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HerMoney Podcast Episode 263: The Best Investing Tips For Moms (And Everyone Else!)

Kathryn Tuggle  |  April 28, 2021

No, the basic rules of investing haven’t changed, but here’s what moms (and everyone else!) need to know to succeed in the market in 2021.

We know these last 14 months of the pandemic have been tough. And they’ve been tough on everyone, but perhaps no one has felt the brunt of COVID’s mental load and isolation more than moms of school-aged children. Many — if not most —  moms in this country completely lost access to childcare and to school, and to any semblance of a routine, and essentially just did not get a break of more than 5 minutes for over a year. We know many women had to leave the workforce due to their increased workload at home. According to data from HerMoney’s sponsor, Fidelity Investments, 45% of women said they’d taken on an even larger share of household responsibilities compared to their significant other since the onset of the pandemic. 

But on this week’s show we want to talk about a different kind of work — the work that moms need to start doing NOW. And no, it doesn’t include dinner prep or diaper changes or anything else that’s in service to the other people in your life. This episode is all about YOU, and how you can get back on track with your financial life, your investments, and your road to a secure retirement. Because the truth is that not enough moms think about their money in terms of what it can do for their personal financial future. According to a study by the U.S. Trust, 77% of women say they see money in terms of what it can do for their families. And we get it. Your family is your life. But your money is the tool that’s going to get you where YOU want to go. 

Chelsea Brennan, the founder of Smart Money Mamas and its monthly membership community, the Motivated Mama Society, discusses how we can all walk our own path to success. Chelsea is an ex-hedge fund manager turned financial educator, and she’s helping moms change the way we talk about money, achieve our biggest goals, and model positive money relationships for the next generation. (Check out her free investing guide here, and for moms who are new to this, take a look at the new mama money plan.) 

Listen in as Jean and Chelsea break down the big “why” question — Why moms? Why investing? Why now, in 2021? What tools do moms need, specifically, that other women don’t? And since the pandemic, have the rules of investing changed … possibly forever? Many of us are a little scared of what’s happening in the market right now. Just look at the recent cover of New York Magazine: “Can I SPAC My Stonks With NFTS?” If you’re just dipping your toes into the waters of investing, and you see headlines like this — it’s easy to get intimidated, but you don’t have to be. Chelsea breaks down how we can educate ourselves to feel more empowered and confident around investing. 

She also talks about how the basic rules of investing simply haven’t changed: “Instead of trying to beat the market, be following Reddit, all of these things, to pick the perfect next meme stock, really focusing on consistent investing, making sure that you’re aligned with your risk, I think is mostly still the same for the average family,” she says. 

Jean and Chelsea also discuss recent research that shows that hourly wages of mothers are approximately 5% lower (per child) than the wages of non-mothers… If you’re a mom looking at those numbers, what does that mean for you? 

And of course on a show dedicated to moms we also talk about career breaks. According to data from Fidelity, a one-year career break for a 35-year-old woman will result in a loss of around $213,000 by the time she hits retirement. (That number factors in the lost salary, as well as lost retirement contributions, and assumes a 4.5% annual growth rate.) So, when we take a break, what do we need to be doing with our investments to lessen the blow of our time out of the workforce? 

We also dive into new moms and what they can do to financially prepare for a baby. Chelsea offers great insight into the big things new parents have to budget for, and what they can skip. We also talk about what to do after baby is here, and you decide to restructure your current role, make a major job change, start your own business, or become a stay-at-home mom. 

In Mailbag, we tackle a question from a listener looking for advice on how to pay for his son’s upcoming college tuition, and we discuss best practices with lingering retirement accounts from previous employers. And in Thrive, why 1 In 3 of ALL women of color are planning on leaving their jobs by next year, and what we can do about it. 

MORE FROM HERMONEY:

Meet all of your money goals in 2021: Sign up for the free HerMoney weekly newsletter packed with inspiration, advice and insights!

Sponsored by Fidelity Investments. Join us for Moms & Money, a candid conversation with moms about this past year and beyond. We’ll talk about the unique financial realities moms face and how you can create a roadmap for your family’s financial future. Visit Fidelity.com/Women today.

Editor’s note: We maintain a strict editorial policy and a judgment-free zone for our community, and we also strive to remain transparent in everything we do. Posts may contain references and links to products from our partners. Learn more about how we make money.

Transcript

Chelsea Brennan: (00:01)
Instead of trying to beat the market, following Reddit, all of these things to pick the perfect next meme stock, really focusing on consistent investing, making sure that you’re aligned with your risk, I think is mostly still the same for the average family.

Jean Chatzky: (00:18)
HerMoney is supported by Fidelity Investments. At Fidelity, we believe planning for retirement can help you feel better about where you stand today and more prepared for tomorrow. So visit Fidelity.com/HerMoney to learn more.

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Jean Chatzky: (00:38)
Hey everybody. I’m Jean Chatzky. Thank you so much for joining me today on HerMoney. I hope that everybody is great. I hope that you’re enjoying this spring weather. I love it when I see the pops of pink in my neighborhood. I hope that you are able to get out and enjoy it with so many of us now fully vaccinated. I know it’s about time to start getting out and breathing some fresh air with the people that we love, because let’s just say it, these last 14 months have been tough. And they have been tough on everyone, but perhaps no one has felt the brunt of COVID’s mental load and isolation more than moms of school-age children. Many of the moms in this country lost access to school with their kids in a remote setting, to any semblance of routine, to some of their childcare solutions that they had worked so hard to put in place. And essentially did not get a break for over a year. We know how many women had to leave the workforce due to their increased workload at home. And according to our data from our sponsor Fidelity, 45% of women said they’d taken on an even larger share of household responsibilities compared with their significant other since the onset of the pandemic. We could talk all day about that statistic because we know we were doing the lion’s share of the housework before. But today we’re going to talk about a different kind of work. We’re going to lead with optimism. And we’re going to talk about the kind of work that moms want to start doing and need to start doing right now. And it doesn’t include dinner prep or diaper changes or getting after your teenager to clean up their space. Today’s episode is all about you and how you can get back on track with your financial life, your investments, and your road to a secure retirement. And to help me with that is Chelsea Brennan, the founder of Smart Money Mamas and its monthly membership community, the Motivated Mama Society. Chelsea is an ex-hedge fund manager — we’re going to dig into that a little bit — turned financial educator. In other words, she is all about the investments. And she’s helping moms change the way we talk about money, achieve our biggest goals and model positive relationships for the next generation. Chelsea is joining me from her home in Connecticut, where she lives with her husband and her two young boys. Hey Chelsea, thanks for being here.

