Enjoy Wellness

HerMoney Podcast: Build Better Habits With Charles Duhigg (Episode 167)

Kelly Hultgren  |  June 26, 2019

You’re trying to save more money, but can’t find the spare change.

You’re trying to exercise more, but end up making monthly donations to your gym. You’re trying to stop snacking at 4:00pm, but reach for the cookie like clockwork. That last one was exactly what was happening to Charles Duhigg. Intrigued by his personal frustration with breaking certain habits for himself, the Pulitzer Prize–winning journalist went on to become an expert on habits — and how to change them — writing two bestsellers, “The Power of Habit” and “Smarter Faster Better,” along the way. With his help, we explore the psychology behind habit formation and discuss his research-backed solutions for long-term behavior change. In Mailbag, we go over how to choose a Roth IRA, a financial planner and how to start investing with your kids. And finally, in Thrive, we’re talking about women rocking it in all professions.

P.S. We’re giving away two floor seats to almost every stop in the Rolling Stones No Filter Tour this summer, and we want you to win! Enter at https://hermoney.com/rolling-stones/!

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The HerMoney podcast is supported by      Edelman
All advisory services offered through Financial Engines Advisors L.L.C. (FEA), a federally registered investment advisor. Results are not guaranteed. AM1969416


Jean Chatzky: (00:02)
HerMoney is supported by Fidelity Investments. We want you to demand more from your money, so start by knowing what you own and what you owe. We’ll help you take the next step at Fidelity.com/demandmorenow. HerMoney comes to youth group PRX. Hey everybody. Welcome to HerMoney. It’s Jean Chatzky. I am on the road this week actually moderating a conference called Think 19 which is run by an organization called Co-op that provides technology for many, many, if not most of the nation’s credit unions. And on the roster at this conference is Charles Duhigg, who is the author of The Power of Habit, which I have talked about on this show many, many times because it’s not only one of my favorite books, it’s actually made a big impact on how I look at life, how I look at money. And so I was so excited that we were going to be able to grab him quite literally for the podcast. We are in a makeshift studio, so if it doesn’t sound exactly the way it does when we are in our typical home at CDM, now, you know why? And Charles, welcome. I am so happy to have you here.

Charles Duhigg: (01:31)
It’s such a huge treat to be able to do this.


Jean Chatzky: (01:33)
So take us back to before you wrote The Power of Habit. What made you take a look at habits to begin with and what were you looking to change in your own life?

Charles Duhigg: (01:44)
So I was a reporter at the New York Times. I’m now a reporter at the New Yorker, but at that point I was writing for the New York Times and my first son was about to be born, our first child. And my wife and I actually had this, so my wife is a scientist and we have this idea. We were like, okay, look, we’re about to have a baby, and this shows how much we did not know about having a baby. We were like, look, we’re about to have a baby. We’re going to remake our lives completely. We’re going to do everything right. We’re going to go read all the studies about how to be happy and how to be productive and how to be efficient. And we’re going to live by all those studies as soon as the baby is born, which of course looking back on it is like insane, right? Because as you and many of the listeners probably know, when that baby comes, you’re not at your best.

Jean Chatzky: (02:29)
Right. Sleep is not a big part of your life for a very long time.

Charles Duhigg: (02:34)
So we were going through these studies and the ones that jumped out at me the most were the ones about habit formation, right? The thing that kind of blew me away as I was reading this one study done by a woman named Wendy Wood, who’s a researcher now at USC, then at Duke. And she had followed hundreds of people around and she’d found that about 40 to 45% of what we do every day is a habit, right? It’s not a choice even though we think of it as a choice. It’s a habit. And, as I was talking to researchers about habits they were saying things like, look, what you have for lunch today doesn’t matter that much, but what you have for lunch every day that has huge impacts on your life. You’re about to have a kid and what you teach your kid about the habits, the habits you help him form, that’s going to determine everything. And as I was exposed to this and as I learned that we’re kind of, we’ve lived through this golden age of understanding how habits function. I just got totally fascinated by it. And so I decided to make it a book.

Jean Chatzky: (03:33)
What habits did you want to change of your own?

Charles Duhigg: (03:36)
So the biggest thing for me was I’m like a smart, successful person, right? And I could not stop myself from snacking.

Jean Chatzky: (03:46)
At 4pm.

