Episode 151: Interview with Chuck Jaffe, Author and Host of Money Life

Today’s guest is Chuck Jaffe, author and host of the Money Life podcast. Chuck shares his Halloween project, meant to help kids learn about money and risk, and maybe eat less candy. Chuck and Dawn also cover how to give your kids an allowance.

Information about Chuck Jaffe:

Chuck Jaffe is a veteran financial journalist and nationally syndicated financial columnist whose work appears in newspapers from coast to coast.  Over the course of his career, he has won numerous awards for business and personal finance journalism.  Chuck is the author of three books: “Getting Started In Finding a Financial Advisor,” “The Right Way to Hire Financial Help,” and “Chuck Jaffe’s Lifetime Guide to Mutual Funds.”

Listen to the Money Life podcast here.

 

Show transcript:

00:00:02 Hey there. I’m Dawn Starks, author of Simplify Your Financial Life and your host for the SimpleMoney Podcast, where we make personal finance simple. Welcome. This is Episode 151. Today’s interview is with Chuck Jaffe. Chuck Jaffe is the host of the Money Life Podcast. He’s a veteran financial journalist and a nationally syndicated financial columnist whose work appears in newspapers from coast to coast.
00:00:26 Over the course of his career, he has won numerous awards for business and personal finance journalism. Chuck is the author of three books on the topics of mutual funds and how to find a financial advisor. Today we’re talking about teaching kids about money. I hope you enjoy my interview with Chuck Jaffe.
00:00:41 DS: Chuck Jaffe, welcome to the SimpleMoney Podcast.
00:00:45 CJ: Thanks so much for having me.
00:00:47 DS: So since it’s October and we’re coming up here to Halloween, there’s something that you and I talked about the last time we were on the phone together. And I was so intrigued by it that I thought it would make a fun topic for the podcast. So I wanted you to tell my listeners about your Halloween scheme. What do you do for trick-or-treaters? And I recognize that, with COVID that this could potentially be a different year,
00:01:10 but this is such a great idea.
00:01:11 CJ: Well, for starters, we’ll get to what is going to happen this year, because COVID is not holding me down. I have done the right things, including contacting the CDC, to make sure that I can do what I do this year. But I don’t do trick or treat, I basically do trade or treat.
00:01:34 It’s a different choice at my house, and the choice is cash or candy. And every year I change the drill, and I’ve now been doing this for five years, and I’ve changed it and made it more complicated and what have you. But there are also people in my audience who have done this as well, and you can make it simple,
00:02:00 you can do a lot of different things with it, but using this as a way to teach kids choices about money, there are so many things that you can do, that, whether it’s what I’m doing, where it is literally kids making a choice that involves what kind of decisions are you going to make, and how do you value candy versus cash and more,
00:02:20 or it can be things that the National Council for Financial Educators, who had a cash-for-candy thing – in their case, it was really what do you do with the extra candy? Because I don’t know about where you live, but in my neighborhood, when my kids were young enough to trick or treat, they always brought home way more candy than any child needed.
00:02:41 DS: That’s true. And actually, just as an aside here, there’s a, where we live it’s very rural and hilly. And so kids would have to be pretty hardcore, Rambo-types to get up our driveways. So we usually go to the neighboring towns, there’s a neighborhood that’s flat. And I heard that so many kids go there to trick or treat, that
00:02:59 that the town accepts donations throughout the fall, in order to help the homeowners buy enough candy for all those trick-or-treaters. And those kids come home with a HAUL, I mean, it is a bag full of candy.
00:03:11 CJ: Well, my neighborhood is not quite like that, but it is reasonably flat. It is pretty easy. And the bigger thing is that, although to get in our neighborhood
00:03:22 you come off of a main drag, every street in our neighborhood ends in a cul-de-sac. So there’s really no traffic. And what happens is, there’ve been people who’ve lived in my town for 40 years who didn’t know that my neighborhood existed. So once you know somebody in the neighborhood, it’s a pretty good chance that when your kids go, ‘Oh, I want to go trick-or-treating with my friends,”
00:03:43 their friends come to our neighborhood and there you can go and your kids feel pretty safe, et cetera. So it’s pretty idyllic, I will say that.
00:03:51 DS: So walk me through it. So if I’m a kid and I come to your house and I’m expecting to get a bowl full of candy that I can pull from, or that you’re going to drop some candy in my,
00:04:02 in my bucket or my bag, tell me what’s going to happen.
00:04:05 CJ: Well, do you want to know the full evolution and how it’s changed over the years?
00:04:08 DS: Totally.
00:04:08 CL: Okay. So 2016, we started this, and it was a very simple choice. Now, if you come to my house, you get three pieces of fun-size candy, retail value
00:04:23 roughly 37 and a half cents, 12 and a half cents a piece. So your return on investment for dressing up is 37 and a half cents. Keep that in mind, because it’s important here. But the first year I did it, it was a simple choice and it only applies to kids who were in grades three and up. I’m not trying to build somebody’s college fund,
00:04:44 I’m not giving money to kids who won’t appreciate it. This does cost you a little bit more. I am extravagant, relatively speaking. It certainly added 30 or 40 bucks to what I would spend on Halloween. But the first time, it was very simple. It was, you can take three pieces of candy, or you can take an envelope that was going to have at least a quarter in it up to a jackpot of $5.