Chelsea Brennan: (03:12)
Hi Jean. Thank you so much for having me .

Jean Chatzky: (03:14)
Well thanks for coming along. Tell me a little bit about you and about Smart Money Mamas. How did this whole thing get started?

Chelsea Brennan: (03:23)
Oh, it was really a very organic thing. So when I got pregnant with our first son, I ended up joining this Facebook group of over 200 women who are going to be having their first child in the same month I would be having my first child. And I kind of became the go-to person to answer their money questions, right? Anything from budgeting and choosing the right health insurance plan to investing, saving for college and retirement. And over a years long period, it was actually right after my son’s first birthday, I realized I’d been answering the same questions a lot of different times. And I was also in a place emotionally after becoming a mom, where I wasn’t as connected in my work with my values and really feeling like I was living the life I wanted to be living. So I decided to start this hobby of a blog, where I took all the questions I’d been answering from these women and started to write them down in a place where other women could find them. And it’s really grown into a big community from there. And we have taken a very holistic look at money. How do we pay attention to the emotions that go around with money? How do we pay attention to the fact that many, many women come into thinking about money when they become mothers and when they realize that they’re going to have the financial responsibility for somebody else, and that they really got to get their act together and feel more confident with their money. And so we deal with all of those things and it has been a really exciting journey,

Jean Chatzky: (04:37)
As you know, and congratulations on that. As you know, at HerMoney, we’re all about women, all women, but why moms? What’s different about moms?

Chelsea Brennan: (04:47)
So I think that there’s a few things that are different about moms. We could first talk about the gender wage gap, right? Which we all talk about all the time. But when you dig into the data on that, it tends to be actually a motherhood gap more than it’s even a solo, just a women gap. You see that the average hourly income for women declines for each additional child that she has, and that gap gets very, very wide after your first child and your subsequent kids. So that’s part of it. I think there are some real financial headwinds for moms. But for me, I like to focus on the real positive. And I think that moms are in this incredible brilliant position to change generational narratives about money. And so when we look at the statistics and we see that the majority of kids, boys and girls, want to learn about money from their mothers, moms do the majority of spending, right? When you talk about over 90% of consumer spending is done by women, our kids are watching that. They’re with us in the grocery store, they’re with us in Target and watching. How do we spend money? How do we talk about money? How do we pay the bills? And so if we can get confident with money, if we can heal some of those old money stories we had from childhood or that might’ve even come from grandparents and great grandparents that have been passed down, we can change that narrative for our kids, let them go into an adulthood with financial stability, and ultimately teach those lessons to our grandkids and beyond. So when we talk about generational wealth, I get really excited about the position that moms are in to really drive that forward.

Jean Chatzky: (06:12)
Oh, I love that narrative actually. It’s a different form of a bedtime story, right?

Chelsea Brennan: (06:17)
Absolutely.

Jean Chatzky: (06:17)
Instilling confidence. And our confidence is a hundred percent lacking. Although a hundred percent is a statistic that just popped up in my head, but it is lacking significantly. I keep focusing on this very recent study that Anna Maria Lusardi did in her work out of Washington, DC. She’s been a researcher in this field for a long time. And she took a look at some financial literacy questionnaires where there were two sets of answers. And one set of answer gave “I don’t know” as an option to every question and one set of answers didn’t give that as an option. And where “I don’t know” was available, women chose it. And where I don’t know was not available we chose the correct answer, which means.

Chelsea Brennan: (07:03)
Oh my goodness.

Jean Chatzky: (07:03)
I know, which says to me, we know so much more than we think we know. How do we wrap our brains around that? And then how do we wrap our brains around it in particular when it comes to investing?

Chelsea Brennan: (07:18)
Oh, that’s a great question. So one of the things that we do as a practice in the Motivated Mama Society is set up what we call their Money Smile File. And I don’t care if it’s a notebook. I don’t care if it’s a Google doc. But I want you to write down all the things that you’ve done well with money. Big or small, right? Did you apply for that promotion? Did you pay off a credit card? Did you pay off part of a credit card? Did you download a new podcasting app? Are you listening to the HerMoney show today and you’re like investing time to learn more about your money? Because I want to create a place where you can go back to when you’re feeling uncertain, when you’re feeling like you don’t know, and remind yourself, wait, I do amazing things with my money all the time. And this is also like there’s some, I don’t know the statistics off the top of my head, but there’s some good neuroscience data around the fact that it’s about nine positive events. We need to offset one negative event. And so those negative events get really loud in our heads, especially for women. And so when we talk about something like investing, where maybe we’re not as comfortable talking about it, where maybe we had a meeting with a financial advisor who talked down to us and now we’ve built this whole negative relationship around it. I want a place where you can go back and really dig into all the little positive things that you do. And also, go ahead.

Jean Chatzky: (08:30)
No, I I’m just still stuck on that nine positive interactions are needed to offset one negative interaction? That’s incredible.

Chelsea Brennan: (08:42)
And I think it comes back to, you know, human beings, we’re animals. We’re trying to keep ourselves safe. And so our brain focuses in on the things that made us feel this comfort that made us feel scared. And so we don’t prioritize as much the things that we’re proud of and that we’re excited of. And so if we can even just bring those things more into the focus of our mind, maybe we don’t need nine. But in general we need a lot more.

