Oprah and Business Leader Mellody Hobson Share the Money Advice You Need to Know Now

Hi everyone. Welcome to the Oprah. podcast. I'm so glad to be here with. you. And hello to everyone watching us. on YouTube. I'm talking with [music] the. brilliant and most effervescent Mellody. Hobson, who is the real maven of money. I know [music] that for many of you. talking about money, especially with. your children, can bring up a lot of. stress and anxiety. Out of nowhere, they're going to ask you. questions you're not prepared for. Mellody grew up the youngest of six.

children to a single mother who. struggled to pay the bills. She has her own painful memories of. being evicted from their homes [music]. in Chicago. This lack of agency fueled. Mellody's awareness of what money means. in the world. So, she made it her. mission to succeed. Shortly after. graduating from Princeton, she joined. Ariel Investments. It's a black-owned global asset. management firm. [music]. Mellody quickly rose through the ranks. there, sharing her formidable knowledge.

on shows like Good Morning [music]. America. When you use a lot of the credit that. has been extended to you, it lowers your. score. Mellody is now the co-CEO and president. of Ariel and served for over 3 years as. chair of the board of Starbucks. She is married to legendary filmmaker. and Star Wars creator George Lucas. Together, [music] they have one. daughter, 11-year-old Everest. She is. the inspiration behind Mellody's latest. project, [music]. the New York Times bestselling. children's book Priceless [music] Facts.

About Money. So, when I first read Mellody's book, Priceless Facts About Money, I was so. surprised and delighted because what you. did was you made learning about money. fun. And I know you were originally. writing this book for children. And I'm reading it like, well, I I know. how the stock exchange started. I didn't. know So, there were many things I didn't. know. And I think are you finding that a.

lot of adults are saying thank you for. this book? That was the goal. So, I was using the. children and I have been using children. as a gateway to adult. Yes. I thought if I could have parents think. I've got to teach this to my children. when I in fact know they don't know the. subject matter, they'd be de facto. learning. Yes. is the exact answer that I'm getting. the goal. And that has been from the most. successful people you could possibly. imagine to people who are struggling. every single day where both sides have.

said I've learned so much from. this from this book. Yes. I liked it so much I chose it as one of. the favorite things because I think to. be able to give it to yourself and then. share it with your children is the. ideal. So, what inspired you? I know. that money has been a part of your. calling from the lack of money as a. little girl. So, let me start off with the fact and. this is one of the ways I anchored the. book. No matter where you live, an. African village or Chicago,

Mhm. you have to deal with money no matter. who you are. It is fundamental. It's like oxygen. It. is something that is fundamental around. the world. no matter what. I just want to start with that piece as. that was part of the inspiration for. this. It's not a an issue of a developed. country or an emerging market. It's the. whole world, every person, every family. has to deal with money in some way every. single day. That's number one. Where I was rooted in this story and. where this became my calling was how I.

grew up and how money affected my life. and created. quite frankly a great deal of trauma for. me. Cuz you were the youngest of six. children and you and never had it. Right. And so, I grew up with a single. mom and there was just a shortage at all. times. So, we would get evicted, our. phone would get disconnected, our lights. would be turned off. There was a time we. were living in an abandoned building. I. mean, I could go on and on and on. Really traumatic when you're a child. Because when you're a child, you have no. control. You can't go get a job. There's.

nothing you can do. On top of that, I. had a mother who was incredible in so. many ways, but made really bad money. decisions. And that was hard to watch. even as a child, and I kept thinking, "This isn't a good idea." So, my mom. would buy Easter dresses instead of. paying the light bill. I had that. mother. Yeah, because the Easter dresses. everybody gets to see you and you look. like a good. Right. You had to go to church looking a. certain way. Yeah. Did you have the patent leather. shoes, too? Of course, Mary Janes, but we we didn't.

have lights at home. And so, that was. one of those things that caused me so. much so much anxiety. So, at a very young age, I said, "I want. to understand money. I want to. understand it. I want to not repeat what. I'm seeing all around me. I want to make. better decisions." It wasn't about an. amount of money. It was about truly. breaking it down so that I could do and. live life in a different way. And so, I. think that it's no accident I work in. the investment business and have my.

entire career. My trauma in life became. my purpose. Oh, I love it when that happens. When. you take the thing that made you feel so. powerless and you turn it into your real. power. And obviously, you have done. that. And now, you say 77% of adults, I would think it's even more, are. anxious about money that they don't want. to talk about it. And parents don't want. to talk about to their children. Parents. who have the money don't want to discuss. it cuz they don't want their kids to.

feel entitled. Parents who don't have. the money don't want to discuss it. because they don't want their children. to have to worry about that. Yes. 77% of people say they have anxiety. about money. A lot of that is rooted in. a lack of knowledge and information. And why are people so uncomfortable. talking about it? Because we don't grow up in schools. where we learn about money. That's why I really do believe, and I've. said this behind your back, this should. be taught in schools. This should be a. part of the curriculum for young kids.

