Interview with a Savings Expert: Joanne Kuster

Wouldn’t it be nice if you could find a Money Godmother who could steer you in the right direction with your finances? Well, Joanne Kuster is the lady for the job. She writes a successful blog, The Money Godmother’s Blog, has published two children’s books about investing, and tours the country giving speeches about money management. Her experience has helped many people learn to make and stick to a budget. Read on to gain some true wisdom from the Money Godmother herself.

Your alter-ego is the Money Godmother, and you’ve become a mentor for so many people looking for help with money management. I read that you started your website because you wanted to assist those who were looking for ideas on how to more effectively handle their finances, but how did you come up with the idea of creating a blog?

As a business journalist, I’ve been trained that simple and succinct makes the best reading. As a busy parent, I learned “shorter is better,” whether reading bedtime stories, teaching new skills, or watching entertainment like “Sesame Street.” Busy parents and kids can more readily grasp and apply short sound bytes. A blog is the perfect way to convey rich nuggets of financial concepts—nuggets that can be easily digested—on topics like savings, couponing, or financing college.

Why the Money Godmother? When it comes to managing our money, most of us can use a helping hand. Just consider Cinderella, who got ahead with help from her godmother.

You’ve written two wonderful children’s books called “Entrepreneur Extraordinaire: Grandpa Helps Emily Build a Business” and “Stock Market Pie: Grandma Helps Emily Make a Million.” These books help provide valuable information for young readers on topics that aren’t normally covered in picture books. What do you think are the most important money lessons to teach children?

Kids are capable of learning a lot about managing money very early…and most are naturally curious about things like buying stocks and turning inventions or ideas into businesses.

These are two topics that appear complex—or maybe impossible—for many parents to tackle easily. But they are among the top triggers that get young kids excited quickly. The quicker kids learn to be investors (the stock market) and/or invest in themselves (entrepreneurship), the more financial success they can see.

With that in mind, learning how to save is my #1 lesson, because saving starts it all. Even children as young as 2 or 3 can understand saving and collecting…I just went to Disney World, and will do a blog post on “What Mickey Mouse Taught My 2-Year-Old Granddaughter About Money.” It’s a lesson in delayed gratification, which is all about saving and investing.

You write a lot about learning at a young age to be frugal. You grew up on a limited budget, like so many of us do. Your parents helped you learn money-saving skills like how to cook, sew, and cut coupons. What is the one piece of advice they gave you about saving money that you still use today?

I was 14 when I had my first full-time job in the summer. My mom was almost as excited about my first paycheck as I was…and we went straight to the bank. “Put all your money in your savings account,” she urged me. “You can always take some out whenever you need it.” You know, putting my money in savings became a habit. Taking it out? Well, I hesitated before I actually withdrew some…and I still do. It was a good stop-gap to give me time to think about my purchase before spending my hard-earned cash. I encouraged our kids to do the same.

Recently, you were able to take part in a weeklong training program at the New York Stock Exchange because of your role as a financial educator. What were the top 3 things you learned from other presenters that can help our readers?

I love the stock market! It’s one of the great foundations of the United States—the very core of our economic success—and any American may participate. When you own a share of stock, you own a part of a company. How great is that?

Be careful you don’t equate the integrity and soundness of our financial markets with a few on Wall Street who have cheated people. Our market system is world class. But some shrink away from investing in stocks, because they lack confidence, know someone who got burned, or don’t understand their own risk personality.

There is no better way to see how the markets work than actually being on the trading floor of one of the largest—the New York Stock Exchange, now called NYSE Euronext. I talked directly with the brokers and specialists as they worked to make trades happen.

Here are 3 things beginning investors might not realize:

1.  All buyers and sellers—large and small—have a fair chance to trade.

Specialists on the trading floor act as the auctioneers and keep the market running efficiently and fairly. Critics may portray the markets as chaotic, manipulated and unfair, but the NYSE Euronext is actually organized and orderly.

2.  NYSE is not 100% computerized trading. Humans make trades happen!

NYSE began when merchants and producers came together to trade furs, molasses and tobacco in 1792, making it America’s oldest stock market. Today, the buyer’s representative and seller’s representative must still agree on a trading price, which may take only a fraction of a second.

3.  So the market is a very fast-moving place.

A company’s stock has no set price (since supply and demand make the price rise and fall daily). Neither the brokers nor the company sets the price—the buyers and sellers do.