Jean Chatzky: (09:04)
Well, and also we’re women. And so we’ve been raised, many of us, schooled, many of us, that when we do do something that we should be proud enough to shout from the rooftops, we should keep the quiet because it’s not polite. We shouldn’t do that. It’s not good to sing your own praises except that we have to. But if you put them in a book and you can go back and you can look at them, I mean, I think that totally conforms to societal impressions about how we should behave. I think we should be shouting from the rooftops more by the way, but if you can’t get yourself to do it, just write it down and then at least you can look at it.

Chelsea Brennan: (09:43)
Yeah. And so we actually do that too. We have winning Wednesday, which once a week, our members are supposed to come in and tell us something that they’re proud of. I don’t care what it is, if it’s money related or not. And some of them end up on my wall behind me in my office. We have a wall of wins for the same reason. I agree with you. Like we need to be celebrating our wins, definitely for ourselves. I think women need to celebrate ourselves, but also we’re still passing down those stories, right? And so our kids are watching us minimize our accomplishments all the time. And that’s not good for us and it’s not good for them either.

Jean Chatzky: (10:13)
I know you recently just came out with a new investing guidebook. Since the pandemic, have the rules of investing changed. I guess since the pandemic is a very sort of fungible window, but I just got the recent copy of New York magazine. And the cover of that magazine says, can I SPAC my stonks with NFTs? Right? That’s the headline. Can I SPAC my stonks with NFTs. And for people who aren’t sure, stonks is what the Reddit crowd is calling meme stocks. Are we in a whole new paradigm? Put on your hedge fund hat and tell us?

Chelsea Brennan: (10:53)
Yeah. So I think there’s a few things going on. The first thing that pops up with the pandemic is what we used to think about emergency funds has changed a little bit, right? And especially when there’s some big gurus out there for a very long time who said, you know, start with a thousand dollars and then pay down debt aggressively. And that was enough for a starter emergency fund. And so many people saw job layoffs or pay cuts or benefit cuts that showed them that what they had for emergency funds was not enough. And so we talk about getting into the game of investing. What we want to do to make sure our financial foundation is secure might be a little bit more upfront work. Might be meaning that you have that six months or that you even have 12 months if you’re someone who is working freelancing and might not have as stable of a income. So those are a little bit different things that’s probably pandemic-related. As far as what’s going on with meme stocks and everything, GameStop, all these things, I think that it’s a signal that there’s a percentage of the market that’s willing to do things differently just to screw the system, for lack of a better word. What that does for the longterm, I’m not sure. I don’t think anyone can really answer that. But I think in general fundamentals prevail. When you look at the long-term history, even though we have all these ups and downs, over the past a hundred years, stock market returns come very, very, very close to EPS, earnings per share growth over time for the entire market. And so when we look at something like GameStop, where we push the stock up to $300, if you look at the fundamentals of that company, even if they went online, that’s just not rational. And so, instead of trying to, you know, beat the market, be following Reddit, all of these things to pick the perfect next meme stock, really focusing on consistent investing, making sure that you’re aligned with your risk, I think is mostly still the same for the average family.

Jean Chatzky: (12:38)
Does Bitcoin belong in the average portfolio?

Chelsea Brennan: (12:41)
I don’t think so. Bitcoin is one of those things that we get asked about all the time. But for me, first of all, it’s an unproven asset, right? Despite the fact that it’s been around for a long time, it really hasn’t come into wide use. And it’s an open source product, so which type of Bitcoin, which of these different coins is going to win out, if any of them ever do, is a big risk. The second thing I tell our audience is that it has what we call stroke of the pen risk, which is basically anytime that you’re worried about a law or a ruling coming into place and completely destroying the market. When we look at how countries are going to be treating this new type of currency, if it does try to come into wider use, that’s still very unknown. And you know, the governments around the world, just deciding that we’re just going to let this other currency be value main currencies is probably pretty unlikely. And then the last part is that, at the end of the day, it is a currency. And so we wouldn’t tell the average family to do any kind of foreign exchange arbitrage trading in their average portfolio. It’s something that’s very difficult to do. That depends on a million different things from interest rates around the world to GDP growth and things like pandemic outbreaks and wars and all this type of stuff. And so I leave it out of your portfolio, even if you were considering it as a full type of currency, we wouldn’t do foreign exchange trading usually. And so, once again, I think it’s something that, if you want to take a teeny tiny piece of your portfolio and make a risky investment, just remember that this is a very risky asset class.

Jean Chatzky: (14:09)
How about the market as a whole right now? When you look at the stock market and granted, with the federal reserve printing a lot of money and with interest rates so low that yields on bonds are unattractive, yields on cash are even more unattractive. There aren’t that many other places to go. When you look at the fact that the stock market has gone from its low of what around 18,000 last March at the start of the pandemic to, it’s not double that now, but boy, oh boy, is it closing in? How do you read that?

Chelsea Brennan: (14:53)
This is such a hard question, right? Because we are in the longest bull market that we’ve remembered in recent time, right? In all the way back to 2009 to really now. So we’re talking in the 12th year. And on average, a bull market lasts about seven years. So we’re already beyond that point. And so you could look at many, many different metrics. You could look up just basic stock valuations. You could look at cashflow valuations. The market is more expensive for the performance of the companies than it has been in almost ever, right? And that would indicate that at some point we need to rebound, right? We need the market to come back down and kind of settle out. That’s how it always works. Trying to time that is almost impossible. And this is where it’s hard for new investors. When you’re looking at how high the market is, you’re worried about that crash and that crash will come at some point. What I can say is that we’ve been talking about that crash since like 2012, right? And so as much as we’ve seen this massive growth over the last year, when you go back all the way to 2012, 2013, we were having the same conversations. The market seems overvalued. It’s been several years. Like we’re going to have a downturn. And so if you didn’t invest then, right, if you said at that point, I’m going to keep my cash out of the market. I’m going to wait for the downturn. You would have been waiting another six or seven years and you would have lost more than doubling your money, tripling your money in that period of time. And so for me, I look at it and it definitely makes me nervous. It’s definitely like, this isn’t rational. But to try to time the market is not something I personally ever do. And it’s not something I recommend for our audience to do. I think that really sticking to consistency, especially for new investors, is the best thing that you can do.