Charles Duhigg: (03:46)
At 4pm. Exactly. I couldn’t stop myself from eating a cookie in the afternoon. And I also couldn’t get myself to exercise as much as I wanted to, right? I had signed up for like a half marathon and then I had run for three weeks and stopped. And, so as a result, I felt like if I was so smart and so successful, there should be more things within my control. And for some reason these small habits weren’t. It was as if my brain turned off.

Jean Chatzky: (04:09)

Charles Duhigg: (04:09)
When the cookie urge struck and I didn’t understand why.

Jean Chatzky: (04:14)
And what you learned in doing this was that it’s a cycle, right?

Charles Duhigg: (04:20)
That’s exactly right.

Jean Chatzky: (04:20)
And that breaking habits is really, really hard, but replacing them with better ones is slightly easier.

Charles Duhigg: (04:27)
Right. So this is the big insight. First of all, you have to understand that a habit actually has three parts, right? There’s a cue which is the trigger for the automatic behavior to begin. And then there’s the routine, which is the behavior itself. And then finally a reward. And every habit in your life has a reward, whether we’re aware of it or not. And for years, even in our lexicon, we talk about breaking habits, right? I want to break that bad habit. But it turns out that’s a totally wrong way of thinking about habits. If you can understand how to analyze that habit, how do identify the cues and the routines and the rewards, and if you focus instead on changing the habit, basically saying, okay look, there’s this cue and I’m going to respect the cue and it causes me to do this thing I don’t like and it gives me a reward that I want. I’m just going to find a new behavior, a new routine to stick into that loop. And so it’s the old cue and it delivers something similar to the old reward, but it’s a new behavior. Then we know behavior change becomes much, much easier to accomplish.

Jean Chatzky: (05:25)
Okay, so let’s take it and apply it to money.

Charles Duhigg: (05:29)

Jean Chatzky: (05:29)
Because when it comes to money, like when it comes to food, we know the right thing to do, right? You eat less, you exercise more. You spend less, you save more. And as money has become more invisible, it’s become much, much more difficult to control the habits.

Charles Duhigg: (05:48)
Absolutely. And like, you know, we just pass tax season recently. So one of the things my wife and I did is we went through all of our accounts and we were figuring out what we spent on last year. And the number of times we’d called Seamless to come deliver food to our home, without even thinking about it, right? Because it’s invisible. We never see the cash. You just press a button. So you’re exactly right. The fact that money has become so invisible has made it so much harder to be aware of what’s going on. But what’s interesting is there’s actually a lot of experiments about money habits and we know a lot about how they function in people’s lives. And one of the first things that we’ve discovered is that to do good things with money, you have to reward yourself for it, right? Every habit has this reward. And the reward is how your brain learns for the future, oh, I should make this pattern more automatic.

Jean Chatzky: (06:40)
Like give me an example. If we’re talking about doing good things with money, are you talking about saving, investing, paying down debt?

Charles Duhigg: (06:47)
Yes. So saving’s a great example, right? Or paying down debt. And there’s an interesting experiment. Think for a minute about the last time you or I saved money, right? Or someone who’s listening. It’s probably kind of painful, right? You’re like, oh, I would like to buy that thing online, but you know what? I really should save money. I’m going to deny myself those new pair of shoes or that new gadget or that new iPhone. And as a result, you’re kind of punishing yourself, right?

Jean Chatzky: (07:15)
It’s not fun.

Charles Duhigg: (07:15)
It’s not fun. There’s no reward there. So one of the things that happened. This was actually an experiment that was done in Peru. They went into this little town and they took two banks and two groups of people. In one of the banks they set up a savings account so that when people got their paychecks, this was in a town where people would still take their paycheck to the bank to cash it. And in one bank they said to folks, okay, look, when you cash your paycheck, if you want, you can put some of the money in this lockbox. Basically like a savings box. And here’s all the reasons why it’s good for you to do so. Right? You can pay for your kid’s education, rainy day fund, et cetera. In the second bank, they did exactly the same thing. They just made these like savings boxes. Literally a box you would put the money into. And then there was a receptionist. And whenever people would put money into the lockbox, the receptionist would say. Man, congratulations. Like I am so proud of the fact that you’re putting $15 away this week. Cause someday your kid’s going to go to college and she’s going to thank you for saving money right now. That was the only difference. A year and a half later they come back to see how full up the boxes are. The first bank where there was no receptionist, people on average had saved about 3% of their paychecks. In the other bank where there’s a receptionist, a receptionist who literally works two and a half hours a week just complimenting people and putting money into lock box. The savings rate is 14%.

