“They are going to ask questions that we don’t know the answer to, and it’s okay to tell them that you don’t know, and hey…let’s figure this out together.”
– Chelsea Brennan
Are you curious about strategies for setting your kids up for financial success from an early age?
Chelsea Brennan, founder of Smart Money Mamas, is on a mission to help moms build meaningful wealth without the hustle. As an ex-hedge fund manager turned financial educator, Chelsea now invests in helping thousands of moms heal their money mindset to own their financial power and grow lasting holistic wealth. Her proven strategies positively impact her clients, their families, and their communities by developing the building blocks for a lasting and powerful financial legacy for future generations. Chelsea is a National Financial Education Instructor. She has been featured in Forbes, Business Insider, Yahoo Finance, Scary Mommy, and Boss Mom.
When she isn’t working on getting more money into the hands of mamas, Chelsea can be found reading fantasy books, doodling, or going on adventures with her husband and 2 young boys in Connecticut.
Links (From the Show)
- Chelsea on the Web
- Money-Smart Mentions
- Brad Klontz podcast episode on taking financial advice with a grain of salt since we are all on our own individual paths.
- The Psychology of Money book on how our money mindset can be framed by a specific event.
- Greenlight as a way for kids to save their money.
- Jason Zweig – “the mad money account”.
- Lessons from The Opposite of Spoiled book by Ron Lieber.
Show Notes (Find what’s most interesting to you!)
- What Chelsea misses about the hedge fund world. [4:43]
- The case for boring investing. [6:32]
- A discussion about fundamental financial truths. [7:27]
- Money is primarily emotional. [12:14]
- Most core money beliefs are set around age seven. [15:26]
- How Chelsea setup their family system. [18:11]
- The purpose of an allowance is to allow our kids to control their money. [20:42]
- Money in the bank isn’t the goal of allowance. [23:25]
- The importance of consistency with your allowance system. [25:12]
- How looking for opportunities to use Share Jar money can help kids see their impact. [27:10]
- Funny story about giving to the WWF – Do Snow Leopards have pockets? [28:32]
- How the use of digital money can be helpful early on. [34:26]
- How Chelsea is starting the investing conversation with her kids. [38:54]
- Talking to your kids about risk and investing in a world of Tik Tok recommendations. [41:37]
- What money-empowerment means to Chelsea. [50:14]
- The best investment Chelsea has made with her kids. [50:43]
- Advice Chelsea hopes her children heed. [51:21]
- A message Chelsea wants everyone to see. [52:02]
Click here for the full transcript.
If you liked this episode …
Check out our other Podcast conversations linked below that touch on some of the topics covered in Chelsea’s episode!
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Thanks for listening!
John
Full Transcript
This transcript is from The Art of Allowance Podcast, Episode 63, featuring host John Lanza and guest Chelsea Brennan.
[00:00:00] John Lanza: Hello, and welcome to Episode 63 of The Art of Allowance Podcast. I’m your host, John Lanza.
[00:00:09] Chelsea Brennan: And so we talk about retirement. We all wanna be able to retire comfortably and spend decades relaxing and doing things that we love, right, and spending time with our grandkids if our families choose to go that route, whatever it is. That’s a huge, that’s the longest-term impact of saving, but when you’re seven, when you’re my seven-year-old son Henry, that might be a $200 Lego set. That might be something that takes him eight months to save for, but we talk about when we go… First of all, every time he gets, he hits that milestone, we celebrate with him. We take him to get the thing in person. This is really important for him, is to see the, the exchange, to make the purchase, and we look while we’re in the store of like, “Hey, like, if you didn’t wait this long, like, you couldn’t have gotten, you could’ve only gotten these smaller sets, or you couldn’t have only done something else,” and really showing him that, “Hey, because I waited, because I was patient, I got to get this really cool thing.” And so that’s the relationship that we wanna build with saving, and so that starts with age-appropriate goals. And when your kid is really little, when they’re three, maybe that’s only a goal that takes them a month or two to reach.
[00:01:11] John Lanza: Sure, yeah.
[00:01:11] Chelsea Brennan: We’re trying to keep that in time, but every time they set a new goal, make it a little bit longer.
[00:01:15] John Lanza: [upbeat music] In this episode, I speak with Chelsea Brennan, founder of Smart Money Mamas. Chelsea is on a mission to help moms build meaningful wealth without the hustle. As an ex-hedge fund manager turned financial educator, Chelsea now invests in helping thousands of moms heal their money mindset to own their financial power and grow lasting, holistic wealth. Her proven strategies positively impact her clients, their families, and their communities by developing the building blocks for a lasting and powerful financial legacy for future generations. Chelsea is a national financial education instructor, and she’s been featured in Forbes, Business Insider, Yahoo Finance, Scary Mommy, and Boss Mom. When she isn’t working on getting more money into the hands of mamas, Chelsea can be found reading fantasy books, doodling, or going on adventures with her husband and two young boys in Connecticut. I hope you enjoy my conversation with the Smart Money Mama Chelsea Brennan. [upbeat music] Today, I am talking with Chelsea Brennan. Welcome, Chelsea.
[00:02:35] Chelsea Brennan: Thanks so much for having me, John.
[00:02:38] John Lanza: Well, to get us started, I just want you to tell us a little bit about yourself and perhaps how you went from working at a hedge fund to becoming the Smart Money Mama.
[00:02:48] Chelsea Brennan: Absolutely. So as you mentioned, I started my career on Wall Street. I was an equities analyst at Goldman Sachs, and then I moved to a distressed debt hedge fund in Boston, and I loved my work there, very intellectually stimulating, but honestly, the hours are long, um, and we didn’t, uh, align with my values very well. So right before my second child was born, um, I left to start Smart Money Mamas. I wanted to take everything I’d learned about money, and I’ve always been a big money nerd, and put it in the hands of people that I felt like could create lasting change. And to me, that was moms, not only because moms are often the, who is in control of the family budget, but because we are teaching the next generation, parents are teaching the next generation about how to have a better relationship with money, and that felt like a great place to start. If we can inspire, um, and motivate women to get comfortable with money, to feel confident with money, they could pass those lessons onto their kids, and we can really create lasting change. And so I’ve been doing this work for about five years now, and it’s been amazing.
[00:03:45] John Lanza: Very impressive, Chelsea. And, uh, makes sense, and you’re definitely filling [laughs] a big hole in the market. So, uh, and, and it definitely, uh, makes sense. The moms really do end up being the, uh, the drivers of, of so much of what’s going on financially in any family.
[00:04:02] Chelsea Brennan: Mm-hmm.
[00:04:03] John Lanza: So I am curious, though, is there anything… ‘Cause it’s such a big jump, like, to-
[00:04:07] Chelsea Brennan: Yeah.
[00:04:07] John Lanza: Is there anything that you miss about the hedge fund world? Is, and is there anything that parents should know about the, that world that might be kind of funny or surprising that they’re unlikely to know about it?
[00:04:16] Chelsea Brennan: [laughs] So the part I miss about it is really getting to deep dive into different industries and companies. And so when I was in that world, I covered metals and mining and industrials, and industrials is kind of this catchall bucket for all the weird things that we do in industry, whether it’s filling aerosol cans or creating packaging. It’s a really wide industry. And so every time I got to pick up a new company, I was really learning a whole new space. I got to really interact with the CEOs and the management teams of those companies, and that was a really exciting and fun experience. So I do miss that intellectual challenge. Um, what do people not know?
[00:04:50] John Lanza: [laughs]
[00:04:51] Chelsea Brennan: Um, that’s a great question. I think the biggest one is that the timelines when we think about investing are different, right? And so what I want people to remember when we hear things about trying to beat the investment markets, right? We are thinking for our retirement long term, over 30 to 40 years, and whether it’s, um, mutual funds or hedge funds, hedge funds even more so, we’re talking about a different timeline, right? We’re talking anywhere from six months to seven years, which maybe you can pick up a beat in that period of time, um, but likely, over the long term, you’re still gonna be better off with indexing, and you’re gonna find a lot of people in that world mostly index their own investing, um, even though they are picking investments. And, and there’s a lot of reasons for that, but one of which is just access to information. I just mentioned, when I’m learning a new company, I could go sit down with the management team. I could call. I could do site visits, all this level of detail and information, where even if you technically have a public company, um, that only, you know, is allowed to tell you what’s in their 10-Ks and 10-Qs, which are their quarterly and annual reporting, for those who don’t know, there’s a lot more depth of information you can get when you’re in the industry versus if you’re just trying to, to Google and figure out what’s going on. And so don’t stress if you’re overwhelmed with, with picking stocks. Honestly, most of us don’t do it, and all of our in- investments are indexed, so.
