How to help a friend who makes bad money decisions with Carrie Schwab-Pomerantz

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Carrie Schwab-Pomerantz may be a Financial Grownup but that doesn’t mean all her friends have been able to grow up. Listen to how she works to get them on track. Plus- the president of the Charles Schwab foundation also shares an everyday money tip about making it easier to give to causes you care about. 

In Carrie's money story you will learn:

-How talking about money with your friend can keep you both on track

-The 3 craziest ways someone has tried to make quick cash

-What Carrie's number one priority is when it comes to saving, and how she follows through with it

-Hear why Carrie believes participating in the market is the key to saving for retirement

In Carrie’s money lesson you will learn:

-The one thing every financial professional does to save money and keep themselves on track. 

-The easiest way to be a good financial friend - and a successful financial grownup

In Carrie's everyday money tip you will learn:

-The ultimate tax smart way give to charity this holiday season 

In My Take you will learn:

-Carrie's friend from her money story was making some crazy financial decisions, here's how you can be the best financial friend possible without damaging your relationship

-Suggesting financial help to your friends could be the best gift you give this holiday season

Bobbi and Carrie also talk about:

-Carrie helped her friend's daughter pick out a broad-based index funds retirement plan, check out if that could also be right savings plan for you

-Mutual funds, index funds, and retirement plans are something to start thinking about as early as in your twenties. 

EPISODE LINKS

For all of your financial planning questions check out Ask Carrie Columns on Schwabmoneywise.com

Follow Carrie!

Twitter: @CarrieSchwab

Facebook: @CarrieSchwabPomerantz


Transcription

CARRIE SCHWAB:
Her daughter's about to go off to college, she panics, so what does she do? She signs up to drive for Instacart in her red, snazzy car, dropping off groceries at people's homes.

BOBBI REBELL:
You're listening to Financial Grownup, with me, certified Financial Planner, Bobbi Rebell. Author of How to Be a Financial Grownup, and you know what? Being a grownup is really hard, especially when it comes to money, but it's okay. We're going to get there together.

BOBBI REBELL:
I'm going to bring you one money store from a financial grownup, one lesson, and then my take on how you can make it your own. We got this.

BOBBI REBELL:
Hey, friends. Let's talk about being friends. Are you on track with your goals, but see a train wreck coming with someone you care about? What do you? Carrie Schwab-Pomerantz knows all about it, and has solutions.

BOBBI REBELL:
First, a quick welcome to everyone. If you are just joining us, you are new to the show, so glad you are here. We keep the shows short because you're busy, but if you are commuting or have a little more time, we fully encourage the binge listen.

BOBBI REBELL:
Got a question? We are putting together some upcoming episodes to answer them, so DM us at bobbirebell1 on Instagram, bobbirebell on Twitter, or email us, hello@financialgrownup.com. That is hello@financialgrownup.com.

BOBBI REBELL:
All right, let's get to Carrie Schwab-Pomerantz. I feel like she is the friend we all need in our back pocket. Yes, she is the daughter of Charles Schwab, and she grew up watching her dad build the business through ups and downs; but she is also, as you'll hear, a fantastic role model and financial expert in her own right.

BOBBI REBELL:
And, her story is one that we'll all be able to relate to. Here is Carrie Schwab-Pomerantz.

BOBBI REBELL:
Hey, Carrie Schwab-Pomerantz. You're a financial grownup. Welcome to the podcast.

CARRIE SCHWAB:
Thanks, Bobbi, so glad to be here.

BOBBI REBELL:
I am so honored to have you, because you are so accomplished in your own right, even though you get talked about a lot as the daughter of Charles Schwab. We're not going to talk about him.

CARRIE SCHWAB:
No.

BOBBI REBELL:
We're only going to talk about you. You are President of the Charles Schwab Foundation, and this is what really we bonded over, is that we are both certified Financial Planners, so you know your stuff.

BOBBI REBELL:
You got a lot of other letters after your name, but that's the one that is most special to me, so-

CARRIE SCHWAB:
I think so, too. We worked hard, didn't we, Bobbi?

BOBBI REBELL:
We did. That is one hard test, so-

CARRIE SCHWAB:
Yeah, yeah.

BOBBI REBELL:
Big pats on the back to us, and kudos to all the CFPs out there who are doing a lot to support people's financial goals, and to act as fiduciaries, which is a really important thing, as well.