00:05:08 Now, of course it was a simple choice, but if you only got a quarter, you would have been better off taking three pieces of candy. Because at least you would’ve gotten 37 and a half cents worth of value instead of 25. So that was 2016. And by the way, in 2016, I had 50 envelopes, they all went, all 50 envelopes went,
00:05:30 there were two kids who got here too late for envelopes, and only four kids chose candy. And that’s not a big surprise when you’re the only place in the neighborhood that’s giving out cash, you should expect that you’re going to give out a lot of cash and not much candy. Now I’ll point out, that in an ideal world where all of my neighbors said,
00:05:50 “Chuck, we know you’re a personal finance journalist, we want to help,” every year I would do what I do and pass it to the house on my left. And by now we’d have like most of the cul-de-sac, and we’d be ‘the money cul-de-sac’. And that would be awesome, but I don’t live in that world. I’m the only one meshuggeneh enough, to use a phrase that my father would have used, to do this.
00:06:13 So 2017, well, you got your three pieces of candy, or you had two choices in envelopes. You had envelopes that had at least twenty-five cents and up to $3, or you could trade me one piece of candy, picked randomly from your bag, and then you could choose from envelopes containing 50 cents up to five bucks. So again, in this case,
00:06:42 the trade was the best thing, because you added your 12 and a half cents to the 37 and a half, you got 50 cents. You were guaranteed at making at least 50 cents. There’s no loss here. Now, in spite of the fact that my across-the-street neighbor had told me in advance of that, “Mr. Jaffe, there is no way you are getting any of my candy,”
00:07:04 when push came to shove that year, I’d like to point out all 48 kids who took money, traded me a piece of candy and went for the big money.
00:07:13 DS: Oh, that’s funny. So are you saying that…
00:07:14 CJ: And only four kids wanted candy.
00:07:16 DS: Are you saying that he, that he thought his candy was so good that no kid would choose to trade it?
00:07:21 CJ: Ah, he just was,
00:07:24 he was out for, for candy on Halloween. It was only when confronted with the actual choice and watching the friends he was trick-or-treating with – and by the way, so again, the lessons you can learn: really good story that, that year – I get a group of seven girls, you’ll hear about these girls again, because they were about 12 girls in their group last year,
00:07:45 and they’re a huge part of the fun. But, that year I get this group of seven girls, they’ve got sacks full of candy. They’re like, “Oh yeah, take whatever you want! We’re going to take the money!” And I go through the first sack, and “I’m just going to take one piece.” And I take one piece from each of the first six girls.
00:08:03 The seventh girl says, “I want candy.” Now she’s watched as I’ve picked six pieces of candy out, and let’s just say that three or four of them happened to be Snickers bars. Obviously, whatever one of my neighbors was giving out, on the top of the bag, I’m not like fishing around for there, I reach in and I grabbed them. So she takes from my candy dish three Snickers bars.
00:08:26 And I say, “I got to know, six of your friends just played for money. You just decided not to.” She said, “Well, yeah, but Snickers bars are my favorite. And so, a) I ran the risk that you’d take a Snickers bar from me, b) I could get three Snickers bars, which ARE my favorite, and that’s what I’m here to do is to get candy.
00:08:46 And c) I have a deal with my parents, that because Snickers bars are my favorite, they won’t steal any of my Snickers bars.” So in other words, she wound up getting her 37 and a half cents of exactly the candy she wanted, and it was more valuable to her and she couldn’t have been happier. And that’s a monetary choice as well. And that’s part of what you want,
00:09:11 you know, you want your kids not only to be savers, but to be smart spenders. And in this case, that was the smartest spend she could have made. Because although she would have been fine without the three pieces of candy, if she had only gotten a, you know, whatever, and she traded, nope, the perfect outcome is use your money on the things you want.
00:09:31 So…
00:09:32 DS: Yeah. It sounds like she’ll be a future economist.
00:09:34 CJ: 2018 is the year that I officially became a monster, I know. So in 20…
00:09:39 DS: (laughs) Wait, Chuck, before you tell me about 2018, I had a question. So, when each group of kids comes to your door, do you explain the value of the three pieces of candy, so that they understand what the value of the candy is that they’re potentially sacrificing?
00:09:58 CJ: Well, I’ve always had a sign up. So I put out the money pumpkin, which is a pumpkin with a dollar sign on it. I put out the money pumpkin, and on the day of Halloween, usually before the bus goes home – because there are now kids who stop at my house in advance – I put up the rules so that they can see if they want to,
00:10:20 but also so that it’s there and now all the parents know, and what have you, so everybody kind of comes up and it’s a lot of fun. So yes, I try to make it that they understand it. And that’s evolving a little bit, but you do try to make sure that they understand the odds a little, because that’s an important part of making money decisions.
00:10:41 So now we get to 2018. And now, it was of course, three pieces of candy, or you could trade one piece of candy for an envelope that had 50 cents to a maximum of $4. And you were told half of these small money envelopes had the 50 cent minimum, right? Or you could trade me three pieces of candy to pick from envelopes that held between $1 and $10,
00:11:15 but only half of the envelopes held money. The other half were empty.