Jean Chatzky: (08:40)
Oh my God.

Charles Duhigg: (08:40)
They had saved tens of thousands of dollars more. And the reason why is because they had a reward. So one of the things that people should do is when you save money, reward yourself. So my wife and I actually have this thing that we do every Sunday. We sit down and we open up our bank accounts and we use this program to look at them. We look at how much we spent and we look at what we didn’t spend and if we’re doing better than last week, and then we have a glass of wine. Because if we did good, we want to reward ourselves, right? We look at like how much we saved and we say like, oh man, we can take a vacation, you a month from now because of that or six months from now. And we have a glass of wine and we make the kids go and watch TV in another room. We reward ourselves when we think about savings, when we talk about savings, when we plan on saving, because that way it’s something you look forward to instead of just something you’re denying yourself.

Jean Chatzky: (09:34)
I have suggested, and your glass of wine by the way, is a much better way to do it, but for a long time I have suggested that when people save and automate their savings, and just make sure that they’re doing it regularly, that once a month you visit your savings accounts and you just look at like, go me, I’m doing a good job.

Charles Duhigg: (09:56)
Absolutely. And the automatic deposit for 401ks, that’s been a great thing, right? Because of all the behavioral economics, it makes it easier, but you’re exactly right. If you don’t celebrate, it’s hard to celebrate not spending money. But if you do it, if you figure out ways to do it, if you give yourself permission to feel good about it, then it actually gets a lot easier.

Jean Chatzky: (10:18)
I hope you’re all enjoying our conversation. I know I am. But I want to take a moment to remind everybody that HerMoney is proudly sponsored by Fidelity Investments. What if you could demand more from your money? What if you could make your savings work as hard as you do? And what if that all helped you reach your financial goals faster? It starts with a financial checkup. It starts with an understanding of what you own and what you owe. And from there, the folks at Fidelity can work with you to evaluate your investment options and different ways to grow your savings. So get started and do it today at Fidelity.com/demandmorenow. And now back to our interview with Charles Duhigg, author of The Power of Habit. Are there habit loops where it’s just tougher to get in there and make lasting change?

Charles Duhigg: (11:11)
Not necessarily. There aren’t situations where you have to like, you really have to think about the reward you’re giving yourself and make sure it’s a reward that you enjoy. And so one of my favorite examples of this actually, particularly when it comes to women in the workplace, is discussing salaries and negotiating for salaries, right? So one of the things that we know from all the available research and data and you know this far better than I do, is that women on average are less likely to talk about their salaries with coworkers, right? Which is a disadvantage because if you don’t know what the person next to you is earning you, you don’t know if you’re getting underpaid.

Jean Chatzky: (11:48)

Charles Duhigg: (11:48)
And when they’re getting hired, they’re less likely to ask for higher salary. And so one of the things you have to think about is, okay, so if I want to start a habit where I’m talking about my salary with my coworkers, I’m learning what they’re making to make sure I’m not getting underpaid, that I’m going in and I’m asking for raises every two years like I’m supposed to, right? How do I reward myself for that? Because that is hard to do. It is scary. It’s anxiety producing. It’s not something that’s fun to think about. So how do I create a reward for myself where I know that it’s going to make it easier and I’m actually going to enjoy that reward. Maybe that means that I have a community of people that I work with where I tell them. I did this and they all applaud for me. Maybe it’s that I sit down and I’ve worked out like, you know, if I get a 3% raise this year, I can buy this and when I actually go and buy that, I compliment myself. I have to say like, look, I earned this thing that I’m getting. But how do I find the reward that actually speaks to me emotionally and makes that change easier?

Jean Chatzky: (13:02)
And when it’s a reward that you’re buying, how do you make sure it isn’t just something that’s so transient because so many of the things we buy are so fleeting.