[00:06:07] John Lanza: [laughs] Yep. Well, we talk a lot about what we like to [laughs] recall, uh, I think, uh, boring investing, that’s something-
[00:06:13] Chelsea Brennan: Yeah
[00:06:13] John Lanza: … Chris Browning with Popcorn Finance came on the podcast and talked about. Uh, and that makes a lot of sense, uh, because there’s so much research out there that just says that, uh, that, uh, your ability to try to beat the market long term is… It’s just not gonna happen, [laughs].
[00:06:29] Chelsea Brennan: Yeah, exactly.
[00:06:29] John Lanza: There, there are probably… You, you could probably count on, on one hand how many people can do it. It’s like Char- Charlie Munger, Warren Buffett, you know? [laughs] It’s-
[00:06:36] Chelsea Brennan: And when you talk about how much you’re beating by over that period of time, right, John? So like, I always talk to people of like, maybe, let’s say you believe that you can beat the market by what? One, 1% [laughs]-
[00:06:46] John Lanza: Yeah, yeah
[00:06:47] Chelsea Brennan: … um, the hours that you would have to put in to research and time, is that worth it to you, um, versus-
[00:06:51] John Lanza: Yeah
[00:06:52] Chelsea Brennan: … that more easier, boring investing? I know it’s not the, the thing that everyone wants to dive in and feel like they can, they can beat the game, uh, but it is generally the, the safer and better bet.
[00:07:01] John Lanza: Yeah. Well, I, I think that kind of fits my next question, because, uh, you talk a lot, and this is, uh… You talk a lot about money mindset, and, uh-
[00:07:11] Chelsea Brennan: Mm-hmm
[00:07:11] John Lanza: … it’s something that I think a lot about as well. I… In fact, my, uh… Recently, I have a weekly newsletter, and I, I talked about these kind of three fundamental truths. Uh, I, I, I, I picked up on this quote that basically most everything that’s out there is not very important, right? To your life.
[00:07:29] Chelsea Brennan: [laughs]
[00:07:29] John Lanza: And so, what are the things that are important? And this is reductionist, obviously. I’m gonna talk about these three ideas, right? And then-
[00:07:38] Chelsea Brennan: Mm-hmm
[00:07:38] John Lanza: … what I wanna do is get your sense of fundamental truths. They don’t have to be one. They can be one, or two, or three. But the things that I talked about were, one, the importance of living beneath your means. Um, something my grandfather told me when I graduated college that, uh, advice that I did not heed for quite a long time. Um, [laughs] moving to Southern California did not help that.
[00:07:59] Chelsea Brennan: [laughs]
[00:07:59] John Lanza: Um, but I’ve, but I’ve learned the lesson finally. So that’s one, living beneath your means. Uh, learning to use money as a tool, as a means to an end rather than an end goal, which I know is totally-
[00:08:08] Chelsea Brennan: Mm-hmm
[00:08:08] John Lanza: … in line with what you’re doing at Smart Money Mama, uh, Smart Money Mamas. And then having less envy will help you lead a happier life, because comparison is the thief of joy. Which is picking up on something that Charlie Munger and Warren Buffett talk about, which is that the world is not driven by greed, it’s actually driven by envy. So I’m curious-
[00:08:29] Chelsea Brennan: [laughs]
[00:08:29] John Lanza: … to know, what are some fundamental, a tr- fundamental truth or truths that you think about that you think parents might, uh, be wise to know?
[00:08:40] Chelsea Brennan: Yeah, so let’s talk first about your first universal truth, which is living beneath your means. So two things come to mind when I think of that.
[00:08:45] John Lanza: [laughs]
[00:08:45] Chelsea Brennan: One is a scarcity mindset, right? We are trying to reduce what we’re spending and what we’re doing below what we have in that moment. And so the reframing of that is that we use money as a tool to build the life that we want. That we a- align our money with our values. And I think that that is absolutely… You know, kind of a little bit different take on it, but I just wanna be careful of scarcity. The other thing I wanna be careful of, when we think about universal truths with money are that there are real economic, um, inequality in the world. There’s real economic inequality in the world. And so there are people who work really, really, really hard, and living beneath their means is just this thing that is either, A, part of what they have to do, right? They’re, they’re kind of paycheck to paycheck no matter what they do, um, and it kind of vilifies anyone who’s in debt. And so debt does not necessarily mean that you’re just going out and blowing it on new electronics-
[00:09:36] John Lanza: [laughs]
[00:09:36] Chelsea Brennan: … ’cause you want them. For some people, that is how they paid their medical bills or how they got out of an em- emergency. And so f- let’s take a step back for a second and we talk about mindset, really talk about aligning our money with our values and understanding that none of this is evil, none of this is good. Let’s take kind of the morality out of it and really align it with, how can you best live the life that you have, while also recognizing that there’s inequality? Um, when it comes to kind of universal truths with money, this is a hard question for me, because I’m a big believer that there’s no one right, right way to do this. Um, everybody’s personality, everybody’s style, everybody’s ideas are different. And I think the biggest one is just… The biggest universal truth is that you have to continually check in with yourself, um, and not try to define your money principles by what anybody else defines as important, right?
[00:10:24] John Lanza: Yeah, yeah.
[00:10:25] Chelsea Brennan: And so that comes down to a universal truth that basically means you have to find your own way to do this.
[00:10:30] John Lanza: Yeah. Well, it, it’s a little unfair of me to ask you the-
[00:10:34] Chelsea Brennan: [laughs]
[00:10:34] John Lanza: … that very broad question-
[00:10:36] Chelsea Brennan: [laughs]
[00:10:36] John Lanza: … because I had a lot of time to think about it-
[00:10:38] Chelsea Brennan: Yeah
[00:10:38] John Lanza: … as I was writing them out. But I also… I, I like what you said. One, I, I, I think that’s a very interesting reframing, uh, t- away from scarcity into-
[00:10:47] Chelsea Brennan: Yeah
[00:10:47] John Lanza: … more abundance, and, and I think there’s, there’s definitely something to that. And I appreciate that. I do think that, um, what you’re saying, it makes a lot of sense, ’cause so much, uh, so much of this comes back to… Remember I had Brad Klontz on the podcast, who’s a mon- money psychologist, and he said, “You have to take every piece of personal advice, and that includes any advice that you’re giving, that I’m giving, with a grain of salt.”
[00:11:09] Chelsea Brennan: Yep.
[00:11:09] John Lanza: Because everybody’s living… You know, everybody’s lives are just completely individual lives, right?
[00:11:15] Chelsea Brennan: Mm-hmm.
[00:11:15] John Lanza: Um, and I think that’s kind of what you’re recognizing with your answer. And, uh, and, uh, one of the things I did at, at the end of that, uh, post, uh, was that I said these are, these are just some truths, right? Uh-
[00:11:27] Chelsea Brennan: Yeah
[00:11:27] John Lanza: … we may… I, I… There are other truths that’ll be out there. I wanna know what other people’s truths are, and it’ll be interesting-
[00:11:32] Chelsea Brennan: Mm-hmm
[00:11:32] John Lanza: … if people do respond to that. So I get that, and, um-
[00:11:36] Chelsea Brennan: [laughs]
[00:11:36] John Lanza: … it’s, it’s something that we can think about, and that was a, a very good answer in a very short amount [laughs] of time-
[00:11:41] Chelsea Brennan: [laughs]
[00:11:42] John Lanza: … so I’m very impressed.
[00:11:43] Chelsea Brennan: Thank you.
[00:11:44] John Lanza: Um, okay. Now, now I’m gonna ask you an even tougher question.
[00:11:47] Chelsea Brennan: Oh, boy.
[00:11:48] John Lanza: Um,
[00:11:49] John Lanza: so… Well, and again, if, uh… Well, I’ll just ask it. So, what’s an important kind of financial truth that you believe that is kind of the opposite of what so many people believe?
[00:12:02] Chelsea Brennan: Um, I think we’ve, we’ve seen a shift in this, so I’m gonna give you your… My, my answer, which is that money is e- inherently emotional. And I think we’ve seen-
[00:12:09] John Lanza: Hm
[00:12:09] Chelsea Brennan: … a real awakening to this over the last several years, and so it’s not something that…… you know, is, is setting me apart from as many people as it used to. But I think that when we talk about money, right? And we c- we go back, I always bring it back to Maslow’s hierarchy of needs, where you start at the bottom with these really ph- physiological needs, food, water, safety, right? A safe place-
[00:12:30] John Lanza: Yep
[00:12:30] Chelsea Brennan: … to live.
[00:12:31] John Lanza: Survival.
[00:12:32] Chelsea Brennan: Those things in our society are all tied to money. And so we can try to say that this is a numbers game and it’s just math and you know how to budget, but the reality is we all have some really deeply ingrained emotional feelings about money and we can’t separate the two. If you are somebody who has had, you know, a lack of security in your home, if you’ve been somebody who hasn’t had access to food, you’re gonna have some really strong held feelings. And that can be, that can come in different ways and reactions to how we manage our money, right? We have some people who will hoard, right? They will hoard that money or they will hoard food. They’ll have way more than they need. They’re al- there’s always overspending on their groceries because they have this inherent emotional fear about not having enough food. Whereas on the other side, you have some people who are major over-spenders, right? As s- soon as money comes in, they spend it on the things that they want, even if they aren’t necessarily the things that they need, because they’re afraid that that emergency is gonna come and, and they’re not gonna have it. Um, and so they’re just putting it out as fast as it comes in. Neither of those things, to go back to the beginning, is inherently evil or bad or whatever. It’s just this is the emotion that we have to deal with. And so my thought has always been the building block, the first thing that we have to deal with when we’re trying to fix somebody’s money or try to get t- get them to a place that they, they can reach their goals, is really looking at what is their money mindset? What is their emotional relationship to money?
[00:13:56] John Lanza: That makes a lot of sense. We, we talk a fair amount about that. And, uh, and you’re right. There are, there’s, people are, more and more people are coming around to it. Um, you know, you have books like The Psychology of Money by Morgan Housel-
[00:14:06] Chelsea Brennan: Mm-hmm
[00:14:06] John Lanza: … which we talk about a lot here. And, uh, and, and so often it’s all, for people, it’s framed by one big event. You know, anybody who’ve s- any of us who have had grandparents who went through the depression, you know, know that how strong their sense of, you know, what we have can be gone quickly and how-
[00:14:27] Chelsea Brennan: Mm-hmm
[00:14:27] John Lanza: … frugality is so important, um, for that generation, that’s something that shaped them forever. And if you don’t know, uh, I mean, everything they do is gonna be based on that. And, you know-
[00:14:39] Chelsea Brennan: Mm-hmm
[00:14:39] John Lanza: … for our kids, it’s gonna be largely for our kids, you know, for our, our kids, uh, uh, my kids are now 18 and 20, so it’ll be kind of the great recession in the h- in the h- uh, that’s kind of in the background for them, but obviously going through COVID will have some kind of financial effect on them in some way. Um, and so those, those are things-
[00:14:58] Chelsea Brennan: I think a lot of people are surprised, John-
[00:15:00] John Lanza: Yeah
[00:15:00] Chelsea Brennan: … to hear that most core money beliefs are set around age seven.
[00:15:05] John Lanza: Yeah.
[00:15:05] Chelsea Brennan: Um, and I’m sure you guys have talked about this on the podcast before, but you really typically can tie it back to, like you said, one event or a couple of events where kids had to make a big decision about what money meant in the world, to remove that uncertainty.
[00:15:21] John Lanza: Mm-hmm.
[00:15:21] Chelsea Brennan: And so when you’re thinking about your kids, you’re going through the world, you can’t take in the million possibilities that are out there. We have a lot less sense of gray when we’re kids, right? It’s all black and white. And so we-
[00:15:31] John Lanza: Yeah
[00:15:31] Chelsea Brennan: … make some big universal truth, universal rule that we then for decades, until we really spend time analyzing and looking at it, or if, you know, hopefully we have a parent that can guide us through that earlier than that. But we’re really out there looking for all the reasons that this assumption that we made when we were five, six, seven is true. And so undoing that work is not necessarily the easiest thing [laughs] because it’s been built up and built up and built up.
[00:15:56] John Lanza: [laughs] Yeah. That makes a ton of sense ’cause that’s, it’s very true. I was talking about this last night, the idea that we tend to make decisions quickly. You know, it’s something that, uh, Daniel Kahneman talked about. We make a decision quickly and then we come up with reasons for-
[00:16:10] Chelsea Brennan: Mm-hmm
[00:16:10] John Lanza: … for why we made that decision. And that can be like you’re saying, a lifelong approach. [laughs] In other words, this is, this, this thing that happened to me in, in my school age years, I’m now kind of piling on reasons why that approach is rational, right? So the emo-
[00:16:26] Chelsea Brennan: Yeah
[00:16:26] John Lanza: … the decision is emotional, but the reasoning is s- is supposedly rational, which I think is kind of what you’re getting at with regard to the importance of really thinking about money as an emotional thing, not a rational thing.
[00:16:40] Chelsea Brennan: Yeah.
[00:16:42] John Lanza: Um, okay, so this is good. That’s a perfect segue into talking about our kids and talking-
[00:16:46] Chelsea Brennan: Mm-hmm
[00:16:46] John Lanza: … about, um, how someone like you, who’s a money expert, is going about this process. Uh, and obviously we’re on The Art of Allowance podcast, so we wanna talk about that. I noticed on your site that you don’t tie allowance to chores. We’re very simpatico-
[00:17:01] Chelsea Brennan: Yeah
[00:17:01] John Lanza: … in that, uh, that approach. Um, and I’m, I’m really looking forward to digging into your system and having you share your system with us because the whole reason I did this, created this podcast, was for me to talk to money experts and parents, and very often both, like in this case, so other parents who are listening can get ideas from all of us about how they can take-
[00:17:25] Chelsea Brennan: Yeah
[00:17:25] John Lanza: … whatever works, whatever might work for their par- family, uh, and use it, uh, effectively. So, let’s just start at the beginning of the beginning. Like, how you got to s- teaching your kids about money. They’re now five and seven. So, um, where did you start? And, uh, and a little bit about kind of how that system works.
[00:17:43] Chelsea Brennan: Absolutely. So we started, uh, with both of our kids, so my oldest is seven, like you said, my youngest is five. We started between the ages of three and four. I think for our older, we started a little bit closer to three. He’s more numbers minded, more, more rigid in that way. Our younger one was probably closer to four, just because we’re not trying to rush these skills, right? So one of the things I tell people to look for is, when are your kids starting to really ask for things in the store? When are they trying to understand what you’re doing at the checkout stand? When they’re starting to show that curiosity, this is a really good time to jump in with money lessons. And one of the ways to kind of create that curiosity, ’cause some kids are, are never gonna naturally have any interest, right? Is to just narrate what you’re doing, right? And so the same way we teach kids to talk when they’re little, where we just say everything that we’re doing, “Mommy’s opening this,” and whatever-You’re gonna do the same thing with money, right? “I’m gonna pay for the groceries with my credit card and this is how a credit card works.” And they’re not necessarily gonna pick it up, but they’re gonna start to get the language and the words and the understanding. And so we kind of always talked about money around them. Those are the ages they started to pick it up. We started with physical money, so we have pretty standard, uh, spend, save, and give jars. For the kids, they started with a dollar per year of life, so they started with three dollars each, um, a dollar in each bucket. Um, where we got a little bit different is that for us, it is required that the boys always have a savings goal and a giving goal. And so for us, those rotate, but they- we print a chart. Every time they put money in those jars, or now we use, um, Greenlight, so every ti- every week when that money goes in, we fill in the chart and say how far you are along their goal. So a couple reasons for this.
[00:19:23] John Lanza: Yeah.
[00:19:23] Chelsea Brennan: Um, I wanna be able- them to see the progress. That’s a really powerful thing when you’re trying to get kids to delay gratification. That is very difficult for adults [laughs] to delay gratification.
[00:19:32] John Lanza: [laughs]
[00:19:32] Chelsea Brennan: It’s really hard for kids to understand.
[00:19:35] John Lanza: Right, right.
[00:19:35] Chelsea Brennan: And so seeing a physical representation of that growth is really important.
[00:19:40] John Lanza: Yep.
[00:19:40] Chelsea Brennan: And the second reason is it allows us to keep things at an age-appropriate level. And so we can dive into this if you want, but I think that saving and giving are places where we can build some really unhealthy money mindsets with allowance. And so we try to bring that back by making sure that they’re goals that speak to them that they chose and that-
[00:20:01] John Lanza: Yeah
[00:20:01] Chelsea Brennan: … when they reach those goals, we celebrate really hard with them.
[00:20:05] John Lanza: Uh, let’s dive in. So talk to me about the, uh, unhealthy side of the, uh… Let’s start with unhealthy side of saving that you’re trying to-
[00:20:14] Chelsea Brennan: Sure
[00:20:14] John Lanza: … kind of avoid. Yeah.
[00:20:15] Chelsea Brennan: So, um, this is the my kid’s gonna put this money away for their first car, for college, for retirement, right? I’m gonna, I’m gonna open a Roth IRA for you and we’re gonna do this, you know-
[00:20:26] John Lanza: [laughs]
[00:20:26] Chelsea Brennan: … for retirement. Adults can’t understand what’s happening at 65, right? We have a really hard time. To kids, and I’ve talked to a lot of adults in our community who had this happen to them when they were younger, where, you know, they had their savings jar and once a month, their parents brought it to the bank and they put it away and they weren’t allowed to touch it for 10, 20, whatever years.
