Episode•July 13, 2022•27 min

Raising Confident Teens with Rachel Murphy | Ep. 122

Rachel joins Tiffany in this week's episode to break down how she helps young adults specifically teenagers learn to be financially literate, and manage their money. About Our Guest Rachel has worked with young people for almost twenty-five years as a youth director, a foster parent, a mentor to young adults and is a mom to five children (ages 8-24). Through the years she became aware of how many teens are lacking easily taught life skills that would help them as they launch out on their own. Her family started Raising Confident Teens to help teach life and leadership skills to teens and their parents. She is the main host of the Raising Confident Teens podcast. Rachel is also the author of the newly released book: I Am Not Your ATM: A Practical Plan for Teaching Your Teen to Manage Money. Connect with Rachel Instagram: https://www.instagram.com/rachelmurphycoaching/ Website: rachelmurphycoaching.com Facebook: https://www.facebook.com/RachelMurphyCoaching Connect with Tiffany on Social Media Facebook: Money Talk With Tiff Twitter: @moneytalkwitht Instagram: @moneytalkwitht LinkedIn: Tiffany Grant This podcast uses the following third-party services for analysis: Podcorn - https://podcorn.com/privacy OP3 - https://op3.dev/privacy

Apple Podcasts Spotify YouTube Overcast Amazon Music

Key Takeaways

1
Financial literacy education must be relevant, repetitive, and interactive to be effective
One-time school classes (half credit in 9th grade) are insufficient for retention
Focus on immediate teen concerns like saving for a car rather than retirement at 65
Use real money scenarios instead of abstract word problems
2
Parents should gradually transfer budget categories to teens starting around ages 10-12
Begin with small categories like lunch money or IC budget that won't cause major harm if mismanaged
Add categories and increase salary annually as teens demonstrate responsibility
Direct deposit salary into teen accounts so parents don't handle the money
3
Teens learn best through practical experience rather than lectures
Lectures are ineffective - teens hear them like Charlie Brown's teacher
Allowing teens to manage their own money creates natural consequences and learning opportunities
Parents should model mistakes and show how to recover from them
4
The salary system puts teens in control and reduces parent-teen money conflicts
Calculate salary based on what parents already spend on teens (haircuts, clothing, dining out, school supplies)
Teens become more resourceful and appreciate money more when spending their own allocated funds
Eliminates situations like asking for money in front of friends or finding unworn clothes with tags
5
Don't bail teens out of normal budgeting mistakes
Unexpected expenses (school trips, growth spurts) warrant parental grace
Normal overspending should have natural consequences to build financial discipline
This prevents adult children from returning home unable to manage independently

Intro

Tiffany discusses practical strategies for teaching teenagers financial literacy and money management with Rachel Murphy, author of 'I Am Not Your ATM.'
Rachel Murphy has worked with young people for nearly 25 years as a youth director, foster parent, and mentor. She's a mother of five and founder of Raising Confident Teens, which teaches life and leadership skills to teens and parents.

Instagram Website Facebook

– Defining Teenagers and Personal Finance Approach

Rachel explains that the definition of 'teenager' depends on the individual child's maturity level. She emphasizes that personal finance education must be tailored to each family's unique circumstances including income, number of children, and geographic location.

– Getting Teens Engaged in Money Conversations

Rachel identifies three components of successful financial literacy programs based on iGrad research: relevance, repetition, and interactivity. She warns against lectures, which teens tune out like Charlie Brown's teacher.

A lot of parents are afraid to teach their kids about money, because they weren't taught about money, or because they feel like they're not winning themselves with money. And they're like, who am I to teach my kids? But I think that you are the perfect person to teach your kids about money, because you are living life with them every day.
– Rachel Murphy

– The Practical Salary System for Teens

Rachel describes her family's approach of giving teens a monthly salary that direct deposits into their accounts. This salary covers categories parents would normally pay for including haircuts, clothing, dining out, school supplies, and gas. Parents should start small with low-stakes categories like lunch money and gradually add more responsibility.

Anything that you spend on them, you could... put that in their salary. It makes them more mindful of the value of the dollar.
– Rachel Murphy

– Budgeting Tools for Teens

Rachel recommends YNAB (You Need A Budget) for tracking and reconciliation practice. She also highlights Cube, a digital envelope system with debit cards that only loads money when an envelope is opened, providing security and intentionality. Both tools allow teens to practice real banking skills in a controlled environment.

– The Blessing and Curse of Financial Independence

Rachel emphasizes that parents must resist bailing out teens from normal budgeting mistakes. She notes that learning these skills in the teens rather than 30s or 40s gives young adults a significant advantage. The approach is described as 'a blessing and a curse' because families must customize it to their situation.

Books Mentioned

I Am Not Your ATM: A Practical Plan for Teaching Your Teen to Manage Money by Rachel Murphy

Resources

Raising Confident Teens Podcast
YNAB Budgeting Apptool
Cube Digital Envelope Systemtool
Free Spending Tracker Download

Topics

teen financial literacyparenting money skillsbudgeting for teensteaching kids about moneyfinancial educationallowance systemsYNABdigital envelope budgetingraising independent teensmoney management for young adults