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Episode Summary
On this episode, I chat with John Lanza. John is a well-known expert on youth financial literacy, and the co-founder of Money Mammals, a company on a mission to help parents raise money-smart kids. He is also the author of The Art of Allowance, a book that teaches parents how to set their kids up for financial success at an early age. John has spent over a decade talking to parent groups and credit unions about the importance of raising money-smart kids. He teaches the value of starting money-smart conversations early to empower youth and families to be wise about their finances.
In this conversation, John shares the dos and don’ts behind an allowance that works and sticks. He talks about the biggest mistakes parents make when they teach their kids about money and the best age to start teaching your kids financial literacy that will last them the rest of their lives. We discuss his techniques to help children distinguish between needs and wants to help raise non-spoiled financially autonomous children. John gives great advice to parents with teens who compare themselves with peers, to better understand the value of larger purchases. If you have kids in your life you’d like to start teaching the art and science of money, you’ll wish to listen in.
John’s Three Jar Method
When it comes to starting your children’s financial journey, John has a three jar method as a starter financial framework:
- The Save jar – teaching children to pay themselves first
- The Share jar – to understand charitable giving
- The Spend Smart Jar – giving children spending power to buy small items
John’s Three Fundamental Principals
All parents frameworks are not exact, but there are three core principals that should be a part of every plan:
- Distinguishing between needs and wants
- Setting and saving for goals
- Being intentional about choices and making money-smart decisions
Using the S.M.A.R.T Goals Method
When teaching children about the value of purchases, using this acronym can help children understand how to set a goal for saving and successfully reach it while getting a feel for planning to reach their goal.
Specific – setting a specific goal to reach
Measurable – being able to measure progress to reach the goal
Attainable – understanding what’s attainable
Relevant – Is the purchase relative to their wants or needs
Time-based – understanding the time it takes to reach the goal
Listen Now
You can also click on the timestamps below to jump to those specific points in the conversation.
What We Covered
- [3:25] – John shares about himself and what led him to educate
- [7:14] – When to start giving children an allowance and the three jars to start with
- [10:29] – The three core money-smart principals for children to understand
- [13:22] – Putting a cap on how much children get and allowance being tied to chores
- [22:34] – A good age to introduce money skills to children and emergent financial literacy
- [27:28] – Should you share household financial info with your children?
- [33:23] – Dealing with children getting older and comparison of their peers
- [39:20] – Regardless of what’s taught in school it’s important to set the groundwork
- [42:47] – How do you factor in debt when educating children?
- [48:28] – If you really knew John you would know that…
- [48:56] – Something John is most proud of
- [49:38] – John’s myth-busting
Tweetables
[Tweet “You’re gonna have to address it at some point and the earlier the better.“]
[Tweet “The combination of the learning and the real money is where the rubber meets the road.“]
Links Mentioned
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