because learning in a fun way like this. makes it accessible. It makes you not. have fear about it. Correct. I think the thing is when you can anchor. it. Not only do you not have fear, you're. kind of excited about what you're. learning. Because everyone who's read the book, and I've had so many different types of. people read the book, they always say to. me, who knew? Yes. And they feel so empowered by knowledge. that they think that they hold that. other people don't have. That's right. makes it, especially for kids, kids love.

facts, but this is not an encyclopedia. The facts are all quirky and different. And the one of the reasons why I think. it's so fun is because you actually used. your daughter, Everest, who's 11 years. old, to help you in writing the book and. also helping to understand what was. accessible for her, right? Yes, so my first draft of the book I. gave to my husband. Yes. And who knows a thing or two about. telling stories. Yes. And he he looked at me and he said, it's too sophisticated. And I was like a. little offended. I was like, I know how.

to talk about money. He's like, I think. it's a little sophisticated. So I gave. it to Everest, who was 8 years old, 9. years old the first draft. And I said, cuz I started when she was 8, I said, um, read it and circle every word you. don't know. And it came back with a lot of circles. Yes. And so I said, you know what? I'm not dumbing this down. I'm going to. explain every word that she circled. So. sometimes I gave the phonetic. definition, sometimes I gave the. definition, we did funny, hilarious.

footnotes, all sorts of things where I. said, I'm not going to walk away from. the concept, but I do understand I need. to break it down another level. And so. she read multiple drafts until I felt. that she truly understood the concepts, which I was just literally using her as. my, you know, one-person focus group. child. Then we took it to expert readers. and did peer review with teachers and. things like that. And explaining everything from. bartering, one of my favorite lines is. is when young Melody in the book, Melody, says, "Oh, I wanted to buy.

something, buy a book, and I couldn't. because I was trying to. They don't take cupcakes. And I thought, "That is Gayle King, okay?" [laughter]. You're telling me that Gayle King trying. to barter for cupcakes. What's the most. surprising thing you learned. while writing this book? There are so many facts that I was just. so I mean, I spent a long time. researching. And everything had to be. vetted, and we had to make sure. everything was absolutely true. But one. of my favorite ones is we think about. the first official credit card having. been born basically 75 years ago, when.

this businessman was traveling in New. York and he forgot his wallet. He had. dinner. Right. And he didn't have any money, and he. ultimately invented what was called the. Diners Club card for dining. It was. originally cardboard, not plastic, even. though we call credit cards plastic. But. that wasn't the really really the first. credit card. The first credit card was a. knight's ring from a thousand years ago. Who would have ever. used signet rings to pay for things. because the king or queen did not want.

the knights on the road where they could. be robbed. And as a result of that, they. gave the knight a signet ring. The The. knight would stay at an inn or go to a. pub, and then put their ring in the wax. seal, and then the innkeeper or the. pubkeeper would take the bill to the. castle and get paid. So, when I was reading this, I was like, did. you know that already, or did you. research and find that? know that one, but there were a lot of. things I did know, like bull and bear. That's one of my favorite facts. Why do. they call it bull and bear markets when.

I started to work in the investment. business? And very early on, after doing. lots of research, because I wanted to. know. The best answer I got was it had. to do with how they kill their prey. That when a bull kills its prey, it. takes its horns and it pulls up. And. when a bear kills its prey, it runs and. bears down on the prey. So, stock market. going up is a bull market, stock market. going down is a bear market. That is. something I knew, for example. And there. were a lot of other facts in the book. that I knew that I said now I knew.

that. Wall Street was because of where. Alexander Hamilton lived. Now, a lot of. people know that facts today because of. the the show Hamilton. yeah, yeah. Okay. So, what do you think, Melody, that most parents get wrong when. it comes to money and their children? So, the first thing is that their lack. of willingness to talk about it. basically means that they pass on all of. their money habits. So, whatever they do. and money fears.

the child is actually just acclimating. themselves to the same behavior. Then. you can't break the cycle. There's not. that 10-year-old Melody saying, "I don't. want to do this.". Yes. So, you can't expect a child to do that. That's number one. That in not dealing. with money they are de facto teaching. their children everything that they do. So, if you pay the minimum payment, your. child's going to do that. If you. overspend, your child will spend. These. are things that we know for sure. The. second thing is shielding their children.

from money. This is where I give my. mother a lot of credit. She may be made. some money decisions that were. questionable, but she put me in the real. world every single day. And what I loved. is she had me handle money. We would go. to a restaurant, from McDonald's to a. diner. She would have me pay when I was. little, 4 or 5 years old, go and give. the money at the counter. Then she'd. have me count the change. that there was an exchange for this. Then count the change. Yes. Then calculate the tip. Every step along.

the way that I became more. sophisticated, I never saw my mom pay a. bill because I paid them. And so, it let. me know what things cost. I knew what a hamburger cost at. McDonald's versus at a fancy restaurant. that we went to a lot of times. this. Do you think parents should allow. their children to know how much money. they make? I think that I would be age-appropriate. So, I would not deny. if you have.

a lot of resources. I think pretending. that you don't is foolish. I also would. not deny if you're resource scarce. And. I think it's very important to level. have to give the number? Yes, but you have to be very, very. honest about it. And it happened to us. recently. I will give you that example. My daughter recently was in a situation. where some kids asked her about her. family situation. And she was very taken. aback because we don't talk about, you. know, what we have versus other people.