00:11:20 DS: Ooh, okay.
00:11:20 CJ: And I’ll point out, they’re not really empty because I print out what your choices are, and that goes in the envelope. You’ve got to do this in ways that kids can’t game the system. So for example, if you’re a $5 winner, but you’re picking from when we have coins,
00:11:36 because you know, it’s 50 cents up, you have a, a small-gauge silver dollar and two $2 bills tucked in there, along with the instructions. You know, if kids will say, “I won, I only won 50 cents!” Really? Because I have to go out of my way to get half dollars and dollar coins and et cetera. So trust me,
00:11:59 I do this in ways that try to make it that no kid has an advantage, because if they can figure out a way to game the system, they will!
00:12:06 DS: Right. I mean, you don’t want them digging around in there and touching the envelopes, right?
00:12:10 CJ: “Touch it, take it” is what we try to make as the rule. So, so here’s the thing,
00:12:16 the total amount of money at stake between the big money envelopes and the small money envelopes, it was only 50 cents more in the big money envelope. If all the envelopes had been played in both cases, it was basically like 43 bucks or whatever, 44 bucks for me to put it out there. But you had the same average result, but you had one piece of candy paying me versus three pieces of candy.
00:12:45 Remember, the one you put in 50 cents – the 37 and a half you were going to get plus your one – the other, you put in 75 cents and you may have come away with nothing. And I’ll point out, a lot of people dislike the idea that a kid could go away with nothing. And I will just say, we had a neighbor child who was ready to go before her friends and family.
00:13:06 So her folks said, “Well, go, we’re still waiting for these people. Go do the first couple of houses.” So she did the first three houses and circled back around to get home, stops at my house, trades me three pieces of candy for an envelope. And I’d like to point out, I try very hard to make sure that the kids never open the envelopes around me.
00:13:27 I don’t actually want to know who won or if they won, I can tell you why about that too. But also I want them to open it with their parents. I want them to make that part of what Halloween is, you know, if you think about what you probably do, what most people do, they open the candy with the kids.
00:13:43 Now I got envelopes, it’s like, “Oh yeah! I’ve got some money in here. Let’s open this up.” We’ll be excited, you can talk with your parents. If your parents like odds, or they like games, or they like whatever, here’s a money lesson coming right at you. But this girl is walking away to her parents. And they’re like,
00:14:01 “So what’s Chuck doing?” And she opens the envelope – and mind you, she had three pieces of candy, she traded them ALL. And she got an empty envelope. And I thought, “Oh my gosh, I have taken a hundred percent of this small child’s candy. I am officially a Halloween monster.” I get it. And, and if you don’t like taking,
00:14:23 you know, giving kids nothing, then you gotta come up with another way to do this. Because, and that’s fine. Trust me, the years where I didn’t do it where you could get nothing, I had a great time. And everybody I know who’s done this has had a great time. They just don’t go quite as crazy as I do. And by the way…
00:14:41 DS: So when, well
00:14:42 when the kids get nothing, or when they’re willing to play for that, do you think that there was a negative response to that? Because you said, because I expected that what you were going to say is that the kids open the envelope right there. But you’re telling me that you want them to go and open it with their parents so that you don’t know who was a winner and who was a loser.
00:15:01 CJ: I have never known, you know, I’ve given away jackpots, I’ve only known one jackpot winner. I don’t, you know, so I’m the guy who’s given away 10 bucks and somebody’s won it, you know, or five bucks and somebody’s won it. I do not hear who does what. I know that it makes a difference. And I know that it makes a difference, so
00:15:19 I’ll go back to that group of girls. So that group of girls, well, last year they were my last customers and they did the entire neighborhood and came to me last and they knew they wanted to come to me last. And in fact, one of the girls was like, “I wanted your house to be, this is my last year trick-or-treating, and I wanted your house to be the last house I ever trick-or-treated at.
00:15:39 Because yours is the one I’ll be telling everybody about for the rest of my life.” And we haven’t gotten to what last year’s choice was. But one of the things that stuck out was a girl, who had joined their group, they were now like 12 kids, who had been there the year before, and the year before had played for big money and had lost.
00:15:58 And so what did she do this time? She said, “I want a guaranteed win.” So yes, you can teach lessons even in loss. And in fact, I think in some respects, loss might be the better lesson. But they have to be open to that, and not everybody’s going to be. Some are going to be, “I didn’t win! Grrr!”
00:16:21 Okay, well that’s going to happen. But that, by the way, is also why we don’t do this for kids under grade three. You sort of understand at times, with some of the third-graders, that they’re like, “Just give me candy and shut up, dude.” Like, you know, okay! We get it.
00:16:36 DS: (laughs) Well, that’s interesting because you know, what you’re describing is,
00:16:41 is really investors’ behavior too, is that they’re, you know, the tendency is, as people are more interested in avoiding loss than they are in potentially getting gain. And so that little girl who decided after getting hosed the last year that she was going to definitely get some candy this year.
00:16:57 CJ: Definitely get some MONEY. She wasn’t interested … she wanted money!
00:17:00 DS: Oh I’m sorry, yeah, right right, sorry, money. Right, yeah.
