Figuring Out the Finances for You and the Kids: A Chat About Financial Empowerment with Neale Godfrey
Meet Neale Godfrey
When a relationship ends and you haven’t been the one taking care of the finances, figuring out how to move forward can be paralyzing. Luckily, it’s a learned skill and on today’s episode, Pete and Seth are joined by New York Times #1 Best-Selling author Neale Godfrey to discuss finances, kids, gray divorce and more.
It’s important to understand your own finances and to learn how to handle them moving forward. It’s also incredibly important to keep your kids in the loop so they’re aware of how finances are going to affect them. (They are very id-focused beings, particularly the younger ones, after all.)
It’s important to never confuse your net-worth with your self-worth. You’re not the money you earn, or don’t earn. Money is about choice. Live within your means. And what about having your kids work? These are lessons for you to learn and to teach your children.
We also touch on gray divorce and why the numbers are growing for couples divorcing after the age of 50.
Our conversation ranges the gamut in today’s episode, but there are lots of juicy tidbits to help you learn how to be more financially healthy after your divorce, regardless of how old you are or if you have kids when it happens.
More About Neale
Neale Godfrey is the financial voice for women and multi-generations as well as a world-renowned speaker and author, who has inspired millions through her work. She motivates, trains, educates, and frankly, entertains by delivering her core message: Empower yourself to take control of your financial life. Neale brings an important perspective on connecting the financial dots for families, which she delivers to thousands of corporate audiences and financial advisors.
As the creator for the topic of “kids and money” and trailblazer for financial literacy, Neale Godfrey has worked tirelessly over the last 35 years to connect the family around the topic of money.
Neale began her journey in 1972 as one of the first female executives at The Chase Manhattan Bank (the world’s largest bank at the time). She later went on to become President of The First Women’s Bank and founder of The First Children’s Bank in FAO Schwarz. Neale was also involved with the Institute for Youth Entrepreneurship in Harlem.
Neale is the New York Times #1 Best-Selling Author of Money Doesn’t Grow on Trees: A Parent’s Guide to Raising Financially Responsible Children and has authored a total of 28 books to empower kids and their parents to have a healthy relationship with money.
Neale has represented global companies as a National Spokesperson; including Microsoft, UPS, Lincoln Financial, Fidelity, AIG, Nuveen, Aetna, Coca-Cola, among others. She has also appeared as a financial expert on programs such as; The Oprah Winfrey Show, Good Morning America, and The Today Show, on major news networks such as; CNN, CNBC, and FOX Business, and starred in the PBS Special, “Your Money, Your Children, Your Life."
Neale is a popular contributor for Kiplinger, a former contributor to Forbes.com and Huffington Post, and a former Nationally Syndicated Columnist for the Associated Press.
Neale has served on White House and Governor’s Task Forces, as well as on the Board of Directors of UNICEF, UNWomen, Young President’s Organization — YPO (Member since 1987), The NY Board of Trade, and Morris County Chamber of Commerce.
Links & Notes
Got a question you want to ask on the show? Click here!
-
Pete Wright:
Welcome to How to Split a Toaster, a divorce podcast about saving your relationships from TruStory FM today, we're taking your toaster to the bank.
Seth Nelson:
Welcome to show everybody I'm Seth Nelson. And as always, I'm here with my good friend, Pete Wright. Today on the show, we're talking about money and empowerment. Neale Godfrey is New York Times number one best selling author with 28 books on kids and money, family finance, work-life balance, entrepreneurship, and female empowerment. She is writing her 29th book on gray divorce and empowering women to take control of their financial lives after divorce right now. She joins us today to share her perspective on financial empowerment, and we are thrilled to bring her expertise to the show. Neale, welcome to the toaster.
Neale Godfrey:
Thank you, Seth and Pete. It's good to be here. Important topic.
Pete Wright:
Important topic. Yeah. And we've been we've been talking about how to frame this conversation, the act of this conversation. And I think there are two perspectives I'd like you to weigh in on over the course of our conversation today. Both the act of how kids relate to money in the act of divorce, and how you encourage and guide women in getting their financial lives in order after divorce. I know both of those areas are areas that you have a particular interest and expertise.
Let's start with the act of marriage breaking up and where you see as the principal areas of struggle for women post-divorce.
Neale Godfrey:
Well, one of the things with divorce and women is that men tend to look at money as the business side of a relationship. And women when they look at marriage and divorce, they're still looking at the trust. I loved him. I trust him. I believe him. He will never hurt me. And unfortunately, in a divorce situation, a man's standard of living goes up and a woman's goes down, exactly for this reason. So it's a whole psychological way to look at divorce. And it's very hard for a woman to get up to speed on that. And we still see it unfortunately. Whether it's with a young divorce or a gray divorce.
Pete Wright:
I think that is a really interesting thing. And I think part of it is because as much as we try not to have a lot of gendered conversations around money experience right now, it does feel like, as you say, this is still something that we see. When generally women come out of the relationship, they don't have the experience with the money. And even if they do have experience with money, they don't have experience with their money. Those two different things, a fundamental understanding of how the finances work versus, to your point about trust, a fundamental misunderstanding about how their money works.
