237 | 3 Money Skills to Raise Financially Empowered Kids with John Lanza

John Lanza


Welcome to episode 237 of Love, your Money! In this episode, I’m sitting down with John Lanza, the creator of The Money Mammals, a comprehensive program that helps parents raise money-smart kids. He’s also the author of “The Art of Allowance,” which helps parents raise financially empowered children of any age.


Raising financially savvy children can be challenging no matter where you are in your wealth journey as a parent. If you’ve struggled financially, you don’t want to pass any bad habits to your kids. And yet, if you’re financially successful, you’re likely trying to avoid raising spoiled kids.


In today’s episode, you’ll hear about the dangers of making money a taboo topic in the house, strategies for using allowance as an educational tool, and the 3 core money skills to expose your kids to.

Here’s what you’ll find out in this week’s episode of Love, your Money:

  • The best ways to teach our children about money.
  • Finding a balance between advising kids on purchases vs giving them autonomy.
  • Dealing with the allowance question. Linked to chores or not?
  • How to incorporate life lessons into teaching kids about money.
  • How to teach awareness of investing and saving for college.
  • Tips to help avoid raising spoiled kids.
  • Using visualization as a tool to help kids reach their financial goals.
  • The key to it all: Have an open dialogue with kids about money.

Inspiring Quotes

“The mistakes they make now will help them learn versus making mistakes when the stakes are much higher as they get older. If they haven't had exposure to money and suddenly they have a job and this windfall comes in and they haven't developed good money habits, that can be dangerous.”

“By opening up the conversation, you are already starting to break down any taboos with talking about money with your kids, and by having them have that allowance and having had that experience which might be considered a failure or a mistake, that's part of the building blocks of success for them later.”

“Part of the beauty of this process is that it's not just about educating your kids. It's about getting the whole family mindset more coordinated.”

“Regardless of where you are on the economic spectrum, the purpose is to teach your kids to gain control of money. You don't want the money to have control of them.”

“When you start talking to your kids about these basics, it does provide a different lens to look at your own finances.”

“If there are no limits, it's going to be hard for any kid to have any real kind of comfort with money.”

Resources and Related to Love, your Money Content

Enjoy the Show?



Hilary Hendershott: Well hey there, money lover. Today, I’m excited to share with you a timeless episode from our podcast archives. Today’s show is on a topic I get asked about more frequently than almost any other, it’s how to empower kids with money. Please enjoy this conversation with youth financial literacy expert, John Lanza. Here we go!




Hilary Hendershott: Here is a topic I get so many questions about, and I’m pleased to be able to cover the idea of how to raise money-savvy kids. I think many of the listeners of this show maybe had money struggles, and you want to make sure you don’t pass those along to your kids. Well, I have covered those topics in a cursory way but we’ve got an expert here. I’ve got with me on the line, John Lanza. He’s the chief mammal of the Money Mammals and author of the new book for parents, The Art of Allowance: A Short Practical Guide to Raising Money-Smart, Money-Empowered Kids. Very cool. So, he’s a pioneer in youth money smarts.


John created the original Money Mammals DVD and he’s written three children’s picture books to help kids learn to share and save and spend smart. And I went and listened to the Money Mammals video, and I can tell this song will be sung in my home very soon. He is recognized nationally as a youth financial literacy expert, and The Money Mammals have been featured in The New York Times, The Wall Street Journal, and the LA Times. Welcome to the show, John.


John Lanza: Well, thank you, Hilary. Thanks for having me.


Hilary Hendershott: Did I say your last name right? Is it Lanza?


John Lanza: Yeah. You can say it either way. I tend to say Le-nza. Some people say Luh-nza.


Hilary Hendershott: Like Tony Danza.


John Lanza: Right. Exactly.


Hilary Hendershott: I got it.


John Lanza: Whatever works. The most famous Lanza is Mario Lanza, the singer, and his usually pronounced Luh-nza. So, who am I to try to pronounce it?


Hilary Hendershott: Okay. Well, I didn’t ruin it. So, John, how did you decide to become an expert on teaching, on empowering kids about money? How did this happen?


