Abby is Thirteen and She Understands Money Better Than You Do
As a fee only financial planner, I meet far too many adults who know shockingly little about money and personal finance.
A small sampling of the questions I hear reveals the knowledge gap: “What’s an index fund?” “What’s an IRA?” I’ve heard this one too – “I thought the stock market earned 10% a year?” Well yes, sometimes it does, just not ALL THE TIME.
Why this lack of knowledge? How did we get here?
Two thoughts spring to mind: the schools don’t teach our kids about money. And, parents are a little shaky on this topic too, owing to cultural taboos around talking about money. We’d sooner talk about our sex lives!
I wanted to find out if there were any young people – teenagers, specifically – who were at least marginally educated about money and finances. If we can get our kids squared away on money, then maybe there’s hope for adults. So I set out to interview some teens.
She’s Thirteen and She Loves Talking Money
Meet Abby – she’s 13, and she lives in San Rafael, California, one of the wealthiest counties in the country. Abby comes to the interview with her mother Claire, who co-owns the Hatch Network, a company that provides education for women entrepreneurs.
It becomes quickly apparent that young Abby is most definitely not your typical 13 year old. My first clue — she would love to talk about money, she tells me, and would be happy to meet with me for an interview. How many 13 year old girls do you know who’d say that?
Does her school provide any classes about personal finance or money?
Abby says a Junior Achievement program provided two classes about how to pick stocks and follow them in the newspaper. Other than those two classes, nothing else focused on personal finances.
Why did she like to learn about money? What sparked that interest?
Some time ago, when her mom (single and in her 20’s) had money troubles it made Abby curious to know more. It was tough for mom to make ends meet. Her mom was always honest and candid with Abby about their situation, explaining, always explaining.
Does She Read About Money?
Abby has read Rich Dad Poor Dad for Teenagers and the Automatic Millionaire. She pays attention to the financial news(!) Her interest in making a lot of money as an adult is not self-centered, she says. After she earns what she needs, she wants to give the rest to charity.
Does She Have Savings?
Abby has a savings account and wants to buy a CD with her $1400.00, but she thinks interest rates are too low to lock in a rate right now. She’s earning about .05 % on her savings account. She knows that’s a paltry amount and would like to earn more. The minimums for money market accounts, which pay a little bit better interest rate, are too high for her, so she’s biding her time.
Have I mentioned that Abby is 13 years old?
We talked about credit card debt and credit scores. Again, Abby was well versed. She knew that having a high credit score was very important and that the best way to maintain a high credit score was “to pay all your bills on time.” She knew about retirement accounts (401K’s and IRA’s), and what 529 plans were (her grandmother funds one for her). She also likes to follow certain stocks like Google and Apple.
In the Future: Musician, Secret Agent, Saver
Abby is a great student, she receives A’s and B’s in all her subjects. She earns money by doing odd jobs for her mom and she baby sits. She saves all her birthday and Christmas checks and immediately deposits them into her checking account. When she grows up she wants to be either a musician, a secret agent or, maybe a financial advisor.
Granted, Abby is not your typical 13 year old. She wouldn’t be typical as a 30 year old either. But her innate curiosity and intelligence, combined with her mother’s candor, patience, and teaching, have paid (and will continue to pay) huge dividends.
So the lesson is this: anyone, kids included, can learn more about money, and how to better manage their own finances. In an ideal world, the schools would teach personal finance and parents would reinforce the lessons initiated in the classroom.
So what about you? What did you learn about money as a young person? Are you teaching your children how to save and plan for the future? Any questions that I can answer for you?
Thanks for reading and stay tuned for more interviews in later blog posts.