We don't We value values, not things. Yes. But I did say to her, I said that, you. know, yes, you have a lot of resources. But they're not yours. They're ours. Just so she understood that it wasn't, you know, it's not her money. Wow. And she said, "Well, will I have. resources one day?". And I said, "You'll have a job. Yes.". And she said, "Where will I live?" And I. said, "You'll probably have a house.". And I said, "But you won't be without. You'll have enough.".

I said, "You will have, you know, you. will have enough." And it was really. interesting. We had a very direct. conversation about it. have another conversation as she's older. because she's 11? it's a running conversation. conversation. a conversation that never ends. Now, the. thing about her, at least at this stage, she's not enamored by things. When we go. to a store, my daughter never asks for. anything. Wow. have to show her something and say, "Would you like this?" But she would not. ask, even though I've never told her. that there's an issue with her asking. She just does it.

Mhm. And she doesn't want a lot of stuff. around her. So, you know, I grew up with a mother. like your mother, and I was just always. told, "We don't have it. We don't have. it. We don't have it." Which is hurtful, and also you carry the shame of that. We. don't have it. We don't have it. We. don't have it. I remember. is huge. the the Christmas I was told there is no. Santa Claus, and you're not having. Christmas cuz we don't have it. five. Wow. Yeah, well, I was 12, and we were on. welfare. I should have known there was.

no Santa by that time anyway, but it was. time. But I often think it would have. been so much more meaningful if she'd. said, "We don't have it, and this is. why.". Yeah. Or this is all we have, instead of we. don't have it. We don't have it. Yeah. So. It's interesting because I think that. they did the best that they could. Yes, I I agree. do, and I think that [clears throat]. these were hard subjects, and you know, there was a lot of struggle. There was a. lot of struggle, and I think they were. at least my mother was trying to anchor. me in reality. Yes. She was constantly trying to help me.

understand what I was going to confront. in life. Yes. And so, her goal was not to sugarcoat. anything. So, she gave it to you. straight. So, I think that you're paying the. bills, you know, at McDonald's versus. this restaurant. You're looking at the. bills. You're seeing how much. look at the utility bills. So, I think that that is very valuable. And I meet kids today who have no idea. what their cell phone costs. I'm like, you know, Wi-Fi costs money. Those all. those streaming services cost thing my. mother I would have. should know that. Absolutely.

The example that I give that I love so. much, I love this example. Everest has. this game that she likes to buy on her. iPad. It's called Toca. Since she was. like five years old, she can't buy. anything without asking. Ever, ever, ever. And she's a rules follower. So, she'll come in and say, "Mom, can I buy". it's called a place, cuz you build a. house or a store or what have you. So, I said, "How much is it?" And she. was when she was very young, she'd say, ".99.". I said, "99 cents.". I said, um.

"Let me think about it.". I take a minute, go back to her and say, "Yes, you can. get that." Next time she comes to me, she says, "I want to buy a place." I. said, "How much is it?" She says, "2.99.". I was like, "I have to ask Baba.". Baba is dad. Dad. Yes. So, I'm helping her to see. She's like, "Oh." I said, "That's That's. more expensive." I said, "I have to ask. Baba." So, she's she understands that. I. go back because I don't want her to get. anything instant. Even though I know 99.

cents is not a lot, but instant. gratification I'm trying to manage and. patience. So, I said, "I have to ask. Baba.". who could have anything she wanted in. the world. for any of us is like a no a no-brainer, but I was like, "No." And it's not. manufactured, but it's just letting her. to see be thoughtful and deliberate. about what you spend. So, the last time. she comes and she says, "I want to watch. a movie.". And I said, "Okay." So, we went to turn. on the show. It was an animated film, and it was $15.99. This is Everest's reaction. "This is.

ridiculous.". [laughter]. She's like, "Come on." She thinks this is the like. biggest number she's ever She's like, "Mom, this is so expensive." And I said, "Well, Everest, you'll probably watch it. multiple times. It's like a toy.". And I said, "I think it'll be a good. investment, but I'm still going to talk. to Baba about it.". Wow. I like that. I like that. That's. great. And I love this because now she knows 99. cents versus 2.99. versus 15.99.