Charles Duhigg: (13:12)
So the key here is to look for emotional rewards. One of the things that we know is that the most powerful kinds of rewards are emotional rewards. Now, that doesn’t mean that they’re not tied to material things, right? But if I need a new car and I’m rewarding myself by getting a new car. And it’s a minivan, perfectly good minivan, then that might be a wise purchase, but that might not be a reward, right? Maybe I want to buy the car that like is a little emotionally exciting. That says to me like, you know what? I used to drive a minivan. Now the person type of person who drives, I don’t know, a sleek minivan, right? A Subaru or a Jaguar, a Volvo. Whatever it is,. We live in a time when there is so much attention paid to our rational being, that we tend not to focus on our emotional selves. And as someone who I like a lot said, we think of ourselves as logical people who tend occasionally to be emotional. Whereas the truth is that we are emotional beings who tend to occasionally to be logical. And the more that we listen to what we enjoy and thrill to emotionally, the more that we give that the respect it deserves and say, actually this thing excites me. This car excites me. Giving myself a massage once every two weeks, buying that, that’s not a splurge, that’s a reward. And it proves to me that I have made it. That like this is the type of life I deserve. That’s an emotional reward that isn’t transient.

Jean Chatzky: (14:44)
That was Ina Garten’s reward by the way. She decided, and I believe this was a profile in the Times Magazine, but she decided she was not having enough fun. So she went out and she bought herself a MINI Cooper and booked a weekly massage. And that was her thing.

Charles Duhigg: (14:59)
And the thing is that like for some people, that sounds like a total waste of money. But for other people, like I like getting massages. Not only is it nice and it feels good, it’s a way of proving to yourself that like, I deserve this. Right? It’s a way of saying to yourself, I’m investing in me. There’s these things known as keystone habits, right? So one of the things we know is that some habits matter more than others. That when some habits start to change, they set up a chain reaction in people’s lives. And for a lot of people, exercise is a good example of this, right? Like if you start exercising, on average, people, they start eating more healthily. They use their credit cards less frequently on the days that they go running.

Jean Chatzky: (15:37)

Charles Duhigg: (15:37)
Yeah. They tend to procrastinate less at work when they, when they go running.

Jean Chatzky: (15:40)
That’s true.

Charles Duhigg: (15:41)
They do their dishes earlier in the day on the day they go running. Now most people don’t even notice this. Right? It’s a surprise to us. And the question is why? And the answer that they found is that it’s not true for everyone, right? So if you’re a high school athlete and you took a couple years off and then you go back to it, the rest of your life isn’t going to change because you start exercising again. But if you’re someone like me, who like was not active in high school and then you’re in your thirties and you say, okay, now I’m going to start running, the self-image impact is huge. All of a sudden you start thinking of yourself as a completely different type of person. I’m the type of person who can train for a marathon. And so when I walk into the grocery store, that type of person doesn’t pull out their credit card, that type of person doesn’t procrastinate at work. Keystone habits have power because they change our self-image in ways that we don’t even notice.

Jean Chatzky: (16:32)
And is the way you handle money a keystone habit?

Charles Duhigg: (16:35)
For many people, yes, right? So for me, I’ve grown up handling, I love talking about money. I’m sure it’s true for you.

Jean Chatzky: (16:43)

Charles Duhigg: (16:43)
I am fluent in money. And so changing my money habits doesn’t change how I see myself. But for many people I know, including my wife, who probably would not appreciate me saying this, but she doesn’t like thinking about money. She’s scared of money.

Jean Chatzky: (17:00)
A lot of women are like that. We don’t like thinking about risk. When you think about money, you’re thinking in many cases about risk.

Charles Duhigg: (17:11)
And for her, this conversation that we’ve set up every week where we go through our accounts and we see how much we’ve spent the last week and how much we’re gonna spend the next week, and are we making good choices. For her, this has been transforming. It’s been huge, right? It changes how she sees herself. She was scared of money before and now she’s someone who controls her financial destiny. And that spreads into the rest of her life.

Jean Chatzky: (17:33)
And that’s huge. When you feel like you’re controlling the money rather than the money controlling you, that is a totally…

Charles Duhigg: (17:40)
And anyone can do that, right?

Jean Chatzky: (17:42)

Charles Duhigg: (17:42)
Just a matter of trying to figure out, like what are the cues that are causing this habit to shy away from this conversation? What are the rewards I can give myself when I engage with it? So that it’s not a negative experience. It’s a positive experience. My brain wants more of this experience.

Jean Chatzky: (17:58)
Speaking of wanting more, you went on after writing The Power of Habit and wrote Smarter, Faster, Better. How did that book take what you had learned and send it into a higher gear?

