Wells Fargo’s Arne Boudewyn and host Michael Liersch discuss actions to take to increase our comfort in talking about money across generations.
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Transcript:
[MICHAEL:] Hey, humans. I’m Michael Liersch, and this is the About Money podcast presented by Wells Fargo. I’m a behavioral scientist with a PhD in cognitive Psychology who loves openly discussing money to help humans better understand their money behaviors.By understanding our money behaviors, we all have the opportunity to make better money decisions. This season, we’re going to talk about jobs money can do for us. Jobs, you might ask? Yes. Money does many jobs for us. Such as helping us with our family, lifestyle, the community, aging, travel, investing, and more.
We have a great lineup of guests for you, so let’s get into it.
In this episode, we’re going to speak with Arne Boudewyn, Head of Family Wealth and Culture Services at Wells Fargo. You may be asking yourself, what does that mean? Well, Arne spent the first part of his career on his Ph.D. and training in clinical psychology. After various roles at Kaiser and at Wells Fargo, he’s spent the most recent part of his career helping families understand how to create a culture where they can achieve their intent for their wealth. I’m so excited to speak with Arne, because he can help us answer the question we’re asking in this episode: How do I make money work for my family?
To answer this question, we’re going to address why communication about money in families is so important, what the pros and cons of communicating about money are, and how we can take action to share information about money in our families, especially across generations.
Arne, welcome to the Wells Fargo About Money podcast.
[Arne:] Thank you, Michael. I’m happy to be here. And as you said, it’s such an important topic. And I’m really looking forward to our dialogue today. [Michael:] So, Arne, let’s just get right into it. I’d like to start with some data around why it’s so important to focus on money in families. And the reason why I’m asking is, I have a lot of clients and, frankly, just human beings in general, Arne, say why should I talk about this? What’s the purpose of talking about money in families?Tell us some data around that to convince us that we should be doing this, Arne.
[Arne:] Absolutely, Michael, and I think some of the recent data in particular is very helpful. We’ll also get to some of the whys around the difficult money conversations in a bit here. But, you know, what I’d say just to start is, it’s a long-term process to understand money, just like it is to learn to read. And that process best starts in early childhood.And that means just taking the time to educate our families in the fundamentals of money management, just as we prepare them for other skills they’ll need in adulthood. And, you know, we cannot assume in our households that our children will learn good money values or attitudes and skills unless we actually take the time to teach them. And that’s one of the most important ways we can make money work for our families.
And we’re starting to see some evidence around the benefits of this in the data. For example, there was a recent study that was conducted by a pretty well-regarded non-profit organization.1 They focus on financial literacy. And they highlight the great opportunity that exists for all families. And so, what they did in this study is they found a discrepancy between parents and their high school-aged children when they were both asked how do young people learn about the role of money and basic money management concepts.
And interestingly, Michael, in the study, 80% of the parents that were surveyed, they said their children learn everything they need to know about money in school. And yet, 90% of the students, the children of these very same parents, they said whatever they know about money they learned from their parents.1 And that’s an important insight.
[Michael:] Oh, wow.Yeah, right there, if we don’t take the time to teach our families about money, who will? And what can happen if we don’t teach them?
[Michael:] I have a follow-up question there. [Arne:] Sure. [Michael:] In that domain, and this wouldn’t be the only discrepancy between parents and their teens, I’m sure, right? [Arne:] That’s right. [Michael:] In terms of what each of them think is going on in terms of learning. I guess my question for you is, where does that all go? So, if teens are really learning from their parents, and parents think their teens are learning from schools, then it feels like the parents may not be being as intentional.So, what are the teens really saying?
[Arne:] Yeah, absolutely, Michael. And there’s actually some good news here that came out of a recent Wells Fargo study. You know, nearly all parents and their teenagers agree that high school should teach students more about personal finance because otherwise, we’re also finding from other data that teenagers today, they’re getting exposed to a lot of information from so-called personal finance experts on social media. And there’s data that shows that one out of seven times, they’re getting erroneous or misleading information about finance.2And the good news is, out of that same study, Michael, parents are increasingly making their children’s financial education their responsibility. Again, a household responsibility. About six in 10 parents in our study said they’re having money conversations with their kids. And there’s promise in parents thinking more about money and money conversations in the context of family. The data says they’re starting to do it more and more.
[Michael:] Well, that’s great news. But I do want to go back to this idea of, if the parents aren’t involved, where are their kids getting the information, and I’m assuming if they’re searching for it, it’s probably not just their peers. Because probably their peers might not know. So, they must be getting it from, what? Like Tik-Tok?But where, where are these young people getting their financial information? And so, for those listening who are young, they probably already know this and are laughing at me, Arne. But, for the parents who are listening maybe they don’t know so please share that with us if you can.