[00:20:45] John Lanza: Right.
[00:20:46] Chelsea Brennan: That builds this relationship that saving is my money going away. Poof.
[00:20:50] John Lanza: Yeah.
[00:20:50] Chelsea Brennan: Like, I’ve lost control, I don’t have a say, I don’t know what it’s for, and really, that whole out of sight, out of mind, it’s gone now, right?
[00:20:58] John Lanza: [laughs] Yeah, yeah.
[00:20:58] Chelsea Brennan: Saving is my money disappearing. And that’s not the relationship we wanna build with saving. The relationship we wanna build with saving is that if I wait, I can get really amazing things that I want that I couldn’t otherwise get, right? And so we talk about retirement. We all wanna be able to retire comfortably and spend decades relaxing and doing things that we love, right, and spending time with our grandkids if our families choose to go that route, whatever it is. That’s a huge, that’s the longest term impact of saving, but when you’re seven, when you’re my seven-year-old son Henry, that might be a $200 Lego set. That might be something that takes him eight months to save for. But we talk about when we go… First of all, every time he gets- he hits that milestone, we celebrate with him. We take him to get the thing in person, which is really important for him, is to see the, the exchange, to make the purchase. And we look while we’re in the store of like, hey, like if you didn’t wait this long, like you couldn’t have gotten, you could’ve only gotten these smaller sets or you couldn’t have only done-
[00:21:55] John Lanza: Yep
[00:21:55] Chelsea Brennan: … something else. And really showing him that hey, because I waited, because I was patient, I got to get this really cool thing. And so that’s the relationship that we wanna build with saving, and so that starts with age-appropriate goals. And when your kid is really little, when they’re three, maybe that’s only a goal that takes them a month or two to reach.
[00:22:13] John Lanza: Sure, yeah.
[00:22:13] Chelsea Brennan: Um, we’re trying to keep that in time, but every time they set a new goal, make it a little bit longer.
[00:22:19] John Lanza: I think that’s, it’s, it’s such a good point, the idea that saving for a rainy day is, is really is just taking your money away from the kid.
[00:22:27] Chelsea Brennan: Mm-hmm.
[00:22:28] John Lanza: Uh, sometimes parents will make a snarky comment about this idea. “Well, now you’re just teaching them to consume by saving.” Like no, what you’re teaching them to do is delay their gratification on a timeline that is age-appropriate. And I think your point is really important, which is you typically would not start a three or four or five-year-old with a goal that’s gonna take six months. You’re gonna do a-
[00:22:49] Chelsea Brennan: Yeah
[00:22:49] John Lanza: … starter goal that might take four to eight weeks, and that’s a very good point for parents.
[00:22:54] Chelsea Brennan: And I wanna tie back, I have heard that, that too, you’re just teaching them to consume, this isn’t actually saving. Listen, money in the bank is not nat- Like, that’s not the goal, right? It’s not, the goal is not to end our lives with lots of money in the bank, un- unless we’re talking about, you know, real generational wealth. And that’s, that’s important too. But the goal-
[00:23:12] John Lanza: Yeah
[00:23:12] Chelsea Brennan: … is to ultimately have a purpose for this money. Money in and of itself is not some big gold star reward. And so for most Americans who likely will struggle to have enough for retirement in general, you’re also going to consume with that money at some point. It’s just that for kids, that goal might only be six months in the future and it might be something that doesn’t feel as life important as, you know, your mortgage payments when you’re retired type of thing.
[00:23:38] John Lanza: Yeah, yeah. I, I remember reading, and I posted about this, uh, it was I think the American CPA Society, uh, put out a survey about allowance, and in the article, one of the people, an accountant, and I love accountants, but this is the hyper-rational approach was saying, “These kids are spending all this money. They’re not saving,” you know, expecting that the savings rate should be 50%. Like, what human is saving 50% aside from some, someone who’s way out in a way outlier fire, you know [laughs]-
[00:24:08] Chelsea Brennan: Exactly
[00:24:09] John Lanza: … person might be doing that. And it’s so unrealistic, so I, I, I think your response to that makes a ton of sense, which is the, the idea here is how… Like, we want, we, we want them to learn to use money as a tool, and one of those ways is to save on a, you know, a s- a longer term basis, but not a longer term basis which is just gonna make them turn off if it’s so long term.
[00:24:32] Chelsea Brennan: Yeah.
[00:24:32] John Lanza: And then obviously putting that money away in some place is exactly the opposite of what we’re trying to do, which is open up a conversation [laughs] about money.
[00:24:41] Chelsea Brennan: And I think there is something to be said, right, if, like, if your allowance system is like, “Hey, I’m giving them $5 a week,” and that’s the end of the discussion, right? And they’re taking that money and they’re spending it, but there’s no other expectation on them, there’s no change on what you provide, that can just be this kid’s out here spending money, and this really isn’t teaching them anything.
[00:24:58] John Lanza: Yeah. Yeah.
[00:24:58] Chelsea Brennan: This has to be a system that you stick to and are consistent with. This has to be that spending money that they have should have some responsibilities along with it. And when they’re little, that could just be, “I’m not buying you anything in the grocery store checkout line anymore. Like, if you want a little thing, you’re gonna have to use your own money for it.” Up until as they get older where you’re really helping them budget for their own clothes, or budgeting for their own school supplies, and you are moving their allowance in tandem with what their responsibilities with that money are so that they can get some of what they want, but not all of what they want. We’re keeping it in that sweet spot where they’re not unable to meet the needs that you’ve set for them, um, but that they also can’t just, you know, blow it and, and still be okay.
[00:25:39] John Lanza: Yeah, and to your point, um, about talking through all this stuff, that’s why we have to kinda know our why for the allowance. The purpose is to help kids learn to use money as a tool, and that’s why at allowance time, it’s worth reiterating these things to the point where, you know, you might even drive yourself crazy saying it, but you know-
[00:25:58] Chelsea Brennan: [laughs]
[00:25:58] John Lanza: … we’re providing this [laughs] money for you to help you learn to get, you know, comfortable with it. If you make mistakes, we’re here to help you. We are your guides. And so I, I like what you’re saying is having that continual conversation, ’cause I think more than anything, sometimes people get hung up on the word allowance. What it’s doing more than anything is opening up a conversation. It’s an-
[00:26:18] Chelsea Brennan: Yeah
[00:26:18] John Lanza: … it’s more about that. Like, I… We could call this the art of conversation podcast, right?
[00:26:23] Chelsea Brennan: Mm-hmm.
[00:26:23] John Lanza: Or the art of money conversation podcast. We just happen to call it the Art of Allowance podcast.
[00:26:27] Chelsea Brennan: [laughs]
[00:26:27] John Lanza: But allowance is a conduit for money conversation, right? Does that make sense?
[00:26:30] Chelsea Brennan: Absolutely. That does make sense.
[00:26:32] John Lanza: Yeah. Okay, so I wanna di- dig into the unhealthy side of the giving, um, jar.
[00:26:39] Chelsea Brennan: Yeah. So giving is one of those odd things for a lot of families, and, and definitely for kids, of the why behind it. Kids are naturally, in most cases, very caring for their friends and they’re very empathetic. But understanding what giving is for and why we do it, this is a conversation we have to have continually. This is about building the communities that we want to live in, right? Um,
[00:27:03] Chelsea Brennan: and, and that’s actually one of our family money values for our family is that we invest in the community we want to see, right? And so that-
[00:27:09] John Lanza: Hmm
[00:27:09] Chelsea Brennan: … can mean, and we talk about this, that can mean that we pay taxes, right? And that we want good school systems and, you know, safe roads and all of these things, and that… Not vilifying kind of that level of giving either.
[00:27:22] John Lanza: Yeah.
[00:27:22] Chelsea Brennan: But when we talk about giving with kids, letting them choose where that giving goes and tying it to something that is important to them. Very often we see, “Hey, as a family, we tithe to the church,” or, “We have this foundation or this organization that’s really important to Mom and Dad,” or Mom… you know, whatever family structure that you have. “And so we’re gonna get…” You know, “We’re all gonna compile our, our giving money and we’re gonna give it to this organization.” That is not likely something that has a heart meaning to your child yet, and so it’s tying into, what do they like? So if your kid loves art, right? This is looking in and saying, “Hey, locally, is there a program that is bringing art supplies to kids that don’t have them?” Right? And can we call them and see, do they take donations? Do they take physical donations, right? Can you go to the store and buy crayons and paints and drop them off with your kids at whatever this center is? Something that is much more tangible to them. A really popular one, um, is, uh, dog rescue facilities, right? And bringing in toys or food or things that are, are meaningful to your child so that they can see that by setting some money aside they can have an impact. That impact is important for them to understand.