John Lanza: Well, it happened when my wife and I, our now 15-year-old, we were discussing what we wanted for our then six-month-old. This is a number of years ago, obviously, and we were talking about the fact that what was odd was my wife, she’s really the original money mammal. She’s always been smart about money. She’s that kind of an aunt that would buy her nieces and nephews savings bonds when people used to do that.


Hilary Hendershott: With the actual paper bond.


John Lanza: With the actual paper bond.


Hilary Hendershott: Yeah.


John Lanza: And that’s what she would do. And so, for example, just to give you an idea, she bought her first car in cash when she was 24 years old. And she just had that. And I, on the other hand, was not that way. I bought my first computer for about $2,000. I ended up paying 3,000 because I bought it brilliantly on a credit card. I was like, “Oh, I have to have this. I’m going to get it.” And that’s what I did. It was not very smart. I quickly got into the mode of not knowingly carrying a balance after that but that’s a harder lesson to learn. And the thing that was odd was that we both came from pretty frugal families, and my dad’s a banker. So, we thought to ourselves, like, how can we get or we knew we wanted to raise our kids to be money smart. And we thought, “Well, how can we do that?” I came from entertainment education.


And we kind of quickly zeroed in on this idea, “Well, why don’t we talk to them early but make it fun for them, teach them that it can be fun, and also that there’s more to money than spending.” And that’s kind of how The Money Mammals came about was just through this kind of conversation and how can we teach our kids. We realized it’s not just our kids. Let’s try to do this for kids everywhere.


Hilary Hendershott: So, your evidence that your model works is, is it n2 or have you replicated this out? Have you tested it or is it anecdotal? Tell me a little bit about that.


John Lanza: Yeah. So, we can’t sit here and say that we have some kind of long-term study on it but there is a lot of evidence to suggest that you should be talking to your kids about money early. And we have certainly talked to a number of kids about it. We have obviously used our kids as kind of guinea pigs for this. But one of the things that we looked into is this concept. So, you probably know the concept of emergent literacy. If you haven’t heard of the concept, it’s the reason that we read to our kids from a very young age because we now know that exposure to language, whether or not they’re understanding what you’re talking to them or reading to them about, is important for their later literacy, reading and writing.


And there is a term called emergent financial literacy. And it’s a similar type of thing, which is you want to expose kids to messages. And in this case, really messages that are other than spending because they’re going to get that from the media that’s out there from a very young age. They’re going to get the media messages. They’re going to get the consuming messages. So, you want to get kind of in their heads with messages other than spending. And so, we talk about spending smart, sharing, or charitable giving and saving.


Hilary Hendershott: Okay. Perfect. And so, do you have rules of thumb for kids in terms of how to allocate between those categories, or is it just that they need to understand that you have to give your dollars a job?


John Lanza: Yeah. We do have a basic rule of thumb where we use the allowance, right? The allowance is really the key element. And the reason that you want to use an allowance is that kids are not going to learn about money unless they’re actually practicing with money, right?


Hilary Hendershott: Right.


John Lanza: And so, the general rule of thumb that pretty much anybody who talks about allowance talks about is using $5, for example, for a five-year-old. So, it’s a dollar per week per age of a child. And you can adjust that for what you feel like works for your kid. But what you don’t want to do is you don’t want to go with too little allowance because that’s going to end up being under-empowering. And I see that sometimes with people where they just feel uncomfortable giving their kids some money to practice with but that’s going to be a problem because they have to have some money and they have to be prepared. You have to be prepared to give them some control and allow them to make some mistakes.


Because the mistakes now when you’re considering getting $5 a week, it’s not a ton of money. The mistakes that they make now will help them learn versus making mistakes when the stakes are much higher as they get older. If they haven’t had exposure to money and suddenly they have a job and this windfall comes in and they haven’t developed good money habits, that can be dangerous.


Hilary Hendershott: Good point. And so, you talked about a five-year-old. And let me just confirm you’re saying $5 per week. So, that would be essentially $20 a month for a five-year-old.


John Lanza: Yeah, essentially.


Hilary Hendershott: And do you think five is a good age to start?


John Lanza: Yeah. Five is a pretty good age to start. And it doesn’t mean you missed the boat if your kid is seven and you start.


Hilary Hendershott: Okay. Good.


