With the oldest heading off to college in a month, we’ve been talking a lot about finances this summer. I hope she’ll head off with a few more tools in her belt than I did. (She’s also quite a bit more receptive than I was at 18, which probably is helping).
Over the past few weeks, she’s been reading I Will Teach You To Be Rich. Hopefully a few seeds are being planted that’ll be helpful, and some blunders with finances will be avoided. (Though I know we all do and will make blunders in all areas — they are part of life and sometimes the most effective way of learning.)
In addition to the book, we also recently watched and then talked about this interview from Marie Forleo with Amanda Steinberg of DailyWorth:
Got to say, I was rather impressed with my teen’s follow up questions/thoughts/takeaways from the interview. (She was paying attention!) We also had an interesting conversation about finances after watching, and it got me thinking and rethinking myself.
My Teen’s Interview Notes
-Net worth is how much you owe subtracted from what you own in a single number. Some millionaires or very high earners could still have a negative net worth!!
-Interesting thought to consider: Saving may be more important than throwing money at the debt you have (if you have some), because without savings, you don’t have the money available to deal with curve balls when they hit = even more debt.
-Question: What exactly does it mean to pay a double principal on your mortgage?
-Nugget: Once you start to challenge your core fundamental beliefs about what’s important, you might discover the joy of what actually matters to you. (E.g., Amanda is experimenting with living far below her means, cutting out what isn’t important to her, and seeing what she actually needs/likes/wants.)
-Set up a curveball account and put something into it each money. Expect it to be wiped out every 3 months — this is separate from emergency fund. Think of curve balls (e.g., car needs work, something unexpectedly breaks in your home and needs to be fixed/replaced, unplanned doctor bill) as life tax. (Clarification question: What exactly are your emergency savings for when using this system above? Answer: Emergency savings are for covering your living expenses (e.g., rent/mortgage, utilities, groceries, debt payments, etc.) in case something major happened, like losing your job. Recommendation: set aside at least one month’s worth (and ultimately more).)
If you’re looking for a finance refresher for yourself or something to watch with an older teen, this interview is worth checking out. My teen said she enjoyed it, as did I.