[00:28:32] John Lanza: Yeah.
[00:28:33] Chelsea Brennan: A really funny story about this, by the way, is, so Henry, my oldest, the first time he ever reached a giving goal, he wanted h- Animals were really important to him. We looked at a lot of different things, and we ended up doing the World Wildlife Foundation. You can adopt an animal. I don’t know if you’ve, you’ve ever seen this. You can donate. Um, we matched him dollar for dollar at that point, ’cause otherwise the goal would’ve been too long for him. But he had to put in $25. We matched it, and he got to adopt an animal. He chose a snow leopard. And so in the time that we’re getting up to him saving for this goal, we’re watching videos about why snow leopards are endangered, and what’s going on, and how this money… you know, w- what people are doing to save snow leopards and whatever. So the day finally comes that he’s reached the goal. We’re all excited. We sit down to order his thing, and when he gets to the physical manifestation of this for him is that he gets a certificate and he gets a little stuffed animal. And so we’re putting in the, the money and he looks at me and he goes,
[00:29:23] Chelsea Brennan: “What if the snow leopards lose their money?” And I was like-
[00:29:27] John Lanza: [laughs]
[00:29:27] Chelsea Brennan: … “What?” So I looked at him, I’m like, “What do you mean, buddy?” And he’s like, “Snow leopards don’t have pockets.” And I was just stunned, right? I’m like, “What are you talking about?” And it was really hard not to laugh, and I, so I, I asked him again, and he’s like, “Well, the snow leopards don’t have a way to hold their money.” And I was like, “Okay.” So we took a step back and l- luckily I was able to quickly think of, I’m like, “You know how you have grownups that take care of you? There are grownups that take care of the snow leopards, and we’re sending your money to them. We’re not sending them actually to the snow leopards.”
[00:29:56] John Lanza: [laughs]
[00:29:57] Chelsea Brennan: And so like you said, the art of conversation, you’re gonna be surprised by the things that come out of their mouths, and the hard conversations you’re gonna have especially when it comes to giving. And it’s being open to having those conversations and open to tying it in. I think this is a comment we get from moms, or, and parents sometimes too, which is, “You know, we did the art supply thing and we reached out, but now my four-year-old wants to know why all kids don’t have crayons at home. And now I have to have this really hard conversation about poverty and inequality-“
[00:30:24] John Lanza: Hmm.
[00:30:24] Chelsea Brennan: “… that I didn’t think I was ready to have yet.” And once again, we’re gonna keep this age-appropriate. Um-
[00:30:28] John Lanza: Yeah.
[00:30:29] Chelsea Brennan: But it, it’s gonna start to open those doors, and I think for a lot of… in a lot of ways, it’s gonna make those topics less scary for your kids and easier for them to wanna be invested in and tackle because it’s not something that we hid, it’s not something that we treated as taboo. We had these conversations when they were old enough to really start to ask the questions that I think as we get older-… aren’t as clear, right? Like, we’re afraid to ask, “Well, how do the snow leopards [laughs] handle their money?”
[00:30:57] John Lanza: Yeah. Yeah.
[00:30:57] Chelsea Brennan: Eh, in the very basic way kids frame things.
[00:31:01] John Lanza: I, I love that. It reminds… That’s a great story. It reminds me of, uh, Malcolm Gladwell talking about his dad, who I believe was a mathematician. And he said his dad retained… Uh, I can’t remember if he’s still alive or not, but he retained that childli- like sense of questioning, where he would ask-
[00:31:19] Chelsea Brennan: Mm-hmm
[00:31:19] John Lanza: … if he did not understand something, he would just keep going, “Why? Why? Why?”
[00:31:23] Chelsea Brennan: [laughs]
[00:31:23] John Lanza: Like, he really wanted to [laughs] understand these things at first principle, uh, uh, by, uh, using first principles, and if he didn’t understand, he would just keep asking. And you’re right, as adults, we lose so much of that, um, because if you ask that question, usually people don’t know the reasoning. It’s actually… A- a- and to some extent, that’s… It kinda gets back to, like, why we’re giving an allowance, right?
[00:31:47] Chelsea Brennan: Yeah.
[00:31:47] John Lanza: It’s, it’s, it’s, it’s knowing that why and the why, the purpose of it really matters. Like, I think for both of us in talking about this, we know the purpose of it is to get used to using it, to have conversations, to screw up with it, to make low-stakes mistakes.
[00:32:02] Chelsea Brennan: Yep.
[00:32:02] John Lanza: Like, that’s all okay, right? That’s part of the process. But I… You know, it’s, it’s such… It’s, it’s almost become trite saying it, but it’s, it’s something that I’m trying to rediscover myself, which is just that you just… If you don’t understand something, it doesn’t matter how much of a fool you look like. Just keep asking why because very often, you don’t understand it because it’s not been explained well or there is not an answer, and it’s more about the question, and that, that’s, that’s-
[00:32:28] Chelsea Brennan: Yeah
[00:32:28] John Lanza: … something you have to kinda continually t- return to. So, uh-
[00:32:31] Chelsea Brennan: And I think we can lead back-
[00:32:32] John Lanza: … wonderful story
[00:32:32] Chelsea Brennan: … into this with our kids, right, because they’re gonna ask questions that we don’t know the answer to.
[00:32:37] John Lanza: [laughs]
[00:32:38] Chelsea Brennan: And it’s okay to tell them that you don’t know, and, “Hey, let’s figure”-
[00:32:41] John Lanza: Yeah
[00:32:41] Chelsea Brennan: “… this out together.” It le- gives them permission to not have to have all the answers when they’re older, right? I think that a lot of us grew up thinking, “Well, I’m gonna move out of the house, and then suddenly this information will be downloaded into my brain, and I’ll just know how to do it.” Right?
[00:32:53] John Lanza: [laughs]
[00:32:53] Chelsea Brennan: It’s that whole, like, “Well, I’ll know when I have to.” Um, and we don’t always, and I think it’s that lesson. But it’s also when your kids ask why and it puts you in a position where you feel a little uncomfortable, that’s a place to even step away and, and have some self-reflection of like, “Hey, why is it really hard for me to talk about this?” Um, And what do I, what are my own hangups with this topic?” And really start to dig into letting that childlike wonder teach us about ourselves.
[00:33:21] John Lanza: You know, I wanna ask you, um, about investing with your kids. Well, actually two things, uh, t- two questions. Um, the first one is you said you moved from physical jar… ‘Cause we maintained our physical jars ’til they were kind of around 10-ish, right? And then we moved-
[00:33:37] Chelsea Brennan: Mm-hmm
[00:33:37] John Lanza: … to cards. So, you… It sounds like you were already on… You were using Greenlight card with them, um, very early. So, uh, tell me about that transition. I, I mean, you-
[00:33:48] Chelsea Brennan: [exhales]
[00:33:48] John Lanza: … did start earlier ’cause you started-
[00:33:49] Chelsea Brennan: Yeah
[00:33:49] John Lanza: … around three. We started around five. So, tell me about that.
[00:33:53] Chelsea Brennan: So, we were looking for a few signs of readiness for this. Um, one was some understanding of how debit and credit card work, cards work. And so, we talk about that a lot with them, about, you know, how we used them when we were ki- when they were little. We’d, we’d talk them through it. Can they do the mental math? This is a big one.
[00:34:09] John Lanza: Mm-hmm.
[00:34:09] Chelsea Brennan: Do we not have to lay out, like, “Here’s 20 versus five,” or whatever it is. Can they do that mental math?
[00:34:14] John Lanza: Sure.
[00:34:14] Chelsea Brennan: Um, and what, how did they feel about budgeting, right? So, was it very easy for them to say, “Hey, if I get this, I can’t get that later,” right? That understanding of opportunity cost.
[00:34:25] John Lanza: Yeah.
[00:34:25] Chelsea Brennan: We started to see that Henry was, was ready to go [laughs]. So, we did this about a year ago.
[00:34:29] John Lanza: Mm-hmm.
[00:34:29] Chelsea Brennan: So, it was six and-
[00:34:30] John Lanza: Yeah
[00:34:30] Chelsea Brennan: … four, which four is really early, but we’ll talk about that in a second.
[00:34:33] John Lanza: Yeah.
[00:34:34] Chelsea Brennan: So, Henry was really ready. He was good at math. He is generally fairly financially minded. W- we were good to go. He wanted a card like we did. He never sees us use cash. And so to him, using cash was actually different than how, if he was getting real experience. He didn’t feel like he was getting real experience.
[00:34:52] John Lanza: Sure.
