My favorite thing to do, when speaking to a room of teenagers, is open it up for fifteen minutes of free questions.
Most of the time, everyone starts quiet, until one brave hand goes up and asks a question like “what is credit?” which always makes me smile.
A financial coach doesn’t deal with complex math or investment funds or any abundance of money. As a coach, I deal with the scarcity of money, and how to communicate around it. So, when a teen asks me ‘what is credit’, a definition flashes in my mind:
The ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future.
But what comes out of my mouth, is this:
“Who plays video games?” A few hands go up. “You know how when you play online, each player has a ranking? It shows how good they are at the game, right? Well, in real life, everyone has a ranking to show how good they are handling their debts. Your ranking is called a credit score, and the higher your score, the more money the banks are willing to let you borrow.”
“If you don’t play video games, think about if your sibling asked to borrow $20 from you. You know your brother might not pay you back, but your sister probably would. Credit is like that feeling when you trust someone with your money, except in the real world, they make it a lot more official by giving you a report and a number to go with it…”
It drives me up the wall when presenters slap a definition on a screen and expect you to absorb and regurgitate. In my mind, that’s a sloppy education. Teenagers deserve proper financial instructions, at such a critical time of life when the first paycheck arrives in the mail at the same time as six credit card offers.
Two hands are in the air and I can see it starting. My smile gets a little wider and I call on the girl in the back, who tilts her head and asks, “how can I save money?”
Ethereal words start swimming around my head. Auto transfers goes across my forehead like a news feed, pay yourself first pops in my eyes, and savings goals hangs from my lobes like earrings.
I blink and they disappear. I look at her. “Well,” I reply, “what is it that you’re saving for?”
“I don’t know,” she shrugs, “sneakers?”
“Good,” I say, “use that to motivate you. There’s a difference between saving money and saving money for the future. Money doesn’t just pile up, it moves in a direction. If you point a little money at something in your future, you’ll keep it in a safe place and it will last. That’s how we start saving – we set a goal in the future.”
“Now, when you or your parents get a paycheck, where does it go?” One kid says the rent. Another boy jokes that it’s all gone at the mall. “Right,” I continue, “it goes to the landlord or the utility company or the store manager. Most people, as soon as they get their paycheck, are giving it away. And this, is wrong.”
I emphasize the word every time – it’s my favorite part. I add a pause to let the drama build. A few eyebrows are drawn together, confused. Others are leaning in, and one kid looks like I just said the sky is purple.
I choose a kid and point at them. “You are more important than your landlord,” I choose another kid, “you are more important than the cable company.” It’s starting to sink in, “pay yourself first. When you get your paycheck, the first person you should pay is yourself. When I get my paycheck, I put a little bit to the side and it’s mine! I don’t care who else I have to pay, this here,” I put my open palm over a pile of invisible cash, “is for me, because I earned it. I’m more important than a company, and you are too.”
It’s amazing how powerful it can be to tell a young person they are more important than the big players controlling the system. Try it and I promise you’ll see it in their expressions like you awarded them the keys to the universe.
I close with the last piece. “The easiest way to do this – to save money – is to make it automatic…” and that opens up a new discussion about checking and savings as more hands go up, and more. Before I know it, the fifteen minutes of questions is turning into thirty.
Communicate about money differently, and you can unlock a lot of potential. I recommend going home tonight, and beginning a conversation with the youth inside you, and see what questions they have to ask.