Neale Godfrey:
It's important to have a gender conversation, just like it's important to have a racial conversation. These things are real. And we unfortunately take baggage in from our childhood and from our culture. And we carry this baggage around and this baggage still makes women think, "Well, we can't handle money as well as a man can." And when you start that conversation, you find out that there's a huge amount of disempowerment.
And also within a relationship, their roles that get established. And when those roles are carried through the relationship, again, you're dragging baggage around. We still have a situation where we have to have the babies that we haven't figured that one out yet. And in a lot of cases, the women are the primary caregivers for the children, and raising those kids. And then a lot of the monetary stuff has shifted to men. Now even though millennials are way more woke than we were and Gen Z coming up, we still have that baggage. They're still watching typical roles within the household. And in a lot of cases, unfortunately, modeling them. And that's disempowerment. And that spells trouble.
Seth Nelson:
On that disempowerment and spells trouble point. Do you believe one, that handling your finances is just a learned skill? It doesn't necessarily have to be overly complicated, but some people get paralyzed with just the thought of having to do it. And it's scary and they've never done it before, but it's not necessarily that difficult. Would you agree that it's a learned skill?
Neale Godfrey:
100%. And money's been this mystery and you have to be really smart. And whenever I empower women to take charge of their financial lives, and maybe to get investing for the first time in the stock market, or even in the crypto world today, and they go, "That's it? That's it?
Seth Nelson:
That's pulling the curtain back, that's all you got? It's that? Right?
Neale Godfrey:
Yeah. It's like, "That's it? That's it?" And women are actually better investors than men because women keep the eye on the ball. What's the money for? Not about betting, or winning, or day trading, or any of that risky stuff. On average over time, women do way better than men when it comes to investing.
Seth Nelson:
In a divorce. What I see is to have the gender conversation, as you say, it's important to have, that men view it as winning in divorce. "I get to keep it." Women view it as security. "I can get the car to get the kids to school, to get to my job," right? Is that a fair statement?
Neale Godfrey:
100%. Absolutely dead on. And women want to know, and to have somebody sitting in front of them as a professional, what's the money for? What are my goals? So it may be to get the kids to college, or it may be about retirement, or it may be whatever that is that emergency fund. And they want to know what's it for. Now, help me build that portfolio to reach those goals. Not, I want to be at the cocktail party being, in this case, macho saying, "Oh, my friend recommended a stock and it's up 56%." Because women also know if it goes up, it also goes down. They want to be able to sleep at night. Their financial world is something that helps them reach their goals, not something in terms of a self-esteem that I won, or I bet, or I'm cool.
Seth Nelson:
Well, that's something I've talked to my son about. He's now 18, learning to manage his money, taking small steps, teaching him, learned skill. One of the things I've always told him is, "Money talks, real money whispers." So if you're the guy at the cocktail party talking about the fancy stock pick, and you're hearing that conversation, what I've tried to teach my son is the guy saying that doesn't have money. Now, I personally don't care whether he has money or not. It's none of my business. It's not something I care about. If someone makes a million dollars, 2 million, 3 million, a billion, I say good for you. I don't particularly want to hear about it. I don't particularly want to hear about your sex life either, right? I mean, so why-
Neale Godfrey:
It might be more interesting. It might be more interesting.
Seth Nelson:
Right?
Neale Godfrey:
[inaudible 00:08:16] is that Challenge.
Seth Nelson:
Well, Neale, when you said women know that when things go up, they go down. I didn't know what we were talking about for a minute there, but I hear what you're saying.
Neale Godfrey:
We flipped into a different show, Pete. I mean that's-
Pete Wright:
We sure did. Yeah.
Neale Godfrey:
I'm good. But Seth, I never want people to confuse net worth with self worth. And I want you to be able to raise those kids to know you're not the money you earn, just because you're an investment banker and make gazillions does not mean you are a better human being than the violinist who is playing for the Philharmonic and is not earning a whole lot of money. So, if you don't raise them, as little kids, understanding that money is really about choice. And that same dollar can go to buy drugs, or it can go to charities. It's the user's choice. For them to have that empowerment, to go build their goals and then the budget that matches that, then they're pretty much in trouble.
Seth Nelson:
I think that's a great point about net worth versus self-worth. And along that topic, I just recently had a client say, "Well, how do I compare? I'm in my early forties? How do I compare on my net worth compared to others in my age bracket?" And I explain to them that's not a comparison I typically do, but from my observations, and I deal with some very high end clients, so I said, against these really high end clients, people that are business owners that have had whatever investment bankers, like you point out, there might be more net worth. I said to this person, "But what's impressive about you. If you compare your income, compared to your net worth, percentage wise, you're far outpacing these other people. They might have 10 million in the bank, but when they're making 3 million in a year, that's not really very good.If you're making 50 grand and you've got 3 million in the bank, you're doing something right." You're living within your means.