[Arne:] Yeah. Absolutely. There’s another study. And let’s call that generation Gen Z just for the purposes of our conversation. That study that I just referenced shows that teenagers are craving the education, and they’re turning to social media for financial information more and more.3 In fact, they’re turning to social media for personal finance and investing information even though they themselves don’t trust these platforms, according to survey data. Nearly half of teens are learning about investing from social media, but they also rank it as one of the least trustworthy sources for investing advice. [Michael:] So, Arne, that’s very revealing in terms of where young people are getting their information. And to your point, at the very least, it’s hard to credentialize, especially in terms of whether those sources are really in line with the family values, because that’s a big part of this, too, isn’t it? [Arne:] Absolutely. It’s so fundamental that we talk about money values and really start to impart those and where those values came from as part of the education process. [Michael:] So, I think that leads me to my next question, which is within the context, then, of all this information coming in different ways, and maybe different people having different perspectives and values around that information and navigating it all, there must be some conflict here.And so, what kind of money topics do you see families struggle with most? Can you share that with us and why?
[Arne:] Absolutely. And you know, we all, I think, agree, and the purpose of this podcast is really to talk about how communicating about finances is one of the ways you can make money work for your family, your community, and yourself. And yet, so many families, as you referenced, they struggle with these conversations.And sometimes, the concern in, as I talk to adults around the country, is that their children will somehow become complacent if they have that conversation, or anxious, or perhaps frustrated, and that they won’t build a solid understanding and appreciation for what can or cannot be provided, you know, within the family context. And yet, avoiding those conversations is such a lost opportunity, Michael, because it’s really an opportunity to impart your values and showcase the behaviors that can lead your children towards managing their own financial lives over time.
So, what is the reason that human beings struggle with these conversations? And you noted in one of your earlier About Money podcasts just the challenges around communicating about money that often stem from feeling like money is a taboo topic. And I talk to many people who carry a deeply-held conviction that talking about money with children is inappropriate in some way.
And here, I would just point to the data I mentioned earlier. We’re learning that kids are hungry for this financial education. That’s a promising trend given the dearth of financial literacy around the country. And we’ve got to go with that energy and try to really nurture it and empower those kids.
Just look at it instead as an amazing opportunity to empower young people in your household to feel financially fluent and confident and competent. And I like to use, Michael, a little exercise sometimes. And I’ll ask an adult or parent to think of themselves as a school-aged child. So, let me ask our listeners to do that right now. And Michael, maybe you too.
[Michael:] I’m doing it. [Arne:] I want you to think of yourself when you were about 13 years old, okay? [Michael:] Okay, 13. [Arne:] Alright. Beginning of teen-hood. And think about the two most important things you, as an adult, would tell your 13-year-old teenaged self, if you could, to educate them about money. Just think about that. [Michael:] Wow. And do you want me to answer that question right now? [Arne:] Absolutely. I’d love to know what came up for you, Michael. [Michael:] So, for me, I would educate them on– and I do have a daughter, Amelia, which our listeners know who’ve listen to the About Money podcast before. I think financial independence and financial resilience are the two topics that I would highlight most. And I came from a very financially, let’s call it challenged household, Arne. And so, I want Amelia to understand how to be resilient, and through that resilience, be an independent person when it comes to her and her money so that she can own her decisions and also function as a human being that doesn’t necessarily need to rely on other people.I mean, she can, if she chooses to. But if she has a situation where she can’t rely on others, that she can make her own way when it comes to money. Does that make sense at all, Arne?
[Arne:] It does, Michael, and you speak so well to that concept of sort of financial literacy and also financial competence, and the confidence that comes with it. That sense of agency and power that comes with knowledge about money and money concepts. [Michael:] So, with that in mind, tell us what– you know, I gave you my perspective, and our listeners have their own. So, what topics do you feel are most critical to address, you know, when it comes to parents and their kids. And frankly, we do have kids who listen.What are those topics that are most important to address, you know, the parents to kids, kids to parents?
[Arne:] Yeah, absolutely. And I recommend that parents start early. That’s one of my main messages today. And then, really expand the lessons as their children mature. Teaching your children about money management, providing opportunities for them to actually take responsibility and accountability for money. That really helps set the stage for some of the later conversations around more sophisticated topics like investing, for example, or how to use credit responsibly. Even how to save for retirement.And it’s important to frame those messages in ways that match where your children are developmentally. Think about their ages; think about their learning styles; think about where they are in their life and their life experiences. And that can help shape the kinds of messages that you deliver to them and some of those teachable moments that come up as part of their development. And some of the early lessons in terms of topics with children, they can include things like fostering the spirit of philanthropy or giving by either donating time or donating money.