John Lanza: You’re going to be okay. But five is good. I can tell you anecdotally, we started at four with our older one. That was a little early but I just had a woman on my podcast. She also is a money educator but she started as four with her kid, and that’s working out okay. So, that range, I think five is just a good range. And then what we do is we break the allowance up into three jars. So, people may be familiar with these. So, we have kind of the share or charitable giving, the save jar, and then the spend smart jar. And the idea behind each of them is so you take the $5. What we would do is we put one in to save and that’s kind of teaching them the maxim of pay yourself first, which, as you know, is kind of the bedrock of any financial plan, right?


Hilary Hendershott: It is the bedrock of financial health, certainly.


John Lanza: Exactly. So, you’re kind of nudging them to do that. And then the second what we’re opting them into that concept, and then the next one would be a dollar into the share jar. And the idea here is you are nudging them or opting them into this concept that it’s good to engage in charitable giving or giving back. And so, they’re starting to collect money now in their share jar. And then the additional $3 jar can go anywhere. They tend to, originally, will go into the spend jar, into the spend smart jar. And then they have autonomy over any of the money in the spend smart jar. So, that means if you go to the store, they can bring that $3 with them and they can spend it on whatever the heck they want.


Hilary Hendershott: Then why is it called Spend Smart if it’s spend on whatever you want?


John Lanza: That’s a very good question. So, it’s an aspirational term.


Hilary Hendershott: We just want smart to be associated with the word spend in their mind.


John Lanza: That’s exactly what you’re trying to do. And the thing is like when you go to the store, so if you see them they’re going to sometimes blow their money on stuff that you’d be like, “Uh.” And you can certainly advise them but you just have to be careful of not letting them have autonomy over that. And so, for example, we would have I remember one of my kids bought, I think in the book I call it like my colorful unicorn set. So, it’s not a real thing but it’s something that they bought and within a week or two, they were bored of it. Right? It just becomes something that we give away or we try to sell at a garage sale. And it’s at that point that you have the conversation to say, “Maybe this wasn’t necessarily the best purchase or maybe think about it next time.”


But what’s good about it is by opening up the conversation, you now are already starting to break down any taboos with talking about money with your kids, and by having them have that allowance and having had that experience which might be considered a failure or a mistake, that’s kind of part of the building blocks to success for them later because it gives you a context to have a conversation with them. And it’s not like this is going to be necessarily an in-depth conversation with your 5 or 6-year-old. It’s just a reference point if that makes sense.


Hilary Hendershott: Okay. And so, there’s this hot topic, the question about allowance. Do you tie allowance to chores or do you just give them the money?


John Lanza: So, the allowance I think the reason this is such a hot-button issue is that the term allowance feels weighty. And I think an allowance is people get concerned about it because they don’t want their kids to have a handout, but it’s only a handout if there’s not a purpose behind it. So, what we try to do is provide parents who are creating these systems with a why behind it. There’s a reason why you’re doing this. And the reason is and you’re very explicit with this with your kids and we were explicit with our kids to say, “We’re giving you this money to teach you to become money smart.” And you do that every time you hand them an allowance. And I’m not saying you’re going to make mistakes and forget to say it one week and that’s fine. That’s not a big deal. You got to kind of go easy on yourself.


But the point is you want to consistently be telling them that this is not a handout. This is something that we’re giving you to learn to become comfortable with and take control of money. And we do not tie it to chores, at least not basic chores around the house. And there’s a few reasons why we don’t do that. One, they don’t really have the choice to opt out of those chores. So, say now our 15-year-old is making some money doing babysitting or whatever she is doing. She may say, “Oh, well, I don’t need the money from the chores, so I’m going to stop making my bed.”


Hilary Hendershott: “Forget you. I don’t need the $5, dad. I’ve been saving since I was five years old. I’m done making my bed.”


John Lanza: Right, exactly. They can’t opt out of that. So, you’re kind of presenting them a false choice if you are requiring them to do that and then if you’re paying them to do that and then not allowing them to opt-out. So, that’s one. Two, the other thing is there’s just a lot of negativity surrounding chores. And that may just be our problem as parents, but you’re going to have conflict with chores, and we’re trying to reduce the negativity around money as much as possible. And so, you reduce the money conflict by pulling chores out and you’re going to have conflict with chores, especially with teenagers.