Charles Duhigg: (18:11)
So the, the idea behind The Power of Habit is that we’re just gonna explain to you the science of habits. You can sort of apply it to whatever habit you want. And then Smarter, Faster, Better is saying, well, look, actually the research shows that there’s some habits that we know kind of universally are really good to cultivate. So, for instance, understanding how human motivation works, how to motivate yourself, that one of the things that we know is that if you’re in the habit of taking something unpleasant and making it into a choice, if you’re gonna make a chore into a choice, it’s a lot easier to start. And oftentimes the way to do that is just to link this thing that you’re doing to some higher goal and aspiration, right? Instead of getting caught in the weeds to say like, no, look, the reason I’m going in and I’m doing homework with my children and forcing them to read for 15 minutes, even though it’s like pulling teeth is because someday they’re going to go to college as a result. Right? The more that you can frame things in the correct way, the easier it is to do that. And so what we wanted to do is there were eight habits in particular, eight skills that we knew were at the core of why some people are more successful than others, and we wanted to really explore those.

Jean Chatzky: (19:19)
Well, and when it comes to money, the one that stood out to me was goal setting. We know people who set goals actually, surprise, reach their goals more frequent.

Charles Duhigg: (19:29)
Absolutely. And we know that there’s a right way to set goals, right? What the research says is that you kind of want these two goals that work together. One is a stretch goal, right? You need something you’re working towards that seems big and exciting. I want to save up to buy a new car. I want to go on a European vacation. But sometimes those goals are so big that they’re just intimidating. It’s hard to know where to start. And so what the research suggests is that you take this big goal, this stretch goal, this big ambition, and then you break it into smaller goals. And there’s a lot of ways to do this. One that we talked about in the book is called smart goals. You find something specific you want to work on and how are you going to measure it, right? Are you going to save $10? Are you going to save a hundred dollars? Is it achievable? Is it realistic? What’s your timeline? And it’s just an easy way to force you to make a specific plan. But you’re exactly right. That when it comes to money, there’s so much emotion in money, right? It’s so scary and intimidating and it makes you feel bad about yourself so frequently. But if you say, here’s this big goal and now I’m going to break it down into a small plan, like literally something I can do tomorrow and this week, it’s transformative.

Jean Chatzky: (20:45)
Yeah, it is. And people enjoy hitting the benchmarks. They enjoy hitting them along the way. That’s the fun. What’s interesting to me, having looked at this, is that it’s the process that people enjoy. It’s not actually hitting the mark, it’s hitting the benchmarks along the way and feeling good about those.

Charles Duhigg: (21:05)
RIght and allowing yourself to feel good about that. So one of the things that we know about rewards is that our brain has this weird capacity that we have to give ourselves permission to enjoy a reward, to actually enjoy the reward. And simply telling yourself that something’s a reward actually makes it more pleasurable. And so I think that when people sit down and they say like, I need $1,700 and I’ve collected 250 of that. And like, man I’m awesome.

Jean Chatzky: (21:33)
We were talking about our kids earlier and I actually think that as I look at my children in their early twenties they’re good at that. They’re good at like, you go Julia. That self-talk that I never mastered.

Charles Duhigg: (21:45)
Yeah, that’s great to hear. I mean like millennials get a lot of like gruff nowadays, but I do feel like that’s a good part of it, right? Is that they’ve actually learned psychological coping mechanisms that will hopefully serve them well in life.

Jean Chatzky: (22:00)
I hope so. I hope so. Well you are fascinating. I could talk to you for hours. Thank you so much. And I love the weekly conversation that you have with your wife.

Charles Duhigg: (22:13)
Do you learn your husband? How do you guys talk about money? I mean you think about money all the time. So what’s up?

Jean Chatzky: (22:18)
We do and we don’t do it on a weekly basis. We tend to schedule conversations when we’re going to have them. Sometimes I’m reluctant. I do this every day. I can talk to anybody about money turns out, except my husband. But we get there and we talk about it. The best conversations are the ones about goals. They’re the ones about these are the dreams, this is what we want. How are we going to plug in the numbers to actually get there?