Jean Chatzky: (16:28)
One of the questions that we get a lot on this show has to do with sort of the medium term money, the money that you need to buy a house in three years or pay for a tuition payment. Or, you know, if you’re thinking of using it in that medium to short three to five year period, what’s your advice on where it belongs?

Chelsea Brennan: (16:50)
So anything under three years is super simple, right? Like don’t invest that money. It’s way too much risk. That three to six year period, we get the same question. It’s a tough one because it’s long enough, technically, that you do smooth a little bit of the risk, but not quite as much. When you talk about the average cycle being seven years, you could hit that point wrong. So then it’s a question of what do you need the money for and what’s your flexibility? So if you need that money in five years, you’re saving to buy a house and you really want to be able to buy the house in year five. It is super important to you. You would feel very, very sick to your stomach if you watched a crash 25%, right? If that is who you are, I would keep it in a high-yield savings account or something like that, even though the return isn’t that great, because that is where your personal risk tolerance and how you plan to use that money is. Now, if you want to buy or build a house in five years, but you don’t really care if it’s five years or six years or seven years, and in year five, you saw a stock market decline and could say, okay, I’m just going to wait a little while for this to recover, and that’s okay with you, than investing is fine. I’d still make sure you’re watching your asset allocation. I wouldn’t put it in 90% stocks because you want some more stability. I’d up your bond allocation. But you have to know that that end line is a little bit flexible because you don’t want to be in a position where you need that money, and it’s a fixed hard stop and you’re going to have to sell at a loss. That’s not a risk we want to take.

Jean Chatzky: (18:17)
It makes so much sense. When we come back, I want to talk about Smart Money Mama 101. And I want to dig into some of the things that I know you do with your community every single day, that I think can be really helpful to all the members of our community, whether or not you have kids. But before we do that, let me just remind everyone that HerMoney is proudly sponsored by Fidelity Investments. Whether you are just starting to save for retirement, inching closer to retirement, or already enjoying your post-career years, Fidelity can help guide you every step of the way. And when life throws you changes, as we all know it will, Fidelity is there to help keep your financial plans in check, so you’ll feel better today and more prepared for tomorrow. And you can visit Fidelity.com/HerMoney to learn more. And while I’m talking about our sponsor, HerMoney has teamed up with Fidelity Investments this spring to give moms the financial solutions, suggestions, and support we know you need right now. Mother’s Day is just around the corner and we can’t think of anyone who deserves a round of applause after this last year more than you. You are incredible. But even rockstars who do it all successfully everyday need a little help now and then, because the truth is, as I said before, this last year hasn’t been easy. Many of us had to step off the financial path we wanted to walk, towards retirement and other big life goals. But the good news is it is never too late to get back on track. So we hope you’ll all sign up for our special week-long Motherhood & Money event. Just go to HerMoney.com. We’ve got a banner at the top of the page, where you can pop in your email address. You’ll get great content delivered straight to your inbox, starting on May 3rd. And we are back with Chelsea Brennan. Okay, Chelsea, let’s talk about some tools that you offer moms and some tactical exercises that you go through with your community on a regular basis. You help moms change the way we talk about money. How?

Chelsea Brennan: (20:30)
Absolutely. So one of the things that we really focus on in the Motivated Mama Society and across Smart Money Mamas is what I call the money hierarchy of needs. And so we take Maslow’s and we literally made each step of five steps of Maslow’s a money goal and a money milestone. And the reason is, so many women, myself included, you know, they love self-development. They love trying to figure out how to be the best version of themselves and have less stress and all these things. But for far too long, I think that has been separated from money, right? That we’ve thought that personal development has nothing to do with money, that money makes you more selfish, money makes you evil, whatever narrative you want to go with that. But to me, as someone who loves both of these things and both of these areas of study, I think they’re intricately related. So the bottom of Maslow’s hierarchy is physiological needs, right? Food, water, housing. We need money in our society to have those things. The second level is safety and security. So I think about that as, do you have an emergency fund? Are you not living paycheck to paycheck? Do you have the proper insurance that you need to keep your family and your wealth safe? If you can’t cover those two bottom basis, and so we have women that come into our society all the time that are in this space. They love personal development. They read all the books. They’re huge, Brené Brown fans, and they just can’t seem to get themselves calm. They’re so stressed out. But when we talk to them, it turns out that they’re in debt and that they live paycheck to paycheck. And what we ended up saying to them is, listen, you don’t have the mental space right now to really focus on yourself. Because even when you’re doing all these things that you’re supposed to be doing. You’re researching the type of work you want to be doing. You don’t yet have the freedom to go change jobs that don’t serve you. To not have panic when you wake up one morning and realize you can’t pay the next bill, right? There’s a real privilege in being able to do that true deep self-development work and actually implement in a big way. And so we talk about really building that foundation. The next step is love and belonging. And so, at that stage, we talk about money mindset for sure. I think money mindset is important at all levels of our money development. But I think that it’s really hard to talk to people about negative money stories and about money affirmations when they’re just trying to figure out how they’re going to buy the groceries next week, right? It’s just too hard. And so we talk about it in love and belonging, but we also talk about that when you’ve built some financial security, and you can build a little more space in your budget and in your life and in your calendar, you can have more to pour into your kids and your partner and your friends and build the network that you need to thrive and have your life. The next step, really being able to have a job that, I’m forgetting the word for it at the moment, but like.

Jean Chatzky: (23:02)
It fulfills you.

Chelsea Brennan: (23:06)
It fulfills you, right? So self-actualization is the top. That’s when you’re absolutely spending all of your time doing exactly what you want to do. And that’s really what I think of as like financial independence. Financial independence doesn’t mean you need to retire, but you’re doing your best life’s work. But that fourth level is kind of like work flexibility. If I have a boss that’s a jerk or I’m have a career that’s just not what I’m really interested in anymore, I have the bandwidth. I have the savings and whatever to go change, to go do something else, to take some classes. And I’ve built that financial security to explore my interests and my superpowers and really develop a job where I feel valued. And so we think about money as like, not just wealth for wealth sake, not just wealth, because it’s nice to not be panicked about emergencies, but also it giving you the options to live your best life.