Hilary Hendershott: That’s your next book, right?


John Lanza: Exactly. Why set yourself up? Let’s just have the money conversations separate from that. That doesn’t mean that they can’t do what have been described as kind of above and beyond chores, where there are things that you might pay someone else to do, for example, washing the car or cleaning the yard. They can make money from that. And then the thing is that that’s a different lesson. So, that’s the lesson that you need to work to earn your money. And if you understand that there are two different lessons that they’re being taught, chores teach this lesson, allowance teaches another one, I think it’s easier to separate them out.


Hilary Hendershott: Okay. So, then at what point do you think they should learn about needing to work to earn money? Or are you thinking just send them out on the job world at some point?


John Lanza: They will start to want to work to make money when they’re going to want to get things or do stuff with their money that they can’t accomplish with the allowance that they have.


Hilary Hendershott: I see. So, keep the allowance fairly small.


John Lanza: Yeah. Well, there’s two things. In the beginning, we keep it small. So, up to say age 10, we’re just following that same mantra. So, it’s going a seven-year-old gets $7 a week and then at nine, $9 a week. We do get into what’s called a breakthrough allowance. And this is where they now are going to get a larger allowance. You give it to them on a monthly basis, not a weekly basis, and they will get more money, but they have a lot more responsibility. So, now, for example, I’ll just give you an example. My 12-year-old gets $100 a month. That sounds like a lot of money but it’s really not because she has to pay for her phone, clothes. She has to pay for any food kind of out if she’s out with her friends. And that’s not like…


Hilary Hendershott: That’s not a lot of money for those three things.


John Lanza: No, it’s not a lot of money. And the other thing about that is we negotiate that amount with them and they have to pay for gifts for their friends. So, they have to sit down and say, “Okay. I’m going to have this many birthday parties and I want to buy X amount of gifts, and I want to pay X amount of dollars.” And then that’s a negotiation. So, with our older daughter, she wanted to pay $25 per gift and we said, “No. We’ll do $20 per gift.” And that’s how we kind of went back and forth on the budget for her. And that’s how you come up with that number and the reason you want to pay them on a per monthly basis is that you want them to get used to getting that kind of relative windfall that you might get with a paycheck, and they have to manage it.


And typically, what will happen and I find this from talking to parents who we’re doing this and I’ve seen it with my kids is they, in the beginning, they will blow more of their money at the beginning of the month. And then as they start to understand how this works, they get smarter about spending that money properly over the course of the month, if that makes sense.


Hilary Hendershott: It does make sense. And really, John, how does she pay for her cell phone, gifts, clothes, and food out on $100 a month? How much is her cell phone bill?


John Lanza: Well, she’s only paying the portion of it. So, her cell phone bill right now is 27. That’s how much it is.


Hilary Hendershott: Okay.


John Lanza: Yeah. She’s got the easy kid version of it.


Hilary Hendershott: I got it.


John Lanza: But when that goes up, we add that to what she’s paying, and it’s up to her to kind of come back and say, “Whoa, wait a second. Hold on a second. We need to discuss the allowance.” And then it becomes another negotiation because we’ll say, “Yeah. Well, that’s fine. Now, you’re paying more, for example, for your phone but we may notice that you’re not necessarily spending as much and maybe we over-budgeted on your gifts. And so, like I said, it’s a nice give and take but they’re getting comfortable with it and we would just want to move them on the road to money empowerment. And that’s really where you have control of money and money doesn’t have control of you.


Hilary Hendershott: Yeah. Well, if you don’t have control of your money, I promise you, it does have control of you. And I really think I like this because you’re teaching your 12-year-old a lot of lessons. It’s budgeting, it’s trade-offs. It’s cash management. It’s what do I value? It’s delayed gratification. It’s a lot. Have you seen some really mature choices on her part, or is she not there yet?


John Lanza: Yes. We’ve seen both frivolous choices and we’ve seen really immature choices. One of the most interesting stories we had was so the older one bought a GoPro camera. I think it was like $160. So, she bought the GoPro. She goes to the beach with my younger daughter and my wife, and she had just got it like just arrived from Amazon. They go in the ocean and my wife texts me and says, “It’s gone.” Like, “What’s gone?” “The GoPro.” And then she’s like, “And it gets worse. Her sister lost it.” So, the younger one had the GoPro and dropped it in the ocean. And then, of course, we found out about the little floaty thing that you attach to the GoPro late but so that’s $150.


