The Dos and Don'ts

Dr. Phil wants Katy to get a reality check, so with the help of financial expert Susan Beacham, Katy tries to balance the family budget.

"So I thought we'd start by taking a look at some of the expenses," Susan says. She fills Katy in on what it costs her parents to run their home. "Our monthly expenses are $5,760. Now, if we take what Dad brings home, and we subtract the expenses, here's what we're left with: $240 a month. Let's talk about some of the things that you want."

"Usually, if I just see something, I just say I want it, and I go get it," Katy says.

Susan adds up the prices for some of Katy's beauty regimen, like manicures: $30, and getting her hair done: $80.

"But I feel like the whole manicure and getting the hair done is what every teenager does," Katy says.

"If you can afford it," Susan stresses.

[AD]"I don't understand why I can't afford it, why I couldn't, because my parents aren't in debt or anything," she says.

"But you know what we haven't talked about yet? College. Out-of-state school for [you] is going to cost $50,000," Susan says.

"That's why I focus on making good grades and plan on getting a full ride," Katy says.

"So, if you don't get a full scholarship, what are you going to do? What's plan B, Katy?"

"I honestly have no clue," she says.

Katy tells Dr. Phil that if she doesn't receive a full scholarship for college, she will ask her parents for help, but she will also be working while in school to help pay for everything.

Dr. Phil brings up the fact that it won't be long before Katy gets her driver's license and wants a car. "What do you have your eye on?" he asks her.

"A 2008 Toyota Solara convertible. That's what I really want," Katy says.


"Black," she says.

Lora informs Dr. Phil that they have no intention of buying Katy a new car.

When Dr. Phil asks Katy how she feels about that, she says, "I'll live. I'll get it eventually."

Dr. Phil brings up the fact that Katy says her closet is so full; she can't get any more clothes to fit in it. "Have you indulged her? Have you overspent on her?" he asks Lora.


"What's it going to take for you to say, ‘Look, it's not responsible for us to do that'? Let's say you said no half of the time and spent $13,500 instead of $27,000. You would have $13,500 to put toward a car right now," Dr. Phil points out.

"Right. Or to college," Lora says.

[AD]Dr. Phil asks Katy, "Would you rather have half of the stuff that you've gotten go away and instead have $13,500 toward a car right now?"

"I think I would, yeah," she says.

"See, you get a little thing right now or a big thing later. If they had said no to you half the time, you would have $13,500 toward a car, then you earn another $6,000, and they match that $6,000, all of a sudden, you're driving a 2008 Solera convertible," Dr. Phil says.

"But I didn't know they were spending that much money," Katy says.

"Exactly my point," Dr. Phil says.

Financial expert Susan Beacham specializes in teaching kids about money. Dr. Phil asks her, "How do you turn this tide financially?"

Susan speaks to Lora and Kris. "You talked about allowance. You started it, but you stopped. You have to start it, and you have to stick with it. I think it's more painful for you to go through allowance than it is for Katy right now. I think if you give Katy a set amount of money that she uses to control certain expenses in her life " not because she's charming. You don't get things in life because you're charming. You get it because you work for it. So, give her a couple expenses that she can manage, and then Katy will all of a sudden be making decisions about her money, not your money," she says.

Dr. Phil goes over the worst money mistakes Susan thinks parents make. "Number one, you say thinking that controlling the money flow equals controlling the outcome of the child's life."

"I think that we like to think, as parents, that we can control our child's decisions when we're paying for it, but you know what? Ultimately, our child leaves home and makes their own decisions, and they will reflect what they've learned, and if they haven't learned anything, you're going to see that behavior," she says.

"You say another big mistake is not teaching that financial independence can actually feel good," Dr. Phil says.

[AD]"The same way your child felt good when they first learned how to tie their shoes," Susan says. "Remember how proud you were? Remember how proud they were? It's the same thing that happens when a child learns how to make good decisions with money. It feels good, and right now, you're robbing Katy of that feeling by not allowing her to do that."

Dr. Phil agrees. "That's really a big deal. There's a sense of independence that comes from mastery over your life. It's like when you tie your shoe or learn to drive. When you make money, and you allocate money, and you buy something, and you say, ‘That's mine.' You know how it felt when you bought your first house, or you bought your first car. And we really cheat kids out of that sense of self-determination and mastery."

He turns back to Susan. "You say hiding money mistakes from kids is a mistake."

"I think our kids need to know we're not perfect when it comes to money, so they can learn how to fix a mistake when they make it," she says.

"And you say we only teach kids how to be spenders, not savers, not donators."

"What I hear from Katy and her mom is they do a lot of bonding shopping. But I'm not seeing the time they're spending driving to the bank to make a deposit, or maybe talking about a donation that they make, or maybe even talking about what stock to buy now," Susan says.

[AD]"Kris, you say you're getting ready to do that by getting [her] a checking account. That's really important. It's astounding how much kids don't really know how that works," Dr. Phil says.

Lora says just the process of coming to the show has opened up the topic of money in her family and has been like family therapy. She says they've been talking about giving Katy a budget, and a debit card that she can control.

Dr. Phil tells her, "That only works if, when the debit card goes to zero, she's done."


To learn more about Susan Beacham's company, go to Money Savvy Generation. And, check out Susan's personal finance organizer for teens!