Charles Duhigg: (22:45)
And I think it’s important to include kids in those conversations. So my father was a trial lawyer and so he would come home and he would say like, you know, I’ve got this case and someone lost an arm. How much do you think an arm is worth? Right? Is an arm worth like $10,000? If it’s a left arm, is it worth less or more?

Jean Chatzky: (23:05)
Hey, I’m a lefty.

Charles Duhigg: (23:07)
RIght. But as a result, we talked about money as kids all the time because it was fun. And I became fluent in money in a way that I’m sure you are in that your kids are and that’s really important.

Jean Chatzky: (23:21)
It’s important to make it dinner table conversation in that way. And I think we all have so many examples that we can just pull out of the newspaper or off TV or YouTube or whatever every single day. And talk about what do you think about the fact that Kim Kardashian got paid X for this? That’s a money conversation. That’s what it is.

Charles Duhigg: (23:41)
I totally agree. That conversation that my wife and I have every Sunday, so before that I actually will update this spreadsheet that we use and the kids will come and they’ll read the numbers to me and we’ll input them together. Just cause I want them, I want talking about money for them to be like talking about sports or talking about like video game. Right? It should be.

Jean Chatzky: (24:00)
It shouldn’t be daunting.

Charles Duhigg: (24:02)

Jean Chatzky: (24:02)
It’s just a tool.

Charles Duhigg: (24:03)
Yeah, it’s just part of life.

Jean Chatzky: (24:05)
Charles Duhigg, thank you so much.

Charles Duhigg: (24:07)
Thanks for having me. I really appreciate it.

Jean Chatzky: (24:13)
We are back in our studio in New York. Kelly is with me, our producer Kelly Hultgren. Were you as blown away by Charles as I was.

Kelly Hultgren: (24:22)
I love Charles. He was fantastic. He was so friendly and smart and engaging.

Jean Chatzky: (24:28)
You know he’s a real reporter.

Kelly Hultgren: (24:31)
Yes he is. And so because of that, I very much respect him already. It was the type of conversation that had me thinking about myself the entire time. And those tend to be my favorite conversations. When the information is that applicable and transferable to anyone listening. So it made me take a hard look at some of the habits I’m looking to break and ones that I’m looking to form, especially around my exercising or lack thereof. But I’ve been doing better.

Jean Chatzky: (24:57)
You have been doing better. You’re going to classes.

Kelly Hultgren: (25:00)
Yeah. I’m going to classes and I’m averaging probably twice a week if I’m being honest. And I’m playing some volleyball too, which is great. But I really got out of habit of doing it for arguably two to three years, of doing it consistently. And New York is the best city to not work out in because you walk everywhere. So that’s great. I had that going for me, but I’m thinking more maturely about my longterm health and making sure that like while optically it might look like, oh, she might be in shape, internally, what’s my age? And what about you? Do you have a habit that you’re working on? I know meditation is one that we’ve discussed before.

Jean Chatzky: (25:34)
I’m doing okay with the meditation. I’m actually, I am still doing it. I’m still using the Headspace app. I do miss days occasionally, but, no, I been feeling pretty good about keeping that going in my life. It just feels like if I don’t do it, I’m missing it. So you know that it’s a strong habit in that way. I’m trying to get from two glasses of wine to one.

Kelly Hultgren: (26:00)

Jean Chatzky: (26:03)
Why? No, you know it’s a sleep thing. You know, look, I have a glass of wine at night. But when I have two, I don’t sleep very well.

Kelly Hultgren: (26:16)
Yeah. Same.

Jean Chatzky: (26:16)
And a good night’s sleep should be reward in and of itself. So that’s how I’m trying to think of it.

Kelly Hultgren: (26:22)
That’s good.

Jean Chatzky: (26:23)
All right, we’ve got questions.

Kelly Hultgren: (26:25)
We do. Yeah. My first one is from Kate. I’m reading your new book, Women with Money.

Jean Chatzky: (26:29)
Thank you Kate.

Kelly Hultgren: (26:29)
And finding it so helpful. I have trouble figuring out how to go about finding the right Roth IRA for me. Do you offer resources to help women go about finding where to invest?