And promoting hard work is also an important topic instilling that sound work ethic, Michael. That helps children understand that entitlement does not outweigh responsibility. And I’d say providing opportunities for older children, even young adults, to have a role and a voice in some of the family financial discussions. That really helps to build upon and advance their wealth education.
And in terms of how to style these conversations, if you will, I’d say some of the best practices here are be candid. You know, those money conversations can feel challenging or awkward or taboo as we’ve mentioned. Always err on the side of being as open and honest and transparent as you can. Provide the context and the meaning to the money you have as a family. You know, you can even talk about the history of money in your family. Discussions about some of your family values and even expressing some of your hopes, you know, and fears around what money can do for your children or your grandchildren. It’s great to be candid that way.
And that kind of open conversation really puts the importance on the topic.
So, I’d say, too, that you know, sharing messages in stages really helps to alleviate many of the concerns about sharing too much too soon. You know, you can control the message. You can control the timing of the money conversations. But give them that important information about money values, and really think of it as a lifelong process and something you build to over time.
[Michael:] So, Arne, let me ask you– So, you have conversations about money– candid conversations that are open. What if family members feel like it goes too far, like how much do you make? What’s in our balance sheet? How much do I get? What do you do then, Arne? [Arne:] Yeah, and Michael, you know, it’s interesting you bring that up, because I think that is one of the things that parents or grandparents struggle with– how much to share. I don’t recommend talking about dollars or cents or specifics of balance sheets or net worth. What I do recommend is talk about the architecture of your financial life.Here are some of the things we’ve done as a family, as parents, to manage our financial lives, whether those be retirement savings, whether they be investments that are outside of retirement, whether they are savings or deposits, whether they’re investments in things like, you know, paying off a mortgage early or always buying things with cash or with low interest rates. Those are the types of architecture comments that can help parents sort of avoid actual dollars and cents discussions.
And I think realistically, parents do have a right to control their own personal financial information. But that doesn’t take away the opportunity to still provide a really in-depth financial education for kids around what you’re doing, as a parent, to manage your own financial life, and also to take care of your kids.
[Michael:] So, with that in mind, we didn’t hit on what kids can do to drive money conversations with their parents. Can you just touch on that really quickly, Arne? [Arne:] Absolutely. And I’m going to talk about teens, since we talked about so many data points about their eagerness and energy around the topic of financial education. [Michael:] Perfect. [Arne:] I recommend three topics for teens to address in their conversations with parents. And I’m going to frame these as questions.Number one: How can I learn more about what I need to know as a young person about money and what it can do for me?
Number two: What should I expect to pay for myself versus what you as my parents will pay for me? Now, that’s more of a middle adolescent conversation. But the types of questions and conversations that teens should be initiating with their parents around things like what is the cost share or what kind of support will be available for things like major purchases? Or even my education? Will you pay for college? Will you help me? And should I really think about creating the financial success and the empowerment of my college on my own? Maybe it’s even a first phone or a car. And so, those kinds of conversations.
And then, third I would say, teens can really benefit from asking their parents about the biggest financial mistakes they have made in their lives and what they learned from it. These kind of real-world examples are critical to share, and a lot of parents don’t want to share about financial mistakes with kids. I think it’s one of the best lessons you can impart to them.
[Michael:] You know, it’s interesting you say that. That’s being very vulnerable as a parent, Arne.And so, I agree with you coming across as someone who is open to having those authentic conversations also allows children to express the mistakes they are concerned with making, and that they have made, so that everyone can collaborate. So, I love all of those ideas.
So, Arne, what are some ways that our listeners can take action right now? What would you do here?
[Arne:] Michael, I have five recommendations. So, consider them five strategies, if you will. And I’m going to list them off and briefly describe them.Number one: Have conversations. Start having those regular talks, whether it’s around the dinner table, about things like savings, accounts, budgeting. Just pick any words around money; you can talk about the difference between checks and credit cards and cash. You can talk about any concept. And remember, you’re not trying to get them to really remember all of the concepts as just being comfortable talking about it.
Number two: I would just remind people that it’s really helpful to engage your children together in payment transactions. Think about all the times that you pay for something as a parent, and your children are right there. They’re present. And whether it’s a regular opportunity to show them what you’re checking out and buying at the grocery store or what you’re purchasing for their own school supplies, it’s a great teaching opportunity. Think about how to describe what you’re paying, how it fits in your family budget, and get them talking about it and engaged.
Number three: The importance of an allowance. You know, by the time your kids are six, seven years old, you can give them an allowance. And it’s really nice to tie that to some of the things that they have to do to earn it, whether it’s chores around the house, household errands, cleaning their rooms. Kids learn very quickly that they can tie effort and input to financial rewards. And that’s an important lesson that’ll carry through with them for the rest of their lives.