So I always like to tell people, look, when you're talking about money, like you say, your choices might be, what do you choose to do for a profession? And if you know that you want to go be a high school teacher, I don't care what college you went to. If you're in the public school system, you're going to be underpaid. But that doesn't mean you can't build and save to live the way that you want to live based on the chosen income that you've put yourself in that bracket. Is that a fair statement?
Neale Godfrey:
Yeah, absolutely. And I think what I'm impressed with Seth is that you're going to sit there with your client and say, "Hey, what do you want life to look like? Let's work from your goals and work backwards in terms of what do you need. And what do you want current life to look like? Where do you want to go? Do you want to travel? Do you want to work less? Do you want to work more? All those things, what do you want? And then moving forward, what do you want your retirement to look like? When do you want to retire? Do you want to live with friends?" I call it living in a pod, another book, where you can live with a friend or friends and share expenses. What do you want it to look like? Then, as a financial professional, then you go and you build backwards. Okay, you're going to need this amount.
Seth Nelson:
Right. And when I'm representing people in the divorce, I always tell them, "I can tell you what the law should provide for you, what I can get you in a settlement, is up to the financial planner to tell you what to do with it." But to your point, and I think this is a service we provide here, is sometimes I will have clients and I will say, I'm just making up a number. "I can get you $5,000 a month in alimony. I think that's what the court should award you." And it's going to cost X number of dollars to get there, to trial because your spouse is going to pay five. But then I ask, "Is three good enough to meet your goals?" And one of your goals might be avoiding litigation, and it's worth not taking the two extra grand because I can still do what I want to do. I can let work the job. I can get the kids. I can have time off in the summer and it's not worth the fight. So I always have those conversations. What are we arguing about? What can you live with?
Neale Godfrey:
I agree, Seth, and the teaming of the lawyers and the financial planners. And frankly, the friends who are there and maybe psychological help to get you over that hump. We need to look at this as business. A divorce is business, not emotional. Leave that at home.
Pete Wright:
That is exactly the thing I think we run into all the time in these conversations, which is to what degree is your settlement tied to ego, right? Tied to your emotional need for something other than the practicality of your plans going forward, right? Is it a vendetta? Are you trying to get back at your former spouse? Do you just have to win something? And what is the value, what is the price, as Seth says, that you'll put on that? Is it two grand a month? Because we can go to court and fight all the live long day, as long as that is a value to you, it may not seem entirely rational, but we can fight.
Neale Godfrey:
Absolutely. And I think also the other thing in all of this are those hidden assets that people don't even think about in terms of 401(k)s, in terms of, in the old days, we had pension plants. Even some goofy stuff like splitting up or air miles. I was dealing with some people, there are a million air miles. That makes a difference. What are we really dividing here? And the emotion is very tough, because you've got to take a step back, "Can I let go of that family home that maybe is way too big to serve me right now. And what's it going to cost to keep it going? What's it going to cost for me to have that piece of real estate? What do I want my life to look like? Can I downsize? Can I live within whatever Seth can get out of that settlement? Is it real?"
And by the way, by the way, by the way, that's as long as, I'm calling it, he, because there are obviously women that have to be the breadwinners and pay their spouse, but let's call it, he for now. If he's not able to work and he's not able to have income, he's not paying you. So you better think too, it's not alimony forever, if it isn't. If he's not working.
Seth Nelson:
On that point, I get this all the time. Someone will be interviewing lawyers, and the spouse calls and says, "Look, I haven't worked for 10 years. I've been raising the children." And I said, "Okay," we talk about alimony. And my first advice is, "You need to start looking for work," or "We need to dust off the resume." We need to get an evaluation on "What do you want to do? What have you done in the past? Did you get to college? Did you not go to college? What were your hopes and dreams for your employment? Now that you have children, have those changed?"
And the question I get every time is, "Wait, I don't understand." And I say, what don't you understand? They say, "Well, I talked to three other lawyers that said don't get a job, because it'll help my alimony claim." And I said, "One, that's assuming that the other side doesn't go to court and prove that you could be earning more money." And I said, "And two, that's assuming you get an alimony award. And that it actually gets paid." Because it's a piece of paper.
Pete Wright:
A lot big assumptions.
Seth Nelson:
And I said, "The best thing you can do for yourself in my perfect world for your case, you would get no alimony." And they freak out. And I said, "Stick with me. If you get no alimony, it means you are financially self-sufficient. And that is the best thing you can do for yourself. And if you have a $10,000 alimony claim," and I'm just using these for round numbers, "And you can make up six of that by working. And now you're only counting on this guy for four. You're better off there than counting on this guy for 10."
Neale Godfrey:
Right. And it goes back to what Pete said too. Is it about being vindictive or is it about being able to close this chapter and move forward? And it's very difficult because you're in the whole thing.
Seth Nelson:
Now, if you're hiring me and you're like, "Look, I want to know about every single asset." Here are a bunch of assets that people miss. You mentioned one of them, and these are usually, check your local jurisdiction to be divided. Because they're marital. They could be marital assets. Airline miles, right? Credit card points, memberships to clubs. Sometimes you have a down payment on a buy-in for a club, whether it's a social club or a country club. So remember that. People's vacation days that get paid out, those were earned during the marriage. These are all potential assets to be divided. And the reason I mention them isn't that you're necessarily going to say, "You have 28 vacation days, you get paid a thousand dollars a day. We do the math and I'm entitled of half that." But you might just say, "Look, I am entitled of half that, but you can keep the vacation days. I don't care about half of that, but I want this."