Jean Chatzky: (26:40)
Kate, and I want to make sure I phrase this answer in the correct way, the Roth IRA, and I think that you know this, is the bucket. It’s not the investments. That the Roth IRA is the account and you put the investments in the account, very much like the 401k is the account or the 529 is the account. And once you’ve opened that account, then you want to load it up with investments that make sense for you. My preference is that you open that account at a place that has low fees and good customer service and a very easy interface to use online. And these days, including our sponsor Fidelity, there are a number of places like that. If you have a retirement account at work, if you also have a 401k or some sort of retirement account at work, you may want to look at opening that Roth IRA at a place where you are already a customer, just to make it easier for you to look at things at one time.

Kelly Hultgren: (27:54)
Great. Thank you. We’ll do one from Tanya. I just discovered your HerMoney podcast and I’ve started listening from the beginning. Thank you so much. I have been slowly educating myself about money.

Jean Chatzky: (28:03)
Thank you.

Kelly Hultgren: (28:04)
I read books and my parents Kiplinger’s. I read Michelle Singletary’s column in the Washington post. That’s a great resource. I’ve had large amounts of money just sitting in savings and checking accounts for a number of years, which I know is really bad. I know that being too conservative is a big no, no, and that I need to invest it. I do have the bulk of my money in mutual funds and IRAs. I even went to a fiduciary financial planner, but I really just want some help in deciding where to invest and rebalancing. Because my salary is so small, I couldn’t bring myself to pay a 1% commission for someone to actively manage my portfolio. I’d like to manage my money myself and I’m looking for a mentor or at least someone who I could pay by the hour to help me. Do you have any suggestions on how I can find the right person to help me?

Jean Chatzky: (28:43)
Absolutely. So it wasn’t clear from her question if she has a retirement plan at work.

Kelly Hultgren: (28:50)
She says IRAs.

Jean Chatzky: (28:52)
IRAs would not mean a retirement plan.

Kelly Hultgren: (28:55)
Well she says retirement plan.

Jean Chatzky: (28:55)
Well, so the first thing is, if you have a retirement plan at work, you may be offered free financial advisor time through that plan. So if that’s an option to you, talk to that benefits provider. Then go to the company where you’ve got your IRA and see what they offer. Often there are low cost solutions including robo solutions built into some of these platforms that can just lead you by the way. It does sound like you want to talk to a person. There’s a whole network of financial planners who are willing to charge by the hour. It’s GarrettPlanningNetwork.com.

Kelly Hultgren: (29:41)
Great, and we’ll do one more from Dana. My sixth grade daughter recently had a teacher explain to her in class the importance of investing in the stock market, stressing the importance of starting early. He went through your typical example of a person who saved a little, 5,000 early in life, compared to a person who started later but saved more, 15,000, to show them how giving compounding interest more time makes such a big difference on the final dollar amount. That’s awesome.

Jean Chatzky: (30:05)
That’s awesome that he’s doing it in sixth grade. Absolutely.

Kelly Hultgren: (30:07)
Just wanted to stop there and acknowledge that. My daughter was so excited to come home and explain this all to me and announced that she’s ready to invest in the stock market so she can retire one day with all the money she’ll need.

Jean Chatzky: (30:17)
I love that.

Kelly Hultgren: (30:18)
I know. It’s so great. She even explained to me how she would like to invest in an index fund. She had even written the ticker symbol down so she wouldn’t forget, because they can give you a little piece of lots, in caps, of companies and it doesn’t charge you a lot of money. I really want to support and encourage this but I’m not sure what options a 12 year old has for investing. She already has a savings account at a brick and mortar bank and a 529 plan for college. She would love to invest and I would love for her to be able to learn about the stock market and the ups and downs that come with it. She doesn’t have a job yet. Just allowance and occasional pet sitting. So a Roth IRA wouldn’t work. Are there joint accounts, like her savings, that is in both of our names that we can open with her. Would it be best for her to wait a couple of years until she can qualify for a Roth IRA? But I would love to find something she could start now because I don’t want to lose the enthusiasm she has for this idea.

Jean Chatzky: (31:07)
First of all, this is maybe the most awesome question that we’ve gotten in a really long time. I mean we love all our questions, but I love this question in particular and no, do not wait. Absolutely. That’s the thing I don’t want you to do. I want you to capture this enthusiasm while it’s hot. You may not be able to open a brokerage account in her name, but you can open a custodial or a guardian account for her and then when she begins to earn income for at least a year, you can open an IRA and you may want to move the money into an IRA. Every financial institution will offer you the ability to open one of these custodial guardian accounts. But I would stick with the advice I gave earlier, about doing it at a place place where the fees are really low and where the cost of these index funds in terms of expense ratios are going to be similarly low. But this is just great. Please keep us posted on how she’s doing.