00:17:00 CJ: Yeah, that’s it. No, there’s no question. You see all those behaviors and they talk about it that way, and you may get more gambling behaviors as well. And you know, there’s no question, that’s why you want the kids to understand that, you know, “Hey, this IS an investment of your time and your effort, and you are getting a return for what you do.
00:17:23 And you want to, whether it’s play that up, do whatever, take your chance. You want to make sure that you get enjoyment.” And you know, I think that that, to one extent or another, is what we hope happens. And yeah, that’s why there is a note in every envelope, and you know. I don’t know what happens in their homes,
00:17:44 I know what happens when they deal with me. And by the way, one other thing about this: so my children are now 29 and 27, and they live over a thousand miles away. And one of the other reasons to do this is not just because of I do what I do, it’s because it gives me an opportunity to make sure I talk to as many kids as possible in the neighborhood. Because my neighborhood has turned over.
00:18:09 And I’m now the guy with the old dog, who works from home, but doesn’t come out. Is usually wearing, you know, sweat pants or whatever. I might be pushing my lawn mower, but you know, they don’t see me a lot. And I’m also one who, prior to COVID-19, I’m the one guy that’s home. I work from home,
00:18:27 my home-office studio is here, so, you know, something seems amiss at your house or whatever, I’m somebody in the neighborhood you should feel safe with, but you’re never going to feel that way if you don’t talk to me. And so to me, because I don’t have kids that go to the bus stop anymore, this is part of that.
00:18:45 This is part of being active and involved in my neighborhood, and knowing my neighbors and knowing the kids, and they all now wave and say hi and whatever, when they go by and that’s, that’s huge. And they didn’t, I mean, they would go by and maybe wave or whatever, but now they talk to me, and, we’ve gotten into October, I was out doing some leaves the other day and a couple of kids stopped,
00:19:07 “What are you doing this year?” I’m like, “You’ll have to wait, but I’ve got you covered.”
00:19:10 DS: Oh that’s so funny.
00:19:10 CJ: So I should point out that what we had happened was, 43 kids played for big money that year, 23 of them picked empty envelopes. 22 took the safer choice, the lower money choice, and 10 stuck with candy. Which brought us to last year. Last year,
00:19:31 I added a lottery element. So keep all the other stuff that I’ve already told you about, or we lose another two minutes of our lives, explaining it again, and a lottery element where you could win $20, or you could win $10, or you could get an empty envelope. And “Oh, by the way, going to cost you six pieces of candy to do that.”
00:19:56 So six pieces … a little bit more actually, right? Because … piece of candy 12 and a half cents, eight pieces of candy gets you to a buck, you got the three you were going to get, the six you’re given me, so a lottery element. And you knew that you had a 2% chance of winning a jackpot, a 4% chance of winning first or second prize.
00:20:28 13 kids went lottery. And I should point out that a young boy named Liam actually won. Liam could not have gotten his candy out of his bag fast enough. And I will point out that Liam will be telling future neighbors about the time he won 20 bucks when he was trick-or-treating for the rest of his life. I know I have impacted him that way. About 40 other children split evenly on the other options.
00:20:55 And there were those kids who wanted the, the guaranteed jackpot. The interesting thing was the kids who wanted the guaranteed jackpot wound up taking more than the kids who played for something bigger, again because roughly half of the kids who played for something bigger, went home with nothing. So that’s how I’ve done it, which now brings me to this year where things have to change.
00:21:17 They can’t even come up, they’re not even going to come up to the front of like – normally I’ve got the money pumpkin up and I’m sitting down and I chat with everybody, et cetera. Well, this year it’s going to be at the end of my driveway, and we’re going to set up tables for it, et cetera. And obviously I can’t reach into anybody’s bag to take candy, that cannot happen.
00:21:37 CDC guidelines say prep your candy in candy bags, and I checked with them and they said, “Oh, if you’re doing envelopes and you can spread them out, then that’s all fine.” So I’ve got candy bags, and the candy bags will contain three pieces of candy. It’s not quite as good a deal as before, because if you were like that girl
00:21:56 and you liked whatever your three favorites were, you could get it? Yeah, that’s not how it’s going to work this year. Three pieces of candy in the candy bag. Now I got to figure out how to do the rest. And I figured that we need to keep the lottery option, right? But the lottery option, again, is just the worst option, because the lottery is ALWAYS the worst option.
00:22:22 So you’ll have the lottery option, you will have an envelope… I haven’t quite ironed out the money, but I suspect it’ll be between a quarter and $5 in it. Then I’m going, because in these times we want to support our local businesses, I’m going to an ice cream shop that you could ride your bike to very easily from where we live in this neighborhood,
00:22:47 without having to go out on busy streets, you can get there. And I’ve talked to the owners and they’ve agreed to give me a 20% discount on $1 cards. They’re not actual gift cards. They basically are a special, you know, it’s like a business card that says “This is good to $1” and they write a code on it, et cetera.
00:23:07 So I’ll be able to pay 80 cents to give a dollar’s worth of value because they know that there’s not much you can buy in this ice cream shop for a dollar. So, you can immediately trade up and know that you’re going to have a win, but that your win only is good if you, or you and your mom, can go to the ice cream store.