Neale Godfrey:
Absolutely. It becomes a bargaining shift. I'm with you. And I've by the way, been married and divorced three times. So I consider myself an amazing expert in all this.
Seth Nelson:
We call that a frequent flyer in my business. I love that.
Neale Godfrey:
It is. It is true too.
Seth Nelson:
You can't pay me with points though.
Neale Godfrey:
No. No. Really? Oh, nevermind. All right.
We also need to talk about [inaudible 00:18:31]. Because Pete, you looked into this, when you're in divorce, I'm into the pre-planning part in terms of the prenuptial. And what to do and how to protect yourself and what the hell that means.
Pete Wright:
Yeah, let's do it. What the hell does it mean? It's one of Seth's favorite topics.
Seth Nelson:
Where do you think about prenups?
Neale Godfrey:
I mean, if there's a disparity in terms of income, if it is the second, third, fourth marriage, whatever that is. And you've got kids and you've got assets, and this one has this, and this one has that. Yes, you need to have that discussion. If you are coming into a marriage to begin with, and you both pretty much have nothing and you're both young, eh, it doesn't matter. You're building a life together.
But if there is anything that there is preexisting assets, and, or by the way, liabilities, because we have to look at the debt when you come into a marriage too. All of a sudden, tada! I'm taking on your student debt. Really? Am I? You have to look at that stuff. And my thing about a prenup is, it's a really tough conversation to have. I love you. I love you. I trust you. I trust you. Now, would you mind signing this document?
Seth Nelson:
Yeah. I love you. I love you. I trust you. I trust you. But if you fucking cheat on me, I'm going to get half that shit.
Neale Godfrey:
And by the way, by the way, my grandmother will right roll over in her grave if her China goes to your new wife. Just saying.
Seth Nelson:
That's right.
Neale Godfrey:
But the deal is, this is where the parents and grandparents can jump in and help with the conversation. It's about the conversation. It's one thing for Seth to recommend it, it's another thing to have that conversation. When you're, I love you. I love you. And now sign the prenup. This is when mom and dad, grandma and grandpa can jump in and say, "Hey, look, these are assets that we've provided for through blah, blah, blah, blah." Not the trust fund because that's protected, but it's the other stuff. And it's very important for us. So, you, mom and dad, can hang it on yourselves and help your kid out. And say, "I want to have that conversation," with your kid and the new one there. And as the couple to be married, don't surprise this woman or man, don't sabotage. Now we're going out to eat, and by the way. Just says, "We need to tell you our concerns."
Seth Nelson:
Right. There's two parts to prenups, I tell people are the most important. One is like you're saying, the conversation. And people have a difficult time talking about money and finances. And you're about to enter into, whether you realize it or not, a binding contract when you get married, because the states tell you what to do with your money if you get divorced, that's a contract. So you should know what those rights are and your responsibilities when you're getting married. So I've had people come to me and say, "You're a divorce lawyer. We don't ever want to get divorced. We're getting married. What should we do about our money?" And I say, "Well, who am I representing? Or if you both are just call want some information, I can't represent either one of you as a joint, but if we're going to do a prenup, here's what we need to do."
And I explain what Florida law is. Now I explain what happens if they would get divorced now. And use that as a framework for them to discuss how they want their lives to be. And when they're getting gifts from parents or grandparents, they make it very clear to the parents or grandparents. If you want the gift to go to both of them, then you put both their names on the check. You put it into a joint account. If you want to go separately, you do it separate. And we can deal with that issues on the prenup. But having those conversations, to me at some levels, are more important than the actual outcome. Because the outcome of what they decide to do upon divorce is different for every family. Some people do it like, "Hey, if we're getting married and we have children, then I'm going to get X. If we have children or not get children, because I'm going to want you to stay home and raise the children."
And then you say, "Well, if I'm staying home, raising the children, I'm out of the workforce for 10 or 15 years. How do I get compensated for that? Because my income could be more then." So we needed to have those conversations.
But the ultimate outcome is client driven. It's not good, nor bad, nor different. It's just different, right? It's their decisions. But there's that imbalance of power because the one with the money's going to be like, "Aren't you marry me because you love me. Why do you care about the money?" The one without the money is going to go back to security. "Well, you love me. Don't you want to provide and I should be secure to raise our children." And that's where it is. And then, now we start having difficult conversations. But getting through those I think are vitally important. I think it's actually build stronger marriages.
Neale Godfrey:
I agree. And I open up the conversation to make it broader. I was working with Oprah for years and did a zillion shows with her. And one of the things was talking about this, and talking about money and opening up those money conversations. And what we found, what Oprah and I found, was that it's easier for couples to talk about sex than it is for them to talk about money. And it was so funny because it's like, "Wait a minute, wait a minute. You've had sex with this guy. You've taken your clothes off. But when it comes to money, it's like, oh, that's personal." Hold it. Like, wait, wait, wait.
