On this week’s edition of Money, I’m Home, Lynne is once again joined by financial expert and Consumers @Work Manager Scott Dobson to discuss helpful tips and conversations to share with your student who may be heading off to college, trade school or directly into the workforce.

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0:00:06.9 Lynne Jarman-Johnson (LJJ): Money, I’m home. Welcome in, I’m Lynne Jarman-Johnson with Consumers Credit Union. From finance to fitness, we have it all, and right now there is just so many congratulations to all those high school seniors heading out the door and heading to new experiences, whether that be trade school or right into a job or college and university, but that means big changes. And Scott Dobson is here to help us, not only as parents, but also as kids to get on track for financial success. Scott, thank you so much.

0:00:37.8 Scott Dobson (SD): Sure, glad to be here.

0:00:40.5 LJJ: Now, Scott, is our @Work financial education guru, I like to call him a guru. Not only has he been there, done it all, but he’s here to help us learn. Scott, tell us a little bit about your background, and why you are so spot-on for this education.

0:00:56.0 SD: Sure, I’ve been in the financial industry for about 20 years now, and for the last 13 years to your Consumers Credit Union, I manage our Consumers @Work Program, and really all we do is we go out into the community and we help people with their basic finances. What to do with your first paycheck? How to get through college without getting into debt? Real live day-to-day stuff that can help you take action when you get your paycheck and do a little bit better for it. So, we don’t talk pie in the sky finances or how to make a million dollars next year, it’s really what to do with your finances, how you take your paycheck and make it work for your life, so you’re not stressed out about finances all the time. So, I’ve worked with lots of people from folks just getting started with their first job, to people that make lots of money a year are trying to figure things out, to my college freshmen, so I think I’ll be able to help them with this one because I just went through one year of this with my daughter, so I’ve done a lot of college-bound financial stuff to try to help her out as well.

0:01:55.4 LJJ: So, Scott, let’s back up to about a year, you are getting ready to send your daughter off to college, it sounds like, which is congratulations, it’s a big leap for you, too. What were some of the things that you did as far as a checklist to help not only educate your daughter, but also really get yourself kind of thinking on letting her go, you know. It’s a hard time.

0:02:19.9 SD: Yeah. So I spent most of my life controlling all of her finances and making sure that she had enough lunch money and all that kind of stuff, so it is a different route when you’re sending your kid off and you have to prepare them for what, I think some kids already have it down pat, and they know exactly what to do, and other kids, maybe even myself, when I was 18 years old that may be a little less responsible with money and maybe needed a little bit more help making sure that they made it through the semester and came back from Christmas with at least a little bit of money. There’s a million things to talk about, and I can tell you, Lynne, my dad is a financial planner, and I’ve been doing financial stuff my whole life, so I had about one billion things that I thought I should tell my daughter to do to have her financial life work for her. But I really had to break it down to simple things, and I really thought about credit and debt and getting into debt, and what should I tell her and what would stress her out?

0:03:12.8 SD: So, I think I kind of started with debt and what it’s like, the most basic things, having a credit card, and what does that mean, and why do you have one? And how does that work for you? And how could it work against you, so she, of course, wanted a credit card, that seems awesome. And my question to her was, “Why do you want a credit card?” And her real answer was she was wanted to be able to spend money, and as a college freshman, I knew that she was not going to have money. So, I needed to help her out, and I didn’t want her to get into debt, so I really tried to stress the importance of not getting into debt. Getting a credit card can be very stressful, especially if you use it for Friday nights to go out and have dinner with your friends, and then next month the bill comes, and you owe $200, and you’ve got $9 in your checking account, so that can be very stressful. So, one of the things that I really taught her about debt is that it’s scary and you want to avoid it at all costs, and you have to be mature enough to handle it. If your kids are mature enough to handle it, you could certainly help them out by co-signing on a loan for them so that they can get a credit card or helping them get a secured credit card.

0:04:22.0 SD: But I always go back to the question of what is the purpose of a credit card, “Lauren, do you need a credit card?” And what we came up with is that she didn’t need a credit card to be able to live her life, to be able to handle her finances. The reason for a credit card was to grow her credit score for the future, and so that’s what we decided to do. Was to get her a credit card, and I co-signed on it with her when she turned 18, and we got her a credit card, and I never gave her the piece of plastic. It came in the mail, and we put it aside, and I managed that and watch it for her, so we have a tool for her, to help her start building her credit report, but she doesn’t have the temptation of having a card with a $500 limit every single weekend when she’s at college just waiting to use. So, it does really depend on maturity. I know 18-year-old kids, you can give them a $500 credit card, and they would never use it once the whole semester. And other 18-year-olds, like when I was 18 that would spend it on the very first Friday. So, we really spend a lot of time talking about how stressful debt can be, and that getting into debt should be really carefully considered, not just a Friday night, not thinking about your future.