As a financial educator, you often go to classrooms and speak to children about money management. You have evened dressed up as a godmother and taken a treasure chest of “gold” with you! Have you ever had children bring up good money-saving tips that you’ve later used?

When it comes to money, some students have amazing stories. They will volunteer that they can’t wait “to get a stack of cards like Mom” (that would be credit cards), that Grandpa gives them a savings bonds for every birthday, or that they help Grandma clip coupons.

Kids like being involved in family projects, like saving for vacations. It gives them a sense of accomplishment, and they’re proud they can contribute. Likewise, many kids can sense if money trouble is brewing, so parents shouldn’t totally shield kids from a family financial disaster.

Instead, provide enough information so kids feel you will be able to handle it. After all, kids look to parents for guidance on money matters, and they model our behaviors. Give them a role model that can deal with financial ups and downs, so they can do the same later in life.

In a recent article called “Grandparents Can Boost Financial Literacy,” you mentioned a few websites that you have found helpful in explaining investing for children. What are your favorite websites for money management advice for adults?

Many good websites have great tips, learning tools, and games. I like Khan Academy for understanding concepts like compound interest, StudyStack for fun ways to learn investor’s vocabulary, and, DripInvestor, and ShareBuilder to start investing. If you’re looking to find money to invest, I like BudgetPulse for budgeting and SmartyPig or FeedthePig for saving.

You’ve developed a classroom tool called “The Wants and Needs Game.” This game helps children determine the difference between items they truly need and ones they merely want. It seems like some adults still have this problem. In what way do you think this idea still plays into adults and their budget woes?

Whether you’re 8 or 88, it’s tough to choose between needs and wants. That’s why this game is such a good tool. Haven’t we all made an impulse purchase—the shoes on sale, vacation trinkets, new electronics? Impulse buying and our “gotta-have-it-now” mentality are imbedded in our culture, which is why many Americans spend more than they make. You see kids go to shopping malls for entertainment—spending for them is leisurely, not planned. We seldom require teens to sort wants from needs and save to reach a goal. If adults did that consistently, we wouldn’t have problems with credit card debt.

You recently tweeted about a Gallup poll that suggested most individuals in the US have enough money to survive on, but not enough to create savings of any kind. What tips would you give to people who are looking to gain more financial security?

Most of us won’t make one big financial decision that determines whether we will be wealthy—or not. Instead, we make a series of small decisions, decisions to spend and decisions to save. Saving is a choice, and choices quickly become habits. If you learn the savings habit when you’re young, it becomes a lifestyle that helps you get ahead.

1.  So, learn to save early, and continue the habit for a lifetime.

2.  Save often. Even small amounts add up.

3.  Nearly everyone can cut out an expense or two. Can you buy one less soda a week?

4.  Learn to use coupons—but only for the things you would buy anyway. A dollar here, 50 cents there. It soon adds up to real money.

5.  Don’t spend money before you have it.

6.  It’s hard to keep up with the Joneses…maybe you shouldn’t.

7.  The magic of compounding is real. The dollars you can save early in life are worth much more—and your savings works to earn interest and dividends for you for years to come.

8.  Borrowing money costs you. Borrowing can make it hard to get ahead, so use credit wisely. Master that card! Statistics show that college students are racking up thousands in student loan debt, and may have that repayment noose around their necks for practically the rest of their lives. Burdening yourself with that kind of debt means you may not be able to afford other things, like a house, a business, vacations, and such.

You’ve given speeches all over the country on financial issues. Is there a common theme that you tend to reinforce across all your speeches?

Save yourself! No one cares more about your money than you do, so learn to save, invest, and manage it yourself. As parents, it is our responsibility to be money mentors for our kids and to teach them sound money values. Learn to capitalize on key money moments when kids are receptive to learning—it’s “just-in-time” learning, if you will.

Teaching the next generation—our children—to be financially literate is not an expensive endeavor…but failing to teach them is.

Thanks for participating in this interview! You’ve certainly served as a loyal Money Godmother to many. Any last bits of advice for the CouponPal readers?

Perhaps you can get your kids hooked on couponing and contribute to your savings too—when you use the coupons they find, split the savings with them.

I definitely agree with Ben Franklin, who said….”A penny saved is a penny earned.” Thank goodness coupons convert to more than pennies!

Like this interview? Check out the rest of our Interview with a Savings Expert series. Have a question for an expert or someone you want to see interviewed? Tweet your suggestions with #SavingsExperts to @CouponPal!

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