Hilary Hendershott: That’s a real-life lesson too, John.


John Lanza: Yeah. Well, you’re right. So, in terms of money empowerment, this was a really interesting thing that happened after that because this was awful. It was a terrible situation. I was kind of glad that I wasn’t there on the beach to deal with it. My wife had to deal with it, but the younger one had enough money in her account to say, “I’ll just pay for the replacement.”


Hilary Hendershott: Wow.


John Lanza: Yeah. She was saving for a goal. I forget what goal it was but she just said, “Listen, I am going to cover it.” And that to me, now, part of that is self-preservation because, you know.


Hilary Hendershott: Exactly. I don’t want to get smushed by my big sister.


John Lanza: Right. Really it was empowering. It was really interesting to see. She made the decision pretty quickly, and recognized that she did make the mistake. She dropped it. She was responsible. I mean, anybody could have done it, but she did. And she stepped in there. And I’ve relayed this story in the book. And I do say for parents, other parents would handle it differently. And it’s fine. Like, you could say as a parent, you could step in and say, “Listen, we’ll go halfsies on it.” But we decided that it was okay. We knew she could handle it and she did it. We thought it was a more powerful lesson for her to pay in full. We did buy a little floaty thing. So, we’re not completely hard on her.


Hilary Hendershott: The insurance policy.


John Lanza: The insurance policy but it’s a good example of kind of money-empowered thinking where you’re taking control of your money. She’s making that calculation like, “This is more important than anything that I’m going to buy with this money right now.” And that’s kind of where you want them to get.


Hilary Hendershott: Yeah. Sounds like they are learning. And so, do you have kind of a list with a timeline of the various lessons that you think you want to teach at certain ages, or do you just move forward as they internalize one lesson, you sort of move on to the next? How are you thinking about when to teach what?


John Lanza: Yeah. That’s a good question. There isn’t necessarily a list, but it does kind of follow a progression. I think at the younger age, you want exposure. So, you want to expose them to the three core money skills. And so, those are saving for goals, distinguishing between needs versus wants, and making smart money choices. Now, those are going to carry through but those are things you can talk to your kid about and they can learn through an allowance starting at age five. They can even start to learn those things before or at least be exposed to those simple messages. So, the saving for a goal is something you want to start immediately. So, once you start your allowance, you want to get that goal set up.


And the way to do it is that you take the save jar and put a picture of whatever you’re saving for, and you want as much information on there. So, you want it to be like a smart goal. Are you familiar with that smart goal concept?


Hilary Hendershott: Oh, yes. My business coach makes me have smart goals. I’m very familiar.


John Lanza: Okay. So, that is you want specific. So, whatever that goal is you want a picture of the goal right there. You want measurable. So, how long is it going to take? How much is it? You want it attainable. So, for like a five-year-old, they’re not going to say for something that’s going to cost them $500 because they’re going to lose track of that, right? You want it relevant. It’s going to naturally be relevant because it’s something they’re saving for. And you want it time-based. You want to say it’s going to take. And I have a good example for a five-year-old is the first goal. She saved for I think was about four weeks. And then within the next goal is about eight weeks. And then you can kind of move as you go to progressively longer savings goals.


But it’s really important to get that going immediately because then they’re going to start thinking they’re going to get into that, what you brought up, delayed gratification right from the get-go. It doesn’t mean they’re going to constantly be saving for goals. Some kids will, some kids won’t. But you will expose them to how powerful that can be for them from a young age. So, you start with those kind of three skills. And then as they get older, then it becomes more about kind of managing money, managing larger amounts of money. And then we’ve started to get into investing but as I’ve said straight up to them. It’s like I’m not an expert investor by any means. I just go with index funds, we have real estate. They are aware of that. My wife is a real estate agent. We have some investment properties. So, we talk to them about those things.


But I don’t put myself out there as an investing expert, but they both have invested in some stock. Like, for example, the older one bought some Adidas stock. And just because that was relevant to her because she’s a soccer player.