Wow. And that was when she was like 7. years old. I love this. This is ridiculous. Yes. Yeah, I mean, she was really she was she. was upset. We have parents zooming in with us today. with questions for Melody. Kelly is a. mother of two. Hello, Kelly, and is. joining us from Milwaukee, my old. stomping grounds. So, what's going on. with you? Well, I wanted to start by saying I'm so. glad to share this space with both of. you. Nobody can break down financial. systems and barriers and things like. that on their own, but financial.

education and access uh means. everything. I will say for us in our. home, I have a 4-year-old and a. 6-year-old, and they're young, and you. always are trying to figure out what is. an age-appropriate way to explain. anything to them because out of nowhere. they're going to ask you questions. you're not prepared for. Where do babies. come from? Why does Mommy have a. mustache today? Um all those. [laughter]. And so, you know, we've been trying to. figure out the most age-appropriate ways. to explain money cuz they'd had a lot of. questions, and it started this summer. where, you know, I'm spending a lot of. time in my office here on my computer,

and you know, they'd say, "Close your. work. Get out of your office. What are. you doing?" And my husband was. explaining to them, "You have to be. quiet now. Mommy's working, and you. know, the work she's doing on the. computer, or when he's out in the field, that pays for, you know, our house, and. the food you need, and the toys you. enjoy. And also, there are some kids. that don't have any of those things.". And it's one thing to explain it to. them, but it's another thing to put it. in practice. So, this summer we did an. experiment, and we gave them each $3 and. took them to the dollar store. And had.

them uh pick what they wanted. Uh and. they had to decide, "Do I I want these. five things, but I only have $3. Do I. want this candy versus this toy? Which. one's going to last longer and bring me. more joy?" So, those tradeoffs they had. to figure out. And there were some. disappointments, and there were some. learnings there. Uh we also went to the. Lego store at one point, and my son was. like, "These things are 189 bucks." So, similar reaction as as Everest had. Yes. So, what is your question for Melody? Yeah, so my question is, you know, at.

the ages of 4 and 6, what is the. age-appropriate way to explain the power. of money? I think you do it as you have already. started. There's the practicality of it, and then there's valuing things. So, the. great example with your dollar store. example is they got to put a value on. things, and they have to give it. relative value. You're not directly. explaining that to them, but that's. actually what's happening. And so, I'm a. big fan of giving kids choices. That's. why I love barter. Barter is there's. actually no money involved, but it's do.

you want Barbie or a cupcake? One you're. going to eat, and it's going to. disappear, and one you may have, and. they actually decide and start to put. that value on it. So, that's a great. way. I think also, and this is really. important because especially for young. kids, I talk about the fact that money. is very mysterious because they don't. actually ever see it anymore because of. our cashless society. Money for children. is on a credit card, a phone now, or it. spits out of a machine. So, trying to. explain that you work for it when you're.

four, that's super hard to understand. And so, as a result of that, I really. encourage parents use cash. Use cash so. they can see it's finite, and it goes. away. That you don't have an endless. amount of it. And just in a wallet, they. can see that it's starting to to go. down, and that can be very, very helpful. for them. That's what you did with the $3, right? You had actually $3. Yeah, three actual dollars, you know. We. get to see other parents. So, to your. point on cash, you know, I have a friend.

who, you know, if her daughter wants. extra dessert, she's got to pay a dollar. for it. Or extra screen time or. something like that. Again, knowing and. understanding the trade-offs, but. physically holding that money does make. make a difference. very important point is also to make. sure it doesn't become something that. builds fear in them or feels like a. hardship. You know, you want to be light. about it. You know, it's a fact of life. It's a conversation you can have, but. not in such a way that you either feel. punished or you feel, you know, um very,

very put upon. I'll give you one quick. example with Everest. So, Everest, when. we told her, just like your children at. about the same age, she said to us, "All. kids have toys.". And we're like, "All kids do not have. toys, Everest." And so, George, to his. credit, my husband, he was like, "Go and. show her.". He's like, "Don't explain it to her. Go. and show her." So, I said, "Okay." We. went to Father Flager's church in. Chicago, Chicago, yes. Yes. I sent her without me. Mhm.

to sit with five-year-old children and. take toys for the holidays. And that was. the first time she saw. that other kids don't have what you. have. And that was. that was visual and it was a reaction. not only the enthusiasm they had for. them. She said a lot of the toys, she. said, I said, "What did you see?" She. said, "Broken toys.". I mean, it touches your heart. I said, "What happened?" She said, "They said, 'Well, who do you live with?'" She said, "My mom and dad." They said, "Mom and. dad.".

Wow. She said, "Where's They said, 'Where's. your mom?'" She said, "My mom's at. work." They said, "Work.". Wow. So, we were explaining to her that at. five years old, we're like, "Everest, everyone doesn't have a mom and dad. Some people have neither. Some people live with their grandpas or. their grandmas or their aunts or uncles. or a friend. Everyone doesn't have a job." It was. this this this living example that we. could explain to a five-year-old. But. George's one he said, "Go and show her. Don't explain it.". Yeah, I think [clears throat] that if.

you're four and six, you can't even. comprehend that somebody doesn't have. what you have until you see it. Until you see it. I think your. your kid but your kids are there. Can we. see your kids? I'm looking at the. picture. Oh, well, hello. There's my. Wow. How gorgeous. Thank you. Look at that family. Thank you for saying hi. They're the big $3 shoppers. Look at. him. Look, who is this and what is going. on? Thank you, Kelly and your family. Thank you so much. Thank you all for. joining us. Thank you for your. questions. Nice to meet you. Christie from Dubuque, Iowa is joining.

us. She has a 12-year-old daughter, Piper, and son, Cole, who's 15. Christie, I hear you're taking a few. steps, you say, right now with Cole. to teach him the value of a dollar. How's that going? For sure. So, Cole is 15. He has started. driving. He has his permit. And so, he. is very active uh as well. And so, he. swims a lot. He has school activities. And so, he's able to drive. And so, we're working with him and have. given him a debit card that he is able.

to use and utilize to get gas or fuel, uh potentially if he goes out to get. food with friends or or things of that. nature. He is working. Uh he works part-time uh. occasionally throughout the year. He. teaches swimming lessons. And so, he. does have an income that's coming in. And can I just stop you right there? How. important is it for kids to have a job, Milly? Very. Yeah. It's very important to have. a job. you don't have a job, how do you ever. learn the value of money if you don't. have a job?