CARRIE SCHWAB:
Yeah, and you know, Bobbi, this is how, again, you bring it up. Here we are, two women, and we need so many more women in our field, and I don't think people realize that this is not a field of match, or stem, or whatever.

CARRIE SCHWAB:
It's about helping people achieve financial security, and I think that we absolutely need more women in the industry to help people achieve that.

BOBBI REBELL:
Absolutely, and it's also important to be helping our friends, but that's not always an easy thing to do, which brings us to the money story that you're going to share.

BOBBI REBELL:
This is one of the most compelling stories that I have heard yet, because it really goes to the heart of what challenges us when it comes to money, and that is the human side.

BOBBI REBELL:
Tell us your money story, Carrie.

CARRIE SCHWAB:
Well, this one's a hard one to share. One of my oldest childhood friends, who I love, she's like a sister to me. She's always struggled with money, always worked, and so forth; so I really respect her financial independence, but she didn't always make good decisions.

CARRIE SCHWAB:
You know? She's not always prioritizing how to spend her earnings. She's a lawyer, by the way, and the one story that just confused me a little bit is ... She has a daughter that went on to college, and she was ... She had been saving for her daughter's college education, but I guess she didn't quite have enough money, and she panicked.

CARRIE SCHWAB:
My girlfriend had been driving a Tesla, much to my chagrin.

BOBBI REBELL:
For those that don't know, what do Teslas go for about? Are they over $100000?

CARRIE SCHWAB:
I think they're about $90000. Yeah, I imagine ... Definitely not in my budget. And so, she's driving these $90000, her daughter's about to go off to college, she panics, so what does she do? She signs up to drive for Instacart in her red, snazzy car, dropping off groceries at people's homes.

CARRIE SCHWAB:
I had to think to myself, “What's with this?” You know? “Tesla and driving for Instacart? Where are our priorities?”

BOBBI REBELL:
What do you do as a friend when you see a friend making what in your mind are irrational money decisions?

CARRIE SCHWAB:
You know, that's a hard conversation to have, I have to tell you. And, she has had this tendency ... I'll tell you another little story about her. She would buy tickets, like the Rolling Stones would come to town, buy expensive tickets in hopes that she could sell them for a profit.

CARRIE SCHWAB:
And, guess what? She can't sell them, so she comes to me and my sister in hopes we'll buy them.

BOBBI REBELL:
Oh, my goodness.

CARRIE SCHWAB:
Yeah, so I just finally ... I had to have some words and some tough love conversations with her, but, you know, the Tesla one, the most recent one ... she kind of knows how I feel. I just have to smile, and grin, and bear it.

CARRIE SCHWAB:
You know, “Why didn't you just get a Prius?” Because she wanted to go across the bridge, I guess you couldn't go through the fast lane, and so forth; but I would not say there's an easy conversation.

CARRIE SCHWAB:
I would say I have little conversations along the way, about the importance of having your priorities straight, and really making number one priority, saving and investing for your retirement.

BOBBI REBELL:
I'm curious, do people come to you, your friends, informally for advice all the time? Kind of like the doctor that goes to parties and everyone says, “Oh, I've got this little bark here, can you tell me what it is?” Do you get that a lot?

CARRIE SCHWAB:
I get it a lot, and to be honest with you, I so appreciate it. A girlfriend of mine, her daughter just got her first job in an investment bank, and I asked right away ... Specially for a young woman, I would say, “Have you started saving in your 401k?” And she said, “No, just because I don't know what to do.”

CARRIE SCHWAB:
She's in New York, and I'm in San Francisco, and I said, “Email me your options at your 401k,” so I took a look at them. I even consulted with one of our Financial Consultants who looks at this stuff every day, and we both agreed that she should be invested in a broad-based index fund that was offered within her plan.

CARRIE SCHWAB:
To me, it's all about participating in the market, specially for young people. When you're talking about retirement, you're talking about up to 40 years, potentially.

BOBBI REBELL:
Yes, we live a long time now.

CARRIE SCHWAB:
We live a long time, and put even more than 40 years, so it's so important to invest in a diversified portfolio of stocks, like a mutual fund, or an index fund. It's about participating in the market, it's not about picking the hot stock, or the hot mutual fund.

BOBBI REBELL:
Totally agree, so what is your advice, your takeaway in terms of being a financial friend? Admit it, you've had mixed success at. What is your advice for our listeners when they do see friends doing things that they know are not in their best financial interest?