Hilary Hendershott: She likes her kicks.


John Lanza: Yeah. She likes her kicks. And so, she invested in that. She’s done well in that particular stock. And then she’s going to start looking at other investments as well. But just exposing them to that concept from a young age and you do not have to be because I am not an investing expert to expose them to that concept. And then we constantly talk to them about just recognizing the power of compound interest, knowing that a lot of times it’s probably just going in one ear and right out the other, but bits of it will get stuck in their head. And we do say, we’re like, “This is your big opportunity. The earlier you get started, the much more powerful time is for you because you have plenty of time now. So, get that money socked away as soon as you can.”


Hilary Hendershott: And so, you aren’t actively putting them like putting $1,000 into a Vanguard fund or something like that? You’re just sort of conceptually talking about investing now.


John Lanza: Yeah. They have 529 accounts, which are college savings.


Hilary Hendershott: Okay. But you own the 529.


John Lanza: Right. Exactly.


Hilary Hendershott: Yeah. So, do they watch the balances or anything like that?


John Lanza: They know exactly how much money they have in those 529 accounts. And in fact, one of the things we do is when we go anywhere in the US or abroad, we’ll go to college campuses and just talk to them about, okay, here’s the campus. This is what it’s going to cost just so you have a sense of what all this, what that money might get you.


Hilary Hendershott: Yeah. Not much.


John Lanza: Right. But certainly, more in some cases than in other places like here’s a state school you’re going to get potentially more bang for your buck. But really those are complicated conversations but the key thing is really just the exposure to the campuses, the fact that they know that there’s some money for them and that they just have an awareness. I didn’t have that awareness at all when I went to school.


Hilary Hendershott: No. Me neither. In fact, money was specifically something we didn’t talk about. I mean, I got told that we don’t talk about money. So, we’re sort of part of this new awakening. It’s like, wow, speaking is what makes us the superior species. Maybe we should apply it to this topic where everyone struggles so much.


John Lanza: Well, I love your talk because you talk about that money operating system.


Hilary Hendershott: Yes.


John Lanza: And I feel like that’s just what I want to get across to parents is that this is where you’re booting up that operating system and it’s such an opportunity for kids. And the fact that you said that a lot of people ask you about this topic just warms my heart because, number one, it’s fun to talk about it but it’s good that there’s an awareness amongst parents but there’s still such a huge gap between because I’ve never run into, I’m sure you’ve never run into anybody who doesn’t answer yes to the question, “Do you want to raise a money smart kid?” Right?


Hilary Hendershott: Right.


John Lanza: But so few people, I shouldn’t say so few, not as many people as should really kind of go about the process of doing it. And it isn’t that hard to do. And I think you have to get past, I think more than anything, you just have to get past your own issues with money and just jump in and you can share the stories. And they know all, well, they probably don’t know all, but they know plenty of boneheaded things that I’ve done with money because we talk about it.


Hilary Hendershott: I’m glad you’re being vulnerable with your kids but what would you say to someone who just really feels like they failed at money and they don’t want to pass those failures along? So, they’re gun shy about even approaching the subject with their kids, afraid that their flaws are going to get imprinted on their kids. What would you say to that?


John Lanza: Yeah. It is not an easy… Like, the easy answer is just jump in, right? But I think the key element there is if you’re open to it, this is a tremendous opportunity for you. I’ve found that in the process of starting this program, starting with The Money Mammals and then The Art of Allowance and talking to parents and raising my own kids, you can just be self-reflective and it opens up a huge opportunity for you to deal with those issues and just having some kind of comfort in the vulnerability, I think. It’s a big opportunity for you to just get stronger. I feel like I’m just stronger as a person having had these conversations with my kids because they understand that I’m not coming at this to say that, “I’m perfect. Follow me.” I’m coming at this to say, “I’ve made some mistakes. I’ve started to learn from those mistakes. And I want you guys to get money smart because I know how important it is.” So, I’m not sure if that’s really answering the question.