But you also get a great sense of value. out of working and getting a paycheck. It's something that um creates. self-confidence. Okay, so I think that's a great thing. that he has a job. That's what I wanted. to say. For sure. And when he got his first paycheck, kind. of our rules with this since he's got. his own debit card, it's tied to my. personal account so I can kind of see. what he's spending and and purchasing. and and things of that that nature. But. when he got his first paycheck and he. went to deposit it, um I had shared with. him that 80% of it has to go into his.

savings account and 20% can go into his. spend account. The spend is fair game. He can buy whatever he would like. I. don't monitor. He doesn't have to ask. ahead of time. You decided on the 80/20. You did. I did. Yes. He He didn't like that, as as you can. imagine. Um and he didn't understand uh. for certain. I still think that's a hard. concept to wrap his wrap his head. around. We're able to supplement him a little. bit each week uh with money as well. He. gets a small allowance for those.

additional purchases, but we've been. really trying to again push that you. have money to spend and save. and again have you know that balance. between the two. My question is so we. have this part-time job but it's very. intermittent just based on activities. and sports that he's in. I feel kids are. pulled in so many different directions. right now. that there are times when. he doesn't have the income coming in. So what would you suggest for parents in.

those situations when they don't have. the income but yet they do have the. expenses that they need to pay for? Okay, I think you laid out a lot of. very useful and interesting facts about. how you're setting this up. I'm struck. by one thing however, I will tell you. I. also would great humility say I'm not. here to tell you what's right for you. and your family. I'm just going to react. to one thing which is the 80/20. I think. that he will feel that that is very.

aggressive. Yeah. And I think that that will make him. resent saving. Yes. And if he's already pushed back on it is. so. biased towards the saving versus the. spend. You're you're doing a great thing. but you might be hardening him against. and at some point he just wants to rebel. about this at rebel from this and not do. it at all. That doesn't feel balanced to. me. Yeah, that's I was struck by that. That's why I asked who came up with. that. Was that your idea because it. feels off balance. It's a little.

aggressive and then therefore it puts. you in the the pickle on the other. things about supplementing and if he's. earning it, he should be able to spend a. a larger portion to me and I don't know. what the absolute dollars are. That. might be something you're trying to. control and that doesn't mean going out. being whole hog. The other thing about. it is if you went to a a larger. percentage, those in between times. wouldn't be a drought. You know, he. actually might be able to keep himself. going during those in between times. What I don't like is when the kid has to.

come back to the parents constantly, I. need this, I need this. And so then they. think, you know, you're never sort of. putting them on their own two feet. because they have to ask permission from. you. felt off balance to me. I I first. thought I misheard you cuz I would think. saving 20%. That's what I would have thought, too. Saving 20%. 30, yes. If you had said 50, I would. have been doing the hallelujah chorus, but I would I think 20% is a bit. austere. Yes. Yeah. So, would you suggest then instead of.

balancing it in that respect, you know, as you suggested, you know, maybe give. him 50%, 60% of it? Supplementing maybe his savings as a. parent just to help him kind of build up. that savings, or do you think that. that's a totally separate. I call a family match. It's like a 401k. plan. So, in a 401k plan, if you put in. a dollar, your company might put in 50. cents up to a certain amount. like this. that. So, I think that's better because. it also teaches him once he becomes. someone who works and the company gives.

free money, he knows not to walk away. from the free money. And if you've got. money on the table, he might say, I'll. pony up to that. You also could change. the match based upon the percentage. So, you say, okay, if you save 30%, this is. what I match. If you save 50, it's even. more. Wow. thing I would say, which is super. important, some parents get themselves. in their own financial trouble by too. being too aggressive with their own. money. And so, just making sure that whatever. you do is within the means that you also. feel comfortable that you can afford.