Seth Nelson:
And I think it's always best. And I don't know what Oprah's views on this or your views on this, it's best to have the conversation about money when you're not wearing clothes.
Neale Godfrey:
That's interesting, Seth, because I always did it at a restaurant and I always had clothes on.
Seth Nelson:
Oh, you go to different restaurants than I go to.
Neale Godfrey:
I obviously [inaudible 00:24:39].
Pete Wright:
Two worlds colliding right now.
Neale Godfrey:
Yeah. I go to different restaurants. Okay. I have to look at the restaurants. Maybe it's a home delivery food, maybe. But who's going to handle the money? And what is this going look like? Those are all the questions that you're asking, Seth. And then you can open it up that I think we both have to know where what's the debt? Where is the money? How much is it? What's your salary? All those things. Your assets, your liabilities, what are your dreams? What are your hopes?
Now, all of a sudden it's a larger conversation. And then, are both people going to work? And if not, like you said, Seth, what does that look like? And I think it's important for both of us to know the money situation. I know it's a pain in the neck, but we have to, each month switch off. You pay the bills one month I pay the bills the next month. And we do that. This has to be the same way we do other stuff within the household. Then it's a broader conversation. Then you ease into the prenup and then you can say, "Look my family feels strongly about it because these are assets they're passing on."
Seth Nelson:
And I think even like you're saying on the conversation with maybe a younger couple that is just getting started and we say, well, we don't really have anything. I think it's important that you both run your credit reports and you share them with each other. You say, "Here are my finances. You can trust and verify," but that's a way also to say, "Yeah, I pay off my credit cards all the time." Or, "Hey, I was a student, I ran up some credit cards and I'm trying to pay them down." And then you can have a conversation like, "Whoa, do we do a consolidation loan? Do we get a better interest rate? How much are we going to put towards that on a monthly basis before we do other things that we want so we can clear that debt?"
And now you're starting to talk about really building a financial life together. And it's not one person just running it, and the other person is either paying it or not. But then that's setting common goals and that actually can bring you together. And don't get into the mistake I see a lot of people make where, "Well, God, he just bought a new set of golf clubs, and so I wanted to go on this trip with the girls." And now you both are spending money you don't have, because why is he allowed to spend it and I'm not? But ultimately, you both are just running up debt.
Neale Godfrey:
100%. And we know 85% of all divorces are due to money issues. It's just the way it works.
Seth Nelson:
Hey Pete, it's back to school season. We're right in the midst of it. Buying clothes, buying the uniforms. And some people are going through a divorce and trying to manage all that. Maybe it's a new school, different houses, driving back and forth, getting the routines down. But there's one thing we can always agree on is that it's important to keep kids safe, especially when alcohol is a concern.
Pete Wright:
That is the truth and on How to Split a Toaster, you know our mission is saving relationships. And that is all about what our fantastic sponsor this week is doing here too. Soberlink. We have partnered with Soberlink to help offer resources, to help you navigate the school year, the school season, as you are also navigating your divorce process.
Seth Nelson:
That's why we've partnered with them. They have a remote alcohol monitoring technology that's created to keep your kids safe. If you're the parent that believes the other parent has a problem with alcohol, this device will give you real time information that parent is sober. And if you're the one that's being accused, maybe wrongfully so, that you can't control your drinking, this gives you way to prove with an independent third party verification to the court, if necessary, "Judge, I'm good. The kids are safe. We're focused on them. I'm not focused on drinking." So it really is vital, especially with its breathalyzer that has the facial recognition, with the real time updates that I'm talking about.
Pete Wright:
Soberlink is partnered with hundreds of thousands of people to help document proof of their sobriety and their real time peace of mind that comes with this device in child custody cases. They're currently offering a free back to school and divorce packet. This includes a Q and A with a top divorce attorney, your back to school checklist is going to help you out, communication tips and more. The only thing, Seth, I don't think they have coupons for uniforms, whether they're for your kid or you. I don't know.
Seth Nelson:
That's a shame. It really should be coupon for uniforms.
Pete Wright:
Uniform coupons. Anyway, request your packet without the uniform coupon at soberlink.com/toaster that's www.soberlink.com/toaster. Thank you Soberlink for sponsoring How to Split a Toaster.
I think we have an area here where you can help a lot of people, which is, how to handle your kids and their relationship to money? And I know you have a particular expertise in kids and related to money large, but particularly, in a divorce. Can you walk us through how you handle this?
Neale Godfrey:
Yeah. The biggest thing in divorce with a kid is to sit them down, to explain what's going on. And what a kid of any age wants to know ultimately is how does it affect them? Where are they going to live? Do they get go summer camp? Are they still going to be able to have whatever? And they need to know how it affects them. They Need to know what is this picture going to look like?