Jean Chatzky: (23:53)
I love that. Every bit of that. You had me hanging on every word because I think it’s so true. And I think sometimes we get stuck on various levels, but particularly level two, that safety and security, for emotional reasons. One of the things that you do at Smart Money Mamas is help us get beyond the emotional roadblocks. How do you do that?

Chelsea Brennan: (24:17)
Yeah. So for that, we talk first about getting comfortable with the idea that emotions are related to money, that we’re going to have to do some hard work. It’s going to feel a little bit like therapy, but we promise it will get easier. We do that. Then we tell people what the core money fears are. So these are things like responsibility, which is the idea that, on some level, you don’t want to be the one that does this. You want somebody else to just come handle it, right? Responsibility is one. Security is another where if you were a person who grew up without food security, without housing security, or even just not feeling like you had enough attention, you’re going to be someone who hoards and holds money very tightly. And that’s going to make it hard for you to spend on yourself, to do the things you need to do. So we talk about the core fears. And then we invite people to go back and do an exercise where we super deeply journal, what are your money memories from very, very early on. Your first memory that you can come to through what were your major milestones? And we ask people like, what did it feel like watching your parents pay the bills? What was the energy in the house when that happened, right? Were your parents arguing? When was your first job? Did you want to get your first job? Did your parents pressure you? Did you have to take some of that money and contribute it back to the household. These are kind of milestone moments and really start to develop that story. And first we tell them to just tell the story, right? Just write the narrative. Take some time. Don’t try to do this all at once, because it’s too much. Take some time. Take a couple of days away. Come back. Read your story with a different color pen and I want you to start to pull out what are the narratives that you’re seeing in this story that have become something that just run on repeat in the back of your brain. And sometimes it’s incredibly surprising, right? It’s not something you even realized you were thinking. But as we pull it forward, it gets really identified.

Jean Chatzky: (26:04)
Like? For example?

Chelsea Brennan: (26:06)
Sure. So I can tell you one of my core money stories that we talk about all the time. The first thing I remember very much wanting to save for was a GameBoy. It was purple. It was like a translucent color. I wanted this GameBoy more than anything. So I spent months saving up for it. I was like eight or nine years old. We went to GameStop actually to buy the thing. And I’m with my dad. And I’m someone who’s a natural saver just in general. And we got to the store and I had all this money that I saved up and I could not buy this GameBoy. Like I was in tears in the store. I don’t think I can do it. I worked so hard for this money. I’m not going to get it. I’m not going to get it. My dad, we left, and his first words were, I’m so proud of you. This is going to be such a good thing for you in the future. You’re going to be so good at saving money. And he told everybody this story, right? His friends, whatever Chelsea didn’t buy. And so to me, I picked two things out of that. One, saving money equals worthiness of love, right? And attention. And two, that buying things that mattered to me was frivolous. And so for a very long time, I saved every penny. Things that would have made me very happy, things that I love to do, I could not spend money. And it came back Jean actually, after I got my first wall street bonus. I’m living in New York, living very, very frugally. I get my first bonus and I wanted a bike. I biked around Manhattan a lot. I wanted a bike and same thing happened. I walked into the store and was literally like hives on my neck, super upset. And this time I was with my mom and she said to me, she was like, we need to really talk about this. You’re checking all the boxes to be financially safe and secure. This is a minor expense for what your budget looks like. Why is this upsetting you so much? And at first I was upset. I was like nothing. It’s just like irresponsible to spend money. And it took a couple of years truly to start to identify where that was coming from and learn to give myself permission to spend money, to enjoy money. And that money was not an end in itself.

Jean Chatzky: (28:04)
Thank you so much for sharing that with us. You’ve got me flashing on a memory that I have not thought of in so long. And I don’t even know if we have time to analyze it. But when I was, I don’t know, maybe 11, my family was going to Disney World and we had been told souvenirs are on you guys kids. You work for it. You save your allowance. And I had this bank. It was a weird little bank. It was metal. It was round. And it was like a pop-top can where in order to get the money out, you had to pop the bottom of it like it was Pringles. So I saved my babysitting money and I know I put a lot of dollars and $5 bills and even the occasional $10 bill into that bank. And when I opened it, there was nothing there because somebody had stolen it and fished it out. Some person that had been in our house, fished it out with a tweezers or something. And like you, a very careful saver, a very cautious saver, but still carry fear that that money is just not going to be there. And now I’m wondering if I need to sort of go back and unpack that memory that I had not thought about in decades. So there you go.

Chelsea Brennan: (29:21)
That’s a meaningful one, especially at that age and with vacation tied in. I’m sure there’s some stuff there.

Jean Chatzky: (29:27)
Yeah. Well, we’ll put me on the couch another day. Let’s talk about new moms for a second. That’s a big expense, but it’s also a big life change. How can we help new moms prepare financially and emotionally for what’s coming their way?