CARRIE SCHWAB:
Steer your friends towards professional help; and I would also say there's no shame in getting help. I tell people all the time that even I have a registered Investment Advisor, and even the professionals get help, because it takes the emotion out of it, it makes you accountable. Right?

CARRIE SCHWAB:
Because, you know, you're showing up, you're meeting with your representative, and you learn, and you get better results. Give them somebody you totally trust, and then you can take it out and not sort of saturate yourself from the situation.

BOBBI REBELL:
So, Carrie, for your everyday money tip, it is almost holiday season, time to be thinking ... Hopefully we think about it all year-round, but time to be thinking, maybe a little more focused on giving to charity; and there is a way to do this where you often get more bang for your buck, as does the charity. Tell us more.

CARRIE SCHWAB:
The secret is a donor-advised fund. Most financial institutions have them. Schwab has one, I'm Chair of the Board, and basically you can open one up for as little as $5000. The way to make it tax smart is donate appreciated stock, that way you're not paying taxes, and you have more money going to the charity, and then ...

CARRIE SCHWAB:
Whatever amount it is, let's just say $10000, you get to deduct that from your taxes for that particular year. Then, you can take your time on what charities you want to choose from.

CARRIE SCHWAB:
Basically there's a search button. We probably have almost all of the non-profits in the system, you point and click, put how much money you want, press “Send,” and we do all the leg work to get that check out to charity.

CARRIE SCHWAB:
And, what we find, is that 90% of our users say they give more to charity, because of the donor advise fund.

BOBBI REBELL:
Wonderful. Tell us more about how people can learn more about you, your work at Schwab. I love your personal Twitter feed, it's awesome. You really have great, inspiring-

CARRIE SCHWAB:
Oh, thank you.

BOBBI REBELL:
Messages on there. Where can people find out more?

CARRIE SCHWAB:
Well, you can follow me @carrieschwab, and you can also follow on Carrie Schwab-Pomerantz on Facebook, and I have a lot of my content, my Ask Carrie columns, personal finance columns.

CARRIE SCHWAB:
Or, if you want an educational site, I highly recommend schwabmoneywise.com. It does have my Ask Carrie columns, but it has lots of tools, and calculators, and information about every aspect about personal finance; and it's for all levels of knowledge around finance.

BOBBI REBELL:
Yes. I have been on the site many times. It is very well done, highly recommend, and highly recommend listening to you more. Thank you so much, Carrie, this has been wonderful.

CARRIE SCHWAB:
Oh, so much fun working with you, Bobbi.

BOBBI REBELL:
Hey, everyone. Love how much you can tell that despite her frustration, Carrie really cares about her friends. Let's get to my tips.

BOBBI REBELL:
Financial grownup tip number one. Carrie held back from saying what I would have said to her friend, which is, “Sell the car already!” I know that cars depreciate in value, and so it's hard because you kind of feel like you're losing money, but really, if she needed the cash, why not just downgrade to that less expensive electric car right now?

BOBBI REBELL:
And, while her friend was at it, maybe there are other things that she can sell that she truly isn't using to pay for her daughter's tuition, rather than be delivering groceries in fancy, red, sports cars.

BOBBI REBELL:
Financial grownup tip number two. Adding to Carrie's advice, to bring in a third party for financial advice. Very often, the best way to help a friend is often to only be a friend. Bring in professionals to help with, maybe not only the financial stuff, but also when it comes to relationship issues or other major life crises.

BOBBI REBELL:
Not that you can't listen and be supportive. Of course you should, as a friend, but pushing them to make a decision that is obvious to you, and usually the world, could also backfire on your friendship and have long-term ramifications; because the truth is, as much as I think Carrie should have been even more blunt with her friend, and tell her to sell that Tesla already, every time the friend missed her Tesla she could potentially resent Carrie.

BOBBI REBELL:
And, it would take a big toll on their friendship, so it's really a delicate thing. I think Carrie had great advice.

BOBBI REBELL:
Thanks to all of you for supporting the show. One way to do that is to leave a review on Apple Podcasts, aka iTunes, or wherever you listen to Financial Grownup. I read every one, and they are truly appreciated.

BOBBI REBELL:
Also appreciated, Carrie Schwab-Pomerantz, whose great story of friendship and money really helped bring us all one step closer to being financial grownups.

BOBBI REBELL:
Financial Grownup with Bobbi Rebell is edited and produced by Steve Stewart, and is a BRK Media production.