And, you know, from allowance to. whatever it might be, the family match, whatever it is, so that you're not. overextending yourself. I also want to. point to the debit card, which I think. is great. Emerson and I are going to get. her a debit card actually very soon. because I think you need training. wheels. And most parents give their kid. a credit card when they leave for. college, I call it a weapon of mass. destruction at that point because now we. know you the credit card of a child has. to be tied to the parent. You have no control over them once they.

leave the house, and if you haven't. taught them at that point, your own. credit could be affected by recklessness. if they haven't been taught how to spend. and what to do. And we all know, I mean, the first time. I got a credit card, I thought it was. like free money and I went immediately. into debt. I was a young reporter first. time cuz my father had not believed in. credit cards ever. I had Amex calling me in my dorm room. with bill collector because I went on a. ski trip. Wow. And I owed $2,000 to Amex, and I had so.

much anxiety and I was kicking myself. I. was like, I can't believe I've repeated. what I grew up there. Yeah. I took out a consolidation loan. because I owed Visa $1,800. and the interest was so high, I thought. I would never ever ever. felt like a million dollars. million dollars. So, I think, first of. all, Cole is very fortunate that he has. Ms. Melody Hobson herself advocating for. him. And I think what she shared with. you today is going to absolutely bring a.

greater sense of balance to your family. Yeah. And I think he'll feel he'll feel better. about his work. love the family match, don't you? I saw. your eyes light up when you heard that. goodness, that's that's brilliant. I. love that so much. Thank you. Thank you. Thank you, Christie. Thank. you so much. So, Lindsey from Chicago. has a question about giving a credit. card to her 7-year-old daughter. Hi, Oprah. Hi, Melody. Yes. Hi. Yeah. What do you want to say? having me.

Yeah, go ahead. my daughter is 7 years old. She is an. only child. You know, Melody, you. mentioned it, we're moving towards a. cashless society. So, not every place. accepts actual cash anymore and some. places only accept credit cards. So, for. example, when we drop our daughter off. to summer camp, we want to make sure. she's able to buy the snacks that she. wants and not every place takes the. cash. So, we were starting to come. contemplate when it would be appropriate. to get her maybe a credit card or a.

debit card. and is 7-years-old too young? Yes. 7-years-old is too young. I'm sorry. Have you been listening to what you were. saying earlier about cash being the best. way because at 7-years-old if you're. using a credit card already you. No. have don't even know what it is. I would take a hard line on that one. But not everywhere accepts cash. What? I would tell the camp. accepts cash. The camp cannot I would push back on the. camp saying they should not be going to. places that don't accept cash because.

7-year-old children should not have. credit cards. I want to know what the. other kids do. I have a quote that I use. in practically everything in my life and. especially with my child. Start as you. intend. Start as you intend. You do not intend for her to be waving. around a credit card in that way. So, at. 7-years-old that is not the way to. start. You want to start with her being. very, very respectful of money even if. you have resources that that she can. take advantage of.

I think this is so powerful what you're. saying. It's seven maybe because you're. able to do things for your daughter that. weren't done for you. You're able to. give her a life that you only dreamed of. and that she gets to actually live and. experience. This is it's I know easier said than. done and it's again, it's our money. habits that they're picking up. Say that again what you just said to her. Melody about start with where you want. her to start. where you intend. And so, what do you. intend for your child? You know, certain. things where you look precocious and. cute really wear off early. You know,

when you're 22 you just look like a. jerk. And so, just you know, sort of. vision envision whatever it is today. The kind of woman you want her to be. into the future. But I would say right. now, just being very practical, I would. implore you not to give her a credit. card or a debit card for the reasons. I've already mentioned. She cannot. comprehend this. It's too hard. And so, you know, she's got a few more years. You know, she doesn't even have, you. know, sort of advanced reasoning yet. And she might be the smartest kid ever,

but it's still very hard to work these. things through in your mind. And that. just will not help her. Okay. And were you feeling pressure cuz. you think other parents were doing that. or you felt like why why did you. like. My husband's in finance as well, and. like we just thought, okay, maybe it's. best to just kind of start teaching her. the concept of the credit card and how. this works to make her responsible at an. early age. Yeah. Yeah. But I I think what you're saying to.

Melody is so important that. conceptually, 7 years old, you can't. even I mean won't even let you do it. No, not at all. Yeah. No matter how smart she is. Yeah. All right, Lindsay. Good advice today. Thank you. 21-year-old Jordan from Texas is also. joining us. Jordan, I hear. congratulations are in order because you. recently secured a full-time job. I did. Thank you for Thank you so much. for having me. I'm super excited to be. here. And second of all, thank you so. much for the congratulations. It It.

means a lot, especially coming from you. So, thank you. Okay, so how is the adulting going for. you now? Ooh. Um. [laughter]. Adulting is definitely way more than it. seems. I have my first apartment by. myself and paying rent and balancing a. credit card and bills and just like how. Melody said earlier, utilities are a. thing that I didn't consider. So, um.

just having to balance that stuff out is. um, a bit of a learning curve, but I'm. doing it. I'm grateful and it's. happening. It's a little rough, but I'm. figuring it out. A little rough. What's your question for. Melody? So, uh, my question for Melody is, I. like I like you said, I am 21. I'm. starting a full-time job. So, at this. point, what advice would you have given. to your 21-year-old self that would for. me? Wow, there's a lot there. First of all,

congratulations. I have to say the same. thing. Your first job, that's a big deal. and just embarking upon life, it's a. very exciting time. And I don't know if. that's your apartment, but if it is, that's an awful nice kitchen for her. first apartment, just FYI. And your mom. would be very happy with how clean it. is. But I will say that um, the piece of. advice that I would give my younger self. is advice that I knew at the time. because I studied this issue, but I'd. only double down on it. Is compounding. is a very powerful thing. And what I. mean by that, you can start with very.