Kelly Hultgren: (32:10)
Yes, I agree with you. This is one of the best questions we’ve seen in awhile.

Jean Chatzky: (32:15)
As we are transitioning to our Thrive segment, one more thing I wanted to tell everybody about. I got a call the other day, a robocall, I think it was a robocall, from quote unquote, the social security administration that my social security number had been hacked. And they wanted me to call back and clear the matter up. I hung up.

Kelly Hultgren: (32:42)

Jean Chatzky: (32:42)
They wanted me to either call back or press the number one, which would take me through some maze of a menu to clear the matter up. I knew better. I knew enough to hang up. But it was just a reminder to me because when I was looking on Facebook today, our friend Mitch from PWC had gotten the same scam call. So this is obviously making the rounds. These days it is just so important to be on high alert when it comes to your security, your data. Fidelity just launched a webcast all about cybersecurity. So it’s free. If anybody wants to take a look at that it’s the it’s Fidelity.com/webcasts. And the guest on the webcast is a guy named Gary Rossi who’s been the head of security services for a long time. He was an FBI agent. I’ve heard him speak before and he’s really, really good.

Kelly Hultgren: (33:40)

Jean Chatzky: (33:40)
So If you’re worried or you get calls like this on a regular basis, you may want to just check that out.

Kelly Hultgren: (33:48)
I received the same call.

Jean Chatzky: (33:49)
You did?

Kelly Hultgren: (33:51)
Uh huh. About a month ago. And I didn’t listen to the voicemail and I just saw the number and I called the number back.

Jean Chatzky: (33:57)
Oh, we gotta stop. You can’t call the number back.

Kelly Hultgren: (34:00)
My phone is, you know, both work and personal. So sometimes I assume it’s just someone calling me for work. So I called. I spoke to someone and immediately realized what was happening and got really angry with this person on the phone. The person was like, why did you call back if this is a scam? I was like, damn it, that’s really good point.

Jean Chatzky: (34:20)
But you gotta be careful. Do you know about the one ring scam that’s going on now?

Kelly Hultgren: (34:25)

Jean Chatzky: (34:25)
So there’s this one ring scam where somebody calls you, lets it ring once, hangs up. And you get a call that it rings once, you tend to call back. Don’t call back because they are connecting you with some telecom service where you’re racking up hundreds if not thousands of dollars of charges.

Kelly Hultgren: (34:47)

Jean Chatzky: (34:47)
Yeah, I know. It’s really bad.

Kelly Hultgren: (34:49)
Uh wow. So, if anyone else has done something similar to me, don’t feel bad. But now we know and we have this webinar option because I need to watch it, clearly.

Jean Chatzky: (34:57)
There you go.

Kelly Hultgren: (34:58)
So, thank you Jean. And if you have questions please email us at mailbag@hermoney.com.

Jean Chatzky: (35:02)
Thanks Kelly. And in this week’s Thrive, we are talking about women rocking it in all sorts of professions. When you think of construction workers, truck drivers, police officers, what type of face comes to mind? For many of us, it might be one with a little bit of stubble, maybe an Adam’s Apple. We’d be wise to rethink those sexist notions according to the Wall Street Journal. In 2018, 43% more women were working as truck drivers, warehouse workers and delivery folks than in 2000. The number of women working as security guards and police officers rose 40%. While construction jobs saw the number of women on the job increase by 23%. Why is this going on? Well, other than the fact that women can do anything we want for a living, the pool of men willing to take these jobs is actually going down. So companies have had to double down on recruiting women. Also in 2019 there are far fewer notions about what is a man’s job, what is a woman’s job, which is great. In other words, the future, no matter what industry we’re talking about, is female.

Jean Chatzky: (36:21)
Thank you so much for joining me today on HerMoney. If you like what you hear, we hope you’ll subscribe to our show at Apple Podcasts. Leave us a review because we love hearing what you think. If you’re not already subscribed to our newsletters, please do so at HerMoney.com/subscribe/. We record this podcast out of CDM Sound Studios. Our music is provided by Track Tribe and our show comes to you through PRX. Join us next week. We’ll be back with another great guest and we’ll talk soon.

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