00:23:30 So you’ll have the candy, the guaranteed win, but limited use of a dollar; the chance to play for money, where you could have a loss; or the chance to play for big money, where you’re likely to have a loss. And that’s how we’re going to do it this year.
00:23:50 DS: Well, thank goodness these kids are plenty sugared-up by the time they get there,
00:23:53 because they’re going to need to have all their synapses going in order to work these, these angles out! (laughs)
00:24:00 CJ: Well, and some of them try to work the angles out, some of them, you know, don’t and don’t care about it, and whatever it is, it’s fine. It’s fun. It’s enjoyable. It’s a blast. I talk to my neighbors, I talk to their children,
00:24:13 our dogs get to meet, you know, whatever it is, it’s a good time had by all. And I wholeheartedly recommend it. And, I’ll tell a few other examples. One of the members of my audience kind of hates Halloween. He’s fought weight issues his whole life, he doesn’t like the idea of giving out candy, et cetera.
00:24:32 So he went and bought – and he doesn’t get many trick-or-treaters. So he went and he bought just a half a dozen, or a dozen, full-size Almond Joy bars, because Almond Joys are his wife’s favorite. And then he put together envelopes that had 50 cents to $5 in it, but it was much more simple than mine. It was basically, you know, almost everything had 50 cents in it,
00:25:06 one envelope had $5 in it. That was how he did it. I didn’t have to put together that many envelopes because he knew he was going to get, in a big year, maybe 20 trick-or-treaters. So full-sized candy bars, pretty good. And you know, yeah, if you’re only getting 25 cents, it’s a loss to you. But ultimately what he wound up with was a few leftover candy bars that his wife loved and they’re her favorites.
00:25:30 So, GREAT, right? She had what she wanted. He had no excess candy, gave away some money, taught lessons and he was totally happy with. It like works. That totally makes sense to me and is great. I have other folks who have done it where, you know, pick candy or an envelope and they’re much more candy is, you know,
00:25:50 whatever they’re giving away, and an envelope is, everything has, you know, a quarter in it except for the three that have dollar coins in it, or something along those lines. Whatever you want to do, there’s no wrong answer. But I do think that in my case, yeah, I know that my neighborhood kids, they look forward to it and we have a good time and the parents enjoy it.
00:26:12 And whatever.
00:26:13 DS: Well I suspect that if they didn’t enjoy it, that you probably would have found out, by either the kids would have egged your house, or (laughs) you would have heard that the kids don’t want to go to Mr. Jaffe’s house because he’s that mean old man who steals your candy and doesn’t give you anything in return! (laughs)
00:26:29 CJ: Yeah. I’ve always wondered whether or not I was going to come outside the next day and find the money pumpkin smashed.
00:26:36 Right? That somebody comes back, “Oh, got no candy!” (smashing noise)
00:26:38 DS: Right. “Here’s your trick!” (laughs) Yeah.
00:26:40 CJ: But, yeah, no, that’s, what’s much more common is for somebody to come to my house twice. Usually because they bumped into a friend and they want to see how the friend does, not because they’re trying to go through a second time.
00:26:55 DS: Right, right, right.
00:26:56 CJ: Well, plenty of kids have wanted to go through a second time, and plenty of kids have, you know, wanted to trade me their envelope or whatever after they picked one. And nope. We don’t do any of that. My favorite about that was the kid who was determined to take the envelope – and all I will say is I do have a code that goes on the back of the envelopes.
00:27:21 I won’t tell you what it is, but it is something that lets me know that this is a bigger winner than the average, let’s just say – and this kid was determined that they had, “picked the wrong envelope, I should have picked the other one!” And I knew that they had a couple of bucks in there and, and you know, I was like,
00:27:42 “I can take this back from you, but I don’t think I’m going to, and you know, hopefully it’ll work out for you!” (laughs)
00:27:48 DS: Right.
00:27:48 CJ: And that’s why I also, the other reason I don’t want to know, I knew that Liam had won last year. And so now I’m offering the choice to everybody else. And I know that the $20 jackpot’s gone.
00:27:58 So I don’t want to be saying, “Hey, by the way, if you pick the lottery, you really are, you know, you got a low percentage …”
00:28:04 DS: Right, not going to win. Right. Exactly. Yeah, and well that makes more sense…
00:28:08 Yeah. That makes more sense to me now that you don’t want to see what the result is. You don’t want to see who gets what,
00:28:16 because then that would make me feel bad, I’m sure it makes you feel bad, if you knew, like you did with Liam, that the jackpot winner was gone, then you know, then you know those kids are walking into a bad deal for them.
00:28:27 CJ: I was fighting the urge to like, “Let me tell you how bad the lottery choice is!”
00:28:34 And by the way, if we didn’t have COVID, the plan this year was to make the lottery choice the cheap option, right? It’s only whatever, but it would have been the cheap option with one winner and everything else losers. And if you won, you won. So you put minimal risk, but you probably get nothing. Whereas had you put something else at risk,
00:28:57 you almost certainly would have gotten something. That was my plan. Now it’ll have to wait, hopefully, ’til 2021.