Now, the truth is, they've seen you argue. They know there's tension within the household. The biggest thing for a kid is a kid always thinks somebody's dying. And what you need to do, and Seth, I'm sure you've seen this a million times, is, "You are going to be okay. We are both going to be okay. This is work in progress. The truth is we don't know what it's going to look like, but we love you. We're going to be there for you." And as this starts to unfold, do not wait for it all to be worked out because it takes a very long time for it to be worked out. There may be a custody situation. There may be, as somebody's moving to a different state, situation. There may be a zillion different things, Seth, that you've seen. But the big thing is, tell the kids early on.
And in terms of money, if it's a belt tightening situation, be honest with them. "You know what? We're going to have to live on a budget. We're going to have to have things differently, or done differently economically. But you know what? We're in this together."
Seth Nelson:
But when you do that, when you say you're in it together, then you're in it together. You can't start cutting all the kids stuff. And then they see you spending it on you. Because you're going to break that trust.
Neale Godfrey:
Totally. And you design the budget with them. "Hey, this is what we've got." My whole thing is get the kids involved. These are the bills. Show the kids the bills. These are older children, obviously. What it's costing us to live. You know what? It's not going to make sense in a divorce situation. We need to, we, need to reduce the expenses. It means downsizing house. We're going to be together, who cares if we live in a smaller house. Let's go look for smaller houses. Let's go do this together. We can't have two cars or three cars or whatever, we need one. Let's go look for cars. "Hey kids, go online and see what you can do." Get the kids as involved as possible.
We found out even during September 11th, I'm from New York, and when we had the biggest tragedy that it hit the city, the kids who were involved, the ones that when the parents or the survivors or the families got the kids involved, they were way more healthy than the kids, you know where the parents said, "Hey, don't think about this. Don't get involved. I want you to be a kid and don't turn the TV on." It doesn't work like that. By the way, half of marriages are going to end in divorce. The kids know people. They know the ones where they're fighting, and they know the ones that work out. And the deal is you want to share with them. Our goal is to have this as pain-free as possible for you guys, but it is a change. It's not necessarily going to be pain-free.
Seth Nelson:
And with the kids, something that we've done in my own household, as I say, "Look for leakage." And that's those little things that we spend money on that we don't even think. It's just like a little leaky drip. And the biggest one is the apps on your phone. How many apps do you pay? 4.99, 3.99 a month, 10 bucks a month for that you don't really use? You just forget about them. And so, from time to time, we just go through our phones like, "Hey, is there any game that we are playing that we liked for a while and we stopped playing? Let's delete the app, right? There's little things like that. That ties to them. Show them how much their phone costs. You want to get a teenager's attention. You want your phone, this how much it costs, how much can you go make an hour?
Neale Godfrey:
And also let them get involved. Let them look at the streaming services that you're using and say, "Okay, come up with a bundle that's going to save us." Okay, "This is what we can afford for a vacation? You guys go work it out and figure out what we can do for whatever that is." And just like you're saying, Seth, get them involved in the drip, drip, drip of stuff, going out. "Come on. We don't need to buy coffee and water every day. Let's go figure out what we're going to do. We don't need to go out twice a week. We don't need to do. Let's talk about it. What's most important?"
Seth Nelson:
The other thing that, I mean, I know I did with my son once he got to an age. We were at the grocery store, and I said, hey... He is old enough to go pick out whatever I said, "Hey, will you go get out some fresh strawberries?" And I was on the other side of the grocery store. And he comes back with fresh strawberries, I said, "How much are they?" He goes, "I don't know." I said, "You're about to find out. Turn your ass around, go tell me." He came back with different strawberries, right? Didn't get the other ones. They were both organic. They were both the same, whatever it was. But he looked at these other ones and I said, "Don't ever bring anything and put in this cart unless you know how much it is."
Pete Wright:
We're dealing with that right now. I've got a kiddo. Who's just figured out how to use Apple Pay on his phone in a vending machine, where he works, at a park and rec thing. And I'm looking at those transactions coming in and he's saying, "Dad, weirdly, I'm over budget." I said, "You spent 20 bucks on the vending machine in two days. What are you eating you trash monster?" And those kinds of things, that little awareness they just don't think about. And part of it, I think is because money doesn't exist like it did when I was a kid, right? Money isn't green to my kids. They don't have a sense of green cash anymore. And when they're out of it, it just miraculously doesn't it... "Isn't it supposed to just refill?" And I think that removes us a degree from financial responsibility when they don't have a sense of what it means. And further and further from catching the drip, drip drips.
Neale Godfrey:
Absolutely. And with digital money, my problem with it is that also they seamlessly go from the world of videos, which you have fake money in there. You bought [inaudible 00:36:55] and moons and all this stuff and win points. And then they move into the world of the magic click away on Apple Pay or whatever debit card or whatever they're using without that accountability, which is why actually I work with a... I'm an advisor to a company called Greenlight where the kids have a debit card, but they're accountable. And you show them, this is what you're doing. So all of a sudden it's like, "Whoa, okay."
Pete Wright:
Yeah. Even if they consider it, even if it's just another digital buck is another point that they're keeping score, isn't it better to have more points than negative points? Like, let's go ahead and treat it a little bit like a game, don't you want to save the points and earn more points? That's fine. I'm okay with that. Let's talk about how to do it.