small amounts of money and if you give. that money time to grow, it turns into. very big amounts. And so, I think a lot. of people think it's not even worth it. to save $20 a month. Is that worth it to. save $25, $10, whatever it might be? But. when you do the math on that over 40. years, you've got. thousands and thousands of dollars. And. so, every little bit adds up and I would. just encourage you even with living as. tightly as you probably are, find a way.

to forego something that doesn't make. you feel totally deprived, but where if. you could forego it occasionally, you. could put away a little extra money. So, you know, if you get your lunch at work, one day you take a sandwich or two. You. know, I could go down the list of those. sort of things. Something that you say, I'm going to miss or skip this time so. that I can put this money away. And then. again, the magic of compounding, Warren. Buffett calls it, who's one of the. greatest investors of all time, the.

eighth wonder of the world. It really, really can make a difference. There's. something I'll just give it to you. quickly so you can think about it called. the rule of 12. You may have learned. that in school. So, the rule of 12 says, if money compounds 12% a year, in 5 years it doubles. So, if you have a $1,000 and it. compounds at 12%, you have 2,000. Yeah. So, then you do 6%. Let's even be more. conservative. So, it double in 10 years. So, you know, if you had a $1,000 in 10. years at 6%, it would double. It's a way.

of you thinking about money that you're. putting away. and saying to yourself and because. you're so young over a long period of. time, the stock market has returned. between, you know, 10% plus. That would actually be possible for you. Right. So, it's not fantastical or magical. thinking. And the thing about the. doubling, so let's just say it's it's. the $1,000 that grows at 6%. That's. $2,000 in in 10 years. It's $4,000 in 20.

years. It's $8,000 in 30 years. Right. in 40 years. Now, think about that as if. you were putting away money in a 401k. plan or something like that and you. start off with 10,000. You can see how. the math just gets to be so compelling. Yes, yeah. So, so, you know, I Have you gotten your. first paycheck yet? Um I have. So, my full-time job. officially doesn't start until the fall, but I did um two internships for the. last two summers at the same company.

So, I did get the full-time job. paycheck. It was very exciting. Um I. love that you did mention about savings. cuz my parents definitely did teach me a. lot about savings. So, what I did was I. took half of that paycheck and just put. it off to the savings cuz I was still. living with my parents. They still. support me a lot. So, I took my check, put half of it away in savings, and. that's what I was just doing for each. check, just putting it half away, um, and using the rest to spend on the. things I like and stuff like that.

give you one important point? So, I gave. a graduation speech, um, a few years ago, actually during COVID. I did a Zoom graduation speech. And I. did it on something I said, "You know, no one does a commencement address about. money.". Yeah. what I did. Yes. And I made one comment to the graduates, and I'm going to say it to you. Select a date certain. Mhm. [clears throat]. You pick whatever date you want, you. pick whatever year you want, that you. will not accept another dime from your. parents. Mhm. A date certain.

Whatever you say, at 24, at 25, at 22, I. will not accept another dime from my. parents ever. Wow. It will em-. power you and put you on a path that I. cannot explain. Now, some of us had no. parents to lean on, so it wasn't a. choice. It actually gave us an. advantage, because we were all we had. Yeah. have a safety net to lean back on, Yeah. I don't think you're as rigorous as you. could be. And I'm not saying that for.

everyone. But it's true. I've experienced it over. and over again. Yes. Set a date Write it on a calendar, stick. it on that refrigerator, stare at it. every day, and know after that day, you're not allowed to take another. dollar at all. You know, it's like I used to pay for us. to go out to lunch, you know, whatever. it was. Now, it's like, "Mom, it's on. me." It The table's totally turned. I can tell that struck you. I could see. your facial expression when she said. that. Why did that strike you? Yeah. It did. Um, so, my parents definitely.

taught me a lot about independence. So, even though they, like you said, they. are my safety net when it comes to. necessities, everything that's, um, a. want-to-have is on me, and, um, even. with my rent right now, they're helping. me pay a portion of it, and then the. rest of it is on me. But, I really like. that you mentioned that because I do. feel that I'm a little bit more. independent than some of my peers when. it comes to finances, but just that that. point right there made me really feel. like yeah, I they still do help me out a.

lot, and I'm so grateful for that, but. at some point I'm going to have to just. let it go, and I don't know what date. that will be, but I just I loved that. point that you made because the. empowerment that you feel whenever no. one else is supporting you, and it's. just you is. That's a great. you one example cuz I love this so much? So, I was living in my first apartment. in Chicago, my second apartment. I had. no furniture, none. And I just lived a very monastic life in.

this apartment. like that. No, not at all. And I decided I. graduated from college in 1991, and I had a goal of having a sofa in. 1996. [laughter]. So, it's like it's 1993, 1994, and I. this was the year that there was a. presidential election. So, I had this. saying that I would say to my friends, "Couch in '96.". Wow. a sofa, but I wanted a grown-up sofa, not like a Jennifer's Convertibles. I. wanted to go to the Merchandise Mart.