00:29:03 DS: Yeah. I think this is so interesting because I’ve heard of dentists – so I know some of the dentists in our town will BUY the candy, because they’re trying to keep the kids, of course, from consuming all that sugar. And so they offer to the kids,
00:29:18 bring your bag of candy in and I’ll pay you X dollars or whatever for it. And so I’m interested to see, you know, what percentage of kids actually do that, are willing to give up the candy. Because I’m still thinking about that one girl that you said where she, she watched her six friends take the money deal, and she was like,
00:29:36 “Nope!” And she worked it out because she knew she wanted her Snickers, but I’m thinking she has a huge bag of candy already, and so I’m interested in that.
00:29:42 CJ: Well, so here’s a story of my daughters, right? Now, my oldest daughter, Thompson, now eats anything. But when she was a child, she only wanted plain chocolate. So it was going to be Hershey’s bars,
00:30:02 no nuts, or those little bags that would like hold two Hershey’s kisses. That was it. The rest of her candy she didn’t care about. Meanwhile, my younger daughter, Whitney, is a garbage disposal. She’ll eat anything. Absolutely, “Whatever you give, I’ll try it, let’s go.” So Whitney quickly figured out that she didn’t particularly value plain chocolate bars, but her sister did.
00:30:34 So when they’d get home and they’d, you know, dump their bags out, Whitney knew that there’d come a point where “I’ve got three chocolate bars left, but you’ve got 30 pieces of candy that you don’t want.” So where we started with, “Me trading you like, I’ll give you a Hershey’s bar for two things that you don’t like,” at the end,
00:30:55 it was, “I got three left. That’s the only other candy you’re going to get. I’ll take all that stuff you don’t want.” And that’s a part of it too. I mean that kind of trading, well, go ahead and be the parent at that point and say, “Hey, my kids have too much candy. I’m going to donate it.” Because there are dentists who will donate it and frequently they donate it and it winds up going to our troops and it’s all good stuff,
00:31:17 right? So if your kids come home with too much candy and you like some candy, and maybe you’ve done cash or candy – which for me, I’ll point out, I don’t have to buy a lot of candy. I didn’t last year, this year I have, I have to have a little more, because I’m not taking from the kids. But last year I like had no candy on hand.
00:31:37 And I finished, I think with more than I started with. And, and trust me, anybody who cannot see me, you should understand, this is not about not liking candy. I adore candy, but it’s really not good for me. So having less of it is a good thing. So, so even if you don’t want to do this and you don’t want to go to the trouble, or you want to be trick or treating with your kids,
00:32:01 when your kids come home, take some candy that might be your favorite, and offer to buy it from them. But then take some candy that’s not your favorite, and offer them less for it. Okay? Don’t just go, “I’ll give you a dime for every piece of candy.” Or “I’ll give you a quarter for every piece you give me.” Give them a quarter
00:32:22 If it’s something that you both value. Give them a penny if it’s something that you don’t think they care about, that you don’t care about, right? Or that you want, but you’re willing, you know, make it that, you know, “Hey, I got something for it, dad, I would’ve given you that for free.”
00:32:39 And your response would be, “Yeah, but I would have paid you a nickel. Ha ha!” Right? But that’s where you can teach financial lessons about, you know, that’s about going to the grocery store and saying hamburger’s on sale this week, but if you really want sirloin, you’re going to have to pay up for it, but make that decision.”
00:32:59 Right? So whether it’s trading or whatever, there are money lessons, let candy be the currency. And that’s great. And your kids will come away with hopefully the benefit of real lessons.
00:33:10 DS: Yeah. Well, this is great because I think that, I think as parents, it’s really important for us to find any way we can to teach kids lessons about money. Because in the world we live in now we’ve gotten so far away from the premise of ‘you actually have to have money to buy things you want’ because everyone is so used to just buying it with plastic and paying for it later,
00:33:37 maybe. And so this idea, so kids don’t really have as strong a grip on the idea of what money actually does and what it’s worth and how you use it.
00:33:47 CJ: Well, and in fact, one of the things that you said is a point that I, I think is really essential. Kids see you taking money all the time.
00:33:56 They see you go to an ATM and pull cash out. They see you get cash back when you give your card at the grocery store and you want to take a few bucks out. They don’t see money going in and they don’t know what it takes for money to go in. And that is where they need to learn. And by the way,
00:34:17 because of the way things have evolved – I’m older than you are Dawn, but you were still of a generation where it’s at least possible that your parents paid their bills at the kitchen table in front of you.
00:34:29 DS: They did.
00:34:30 CJ: But it really doesn’t happen that way in modern families. It happens at, go on, pay it on the app, do whatever, your kids don’t see you sweating over the bills. Because they don’t see you sweating over the bills,
00:34:41 they don’t understand it. And if they ever get to the spot where they’re struggling to pay, but they never saw that you had times when you struggled, they feel much more like a failure, and you didn’t teach them what you needed to teach them. So don’t keep, whether it’s struggles or anything else, but let the kids understand like, “Hey,
00:34:58 when you want, you know, that extra whatever, that, okay…” I mean, in my case, my kids always knew because I was freelancing and doing side gigs like, “Oh, you want that? Sure. Okay. Well, I got to go to work for eight hours to make that for you. So like, I’m cool with that. I’ve got something I can do.