Hilary Hendershott: Well, I think it’s like there’s a saying we teach what we most need to know. So, if you take on teaching healthy and empowered money practices and you don’t feel empowered at the start of it, I feel like you can’t help but take ground in that area. It’s like, okay, well, you’re going to be conscious of the words that are coming out of your mouth and that’s going to impact your thoughts and feelings and ultimately your actions. So, I kind of agree with you. And besides, if you don’t talk about it, they’re just going to have the same problems we all have because our parents wouldn’t talk about money, right? So, at least, getting into communication about it.


John Lanza: Well, that’s a really good point, which is some people will just say, “Well, I don’t want to expose them. I don’t want them to get burdened by money at a young age.” And that’s why I say to parents, I’m like, “It’s not a burden. At a young age, this is the fun part.” Here’s the other great part. So, if we have had difficulty with money, when you distill it down to like the basics so like distinguishing needs and wants, making smart money choices, saving for goals, it’s not hard. You can start to adjust what you’re doing to fit that approach and just make that adjustment. So, if you haven’t been doing it, you can make the adjustment yourself, and that’s empowering.


And when you start talking to your kids about these basics, it does provide a different lens to look at your own finances. And actually, that’s part of the beauty of this process is that it’s not just about educating your kids. It’s about getting the whole family mindset more coordinated, I guess, would be a good way to put it.


Hilary Hendershott: Right. I mean, you’re becoming a family that talks openly about money and gives money lessons. I mean, I think that has to sort of impact you over time. I just don’t see any way around it that it can’t not improve you.


John Lanza: Yeah. Right.


Hilary Hendershott: Okay. And then the converse of how do I not mess my kids up is another version of how do I not mess my kids up? But what if someone is listening and they do have resources and they’re not sure how their kids are ever going to really learn to do without? How do you make sure your kid isn’t spoiled?


John Lanza: Yeah. It’s a great question. And it is just as important for a family of significant means to have a program like this as it is for a family that’s middle class or is even a lower income family. Because if there are no limits, it’s going to be hard for any kid to have any real kind of comfort with money. So, it’s a way of, obviously, you can’t just say, “Oh yeah, we can’t afford that,” because the kids are going to look at you and go, “Well, of course, we can.” So, you want to drop the afford out of the conversation. And this is just as powerful for families of means because then you’re setting some limits on them. And also, I think part of that conversation is that and this gets to the kind of broader conversation of what you want to do with that money in the end. Do you want to kind of go down the Warren Buffett route where your kids are only going to get some smaller amount of your fortune and you’re giving a lot of that away?


But more than anything, you want to have this allowance in there so that they have limits and you don’t have this endless stream from pocket to their hands. And I think it’s just as important for families of means to do this. And I’ve had lots of conversations with folks on all different areas of the spectrum. And really, it can be very powerful.


Hilary Hendershott: So, keep the rules the same as the ones we’ve talked about, $5 per week for a five-year-old, and make sure that there’s a ceiling on what that child, how much cash or money that child has control over so that they learn the limitations or the scarcity of there’s a reality to, “If I only have $20, there’s a lot I can’t buy in this world.” Is that what you’re saying?


John Lanza: Yeah. As you want them because ultimately, the purpose of it, regardless of where you are on the economic spectrum, the purpose is to teach your kids to gain control of money. You don’t want the money to have control of them. And it is the same. That’s going to be the same structure that you’re going to use for what’s really in any economic class. The only caveat to that would be if you are very low income, where you may not be able to do $5 per week, you should do something whatever you can do. Because again, it’s really about we’re trying to all of us get to that money empowerment stage. And that only comes with money in hand, money with which you can practice, money with which you can make some mistakes. And that’s kind of how the process works.


Hilary Hendershott: Right. And I think in the book, speaking of aspirational goals, you talk about visualization. How can visualization help children reach their goals? And how do you teach that?


John Lanza: Well, the best way that we’ve found is to use the jar and put the goal on the jar. And the reason this is good, especially good for younger…


Hilary Hendershott: Oh, so they’re using external imagery. It isn’t like an Olympic athlete would visualize themselves winning the race.


John Lanza: That’s correct.


Hilary Hendershott: Got it. Okay. Yeah.


