Financial Wisdom for Parents and Graduates: Insights from Jean Chatzky

Jean Chatzky, a personal finance expert who is regularly featured on national television and has been a Today Show contributor for 25 years shares her financial expertise on the Living Ageless and Bold Podcast.

Introduction and Setting the Stage

Welcome to the Living Ageless and Bold podcast, where inspiring women share their experiences and journeys. Pour yourself a glass of wine or a cup of coffee, get comfortable, and let’s explore what can be achieved after 55.

In this episode, my guest is Jean Chatzky, a personal finance expert. Jean’s accomplishments include being the CEO and co-founder of HerMoney.com, hosting a podcast and a national radio show, and making appearances on The Today Show for over two decades.

We delve into the topic of adult children’s financial independence, starting with a humorous anecdote about adult children still being on family phone plans. We discuss the challenge of determining the right time to transition support for adult children and touch on the rising costs of living and student loans.

Navigating Financial Support for Adult Children

We explore the question of when to “rip off the band-aid” regarding financial support for adult children. We emphasize the importance of gauging both the children’s readiness for adult responsibilities and the parents’ ability to prioritize their financial goals, such as retirement.

The conversation turns to the financial struggles young adults face due to the increasing costs of living, stagnant wages in recent years, and the potential impact on parents’ future financial security. Jean stresses the balance between providing support and encouraging financial independence to avoid creating dependency.Teaching Financial Responsibility

I seek advice from Jean on teaching financial responsibility to high school graduates. Jean actually praises my method of giving my kids a monthly budget while also noting the importance of preparatory steps. She mentions that many young adults lack budgeting skills, necessitating guidance through allowances and gradual budgeting training.

Jean recommends gradually increasing financial responsibilities throughout middle and high school, giving kids controlled autonomy over their spending. By not providing them with unlimited funds and encouraging part-time work, kids learn the value of money earned through their effort and time.

Guiding Young Adults in Budgeting and Savings

By the time kids reach college, it’s crucial to evaluate how well they can budget their time. Jean elaborates on her own approach with her children. She shares that she had her kids allocate a portion of their summer earnings to cover expenses during the school year. Her daughter even entrusted Jean to handle her money on a weekly basis, ensuring responsible spending.

Transitioning to the post-college phase, Jean discusses helping her 28-year-old son create a budget when he moved to California for work. She emphasizes the significance of tracking spending patterns backward to build a forward-looking budget effectively. Jean and her son identified goals such as funding a Roth IRA while ensuring he had enough for his desired lifestyle.

During this process, Jean’s son expressed a need for $250 a month for Uber. Jean challenged him, considering he had a car, to which he explained its use for safe transportation after drinking. By reorganizing other resources, they met this demand, showcasing the importance of realigning spending. Jean mentions that this methodology influenced their “finance fix” coaching program, which empowers people to take control of their spending and achieve financial goals.

The conversation shifts to addressing recent graduates’ financial challenges. Jean highlights that money tends to flow too quickly in today’s swipe-and-dip culture. She introduces her “finance fix” coaching program, designed to provide participants with tools and guidance to regain control over their finances.

Structuring Finances for Young Professionals

I recall watching Jean on a TV show and share how she shared Jean’s advice with her daughter and friends. They discuss the struggles faced by recent graduates, who often earn the average starting salary of around $52,000. Jean provides guidelines for budgeting based on take-home pay:

Around 30-35% for housing expenses, which may vary in larger cities.
12.5% for transportation costs.
15% for savings, especially essential if a retirement plan offers matching contributions.
Another 12.5% for debt repayment, including student loans.
Lastly, 25% for personal spending and leisure activities.

Jean stresses that borrowing from one category to support another is acceptable, except for the 15% allocated to savings. She underlines the importance of grasping these financial principles, especially for younger individuals.

Guiding Parents and Young Adults Towards Financial Success

I share a personal story about her and her husband’s financial journey. While my husband wisely invested their savings from a young age, I learned from him how impactful early financial decisions can be. I also talk about co-signing credit cards for my kids and the unintended consequences on their credit scores due to a high utilization ratio. Jean provides valuable insight, emphasizing the importance of understanding how financial actions can influence credit scores.

Continuing the conversation, I ask Jean to elaborate on her five-step philosophy. Jean breaks down the philosophy as follows:

Step 1: Earn a Decent Living – Jean stresses that earning enough to comfortably support oneself is essential for a contented life. Research indicates that beyond a certain point, more money doesn’t significantly increase happiness.

Step 2: Spend Less Than You Make – It’s crucial to consistently spend less than what you earn. Jean highlights the significance of saving 15% of your income and investing it for future growth.

Step 3: Invest the Money You’re Not Spending – Jean underscores the need to make your money work for you through smart investments. She encourages taking advantage of retirement plans, like a 401(k) or Roth IRA, and consistently contributing to them.

Step 4: Protect Yourself and Your Family from Disaster – Jean stresses the importance of having a financial safety net, including an emergency fund and insurance coverage. Having these safeguards in place can help prevent financial setbacks from becoming devastating.

Step 5: Give Back – Jean advocates for integrating philanthropy into your financial journey. Whether through donating time or money, giving back to causes you care about can provide a sense of purpose and fulfillment.

These five steps, when followed diligently, create a solid foundation for financial success and security

Embracing the Future with Financial Wisdom

Jean concludes the interview with a discussion about the remaining steps of her financial philosophy. She highlights the importance of protecting the financial life you’ve built through proper insurance coverage and estate planning. Jean specifically advises on matters like renter’s insurance, disability policies, and life insurance, stressing that these steps should be taken with care and consideration of individual circumstances.

The conversation shifts to the topic of giving back. Jean emphasizes that giving doesn’t always have to involve financial contributions; contributing your time and expertise can also be impactful. I share my own experiences of giving back to her alma mater by offering my time and expertise to help students.

As the interview wraps up, We discuss the evolving phases of life as parents and empty nesters. Jean advises that this next phase will likely last longer than expected due to increased life expectancies. It’s essential to ensure a well-prepared financial plan that spans several decades. Jean encourages individuals to seek professional financial advice when they feel the need for a roadmap to meet their financial goals.

The interview concludes with Jean reflecting on her greatest accomplishment since turning 50—starting hermoney.com, a valuable resource that simplifies financial topics. Jean’s mission to demystify money and investing has been a significant achievement, resonating with many.

The final question of the interview explores Jean’s vision for the next 10 years. She envisions herself continuing her work, possibly with more free time for travel and personal pursuits like gardening. The interview ends on a note of empowerment and foresight, leaving listeners inspired to navigate their financial journeys with confidence.

Jean’s information is so valuable and she helps us not only with our kids but how to handle our finances after empty nest when we get our “raise.” She is showing us how to live ageless and bold.

Watch Jean’s full episode here: