Speaker 1: Welcome to How the Money. I'm Joel and I am that,
Speaker 1: and today we're discussing fast tracking your kids to financial success.
Speaker 1: You know, Joel, since this is a kid's episode, because
Speaker 1: I mean, we should be having an an a beer,
Speaker 1: a non alcoholic beverage instead of our typical craft beer.
Speaker 1: Maybe we can all assess me street and have like
Speaker 1: Cookie Monster deliver the message, or at least a butter beer. Sure,
Speaker 1: which they never addressed this in the Harry Potter books,
Speaker 1: but it does seem like there's a small trace amount
Speaker 1: of alcohol and butter beer because like the Dobby whatever
Speaker 1: would get drunk on butter beer. I guess it just
Speaker 1: didn't affect the kids as much. Maybe it only affected household.
Speaker 1: It's just yeah, our our kids are talking about it
Speaker 1: the other day. They're like, well, we can have butter beer,
Speaker 1: but we can't have are whiskey. And then Kate never talking,
Speaker 1: We're like, wait a minute, technically it's not addressed. But
Speaker 1: I do think there's small amounts of alcohol in butter beer.
Speaker 1: But that's not what we're talking about today. We're talking
Speaker 1: specifically about kids and how it is that you can
Speaker 1: give your kids just a massive leg up um I
Speaker 1: feel oftentimes when we're in young adulthood, we say to ourselves,
Speaker 1: if only I had known this ten years ago, twenty
Speaker 1: years ago, if if only I had been able to
Speaker 1: start my life with this knowledge that I have now,
Speaker 1: I would have made some different decisions. And so basically
Speaker 1: that is what we're talking about today, the different lessons
Speaker 1: that you can begin teaching your kids who are still
Speaker 1: at home, but then also specifically some of the accounts
Speaker 1: and some of the specific strategies that you can employ
Speaker 1: with your kids in order to get them investing for
Speaker 1: their future. And we hear that from how the Money
Speaker 1: Listeners a lot they're like, man, I wish I had
Speaker 1: this information when I was a lot younger. Some of
Speaker 1: some of who are something upon this podcast late thirties,
Speaker 1: early forties or even later in their life, and they're like, man,
Speaker 1: this has been transformational. But if I had known this
Speaker 1: stuff when I was early twenties, I would be crushing
Speaker 1: it now, which is true, like the early even more
Speaker 1: transform I would be a beautiful butterfly already instead of
Speaker 1: in the pupa state. Right there's a lot of kids
Speaker 1: stuff that is coming to mind. Right now, We're not
Speaker 1: going to incorporate more into the you might even sink
Speaker 1: the Reading Rainbow soundtrack Mitochondria. Do you remember Mitochondria? That's
Speaker 1: the powerhouse of the cell. Would be like some schoolhouse
Speaker 1: for rocks. I mean, there's so many options here, lots
Speaker 1: of different things we learned in school. But before we
Speaker 1: get rolling, man, I want to mention something We've been
Speaker 1: emailing a little bit with a listener who actually happens
Speaker 1: to be Ukrainian. He and he's also living in Ukraine,
Speaker 1: and he was asking about maybe some sort of financial
Speaker 1: goals that he had, and he kind of casually mentions
Speaker 1: how his savings and financial goals have been on pause
Speaker 1: for the past eight months, and oh, yeah, I wonder why,
Speaker 1: maybe because Russia has completely invaded his country. But I
Speaker 1: don't know, he simultaneously. He didn't put that out there
Speaker 1: just for us to like feel bad for him necessarily.
Speaker 1: He was just a matter of factually stating that, like, yeah,
Speaker 1: you know, I haven't been able to pursue my goals
Speaker 1: like I have been, but I'm really excited for things
Speaker 1: to get about going again. I mean, I wanted to
Speaker 1: share that just because when you hear something like that,
Speaker 1: it just gives you just some incredible perspective, right, some
Speaker 1: of the problems that we have in our lives that
Speaker 1: seem to loom so large in our minds, something causing
Speaker 1: us stress. In reality, they're not all that big. And
Speaker 1: especially if you're a listener and you live here in
Speaker 1: the US, I think, I mean, I I feel that
Speaker 1: I've got a lot to be thankful for within my
Speaker 1: own life, not only for you know, me and you
Speaker 1: and the business and our families, but just also for
Speaker 1: our country. Even though we're all aware of what's been
Speaker 1: going on over in Ukraine. When you kind of have
Speaker 1: a I guess just like a personal somewhat of a
Speaker 1: personal connection that brings it to life a whole lot more.