John Lanza: Yeah, this is right. We’re not talking about the Michael Phelps approach. And I’m glad you asked that question because I realized now that it wasn’t as clear when I explained it. Yeah. This is where they see it on their jar, which is for a kid, it’s good because they see it. And then they’re committing that to memory every time they see it. But it’s also another reference point. So, when you’re handing out, say the $5, they’re going to get $1 that’s going to go into the save, one into the share, then they have the $3. If they’re trying to get to their goal, that’s a great opportunity for you to say, “Oh, you can get to that goal quicker by not putting into their spend jar but putting it into your save jar.”


Hilary Hendershott: Perfect. That really makes it real. Very tangible.


John Lanza: Very tangible. Yeah.


Hilary Hendershott: Perfect. Okay, John, is there anything I haven’t asked about that’s critical to this conversation? I feel like we’ve kind of danced all around a bunch of topics. Anything I missed?


John Lanza: No, I don’t think so. I think really like we’re having right now, I think one of the key elements to this is opening up the dialog. So, the jars are really a metaphor for the conversations, the openness that we want to have with the money. So, we’re moving from the paradigm of the piggy bank, which is kind of, oh, this opaque thing that was hard to get money out of. Some piggy banks are designed to be smashed in order to get the money. Like, what is the point? That point of saving money for, say, like a rainy day, way too abstract. We’re talking about this is the new approach. Open dialog about money. It’s their money. They can see it. We’re not hiding anything from anybody. So, I think the fact that we’re having this conversation again ties into this, what we’re trying to do, what we want parents to do, which is to have an open dialog with their kids about money.


Hilary Hendershott: Perfect. Oh, I know one question I didn’t ask. Have you and your wife chosen to share your family finances with the kids? Do they know how much money you make or how much you have saved?


John Lanza: You know, we haven’t had the… They know. We’ve talked about like our overall net worth with them. And we talk about how much we’ve made. We haven’t like sat down and specifically had that conversation about, I mean, they know, for example, with my wife as a real estate agent, they know what she makes with each transaction. So, they certainly have a sense. We’re pretty open about it. We haven’t like sat down as a family and said, “Here’s what you make. Here’s what you make,” that type of thing but there’s a pretty open conversation about the money. Ron Lieber has this book called The Opposite of Spoiled and Ron Lieber writes for the New York Times, a money column for the New York Times. He advocates for that idea that you really should talk to your kids very specifically about how much money you’re making because they’re going to figure it out. Anyway, it doesn’t take too long. They can kind of google around and get a sense of what you’re making.


Hilary Hendershott: That’s true.


John Lanza: It’s your salary.


Hilary Hendershott: Salary.com, right?


John Lanza: Yeah. So, I think it’s a very good question. I think I’m kind of giving you a long answer probably for this. So, we have had conversations not like specifically sitting around the table to discuss it but it comes up from time to time. Yes.


Hilary Hendershott: Okay. And you don’t feel that it’s private?


John Lanza: No. We don’t feel that it’s private.


Hilary Hendershott: Yeah. We want everyone to go pick up a copy of the Art of Allowance. And you can get that on Amazon, right?


John Lanza: You can get it on Amazon. You can get it on our site, which is TheArtofAllowance.com. And yeah, that’s great. And, Hilary, I really appreciate you having me on the show. I love what you’re doing.


Hilary Hendershott: Thank you.


John Lanza: And I feel honored to be a part of this diaspora of it.


Hilary Hendershott: It’s a big money movement.


John Lanza: Yes.


Hilary Hendershott: All right. Thanks for everything. Thanks for your time. And I can tell you that The Money Mammals, again, definitely will be in my living room very soon because we’ve got a two-year-old to teach. And I better put my money where my mouth is, right? Can you imagine if I raise a money-messed-up kid? I think I’d be out of a job.


John Lanza: Yeah. I told my kid that too.


Hilary Hendershott: Get it right, kid.


John Lanza: Get it right.


Hilary Hendershott: You make me look bad. All right. Great. Thanks again for being on the show. You have a great day.


John Lanza: Sure. Thanks, Hilary.




Hendershott Wealth Management, LLC and Love, your Money do not make specific investment recommendations on Love, your Money or in any public media. Any specific mentions of funds or investments are strictly for illustrative purposes only and should not be taken as investment advice or acted upon by individual investors. The opinions expressed in this episode are those of Hilary Hendershott, CFP®, MBA.


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