0:05:36.3 LJJ: You mentioned, I think, something that is absolutely critical, and that is the transparency of the conversation, being able to talk about money with your children in a way that is exciting, not scary.

0:05:51.7 SD: Yeah, and very enlightening. If you ask an 18-year-old what a credit card is for, they’re probably going to say, “It’s so you can go buy stuff.” If you want a PlayStation on a Friday, you can just go get it, you don’t have to have the money, you can use the card to go get it.” Which is for me, the exact opposite that I want to teach. I think a credit card is just for convenience and makes your life easy, it allows you to buy something, and then you have to pay it in full at the end of the month. If you’re giving your kid a credit card, and you’re paying the bill for them every single month or not worrying about it, you may be teaching the wrong lesson to your kid, that credit cards are just for using to buy what you want. When really, every time you use a credit card, it should be carefully considered and you should be thinking to yourself, “Can I pay this off in full at the end of the month?” And that’s really a lot of what I wanted to teach is, “You need to learn to control your own money, because you’re only 18, I’m going to help you control it until you can get there by yourself.”

0:06:44.8 LJJ: So, what about those… And we know for a fact that in banking, it’s not supposed to be easy to get a credit card, if you’re a teenager. The minute that you turn 18 that changes, and there will be offers coming to people consistently. You as an adult, as a parent, may never see those offers and not know. That’s, I think, where the key is to trying to help that transparent, open communication start. Don’t immediately… Just because you get offered $500 on a credit card, don’t immediately open it if it’s just because you want to buy pizzas every Friday, and you think that’s simple, right?

0:07:25.6 SD: It is simple, and I think as a parent, when you’re going through this summer, do life lessons with your kids. If you take them shopping at Kohls and they say, “Hey, would you like to apply for this credit card and get 30% off your total bill today?” It’s a great teaching moment to say to your kids, “Man, if you had a credit card, you could get 30% off your bill today, and that’s what they want you to do because guess what, at the end of the month, your whole bill’s going to show up and you’ll have spent that money elsewhere, and you’ll end up paying your minimum payment and then paying them interest forever and ever and ever.” So those real live teaching moments are great to use to say, “Why did they offer me this? Why are they going to give me 30% off my bill today?” It’s because they can make it up later and they hope that your want of new clothes today outweighs your need to be financially responsible. So those are the life lessons that I always say to my kids every single time when they say, “Hey, would you like to apply? I say, “Oh, no, thank you.”

0:08:22.5 SD: I always say, “I worked for Consumers Credit Union, I have to use their card.” I just have my standard response. I taught my kids the standard response. I just want to get in their mind that applying for credit is never just an, oh, an instantaneous decision, it really affects your life. You should really be thinking hard about it, and you should almost always just say no.

0:08:40.4 LJJ: Now, Scott, when you look at younger bankers, one of the things that I look at when I see good debt versus bad debt and how our teens are using money, you know the word Venmo comes to light. I don’t even know that the word checking account is used as much anymore, it’s because there’s the debit card, not the checking account, and I think that’s what your component has looked at. We all need to know what people are talking about and have the same language when it comes to good credit, bad credit, good debt, bad debt.

0:09:13.5 SD: Yes, and even banking terms. If you’re an old adult like myself, you might think that your kid needs a checkbook and to balance their account at the end of the month. If you talk to anyone under 30 years old, they will look at you strangely, if you ask them if they balance their checkbook, because they probably don’t have a book of checks or even have an understanding what balancing is. Personal finances are managed in a different way for young people. It’s what comes in and what goes out and being able to look on your device to see exactly where you are. Not getting out a pen and paper at the end of the month and balancing your checkbook to figure out how much money you have in the bank. So, if you are the adult in the situation and trying to help your kid out, you’re going to have to switch to use their terms and use their technology and help make life easy for them, because I promise no 18-year-old is getting out a piece of paper to balance their checkbook at the end of the month.

0:10:08.6 LJJ: Money, I’m home. I’m Lynne Jarman-Johnson with Scott Dobson, and we are focusing on college bound or trade school or getting into the old adulting section of your life. Thank you so much for joining us this week.

0:10:22.1 SD: Yeah, thank you.

0:10:22.2 LJJ: Jake Esselink, thank you so much for your production skills and we’ll see ya next week.

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