Neale Godfrey:
Right.
Seth Nelson:
What about kids getting jobs?
Neale Godfrey:
My whole thing with kids is to teach them how to earn, save, spend, and share, which is what you do with money, which is your social interaction with money.
Now, I start them on an allowance system within the household earning money. And I start them when they're really young, when they start saying, "I want, I want," so you say, "Did you do your chores within the household to earn your money?" And it's an answer, yes or no. Well, if you didn't, then you don't have money. Because I want them to connect real world instances. There is no entitlement program out there. It's not just that I'm in a store and I whine and say that I want something. The way you parents get money is you earn it.
So same thing with kids. Then I have them set up on a budget. And it's a baby budget when they're young. And they divide the budget into four different categories, one is 10% comes off the top of the money they earned as little ones to go to charity. And then I take the remaining 90% and divided into thirds. The next third is what I call quick cash, which is instant gratification. They worked hard. They get to spend some money and make their own choice. But you set the parameters. If it's no sugar or candy or whatever, then they can't. And then I show them how to push off instant gratification and say for something larger, they set a medium term goal, which for little ones is a couple of weeks to save for something. And then long term goals, the money goes away and eventually gets invested and you get them involved in what the stock market is.
Now it does a three year old understand the concept of long term savings? No. Does a 10 year old understand the concept of long term savings? No. Do the adults in America understand the concept of long term savings? No. So you might as well teach them the habit.
And then as they grow up, they start to do some jobs outside of the home. Obviously you want them to be safe. So they're working with neighbors doing raking, whatever it is. And then when they're 16 and they can get working papers in the United States, they can start having jobs. And I think it's really important. There's no way to teach a kid the importance of money and how hard it is and the value of money, than when they're working for $12 an hour, $10 an hour. And it's like, Really, the designer jeans cost 150? I'm going to have to work how long to get them." And that's what you start doing with the kids.
Pete Wright:
So, that tells us about this. It sets this table for a kiddo that is financially responsible, and thus more resilient in times of divorce. You have a kid who's already set up on that program, seems like a completely logical next step to have the conversation about here's how life is going to change. What does that mean for your finances?
Neale Godfrey:
Exactly. And the biggest thing in divorce is they want that security of knowing that they're going to be okay, and that you're going to be okay. Because remember the emotional part of it. They see mom and dad probably walking around the house crying. And that's scary stuff. So on the money side of it, you have to be honest with them. "No, we're not going to be able to afford summer camp, but this is what we can do. We can take Dave trips or we can do whatever." Get them involved in what that alternative could be. And yeah, the kids who are set up on this, get it. They get it.
Pete Wright:
Yeah. Well, and they may be sad, they may be mad, but as you said earlier, they're not going to be surprised at divorce. They'll probably already know, they get it. Things are not going right. And as you say, they know other kids who've been through this.
This is fantastic. Thank you so much, Neale, for hanging out with us. And you have a lot of books that are all about this stuff. If you're interested, pick any one of Neale's 28 books from Money Doesn't Grow on Trees, to Money Still Doesn't Grow on Trees, to Be Money Smart in Tough Times. I mean, the list goes on and on. But you are working on number 29, and it's on gray divorce. Can you give us a setup on what that means and your perspective on it?
Neale Godfrey:
Yeah, it's really interesting because the divorce rate has doubled since 1990, for people who were 65 years and older. And that is really an unheard of phenomena. One in four divorces today are gray divorces and a gray divorce is deemed to be 50 and above. And there were several reasons.
First of all, the millennials are getting married later. So obviously, the divorce rate would be pushed out on that one. But it's more that. The older generation is saying, "Hold it. I'm going to live for another 40 years. I don't even know this guy sitting across the table from me anymore. The kids are gone. I have nothing in common with him. I don't have to sit here and suffer anymore. What we had in common, we no longer have in common." And it's interesting because 73% of those gray divorces are actually initiated by the women.
Pete Wright:
Hmm.
Neale Godfrey:
So a phenomena. Yeah. That's very, very different.
Pete Wright:
That's really interesting.
Neale Godfrey:
Very interesting than we had before
Seth Nelson:
and what I hear sometimes from the man's perspective on that is, "I never saw it coming. I thought I was providing. I was out there working." And I said, "Yeah." And all these guys I talked to, I said, "Did you ever spend time with your wife?" And it's like the fifth, sixth, seventh, 10th thing on the list. It's way back there. And from the woman's point of view is, "I no longer have anything in common. We had the kids in common. I was raising the kids." From their perspective, they tried to maintain connectivity, the relationship, the spark, the love, the commitment, all of that. And it just went away. And it's a million little cuts. It happens a million little times. And the next thing you know, there's this great divide. And it might not be that anybody did anything wrong.
Sometimes I hear, "Well, he didn't cheat on me. He was a great provider. I just don't love him anymore." And the guy's like, "I didn't cheat on her. I was a great provider. What did I do wrong?" And I was like, "It's not really, you did wrong. You took your eye off the ball," right? Because you thought you were supposed to be focused on other things. Is that what you're seeing?