Oh, I remember the Merchandise Mart. Yes. real sofa where I picked fabric and the. whole thing. went. Exactly. And I remember it was this. Donghia sofa, and it was expensive, and. I was like, "I'm just going to save for. this sofa." There was nothing in my. apartment. It was 850 square feet. I got that sofa. I would go visit it at. lunchtime. Mm. I felt so accomplished in buying that. sofa. I can't tell you what I got from.

that I bought it myself. So, I worked a. few miles away in Chicago. At lunchtime, I would go sit on my sofa because I was. so. Mart? No, no, what once it got to my house and. I was able to buy it in 1996, it got delivered. There was nothing else. in the room. And I would just visit the. sofa during the day from work because. and I was like no one can take that away. from me. I earned that sofa. Yes. I gave it away at one point and I was. like that sofa means so much to me. I.

don't think I want to give it away. took you from 1991 to 96. Because it was it was a you know, it was. not a it was several thousand dollars. and you know, it wasn't like that was. something you wouldn't did. I mean I had. to save to buy a mattress. I remember. calling my mom. We all remember saving to buy a. mattress. was $2,000 and I said to my mother, I. cannot afford this. And she was like the. per diem on that mattress is nothing. My. mother who not book smart, she was like. you're going to own the mattress for a.

long time, Melody. If you do the daily rate, it's nothing. And that sleep is really. important to you. Really important. So, she was talking. Jordan was talking about savings. What. do you think about the proportion of. savings versus what you're actually. spending? What should that be? Ideally, I think it's especially at your. age, this is the way I did it. You want. to start with a number and every year. increase it. And so instead of being. absolute, just having the goal that I. will do better next year than I did this.

year. Especially in the beginning, when. you're starting a life, you got a lot of. stuff to buy. Right. You need knives and pots and pans and. towels and. First month's rent and the security. deposit, yes. you know, all sorts of things are just. real life. So, I'm trying to be. realistic about that. So, if you could. do 5%, you know, great. But in your. company 401k plan, give enough to get the match. You might. not have a separate savings account. outside of that. I really want you to. have though emergency money.

because you need three to six months. living expenses if something goes wrong. And I've been saying this for years and. years and years and years, and then when. COVID happened. I know. Like literally people with no income, and this idea that those people who had. some emergency savings, it made a. difference. So, first save to have the. emergency money, then start putting. money in your your 401k plan at work, and every year make a commitment that. you increase it. Every time I got a. raise, I raised the amount I saved.

Mhm. Ooh. I see that hit too, Jordan. It did. Jordan's like the amen choir. Mhm. Amen. [laughter]. Jordan, thank you so much. You're such a. lovely person. Thank you so much. Probably. Thank you. So, Melody, what's your advice to. everyone listening? What is the number. one. thing you want us to take away from. Priceless Facts About Money, from. knowing about what to do with our money? You don't have to live in fear. You can. take control of your life when it comes. to money, even if you feel strapped. I.

have met people at. from every single walk of life, from. poverty and welfare to billionaire, and. at every level I found some level of. waste when it comes to money. Some level. And it could be bottled. water, it could be, you know, all where. I'm like, if you could just pull that. back, where on the margins can you get. yourself in in better financial shape? I.

remember when I was a kid, we would go. to the newsstand. We loved magazines. Think of how much money you can spend on. magazines. You know, we would have been. better off going to the library. The magazines would have been there. So, those would be the examples of thinking. through on the margins how you're living. your life, and how can you take control. and take the fear out of this? The only. way you can truly take the fear out is. to have knowledge. The only way you can. truly have knowledge is to read and ask.

questions. There's no way anyone should. know this because I said we didn't learn. about it in school. No, we didn't. So, unless you grow up in a family where. the stock market and money is discussed. That's right. And when people talk about personal. finance, I push back because that's not. being financially literate. I'm not. talking about how to write a check or. how to pay a read a utility bill. I'm. talking about how to think about things. like compounding, how to make sure. you're not walking away from free money. in that 401K plan, how to make sure that. you're thinking about the long term.

Um all of those things are they can be. learned and they can you can you can. teach it to yourself, but you have to. make the commitment to do so. Now, and I think one of the. one of the most important things you've. shared is that whatever your money. habits are, you are passing that on to. your children whether you recognize it. or not. And so, you need to clean that. up with yourself first and that's why I. think that Priceless Facts About Money. is invaluable to adults first and then. pass it on to your children. Thank you.

for writing this. Thank you so much for having me and. thank you. being the most amazing person that you. have always been. Thank you. Thank you. Melody Hobson, thank you to all of my guests zooming in. with your great questions for Melody. Every family needs this book. You need. this book in your house. Priceless Facts. About Money. Then you put it in your. house, then you give it to your auntie's. house, your cousin's house. And if. you're listening to this podcast, you. can head over to YouTube to watch the. full video. Thank you so much, Melody.

Thank you. That's great. You can subscribe to the Oprah podcast. on YouTube and follow us on Spotify, Apple podcasts, or wherever you listen. I'll see you next week. Thanks, everybody.