to this field or about, you know, to the couples and money management field. And let's see, I'm thinking of like the three I'm working on right now, maybe, uh, one that I'll talk that that has to do with financial socialization.
So about the modeling methods specifically. You know, there's lots of research showing that modeling matters and that people whose parents were good examples tend to be better at managing their own money later. But there's this idea in social science called the modeling compensation hypothesis. Which means that people kind of have two, two options.
They can either imitate the behavior they've seen modeled by their parents, or people who have received poor modeling can intentionally decide to the opposite, compensate from that and do the opposite. [00:56:00] Exactly. And no one had, um, has really studied this yet, um, in financial socialization. So I wanted to, you know, kind of exactly what we were just talking about, like is all hope lost for people whose parents weren't good examples?
And so in that same data set of, of, you know, over 4,000 emerging adults, I had asked them to categorize themselves into one of four categories. Either my parents were good at managing money when I was growing up, and I am also now good at managing money. And we call, we had about half of our sample who categorized themselves as that.
We called, um, we're calling them intergenerational financial Flourishers. And then we had, um, another object is. Yeah, it's true. We had another option of, my parents were bad at managing money when I was growing up, but I am now good at managing money. Hmm. And we call those the, that was about a fourth of the sample, I think.
And we called them Financial Phoenixes. They're like rising risings from the ashes. Yeah. And then, um, the two other groups [00:57:00] were whether their parents, you know, one of 'em was, their parents were good, one of 'em was their parents were bad, but either way, like they're now bad at managing their money. And so we called those people the financial Flounders, and that's the last quarter of our sample about.
Hmm. And so we're looking at those three groups, the like Intergenerational Flourishers, the Phoenixes, the Flounders. We're looking at those groups as predictors of those like financial outcomes that we'd already talked about with that other paper. And what we're finding is, Kind of exactly what I was like hoping we would find, which is like, cuz I was kind of worried.
I was like, Ooh, what if we find that actually like parents don't matter at all, that like you're just as well off, even if they were bad. Um, but what we ended up finding, I love the, the takeaway message from it is that compared to the flounders, the, the intergenerational financial Flourishers and the financial Phoenixes both had higher financial independence, higher financial satisfaction, lower financial distress, but [00:58:00] the.
Intergenerational financial Flourishers had the highest scores of all, they were like the best off. So it's ideal for parents to be good examples of money management. Like that's kind of best case scenario for Right. Those kids later. But for, but it's still okay
Alec: if they're not.
Ashley: Yes. It's like not all hope is lost if your parents were bad.
Like you can still decide to compensate for that. You know, get, get yourself financial education from, from somewhere else and, and like you can be okay if you intentionally do that.
Alec: Cool. All right. We're gonna look out for that
Ashley: for sure. So, uh, yeah, hopefully that'll be submitted in like a month or so and publications along process.
So maybe in a year or two we'll see that going out.
Alec: Oh my goodness. That's how long it takes.
Ashley: Yeah. It's kinda a whole, the review process back and forth. Yeah. Usually takes a
Alec: while. Wow. All right. Ashley, last question. Yeah. What are the words of wisdom that you would give a parent who has not yet taken the plunge?
Whether that means allowance, that means. Just [00:59:00] mindfully saying, okay, I am now gonna provide an experience for my child. What would you tell them?
Ashley: I would tell them that hopefully based on our podcast, they now can understand how important it is. And so I would just, you know, try to tell them to just do something like, just do a little bit, just get started.
I think we are kind of bombarded with parenting advice and like people feel like they have to be the perfect parent in every way for their kids to turn out. And that's not true, but just like exactly what you said, just intentionally doing something and maybe doing something in each category, meaning like each of the three methods, like what can you do to be a better example to your kids about money?
Do one thing there. Differently than you're doing. What's one good conversation that might be important for you to have about money with your kids? Do that sometime this week. What's one thing that you can get your kids to actually practice doing themselves with their own money? Just make one little change that way.
And I think those little changes, [01:00:00] again over years, add up a lot in your just intentional efforts will, will help them a lot later. And not just financially, again, like this matters for mental health, this matters for relationships, money affects all areas of life. So, so just, just do a little something, even though you already have so much on your plate to to do and to think about.
This is worth thinking about.
Alec: So I know that you love statistics. So Ashley, I can tell you that five out of five"How to Teach Your Kids About Money" podcast guests, when asked that question, said the same thing, which is just do it. Just start just to dig in. Yes, that's a small sample size, but, but I, but I love them all.
That's great. All right, so parents, caregivers, that's Dr. Ashley LeBaron Black. I can't thank you enough. That was really informative. I really wanted to nerd out and hopefully everybody feels like we did.
Ashley: Thanks, Alec. Great to be on here. [01:01:00]
Alec: So as a reminder to everybody, check out our resources. The best place to do that is Cents of Responsibility responsibility.com, C E N T S, of course, and go to centsofresponsibility.com/resources, whether that's our courses, the blog, podcast, the newsletter, sign up, it's all there.
And of course, click the little subscribe button, whether it's a thumbs up, a star, whatever it is on however you're listening or watching, that's always very helpful. And lastly, I always close with Teach Centsibly, everyone.