00:35:17 And then, hey, all of a sudden we’ll have that extra money that we need for that thing you want. But you know, I can’t play with you today, because that’s what you want.” That’s an important lesson for them to learn too. So they’re always watching, they’re always learning, and the more you can teach them in ways that are not particularly intrusive,
00:35:37 it’s great. And oh, by the way, I want to point out that for all the bad things that happen in 2020, the greatest thing from an investment standpoint, when it comes to your kids, is that this is the year that we got stock slices. If you don’t know what to get your children, or what your parents should give their grandchildren, stock slices.
00:36:02 You can buy stocks for five bucks, no fees, put them in. Schwab does it, Fidelity does it, a few others do it, buy stocks that they’re going to understand. Apple, McDonald’s, Coca-Cola, and start talking to them about ownership and what it means to be an owner and why, if you own McDonald’s stock, you want to go to McDonald’s and not to Burger King, or not to Wendy’s.
00:36:27 And if they like one versus the other, they should understand that maybe that’s the one they want to buy. Those sorts of things, those examples are out there, and this year, I mean, trust me, I had portfolios for my kids from the moment they had a social security number, but it was always hard and difficult. And I had to put up with,
00:36:46 you know, paying not enormous commissions, but full commissions to buy two shares of some stock or whatever. Yeah. Now $5 a pop, you can do it really easy, super simple. Do it. That’s your holiday gift. That’s your extra holiday gift, whatever. Find a way and make it something that you, you do. That’s my holiday tip for people for once you get past Halloween and you got to worry about the holidays.
00:37:12 DS: Yeah. That’s a great tip. And I think that, you know, you’re really driving home something that’s a passionate topic for me, which is this financial literacy for kids. And as you were mentioning before, the kids need to see the bad along with the good. And when we cover up the fact that we’re having money problems
00:37:31 in our household, then the kids don’t really understand, that, you know, we expect too much of them to, for them to put two and two together that, Oh, the reason that I can’t have this lesson that I want to have, or this toy that I want to have, or go out with my friends
00:37:46 the way I want to, is because of my mom lost her job, or we, you know, had an extra expense this month, you know, or something like that. They just think it’s punitive. And so I think as parents, it’s so easy to just fall into the trap of, “Oh, we can’t afford that. Oh, we can’t afford that.”
00:38:03 You know, without any subsequent explanation for why can’t we afford that. And I think if parents could just go to a little bit more effort to explain why they’re making the decision that they’re making about why the kid can’t have this money, or whatever it is that the child wants, just taking that moment to have a little bit of a learning lesson there.
00:38:22 And then, because I think we don’t sometimes give kids enough credit. I think they’re smarter than we think.
00:38:26 CJ: Well, you know, allowances should never be a controversial subject, but you know, as a personal finance educator, that they are. Because people want to make them more than they’re supposed to be. So I gave my kids allowances starting at age three, and it was an age-based allowance and it taught them how to save short-term, long-term and how to give the charity.
00:38:48 And they literally had different things. And it, if you put money in to save long-term, I’ll match that. I started teaching my kids that at third grade. Well guess what, my kids are now in their twenties, those stock portfolios that they, that became theirs when they became adults, they haven’t plowed through that money and spent it willy nilly. It has been their financial bedrock that,
00:39:11 you know, it’s, they’re doing all the right things, but they have managed to avoid some of the wrong things because they grew up with those lessons. And trust me, if you really want to hear it, my kids know that anytime I go onto a show like this, I’m likely to tell the story of Timber the Talking Tree. But it is a lesson,
00:39:31 it makes them want to kill me, but they have to acknowledge that they did learn the lesson. And Timber the Talking Tree is simply this: We went to a steak house that had, you know, the moose on the wall talks at you and you know, the fish flap and whatever, and the waitstaff sings occasionally. And while you were in the waiting room,
00:39:51 they had a talking tree named Timber, which was really a mechanical thing with a guy who had a microphone, and he was just kind of watching, whatever. And, you know, the kids weren’t paying attention to what was going on. But it also had a gift shop that sold Timber the Talking Tree puppets, and my kids had allowances and they were probably six and four and they wanted to get a Timber
00:40:21 the Talking Tee puppet. And they both wanted to do this. And I’m like, “Why don’t you guys share this? Why don’t you find a way to make it that, you know, you’ve got Timber, but you’re sharing with your sister. You both put a little money in and you can do that because otherwise you’re going to pretty much run out of your spending money in your allowance account.
00:40:44 And then you won’t be able to buy anything for awhile.” And no, they both insisted on buying Timber the Talking Tree. And about three weeks later, Timber was never seen again. So they just stopped playing with it. But they recognized that it was a mistake. That, for a while there, it was, you know, “Oh, I want this.” Because to me,
00:41:05 an allowance is replacing money that you would otherwise give them. In other words, it’s not for chores. If my kids did, chores are part of being part of the family and it’s not for like, “Hey, if you go cut the lawn…” Well, if I’m cutting the grass and I have to pay a guy 50 bucks to cut it if I don’t want to,
00:41:21 and you want to volunteer to cut the grass and you do a good job, you should get paid for that. But I’m not paying you to, you know, “Oh, I just went grocery shopping and bring the groceries in.” No, no, no, you don’t get paid for that. You don’t get paid for doing the dishes,, or vacuuming or doing what you need to do to be a citizen of the house.