Speaker 1: You're right, man, that does like and it just makes
Speaker 1: me think, like, not that our country doesn't have problems
Speaker 1: that need to be worked on, that need to be discussed,
Speaker 1: but man, we're really lucky to live here. There's so
Speaker 1: many good things about living in the United States, and
Speaker 1: it doesn't My heart goes out to our listener in Ukraine.
Speaker 1: I hope that his country is able to restore their
Speaker 1: their freedom, their independence in the near future, and then
Speaker 1: he's able to get his you know, goals of financial independence,
Speaker 1: restore it soon too, and our heart goes out to
Speaker 1: everybody in Ukraine, like your cause still matters over here,
Speaker 1: and it's it's still something we're thinking about and talking about.
Speaker 1: But Matt, let's move on. Let's let's mention the beer
Speaker 1: that we're having on this episode. This is Postmeister october Fest.
Speaker 1: It's by odd story. It's which is a brewery actually
Speaker 1: had of Chattanoogat picked this beer up when I was
Speaker 1: there just a couple of weekends ago, did you, Yeah,
Speaker 1: so you actually were at this brewery. No, just a
Speaker 1: local beer store there, which which is honestly it's Imbibe.
Speaker 1: I think it's what it's called in in Chattanooga. Fantastic
Speaker 1: beer store. Yeah, great selection. So next time you're in
Speaker 1: Chattanooga one, I'll recommend you some hikes if you email me,
Speaker 1: but I'll also recommend that you go to Imbibe and
Speaker 1: pick up some beers there. So all right, Matt, let's
Speaker 1: let's get onto the subject in hand. We're talking about
Speaker 1: fast tracking your kids to financial success. And for some reason,
Speaker 1: as we were fast tracking, right, I started maybe think
Speaker 1: about racing. And I'm not a huge racing fan, but
Speaker 1: Americans have kind of You're always challenging me to foot races, like,
Speaker 1: just take it easy, dude, going for a walk. Well,
Speaker 1: I prefer wrestling, but you know, foot races are fun too.
Speaker 1: But Formula one has kind of come back in vogue
Speaker 1: with the success of Netflix's Drive to Survive. Yeah, and
Speaker 1: and it's honestly, it's a really it's a really interesting show.
Speaker 1: I never was in the Formula one and I still
Speaker 1: don't really like watch races or anything like that, but
Speaker 1: the show. I watched some of that show at least,
Speaker 1: and it was super interesting. But the interesting thing Matt
Speaker 1: about being a Formula one driver is is that the
Speaker 1: driver with the fastest lap time in trials the day
Speaker 1: before the race, they get the what's known as the
Speaker 1: pole position, Right, they get the top spot in the race.
Speaker 1: Is that right there at the finish line, right at
Speaker 1: the front starting point, so as also becomes the finish
Speaker 1: line at some point later on the race. And uh,
Speaker 1: but the pole position, we know so much about racing.
Speaker 1: The pole position though it's crucial. It is this crucial
Speaker 1: advantage to being able to win the race because, uh,
Speaker 1: the stats show that if you start first, the person
Speaker 1: first out of the gate. They win more than forty
Speaker 1: two percent of the time, So there's sixteen cars. Makes
Speaker 1: a lot of sense. But if you're in first place
Speaker 1: to begin with, the chances are overwhelmingly you have a
Speaker 1: much higher chance of success. Where you start matters. You
Speaker 1: don't have to pass anybody, you're just I guess you're
Speaker 1: just out there just driving really fast. You gotta stay
Speaker 1: in front of people, right, that's all you gotta do
Speaker 1: now having to worry about hitting tires with the other guys. Right.
Speaker 1: But that's the thing with Formula one is that they
Speaker 1: got those exposed tires, and I'm always like, how do
Speaker 1: they not just like just launch, just jump onto each
Speaker 1: other until makes it crazy? I mean that like Nascar
Speaker 1: where you can kind of like push into each other
Speaker 1: and bump each other into game finches. Really it's it's
Speaker 1: pretty nuts. But anilimeters Joel millimeters. But where you're starting
Speaker 1: right impacts impacts how you finish in a significant way
Speaker 1: in Formula one. But the truth is it's the same
Speaker 1: exact exact thing with money. And it doesn't mean that
Speaker 1: like inheriting a trust fund, that's not what we're talking
Speaker 1: about here. But if you're a parent, you greatly influence
Speaker 1: whether your kids start out in the personal finance pole position.