[00:34:52] Chelsea Brennan: With the younger one, we’re probably pushing it. Like, four is, is very-
[00:34:56] John Lanza: [laughs]
[00:34:56] Chelsea Brennan: … young to start this. But anybody who-
[00:34:58] John Lanza: Good seeing you.
[00:34:58] Chelsea Brennan: … has kids knows that we can’t have different [laughs] systems at any given time-
[00:35:02] John Lanza: [laughs]
[00:35:02] Chelsea Brennan: … especially when they’re this close. And so, Henry has a card, then George wants a card, and that’s, and that’s okay. And so for him, we still do a lot more handholding. And so, every week, um, we sit down when that fund happens. We look at his balances. We update his savings charts. We color things in. So, he really still has that understanding of what’s going on. We have to do that less with Henry. He has the app on his iPad. He’ll take a look at it. He’ll h- keep his savings charts. Um, but we’re really walking him through it. But the other reason, once we had those s- signs of readiness, the other reason we switched it is my biggest rule when it comes to allowance is consistency.
[00:35:37] John Lanza: [laughs]
[00:35:37] Chelsea Brennan: And so, we do not want kids to develop a sense of uncertainty with money and fear of like, “Oh, sometimes I get my allowance, but sometimes I don’t. And then I still have to be kept to the, you know, the standards of what I have to buy myself, but I didn’t get my allowance this week,” or whatever it is. For us, who, we use all digital banking, we never use cash, making sure we always had cash to do allowance was not easy. And it was causing-
[00:36:00] John Lanza: Yeah
[00:36:00] Chelsea Brennan: … some inconsistency. Even if we’d say like, “Oh, we’ll catch up tomorrow,” it just wasn’t that consistency for the boys, and we wanted that. And so, Greenlight let us do that, and we made that switch. And it definitely has been more of a
[00:36:13] Chelsea Brennan: standard process. We don’t have to think about it. They don’t have to think about it. And they’ve taken more ownership of their own spending, which has been great.
[00:36:21] John Lanza: Yeah. Yeah. And, uh, this is not a, uh, a promotion for Greenlight. It just happens-
[00:36:26] Chelsea Brennan: No
[00:36:26] John Lanza: … to be a card that you’re using. Um, I think, uh, I, I, that’s, that’s really interesting ’cause you made a case that we really have not talked about on the podcast, um, that early. Um, and which is great because now parents, we’ve, we’ve always talked about kind of school age being more cash-focused, but your consistency point is really good. And this, uh, this idea of, of looking and making sure that they’re prepared for it is good. And I totally get that whatever [laughs] you’re doing for the older kid, you pretty much have to do for the younger kid. So, I really appreciate that. That’s, that’s something completely new that we really haven’t talked about. So, that’s something that parents can think about and then decide what’s gonna kinda work for them and figure out when that transition is going to happen. They just… Digital money is the same as physical money in, in terms of actual exchange value. So, it is something they have to learn. And why not teach them early? So, great kids.
[00:37:18] Chelsea Brennan: And I think that definitely with these younger generations…… by the time my kids are adults, there’s… It’s gonna be very rare that they’re using physical money. And so, that was the other part too-
[00:37:26] John Lanza: Yeah
[00:37:26] Chelsea Brennan: … of like, the sooner we can teach them that these numbers on a screen have a real-life value and a real-life impact. And if that number goes down, there’s no way to just, like, instantly fill it back up, right? [laughs]
[00:37:36] John Lanza: [laughs]
[00:37:36] Chelsea Brennan: We have to actually do the work. And so, those are all the things that went into it. It definitely, it definitely is pushing early, and I think that looking for those math skills, looking for that ability to delay gratification, have you practiced that, um, is all really important. And then the other thing that comes back is, they have to remember their card. Like, this is, uh, if they don’t bring their wallet with them… And you can do this with physical cash too. But if they don’t bring their wallet with them, they don’t get to buy things. Like, that’s our rule.
[00:38:01] John Lanza: Yeah, yep.
[00:38:01] Chelsea Brennan: And so, it works well for us.
[00:38:05] John Lanza: That’s terrific. And, and I like the way that you frame these things too, because you are saying, you’re acknowledging that it is very early. It’s not-
[00:38:13] Chelsea Brennan: Mm-hmm
[00:38:13] John Lanza: … necessarily gonna be app- be appropriate for other parents. So, now everybody who’s listening, different parents will take different things from it. So, I, I think that’s great. Okay, so let’s jump into, uh, before we get to a few final questions and then our, uh, uh, fast and fun round questions-
[00:38:27] Chelsea Brennan: [laughs]
[00:38:27] John Lanza: … which I’m very curious to hear your answers to. Uh, investing. So, um, have you started them with investing? How are you thinking about investing, um, for your kids?
[00:38:39] Chelsea Brennan: Sure. So, both boys have, um, college 529 plans. Um, and Henry has a very small Roth IRA. He works a little bit with us just doing basic. So, we run a sticker and stationary company called Wildly Enough, and so he’ll come in-
[00:38:54] John Lanza: Hmm
[00:38:54] Chelsea Brennan: … and help us pack stickers and things, do things like that. As far as explaining it to them, this is really in the conceptual age for us, and so we talk about, um, how investments make money. We talk about what a stock is and what debt is, and we kinda have those conversations. I’m not one to rush into them feeling like they have to have their hands on it. It is a little bit more of a complicated concept, right? You’re taking steps and steps removed from how you’re making money. And so, we don’t necessarily need them to be looking at the accounts with us in any way yet. They are understanding the basic fundamental principles. They can tell you about risk. They can tell you what a stock is. But that’s kind of where we’re stopping it for now. The idea is that somewhere around 10 or 11, depending on where the boys are, we’re really gonna pull them closer into, how do we make these decisions? You know, w- w- where are their funds? What are the money that’s set aside for them? These are conversations kind of in middle school we wanna have about, you know, “How much are mom and dad willing to help you with college?” And letting them set that, that sight of, you know, “Here’s what I’m gonna be able to afford,” or, “Here’s what I’m gonna have to do for scholarships,” or whatever, “if I wanna go to a different type of edu- go towards a different type of education.” But for now, we’re really just focusing on the fundamentals. Um, I think there’s way more that we need to build in that confidence and trust in themselves with money and in that mindset before you can take into something that you don’t necessarily have as much control over, right? We can choose our index funds, but we don’t have control over the cycle, and we don’t wanna-
[00:40:24] John Lanza: Mm-hmm
[00:40:25] Chelsea Brennan: … create a scarring experience, for lack of a better word, at a young age, right? We don’t wanna-
[00:40:32] John Lanza: Yeah
[00:40:32] Chelsea Brennan: … necessarily say like, “Look, you know, we have this investment bucket of your allowance, and you’ve been saving for two years. And oh, we just hit a recession, and, like, your money’s down 40%” And have to explain to them that, like, you know, “This is how it works.” I don’t think e- m- emotionally they’re ready for that yet.
[00:40:48] John Lanza: Yeah, that makes sense. I, I want your perspective on something, ’cause, uh, I was talking to a, uh, friend whose, uh, son is, uh, like 11, and he’s excited about investing, um, because his friend came to him and said he just made… Like, h- he invested in something, and it went up in, in a very short period of time, right?
[00:41:09] Chelsea Brennan: Mm-hmm.
[00:41:10] John Lanza: Which really is tantamount to gambling, right?
[00:41:12] Chelsea Brennan: Yeah.
[00:41:12] John Lanza: And so, n- n- n- now, though on the one hand, it’s great that he’s excited about investing, but he’s probably excited about it for the wrong th- I mean, it’s the right thing for his perspective, because he’s-
[00:41:24] Chelsea Brennan: Yeah
[00:41:24] John Lanza: … looking for that quick dopamine hit. So, um, w- what’s your perspective on how to deal with that kind of, um, dilemma?
[00:41:34] Chelsea Brennan: Yeah, so when we’re in the world of TikTok and, um, easy trading-
[00:41:38] John Lanza: [laughs]
[00:41:38] Chelsea Brennan: … and, and not really [laughs] vetting people on a lot of things, right? We see people trading options and trading on margin. People that 10 years ago could never have had access to this kind of risk now do. And so we get parents that come to us all the time saying, “Hey, my kids saw…” You know, when the GameStop thing happened, right, we had everybody reaching out-
[00:41:54] John Lanza: Yeah
[00:41:54] Chelsea Brennan: … asking like, “Should I be buying GameStop,” and, uh, GameStop… So, the conversations I’d have with your kids at that point are about risk. The, the line we use with the boys is that nobody can tell the future. Um, and so even if you feel like something is a sure thing, nobody really knows what that means and that, if we’re trying to guess, sometimes you’re gonna be right, and a lot of times you’re gonna be wrong, right? We always kinda tie it back to the weather, um, and we’ll talk about that with Henry-
[00:42:20] John Lanza: [laughs]
[00:42:20] Chelsea Brennan: … our seven-year-old, of like, hey, the weatherman, that’s a lot fewer possibilities, right? You’re probably not gonna wake up in July and it’s gonna be negative 50, and you’re probably not gonna wake up and have it be 200 degrees. So, we have a, a narrower margin, and they have trends and all these things, and they’re still wrong [laughs]-
[00:42:37] John Lanza: [laughs]
[00:42:37] Chelsea Brennan: … sometimes. Whereas investing, we have a way wider range of possibilities, and we’re trying to tell the, tell the future in that way r- range of possibilities. When your kid’s 11, I think
[00:42:48] Chelsea Brennan: having that conversation, so not just saying what I say to adults, which is, “You can’t beat the market,” right? Like-
[00:42:53] John Lanza: Yeah
[00:42:53] Chelsea Brennan: … we’ll have a conversation about it. Start to show them some examples, right? Let them… There’s a lot of ways to free create tracking stock portfolios. Let them play with some money.