Chelsea Brennan: (29:43)
Yeah. So we have a product called the New Mama Money Plan where we talk people through three core pillars. And we try to break it down because there’s so much, and there’s also so many marketing dollars spent on really taking advantage of the nerves of new parents, right? That you’re going to be a bad parent if they don’t have this educational toy or that your kid’s going to be in danger, if you don’t have this type of crib, and all of these types of things. And so really giving a place where we can understand what is actually needed, what do we need to do to make sure where our baby has everything they need and that they’re financially secure. So that first step is a baby budget. And the first thing I’d have anybody do is look at your current spending and your current income and what room do you have there and where are you going to have to learn to either cut or bring in income to cover the expenses that are to come? It’s kind of the first thing. It’s getting an idea of where you stand. And then we look at, we have a whole checklist of saying like, what do you actually need? What does your kid actually need? This is a place to sleep, a way to eat, clothes to wear, diapers of some form, right? This is very, very basic. Babies especially early on, need very, very little. And you can get other stuff. It’s fun and it’s cute, but like let’s prioritize first. So we have that nice-to-have column, which are things that are just a little more fun if you have the budget space for it. And then we actually have a whole list of things like just don’t do that. Just let that go. You don’t need that. And to kind of help you build a budget and we focus on, you know, take some time, use our checklist, use somebody else’s checklist, to really plan out what you’re going to need for that whole first year. And I think the reason that I like that is one, it lets you start to prepare ahead of time. Like if you have a certain amount set aside for your baby, instead of spending it all on newborn stuff and then realizing that, as your kid starts crawling, they’re going to need different things. Lets you know that you have to save for it. But then the second part is seeing that there are things that get marketed to you or that pop across that you think are really important. But when you lay it out in a year, you’re like, oh my God, my kid’s only going to use that for three weeks. Like I’m not bringing that clutter into my house. And it lets you make that choice. Like what’s it worth to really bring into your house and let you start to budget for it. This includes too things like health insurance costs and delivery costs. The average delivery in the US is around $5,000. It’s a lot of money for an average American family. And so figuring out what that’s going to cost. And so we have checklists in there of the type of questions to ask your doctor and your hospital and your insurance provider to get a range. Depending on the type of delivery you have, any complications, there’s a very, very wide range, which means that mostly doctors and hospitals are reticent to give you any kind of indication. But there are good questions to ask specifically of your insurance company. What are deductibles? What are max out of pocket specifically for maternity and delivery costs? Some insurances have maxes that are related specifically to delivery. And then asking your hospital, okay, what’s the average C-section?What’s the average vaginal delivery? And let them know very clearly, I know that this isn’t a fixed number, but just give me an idea, right? And you can start to ask those questions. And really just give yourself as much clarity as possible with what those numbers are. Because I think that there ends up being a lot of fear and we blow the number up in our head of like, oh my God, we’re going to need $30,000. We’re going to need… And that might be the case depending on the type of delivery that you end up having, the type of insurance that you have. But instead of just creating this kind of demon in your head, get some real numbers on paper,

Jean Chatzky: (32:52)
I totally agree. And I would say the same thing if you’re adopting, you know? Figure out what those costs are. Get honest about the numbers. Because sometimes we don’t like to look at the numbers, but the numbers are actually a lot less scary than we thought that they were going to be. Chelsea, I could talk to you all day. We are definitely going to have you back because there’s many more things to dig into in the world of motherhood. But as we wrap this up, your top three pieces of advice for moms. And try to give me one for moms at three different stages, maybe starting, middle of the road, and as your kids are flown or flying.

Chelsea Brennan: (33:30)
Good question. This is, I got to think for a second what my three tips are going to be. So for the new mom, whether you’re pregnant, whether you just had a baby, know that there are a lot of changes happening and everything feels like the decision needs to be made right now. The best piece of advice I got as a new mom that was really about parenting, but can really tie into money too, is don’t make any major life decisions the first six months after your baby is born. Our brains just aren’t quite working, right? Like if your kid doesn’t start their 529 until they’re seven months old, they’re great. They’re still way ahead of the game. Don’t put too much pressure on yourself and remember that too, have a way to gut check yourself on spending, because often, because we’re nervous, we are more likely to overspend. We actually see that with adoptive parents a lot, you buy all kinds of stuff to kind of relive that experience and then end up feeling stressed. So have somebody to check you, whether it’s a friend or a spouse to say like, okay, if I’m buying anything over $50, I’m going to text you first. Just have a way to check. The second thing is that, don’t put your whole life and career on hold. Sometimes we hear this narrative, if your kids are in that five, six age group where women say like, well, I’ll wait for that big promotion or that big job change or go back to school until my kids are more able to do things on their own, until they’re 15, 16, until they move out. But that’s years and your kids deserve to see a mom who thrives in her superpower, that lives her best life, that builds wealth, that demands her worth. That’s such a positive experience for them and such a good thing for you. It makes you come back to be a mom with just this amazing energy. And so, don’t put your life on hold. Don’t wait to save for retirement. Don’t wait to go for that promotion until your kids are older. They’re going to love seeing you be happy. And then for those people whose kids are grown and flown, I know we’re thinking really clearly at this point about retirement. We’re looking at those numbers. Some people get a little bit worried that they haven’t saved enough. But this is another moment, right? This is another Phoenix rising from the ashes moment where you now have way more time for yourself in your life. And so give yourself a few weeks, months to think about it. What do you want to do differently? Do you want to make a big change? Do you want to move? And then break down those big, beautiful dream goals into smaller steps? What are the first things that you’re going to have to do? Really use that to titration, which is saying like, what’s the micro-step? Like, okay, I want to live on a Lake, let’s Google, lake houses and just look at the pictures and get an idea, right? Very, very small steps. But you know, let yourself reimagine what your life is going to be like and what your financial life is going to be like now that you and your partner, if you have one, are kind of on your own again.

Jean Chatzky: (36:10)
Chelsea Brennan from Smart Money Mamas. You are so smart. I mean, you’re just so smart. It’s a perfectly named site and community. Thank you so much for being with us today and Happy Moms Day.

Chelsea Brennan: (36:22)
Thank you so much for having me.

Jean Chatzky: (36:24)
We’ll be right back with Kathryn and your mailbag.

Jean Chatzky: (36:26)
And HerMoney’s, Kathryn Tuggle is with me now. Hey Kathryn.

Kathryn Tuggle: (36:39)
Hey Jean, I really enjoyed that conversation.

Jean Chatzky: (36:41)
Thanks. I enjoy all of our guests, but something about Chelsea’s affect, and I’ve talked to her before, not for this show, but for other things. She’s very soothing. She’s just very calming to me and I wonder if it’s a product of working in that hedge fund environment That it’s so go, go, go, and everything is always a high wire act and you just learn to be totally Zen in the moment.

Kathryn Tuggle: (37:08)
It’s such a good point. I think maybe it’s a combination of hedge fund trial by fire and trying to keep up with two young boys who she described as very rambunctious. And this really speaks to what we’ve been talking about with moms looking to get back into the workforce, and that experience that you get when you are raising kids, because it is just as valuable as it is to be in the kitchen helping your kids with homework as it is to be running a meeting in the boardroom.