Neale Godfrey:
Totally. And I'm not talking about the guy who goes out and gets living jewelry to replace the woman that's there. That's not what I'm talking about. I'm talking about the, "Please pass the butter. And by the way, I want to divorce," syndrome. The one that happened without [inaudible 00:45:43]. They woke up one day, they looked at each other and said, "You know what? We're just not growing together. We're growing apart. And we're going to live for a very long time." So let's make different decisions.
But what I think is interesting is that the woman initiates this. And by the way, she's at more risk economically than he is. So, that's a big statement. That's a big phenomena. And there really aren't enough books, whatever, out there to help that woman through that situation. Because she has to redesign her entire life. And in a lot of cases, she may not have been working.
Seth Nelson:
Oh, those are the cases when they come to me, I say, I" know we're going through a divorce, but we are really talking about financial planning for the rest of your life. We need to get a financial planner in here right away." Because the decision on whether to keep the house or not, or get more in retirement or not, is a decision that you're not going to be able to recover from later. Because even though you might live another 10, 20, 30, 40 years, if you're not necessarily working in that timeframe, these decisions are very difficult to recover from, and you're not going to get it all, right? So do you want to have cash flow? Do you want to be house poor? You're in the big house, but you don't have the retirement and then you have to sell the house down the road. What happens if it's on a down market? There's all these, what if scary things? So do we downsize now, get a flow of income so we can live a different lifestyle, but we know it's going to be there.
These are the conversations we're having with the financial planner. And when we're looking at all these different assets and how to divide it up. And people forget, alimony stops when the other person dies. So are you willing to take one in-
Neale Godfrey:
Or stops working.
Seth Nelson:
Or stops working, or stops working or retirement.
Neale Godfrey:
Right, you can't be forced to work.
Seth Nelson:
So one in the hand, verse two in the Bush, do we take less now and a lump sum, and now you're financially responsible? Which is really scary. People like the security blanket of, "Oh, I'm going to get a check every month." But you might not get that check every month. And the further in time away from where you are today, it's easier to think I'll be better off. So it's very hard to settle a case and say, "You're getting a lump sum today. Where it's easier to settle a case that says, "Okay, you're going to get a check every month for five years. And then you're going to get a lump sum." But be careful of that, because five years from now, you might not be in a better financial place. You might not really have that security. So you got to think that through, on these gray divorces. It's a different animal.
Neale Godfrey:
Absolutely. And you don't also have the situation with kids. You're not deciding who's going to be the parent, who's responsible for kid. College is paid for. I mean, this is a later in life divorce. It's a very, very different situation as you're saying, Seth.
Pete Wright:
And we got on this because you were telling us about the book.
Neale Godfrey:
Oh, did I get off?
Pete Wright:
That's what the book is about.
Seth Nelson:
Sorry.
Neale Godfrey:
Sorry. Sorry. We did get off.
Seth Nelson:
Objection, your honor.
Pete Wright:
You guys are doing great.
Neale Godfrey:
The book, exactly, thank you, Seth. He's wearing a suit, leave him alone.
The book empowers women to take a look at their life before, during, and after a gray divorce. And I come at it from obviously the financial empowerment side, of how are you going to design it? What is it going to look like? What's important? And how to have those conversations. Not only with him, but to have them with your attorney, and again, what are those things going to look like? How do you prepare yourself to sit down with Seth? Because the more prepared you are, the more that you've thought this through, the more helpful it's going to be to you, but also to Seth so that he can do his lawyering and not his coaching side.
And what's it going to look like after divorce, and what does life really look like financially? So I come at it from the financial point. Because truthfully, if you're financially secure, you reduce your stress. And you're way able to handle the emotional side of it. Rather than the panic that usually takes place when divorce... "What am I doing? I can't cope."
Pete Wright:
There's a lot going on to unpack in that subject and you have a catalog of trusted books and resources that you have written, indicates people, you should go check out this book. It's coming, but there is no shortage of other stuff to look at from our fantastic guests, Neale Godfrey today. Thank you so much, Neale, for sitting down with us.
Neale Godfrey:
Thank you.
Pete Wright:
And thank you everybody for downloading and listening to this show. We sure appreciate your time and attention. Don't forget, if you have any questions, you can head over to howtosplitatoaster.com. There's a big question button. Ask a question. You want to get your question in for the lawyer about financial topics, raising financially competent kids. Will get those questions answered one way or another. Howtosplitatoaster.com. Thank you everybody. On behalf of Neale Godfrey and America's favorite divorce attorney, Seth Nelson, I'm Pete Wright, and we'll catch you right back here next week on How to Split a Toaster, a divorce podcast about saving your relationships.
Outro:
Seth Nelson is an attorney with NLG Divorce and Family Law with offices in Tampa, Florida. While we may be discussing family law topics, How to Split a Toaster is not intended to, nor is it providing legal advice. Every situation is different. If you have specific questions regarding your situation, please seek your own legal counsel with an attorney licensed to practice law in your jurisdiction. Pete Wright is not an attorney or employee of NLG Divorce and Family Law. Seth Nelson is licensed to practice law in Florida.