[00:43:03] John Lanza: Mm-hmm.
[00:43:03] Chelsea Brennan: Say like, “Hey, if you spend six months, you know, investing some fake money and see how it goes, then let’s revisit what you wanna do with your investments.” Um, deciding that there’s a safe… If they’ve reached that point and they still wanna play, then it’s a-What’s a safe amount of money we’re willing to let you risk?
[00:43:22] John Lanza: Sure.
[00:43:22] Chelsea Brennan: Because you can, just like with allowance and everything else, let’s make an inexpensive mistake, not a really expensive mistake, right?
[00:43:28] John Lanza: Yeah. Yeah.
[00:43:28] Chelsea Brennan: Like let’s not put 80% of our 401[k] in one stock ’cause our buddy said-
[00:43:31] John Lanza: [laughs]
[00:43:31] Chelsea Brennan: … it was gonna win big, right?
[00:43:33] John Lanza: Right.
[00:43:33] Chelsea Brennan: Let’s make those mistakes smaller. But I think it’s being honest with our kids and showing them all the different trends that have… people have been wrong about over time, right?
[00:43:41] John Lanza: Yeah.
[00:43:41] Chelsea Brennan: And, and people have been right too, but all the things that you cannot understand and, and really starting to have those conversations. I think turning them off from it completely is hard.
[00:43:50] John Lanza: Yeah.
[00:43:51] Chelsea Brennan: Um, but I think also, you know, we can always lean back on, “You are not legally allowed to invest.”
[00:43:55] John Lanza: [laughs]
[00:43:56] Chelsea Brennan: Like your friend might be doing it but you’re 11. Um, and we’re not gonna be breaking the law for you, so- [laughs]
[00:44:01] John Lanza: [laughs]
[00:44:02] Chelsea Brennan: … um, those are the type of things. But I think that really-
[00:44:05] John Lanza: Yeah
[00:44:05] Chelsea Brennan: … just letting them experience it in a safe way, um, is, is the best way to go.
[00:44:12] John Lanza: Yeah. Uh, and I, I think that idea of, uh, of, uh, I think, uh, Jason Zweig, The Intelligent Investor, calls it like, “The mad money account.” You know-
[00:44:21] Chelsea Brennan: Yeah
[00:44:21] John Lanza: … having that small percentage of money that you’re just prepared. Are you ready for this to go to zero? Okay, let’s have some fun with it.
[00:44:26] Chelsea Brennan: Mm-hmm.
[00:44:27] John Lanza: Um, that makes sense. Okay.
[00:44:29] Chelsea Brennan: Yeah.
[00:44:29] John Lanza: Um, thank you for that. I, I, it’s, I think it’s a tough question for us to deal with. I, I, another, I’ll bring up Brad Konz again, ’cause he said that was one of his concerns when he introduced his kid to investing at age seven was that he would hit it big on his first investment. Because-
[00:44:44] Chelsea Brennan: Yeah
[00:44:44] John Lanza: … then that can really affect the way you think about investing for the rest of your life. You know, it’s, uh, it affected Mark Twain when he hit it big in a silver mine, right?
[00:44:52] Chelsea Brennan: Yep.
[00:44:53] John Lanza: And he, and he continually kind of chased [laughs] that big hit. And, uh, so these are not, they’re, they’re-
[00:44:58] Chelsea Brennan: And I think it’s okay to s- say to kids like, “Listen, this is tantamount. Day trading is tantamount to gambling.” There’s dopamine involved, there’s a lot of things that are really closer to addiction training than actually long-term thinking, and t- and telling them the, the risks of that, right? We’ve seen a lot of kids, sadly, lose a lot, uh, we’re talking 18, 19-year-olds-
[00:45:18] John Lanza: Yeah
[00:45:18] Chelsea Brennan: … lose a lot of money or end up negative w- when we now have ways that people can margin trade when they really don’t have the way to cover that margin. We’ve seen kids end up in a lot of trouble. And so showing them what the risks of that are as well, and the-
[00:45:31] John Lanza: Yeah
[00:45:31] Chelsea Brennan: … and the risk of them winning it big, I totally feel that. My dad still jokes that he sat my brother and I down one night to play Blackjack to show us like the dangers of gambling or whatever-
[00:45:39] John Lanza: [laughs]
[00:45:39] Chelsea Brennan: … and my brother cleaned up, like cleaned him out. And to this day, my brother’s like, “I can, I can win whatever. It’s totally fine.” [laughs] Um-
[00:45:47] John Lanza: Yeah, yeah
[00:45:47] Chelsea Brennan: … so it is hard. Yeah, you gotta take that risk.
[00:45:52] Chelsea Brennan: That, um, the, the… it’s, it’s amazing how much those kind of early experiences can really affect you. It kinda get, gets back to the point you made earlier, which is that these, these, their money habits, a lot of money habits are formed by age seven.
[00:46:03] Chelsea Brennan: Mm-hmm.
[00:46:03] John Lanza: And it’s hard to fathom. You know, almost as hard to fathom as the power of compound interest, but it’s real, and, uh, it’s something that we have to, we have to really pay attention to as we go about this process of teaching our kids.
[00:46:17] Chelsea Brennan: I wanna share this one really beautiful thing, John.
[00:46:19] John Lanza: Sure.
[00:46:19] Chelsea Brennan: We have a, a woman in our, our Motivated Mamas society, which is our mon- our membership community. Um, she has four sisters, and they started, as she started her own money mindset journey, they started doing this monthly Zoom call. So them and their spouses would all get on, and all the kids, nieces and nephews could get on, and they could ask any money questions that they have-
[00:46:36] John Lanza: Hmm
[00:46:36] Chelsea Brennan: … including things about their past, mistakes they’ve made, and they really created this family open discussion about money. And the things that have come out of it and the, the sense of safety of mistakes are gonna happen, um, we don’t know all the answers, and we can learn from other people’s mistakes. You don’t have to go reinvent the wheel. [laughs] We can talk about, hey, maybe you won it big, but these five other people in your family tried the same thing and they lost, and it’s not that anyone was necessarily better than anybody else. It’s just this is how life works. And when you talk about generational wealth, I com- uh, come back always to setting that family money mindset and having a community, whether it’s siblings, whether it’s close friends that you’re willing to have hard conversations with in front of your kids as parents and be vulnerable as adults that we don’t have it all figured out-
[00:47:22] John Lanza: Yeah
[00:47:22] Chelsea Brennan: … the better off our kids are gonna be long term.
[00:47:25] John Lanza: Hear, hear. That makes a lot of sense. All right, um, I wanna ask you, uh, one question before we do the fast and fun round. Who is the, who’s the most influential person in your life, Chelsea, when it comes to the way that you think about money?
[00:47:39] Chelsea Brennan: That’s a great question. I think the biggest influence was actually my dad’s business partner. Um-
[00:47:44] John Lanza: Hmm
[00:47:44] Chelsea Brennan: … so my dad and his, his business partner worked together almost my entire childhood until I was almost done with college. Uh, and Uncle Glennie was fantastic, and he was early Bogleheads forums, um-
[00:47:57] John Lanza: [laughs]
[00:47:57] Chelsea Brennan: … fire before there was fire type of guy.
[00:47:59] John Lanza: Wow.
[00:47:59] Chelsea Brennan: And I was always really interested in money and really interested in the stock market. And so he gave me books on investing, he talked to me about the cost of investing, we talked about saving from a really young age. And I think that, you know, without going too far into personal things, my parents both tried to teach us about money, um, and both had their own difficulties and em- own emotional issues with money that neces- wouldn’t-
[00:48:20] John Lanza: Yeah
[00:48:20] Chelsea Brennan: … necessarily have been the right actions, right? My dad was really good at saying the right thing, but not so good at doing the right thing. And so-
[00:48:27] John Lanza: Yeah
[00:48:27] Chelsea Brennan: … he was kind of that steady driving force and really brought me into investing as my first stage career, which I’m very grateful for just from a sense of understanding how the markets work, um, and understanding what I wanted from life. I think that getting to do that work that was intellectually stimulating but not what I wanted and being able to make that pivot because I had the savings goals in place that I did from a young age, um, I’m really grateful to him for that.