00:41:38 But if you think about kids at age three, you know, they want to spend your money when they get to the grocery checkout. That wasn’t going to be my money, it was going to be theirs, “Hey, you got that quarter? You want to put it in that thing at the end and see if you get a good toy? Well,
00:41:51 okay. But if you spend it there, you got nothing else till next week.”
00:41:56 DS: Yep. That’s exactly right. That’s the way we’ve done it in our house too, I was going to ask you that earlier, when you brought up allowances, whether or not you’ve ever tied yours to chores. Because I know that that tends to be the big division, is people
00:42:08 either want to, parents either want to tie the allowance to chores or not. And so I feel like you do, which is you’re a citizen of this house. And therefore we all have to do things in this house to keep the house running. But there are certain chores, kind of the, you know, the bigger or more one-off type chores that can
00:42:27 have a payment involved with them. If you know, she’s interested in that.
00:42:30 CJ: Well, when I talk to people who say they don’t give, they don’t believe in giving an allowance. And then I would say, “Well, so when your kid was 12 or 13 and they started the, you know, ‘I want to go to the movies with a friend,’
00:42:42 what would you do?” And they’re all, “Oh I’d, you know, buy their tickets and drop them off.” And I’m like, “Okay…
00:42:46 DS: That’s an allowance.
00:42:46 CJ: … well, why are you doing that?” Like I gave my kid an allowance. And if my kid said, “Hey dad, can I go to the movies?” “Well, you tell me. Like, I’ll drive you, but I’m not paying for you.”
00:43:00 “Why not?” “Because it’s your money, to decide that you’re going to go.” And make them make those choices, and discover that money gives you choices and money gives you options and power.
00:43:11 DS: Exactly. I always refer to that as ‘the magic words.’ The magic words are “use your money.” “You have to use your money,” because that, I mean, I can’t tell you that,
00:43:24 I mean, it was almost like a switch, a flip of a switch, when, you know, we would go out shopping and she would say, “Oh, I want this, I want this.” And then you’d have to have these conversations about why she can’t have that, you know, or why it’s a bad deal or whatever. And then finally,
00:43:38 when allowances started kicking in and were regular, and she said she wanted something, I would say, Well, okay, but you have to use your money.” Whoa! I mean, that was like screeching to a halt. And then she had to really think about how bad did she want this thing? Was she willing to use her money for it? And nine times out of ten,
00:43:56 the answer was no! She was willing to spend my money, but she wasn’t willing to spend her money on it. And so I think that’s been one of the most important lessons that I’ve taught my daughter. She’s 12 now, and she’s pretty savvy with her money, but that’s been one of the most important lessons for her is that when she knows it’s her money,
00:44:15 then she makes better decisions.
00:44:16 CJ: There’s no question that that’s something you want to teach them. That’s how it should work. And oh, by the way, that idea that, “Okay, you can blow the money today, but then it means you’re not going to have enough next weekend.” You know, it wasn’t like, “Oh, when your allowance goes up,
00:44:33 as you start to spend more, it’s going up so dramatically that like, wow, now you’ve got, you’re flush with cash.” It was still going to be, “Okay if you go to the movies…” You know, when they were able to start, “Okay, well you can go to the movies with your friends or whatever,” it was going to be, “If you
00:44:48 DS: Yeah.
00:44:48 blow your money on something else, you’re not going to the movies this weekend.”
00:44:49 CJ: And so that gave them those choices too. And I think anytime you’re teaching them that stuff, you’re making them better consumers.
00:44:54 DS: Oh, definitely. I mean, and that speaks to, you know, the advanced planning of sacrificing the enjoyment now, in order to have enjoyment later.
00:45:09 Something bigger and possibly more expensive later that you might want, you’re sacrificing the pleasure you might get from the small thing you might buy today in order to save up for something bigger. So yeah, these are, I think these are lessons, Chuck, that probably a lot of adults need to have too! (laughs) Not just kids!
00:45:23 CJ: They are much harder to learn later in life.
00:45:29 DS: I think so. I think so. Well, thank you so much for sharing your Halloween adventures. And if we got trick-or-treaters here, I would definitely be inclined to try that, but we don’t. And I’m grateful for that actually! (laughs) And it was fun talking about just kids and money. And so I really appreciate you being here.
00:45:50 Folks that – so you’ve been a financial journalist for a really long time and you run the Money Life podcast, so where can folks find you online?
00:45:57 CJ: Well, the show is Money Life with Chuck Jaffe, and you can find us on all of your favorite podcast apps. But you can also find us at moneylifeshow.com. So on Twitter, on Facebook, it’s @moneylifeshow,
00:46:13 and then it’s moneylifeshow.com, three words put together, no spaces, no dashes moneylifeshow.com.
00:46:20 DS: Sounds great. Well, thanks a bunch.
00:46:22 CJ: Thank you for having me. It’s been a blast.
00:46:23 Do you enjoy the SimpleMoney Podcast? Tell your friends and please be sure to subscribe and leave us a review. Find out about our blog, courses, the SimpleMoney Club, and my book by visiting simplemoneypro.com.
00:46:40 My book, Simplify Your Financial Life, is available for purchase online, or you can ask your local bookseller or library to order it. See you next time.

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