Jean Chatzky: (37:38)
A hundred percent. And harder by the way. It is so much harder to be managing at home than it is often in the workforce. I mean, I remember when my kids were young, that my time at work felt like I could breathe. You know, my time at work just felt so much easier. I think it was because I knew what to expect and I could predict, not necessarily what problems were going to arise, but when they arose, how to handle them. Whereas when you’re a parent, the stakes just feel larger every single time. And the decisions, to me at least, always felt much more difficult.

Kathryn Tuggle: (38:23)
I think that word predict is so important because I think that is what made this last year so impossible for so many moms, is that there was no way to predict how your kid was going to react to school. There was no way to predict if you were going to have to be on a zoom meeting at the same time a jar of mayonnaise broke, right? Like it was just all elements of predictability were stripped from this last year, which would drive me crazy if I were a mom.

Jean Chatzky: (38:50)
And let’s just acknowledge that it’s been a really hard year for everyone, right?

Kathryn Tuggle: (38:55)
Yeah.

Jean Chatzky: (38:55)
I mean, all of our listeners, moms, not moms, men, women, we know you’re out there. We know you’re all listening. And we know this year has been a beast, no matter who you are. And I think there is a lot of wisdom in what Chelsea said that applies across the board to all people. You know, it’s just like on this show, I think that a lot of what we talk about, of course, we talk about it geared to our audience of women. But we know that men are listening and we know they’re getting stuff from it because they write us in the tell us.

Kathryn Tuggle: (39:29)
They do. I was really struck by what she said about how it takes nine positive interactions to offset one negative one, because that is so my brain. And I often find myself thinking, why do I fixate on this one bad thing when so many good things happened in my day? And I know I’m not the only person who does that.

Jean Chatzky: (39:50)
No, I made a note. I want to look up that research and then I want to figure out who did it and then I want to have the researcher on the show. Because that was just astonishing and a hundred percent true for me too.

Kathryn Tuggle: (40:04)
It made me think how important something as simple as a gratitude journal really is because you are giving yourself concrete, visual, tangible, written-out reminders of those good things. You are tricking your own brain into being more positive.

Jean Chatzky: (40:21)
Yeah. And sometimes that’s what we need to do. Is to just trick our brain into believing the true story that happens to be true, but we just don’t believe it because we have so much evidence to the contrary.

Kathryn Tuggle: (40:33)
Exactly.

Jean Chatzky: (40:34)
Anyway, thank you for teeing up that conversation and let’s dig into some questions.

Kathryn Tuggle: (40:40)
Absolutely. Speaking of our male listeners that you just mentioned, our first note comes to us from Jeff. He writes hi Jean. Thanks for all your help over the years. I’m in the middle of trying to figure out how to pay for my son’s upcoming college tuition. The calculated family contribution is a crazy amount that we simply cannot afford. He’s an exceptional student and we expected more merit and scholarships then he received. What’s the best way to attack this as far as applying for loans. The federal student loan is nowhere near enough, under $5,000. Should we work with a bank or are there better options you can suggest. He’s the oldest of three so there are many more tuitions to come. Thank you.

Jean Chatzky: (41:22)
Thank you so much for writing Jeff. Yep. We’re happy that you’re out there and we’re happy that all of our male listeners are out there. This is such a common conversation, particularly at this time of year. So a couple of things. The first is, I would take a look at all of the schools that he was accepted to. Not to say that he should go somewhere else, but you may have a card that you can play with the school that he has chosen to go to if another school in a similar category, of a similar rank, offered him more in the way of financial aid. You should pick up the phone and talk to the financial aid department at his school of choice about the fact that you were expecting more, and see if you can get them to engage in some sort of a negotiation. It happens all the time. Families are reluctant to do it because they’ve heard that schools don’t like to quote unquote negotiate. But particularly in this year with financial situations from families changing so frequently, you may be able to get more in the way of scholarships and grants and merit aid, aid that doesn’t have to be repaid, than you thought. Then, as far as borrowing the rest of the money, there are a couple of choices. You can look into the world of plus loans, which will allow you to borrow up to the cost of attendance. Plus loans are loans that are made to parents, but there’s an origination fee of slightly over 4% for those loans. You can also look into the private loan market. And private loans are credit based loans. So assuming you’ve got good credit, you can absolutely shop around for those loans. There are different lenders with different programs. Some will offer you loans where you co-sign for your student. Some will offer you programs where you can get released as a co-signer after your child has been in the workforce for a few additional years. But I would encourage you to really survey the landscape there. There are a lot of banks in this marketplace. HerMoney has done some work with Citizens Bank, for example. But there are also some FinTech companies like SoFi and Earnest and others. And you just want to go to a website like a magnifymoney.com or a bankrate.com, where you can get a sense of what the deals are that are being offered at that point in time. The third piece of advice that I want to give you, and I want to give it to you because of the additional tuitions that you have coming down the pike, is that if this time you didn’t apply to a very wide range of schools, you may want to change that approach next time. What we learned from our discussion with Ron Lieber, who was a guest on the show a few weeks back, is that when you apply to a wide range of schools that include a number of schools that really want to have your child because of your child’s academic achievement, then you are likely to get more in financial aid. This year in the college market was a little bit of an anomaly. Because they weren’t requiring test scores, the number of applications was just off the reservation. And for that reason, you may have received less than you thought, even if you did follow that approach. But I just encourage you to make sure that there are at least a couple of schools on your next couple of kids’ lists that you think would be so lucky to have them and that will maybe step up with truly significant aid packages. Lots of luck with all of that. And please let me know if you have other questions.

Kathryn Tuggle: (45:31)
Yeah. Good luck. This question just made me think of all of the trials that parents go through, because right up until college some of those biggest decisions are still weighing.