[00:48:54] John Lanza: Well, that’s great. You said Uncle Lennie, was that the name?
[00:48:57] Chelsea Brennan: Uncle Glennie, yeah.
[00:48:58] John Lanza: Un- Uncle Glennie, yeah.
[00:48:59] Chelsea Brennan: [laughs]
[00:49:00] John Lanza: You know, you really do have that killer combination because I can tell, I mean, I mean if you’re coming from the hedge fund, you have the hyper-rational side of things.
[00:49:08] Chelsea Brennan: Mm-hmm.
[00:49:08] John Lanza: And if you combine that with the understanding that [laughs] money is anything but rational-
[00:49:13] Chelsea Brennan: [laughs]
[00:49:13] John Lanza: … it’s, that’s such a great combination. So I’m not surprised that you have as much wisdom as you have and you’ve been able to share that with us today, so I appreciate that.
[00:49:23] Chelsea Brennan: Thank you.
[00:49:24] John Lanza: All right. So, Uncle Glenny-
[00:49:27] Chelsea Brennan: [laughs]
[00:49:27] John Lanza: … well done. [laughs] Are you ready for your fast and fun round questions now, Chelsea?
[00:49:31] Chelsea Brennan: I am ready.
[00:49:33] John Lanza: Here they come. What does the term money empowered mean to you?
[00:49:39] Chelsea Brennan: It means that you can trust yourself to make the right decisions for you. I think having that sense of trust in the way you handle money is when you really are empowered, when you’re not looking for everybody else to, to validate your own choices.
[00:49:54] John Lanza: What is the best investment of time or money you’ve spent on your kids so far?
[00:50:00] Chelsea Brennan: Hmm. I would have to say, uh, their allowance system has been the best thing. We talk about long-term generational wealth, that’s been the best investment we’ve made. And that’s how we explain it to them, that when they ask why they don’t have to do work to get their allowance, we say that-
[00:50:13] John Lanza: [laughs]
[00:50:13] Chelsea Brennan: … this is an investment that we’re making in our family’s future. And that someday you’re gonna have more control of the family money. The idea is to eventually pass this down to you. And we’re starting with we can trust you with eight bucks a week or [laughs] whatever it is, um, and that will step into it. So we view it as an investment.
[00:50:31] John Lanza: That is, uh, that is an original… I love that framing.
[00:50:34] Chelsea Brennan: [laughs]
[00:50:34] John Lanza: The, uh… That’s a great way to put it. What advice to your kids do you most hope that they will heed?
[00:50:43] Chelsea Brennan: It’s okay for your goals to change. I think that we get very, very tied to our goals and that sense of accomplishment in climbing the mountain and we’re really scared often to realize we’re on the wrong mountain. And I want them to know it’s okay to change directions. Um, and that-
[00:51:02] John Lanza: Hm
[00:51:02] Chelsea Brennan: … we’re gonna change as people as our life goes on and it is okay to change your goals. And it does not mean you’re failing, it means you’re choosing yourself.
[00:51:10] John Lanza: Great advice. If you could transmit a message, Chelsea, that everyone would see, so sky-written, on a billboard, wherever, what would that message say?
[00:51:20] Chelsea Brennan: Oh boy. Oh boy. I totally, totally lost my train of thought. I don’t wa- I don’t know… This is a hard question. Um-
[00:51:26] John Lanza: We can come back to the question if you want.
[00:51:28] Chelsea Brennan: No, I think the b- I think the biggest answer was coming to my head here, John, is what do you want? Right? Um, that’s my big question to everybody that we meet, to everybody that we work with is, “What do you want your life to look like? In those quiet moments away from other people, what comes into your brain?” And take a moment and think about what do you want and start to reframe your choices around what you most deeply want and not what other people expect of you.
[00:51:56] John Lanza: I’m glad we waited for that response.
[00:51:58] Chelsea Brennan: [laughs]
[00:51:58] John Lanza: Thank you. Okay, so what is the one parenting and/or money smarts book or podcast or, frankly, any media, that you either, um, go back to or that you gift the most often that’s not yours? [laughs]
[00:52:13] Chelsea Brennan: Yeah. [laughs] I have not written a book, so, so we’re good on that. Uh, the book-
[00:52:17] John Lanza: [laughs]
[00:52:17] Chelsea Brennan: … I give every parent of young kids when their kids hit kinda three or four is The Opposite of Spoiled by Ron Lieber. I’m sure that book comes up on here a lot. I love his work and his philosophy. I think he has a very healthy relationship to money. I think a lot of allowance books and a lot of lessons focus on the dollars and cents and the, the math of it, and he really tie- ties into how are we building real life skills with money. And so, that’s the gift, the book I gift most often.
[00:52:43] John Lanza: Yeah, it’s a great book. Plus, it, it really ties into what we’re doing here, which is, is gives you all different types of stories that different parents are doing that you can kinda-
[00:52:51] Chelsea Brennan: Yep
[00:52:51] John Lanza: … grab and take what is gonna work for your family. All right. Well, you made it through the fast and fun round gauntlet, uh, Chelsea.
[00:53:00] Chelsea Brennan: [laughs]
[00:53:00] John Lanza: So, uh, how can people find you on social media and/or the web where I know you are very prolific?
[00:53:06] Chelsea Brennan: Absolutely. So, smartmoneymamas.com is our website. You can find us @smartmoneymamas, which is M-A-M-A-S, on almost every platform. Instagram’s probably where we spend the most time, so come and say hi.
[00:53:17] John Lanza: Fantastic. And is there any action that, uh, would be helpful to you or your audience, uh, that our audience can provide?
[00:53:27] Chelsea Brennan: I’d love to hear. Send me a, an email at chelsea@smartmoneymamas.com or send me a DM on Instagram and share with me what you most want your kids to learn about money. This is a question we ask our mamas all the time. What are we trying to teach them? And it really helps me see, you know, where can we frame good mindset lessons with our kids and things that we’re, we’re teaching over at Smart Money Mamas to what people are really trying to teach their kids.
[00:53:50] John Lanza: Fantastic. Chelsea, this was a wonderful conversation. I learned a lot and we got so much good, surprising, useful information, so I appreciate you taking your time and sharing your wisdom, uh, with us. Thanks.
[00:54:03] Chelsea Brennan: Thank you so much for having me. [upbeat music]
[00:54:07] John Lanza: That was a really fun conversation. Chelsea is really one of the clearer money thinkers I’ve come across. And I’ve come across a lot of really clear thinkers on this podcast. I thought it was an interesting idea to require kids to always have save and share goals. Of course, you know, they’re pretty early in their kids development, so it’s subject to change, but, uh, this approach makes sense. And it addresses this question we discussed with Kelly Mindel about kinda what to do once a goal is achieved and there’s that lull that naturally happens after that goal achievement. So, I like this concept. When Chelsea mentioned that the allowance amount should hit a sweet spot, it reminded me of, uh, David Owen, another very clear money thinker, and, uh, his point was that your kids should feel flush enough with money to be empowered to purchase the things they want. We don’t wanna give them too little of an allowance that they really don’t feel empowered at all. And I think it’s smart that she matches the share jar money. Uh, incentives just drive so much in life. And lastly, we mentioned the acronym FIRE, F-I-R-E, and I… We didn’t define it. FIRE stands for younger folks who are striving for financial independence, FI, so they can retire early, RE. That’s the FIRE movement. And that is a wrap. [upbeat music]
[00:55:41] John Lanza: I really appreciate you taking your valuable time to listen to this episode. I hope you found it useful. You can find detailed show notes for this and all past episodes at themoneymammals.com. That’s T-H-E M-O-N-E-Y-M-A-M-M-A-L-S .com. Just click the podcast and blog link at the top of our homepage to discover our entire podcast archive. And if you like my work here, please, please leave a rating, or even better, a review on whichever service that you use to stream these podcast episodes. You are part of our Money Smart movement, and this podcast plays an important role in that movement. Your rating and review will help other people like us find this material. And lastly, if you’d like three ideas to help you raise money smart kids delivered directly to your inbox each week, I think you’ll really love my weekly newsletter. Just click on the little purple circle with the chat icon at themoneymammals.com and select “Get Our Newsletter.” Of course, please consult with an investment or financial professional before engaging in any decisions that might affect your financial wellbeing. And until next time, don’t forget to enjoy the journey. [upbeat music]