In terms of saving, I also recommend with the allowance, have a discussion with your child about potentially dividing their allowance into three buckets. One bucket for spending, one for saving, and another bucket that is for helping others or philanthropy. Those are important early money behaviors.
Number four, Michael: I would say, don’t forget to make your children use their own money. You know, one of my friends recently did this with his son, who felt like a million bucks when he went up to the cash register and paid for a special item on his own.
[Michael:] Arne, can you describe, what was that item? I’m sorry to interrupt, I have to know, though. What was it? [Arne:] Yeah, absolutely. In this case, it was a guitar. And so, a musically-inclined son. Dad and Mom were willing to buy the son a guitar if he earned the majority of the money himself. [Michael:] Wow. Okay. Keep going. I just wanted to know what it was. And sometimes those examples, right, put those ideas in our head of things we bought ourselves to your point, and how empowering and exciting that was to have that feeling of ownership and that you earned it. [Arne:] And so, Michael, last but not least, don’t forget about philanthropy or giving. It’s such a great opportunity to talk about money. Let your kids know what you’re doing to give back, and talk about how they can raise money to help or donate their time to really embody that philanthropic spirit.So, those five strategies I’d recommend highly. And they’re all actionable today.
[Michael:] And so, what’s interesting about that, Arne, is that there’s a lot of those strategies that we all intuitively are aware of, but we may not use or utilize to the extent that we could in our families.So with that, if someone is really looking for advice and guidance right now about where to get started with those types of strategies or maybe they still feel like there’s some inertia, where can they turn first to get that kind of help right now?
[Arne:] Yeah, I think that’s a really great question, Michael. And I have a couple of thoughts here. First of all, as you mentioned on one of your prior podcasts, it’s really important for us to do a few minutes of introspection, and ask ourselves what is getting in the way of having those money conversations.And I would just say, think about all the faculty or teachers that may be around and available in your life, starting with other parents, good friends. Anyone who has kids has to consider these same conversations. And I always recommend, talk with other parents about the strategies that they’ve used. What are some of the best practices that they’ve used to have those conversations and really help empower their kids?
The other thing I would say is, if you do find that you’ve got a serious challenge around having these conversations– literally, you feel like you’re blocked from being able to take action– well, then, I would suggest talk to a counselor.
Talk to someone who’s in a position as a trusted friend or advisor or counselor about how to get past that and really move towards having those healthy conversations around money.
And, you know, I’d also add, too, for families that are working with financial advisors, absolutely consider your advisor as part of the faculty or teaching group around money management and those concepts.
They can be really helpful
So, a couple of ideas there.
[Michael:] So, one final question for you, Arne. Why do you like focusing on this idea of helping families navigate the challenges and the opportunities of wealth? What drives you to do that each and every day? [Arne:] I am passionate about this topic, Michael. And you know, there’s so much that families can do within their households to really educate and empower their children. And that empowerment can carry through throughout their financial lives.And I had the benefit of that myself as a young person, from my own parents. They took the time to teach me and my two brothers about money and what it could do. They shared about some of the mistakes and lessons learned in their own financial lives. And those early lessons have truly– and I can say truly–they have shaped my own relationship with money. They’ve actually influenced my money behaviors throughout the rest of my life. And I’m really grateful for this, and I want to find other families to help make money work for them in similar ways.
[Michael:] Wow, Arne, that’s called paying it forward, I think, right? [Arne:] Absolutely. My parents paid it forward for me, and we all have an opportunity to continue to discuss and dialogue around conversations around money. So, start anywhere. And good luck to you on the road. [Michael:] Arne, thank you so much for being here today and sharing your thoughts around money and family. [Arne:] It was my pleasure to be here today, Michael. It’s such an important topic and there’s so many great strategies that are available for families to take action. I hope everyone got something out of our discussion today, and that they can put those ideas into place with their families and really start that journey around financial education. It’s so important to all of us. So, thanks for having me. [Michael:] Thank you Arne. We are so grateful.That’s it for this episode of the About Money Podcast. Please email us with the topics that you while like us to address, at aboutmoney@wellsfargo.com, and if you really liked the episode, share it with family, friends, and anyone who listens to podcasts.
About Money is produced by Wells Fargo. You can learn more about ways to work with us at WellsFargo.com/AboutMoney. I’m Michael Liersch, asking you to talk about money today.
2 Wells Fargo Newsroom – Social Media Increases Teenage Interest in Wall Street, Wells Fargo Survey Finds (wf.com)
3 Celebrate Financial Literacy Month with Your Kids and Teens | Greenlight
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