Jean Chatzky: (45:43)
Yeah, yeah. Right up until college. Right up through college. Right up through graduate school. I don’t think it ends. I’m thinking about my mother who, right now, is being visited by my stepdad’s three boys who all have swooped in because their dad was having some health issues. And you know, as much as we feel like we parent our parents, when they get to a certain age, they are absolutely a hundred percent still parenting us.

Kathryn Tuggle: (46:15)
A hundred percent. Every day. Our next question comes to us from Sarah. She writes, hello, Jean. I love your podcast. It’s been a consistent, calm presence in my life, and I’m grateful for your guidance over the years. I have a lot of questions I could ask you, but I’ll focus on one for now. My husband, 35 years old, is a public school teacher and I, 33 years old, have worked in nonprofits for 10 plus years. He has two 403Bs, one from a district he used to work in and one with his current school district. I have a Roth IRA I started on my own and a simple IRA from a previous employer. Can you tell me about best practices with retirement accounts from previous employers? Is it best to leave them be or combine them? If he combines his 403Bs and I combine my IRAs, will we accrue penalties or fees? What’s the process? In the future, what should we keep in mind with regard to retirement accounts when we switch employers? A friend said that you get a 60 to 90 day window after leaving a job to combine 403Bs. Is that true? Thank you so much.

Jean Chatzky: (47:22)
Hey, Sarah. Thanks so much for the question. And, thanks to you and your husband for what you in your workaday lives. Teaching public school is just such a gift. And I think working in nonprofits, although I’m not sure what you do specifically, is very much the same. So thank you for all of that. As far as these questions, the rules for 403Bs are very much like the rules for 401ks. So when you leave an employer, assuming you have a sizable balance, usually it’s about $5,000 in that account, you can leave it with your former employer, if that’s something that you decide to do. You can roll it into a rollover IRA or into a new employer’s plan, or you can withdraw it. You didn’t ask about withdrawing it. We don’t want you to withdraw it. So let’s just leave that to the side. In terms of combining these accounts, there are two things to look at. One is administrative ease, and the other is cost. When we change jobs a lot, and the average adult will have 12 different jobs over a career. If we leave a retirement account behind at every single job and they are with different institutions, it is really, really difficult to keep track of how your money is invested, whether you’re appropriately diversified. You lose track of accounts. It’s hard to get a sense of the whole picture. And that’s a really motivating reason to start to combine things, to roll things into the same IRA, where you can have some control over your account, but also, you know exactly where it is. You can sign on to one screen and you can see everything. The other thing, as I said is cost. And there are costs to retirement plans. You should know what the cost is when you’re an active employee. But you should also know, is that cost going to change if you leave that employer. And then compare that cost to the cost of maintaining an IRA at your choice of institution. And at that point, you’ll be able to figure it out. The other thing to keep in mind when it comes to orphan programs, orphan 403Bs or orphan 401ks, jobs that you’ve already left, is that another reason to move the money is that you don’t particularly like the menu of investments that you’ve been offered. But a lot of plans these days offer a vast variety of choice. And so I think that falls down to probably the third position on the list. As far as that 60 day window to combine 403Bs, what she’s talking about is the instance where you actually received the money, where you get a check for that money. Then you have 60 days to roll it into another qualified account. In the best of all possible worlds, you don’t want the money at all. You want to do a direct rollover where the funds go from one institution to another institution. And if you’re moving money, let’s say out of a 403B and into an account, let’s just say at Fidelity, because Fidelity is our sponsor. You can call Fidelity and they will help you with that transfer. You can call any brokerage firm and they will help you with that transfer so that you don’t take receipt of that money. Thank you so much for the question, Sarah.

Kathryn Tuggle: (51:12)
Thank you so much for the advice Jean. And anyone looking to write into us can do so at [email protected]

Jean Chatzky: (51:20)
And in today’s thrive, a recent survey by FairyGodBoss and nFormation found that one in three of all women of color are planning to leave their jobs by next year. More than anything else, the women cited feelings of burnout as their reason for leaving. As the saying goes, a woman’s work is never done and last year, our workloads became back-breaking. Many women, as we talked about today, faced additional family duties, homeschooling kids taking care of older parents, in addition to shouldering more household responsibilities and demands at work. The survey found that despite companies often lofty statements about a commitment to diversity, nearly two thirds of women of color are not satisfied with their company’s diversity and inclusion initiatives. And 60% of women of color feel their companies are not prepared to handle racist incidents in the workplace. Both are contributing factors when it comes to leaving their jobs. Furthermore, many women of color want more than a career. They desire a calling, which also causes women of color to consider leaving their jobs. So what can companies do better to serve women of color? We’ve got a story on HerMoney.com this week that breaks it all down. But just a few points here. If companies want to retain the women of color they employ, it’s time to get serious about diversity and inclusion initiatives, which means moving beyond lip service. This means that while corporate pledges and statements are a great place to start, they need to be backed up with actions. And these actions should include investing time and resources into defining a diversity and inclusion strategy that spans recruitment, hiring and workplace practices and that sets specific goals. Rha Goddess, who is co-founder of nFormation, told HerMoney.com that seeing women of color in positions of leadership is critical in attracting women to your organization, and it’s the clearest way for a company to showcase its commitment to diversity. She also told us that there has to be honest dialogue about where the gaps are in knowledge, mindset, and behavior, so that they can be addressed. And women of color need to feel safe to talk about the challenges they face, and safe to say they need a break without it being detrimental to their careers. They also need to feel supported in their goals and aspirations. Simply put, women of color want credit where it’s due. And we are encouraging all of our listeners to ask your employer for what you need and to be an ally and advocate wherever possible. Thank you so much for joining me today on HerMoney. Thanks to Chelsea Brennan for sharing her mama magic and her wisdom with us today. I hope that all of you listening were able to get some encouragement and inspiration for your investing journey. If you like what you hear, please subscribe to our show at Apple podcasts. Leave us a review. We love hearing what you think. We’d like to thank our sponsor, Fidelity. We record this podcast out of CDM Sound Studios. Our music is provided by Video Helper and our show comes to you through Megaphone. Thank you so much for joining us and we’ll talk soon.


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