Speaker 1: We'll talk about passing on knowledge in this hose, but
Speaker 1: we're also going to talk about the mechanics and the
Speaker 1: accounts that can give your kid a leg up, which
Speaker 1: most of us, if we're honest, didn't have, Like we
Speaker 1: didn't learn about this stuff in school, and in all
Speaker 1: likely your parents didn't teach you about personal finance, so
Speaker 1: you kind of maybe started off behind the eight ball. Well,
Speaker 1: how can you change that for the next generation. That's
Speaker 1: the topic of today's episode, right, Yeah, Yeah, what you
Speaker 1: know at the start has a remarkable impact on where
Speaker 1: you are going to end up at the finish. It's
Speaker 1: gonna have a remarkable impact on the quality of life
Speaker 1: that you're gonna be able to lead. And we think
Speaker 1: that there is a massive advantage gained in life when
Speaker 1: you've got these basic financial literacy principles being taught to
Speaker 1: two kids consistently as they are growing up. And it
Speaker 1: doesn't have to be uber fancy or sophisticated, right, Like, honestly,
Speaker 1: it's pretty simple and straightforward stuff, but it's incredibly foundational
Speaker 1: as kids begin to develop their own ideas of how
Speaker 1: does the world works. But let's say that you've got teenagers. Now,
Speaker 1: maybe your kid wasn't necessarily hustling at age six selling
Speaker 1: lemonade out in the neighborhood. Let's say didn't develop an
Speaker 1: award winning app at the age of eight. That are
Speaker 1: their kids? Who do that? Okay? I read about those
Speaker 1: kids sometimes, like who are they? That's incredible either, I'm
Speaker 1: not sure if their parents are amazing. I mean it's
Speaker 1: probably both, and right, the parents and the kids are
Speaker 1: pretty incredible nerds. But he signed play instead losers. But
Speaker 1: even if you have a kid that's older, the truth is,
Speaker 1: you still have time to get them pointed in the
Speaker 1: right direction. Like, honestly, you still have influence. Even if
Speaker 1: you have a grown adult who's out of the house,
Speaker 1: who is you know, there's still your kid though. Uh.
Speaker 1: And we actually talked about this with our friend Bobby
Speaker 1: Rebel back in I think his episode five and eleven.
Speaker 1: It's not too late. So that's right. We're gonna discuss
Speaker 1: how to set your kids up for a successful financial
Speaker 1: future in detail during this episode. Yeah, and most holks,
Speaker 1: like I said, they learned in their thirties or forties,
Speaker 1: and then they get started and they're like, man, I
Speaker 1: wish I had known that stuff earlier instead of really
Speaker 1: just learning from my bad beats, from the mistakes I
Speaker 1: made and then having to kind of figure it out
Speaker 1: from there. It just seems like a lot of people
Speaker 1: and not only are you kind of learning along the
Speaker 1: way from the mistakes you've made, but those mistakes actually
Speaker 1: make it harder to make progress, right because let's say
Speaker 1: one of those mistakes is taking on too much student
Speaker 1: loan debt, or one of those mistakes is getting into
Speaker 1: credit card debt up to your eyeballs and then realizing,
Speaker 1: wait a second, wait a second, that's not the route
Speaker 1: I should be taking. It just makes it that much
Speaker 1: harder to get to the place where you want to be.
Speaker 1: And so, yeah, the earlier kids start learning about money,
Speaker 1: the more time they have to impleuent that knowledge, the
Speaker 1: more they can avoid having to learn from mistakes, the
Speaker 1: more they can just learn on the front end, and
Speaker 1: then that gives them also time to to enjoy compounding returns, right,
Speaker 1: which is something we talk about a lot on the show.
Speaker 1: How your money working for you is huge. It makes
Speaker 1: a massive impact on your ability to build wealth. Time
Speaker 1: allows them to have more exposure to the market, and
Speaker 1: it allows their money to kind of start doing the
Speaker 1: heavy lifting on their behalf much sooner, and that that
Speaker 1: means that they don't have to do as much heavy
Speaker 1: lifting as most of us did in order to get
Speaker 1: our financial financials on the right path. The earlier they
Speaker 1: get started, it actually means they can be a little
Speaker 1: more relaxed as they as they get up with their money,
Speaker 1: and that's not the norm. That's pretty cool that you
Speaker 1: can actually help your kid set them up for for
Speaker 1: that sort of success, but it's definitely not what most
Speaker 1: people experience with their personal finances. Yeah, yeah, So this
Speaker 1: is why this is such an important thing, because your
Speaker 1: kids have time on their side, and you know, Joe,
Speaker 1: you're talking about compounding returns, like not, not only do
Speaker 1: we see this eighth wonder of the world at play
Speaker 1: with our you know, with our kids actual dollars, but
Speaker 1: we also get to see the compounding effects of their
Speaker 1: behavior as well. You know. It's it's just like the
Speaker 1: virtuous cycle of how our money ends up making money
Speaker 1: for us. Healthy habits build upon other healthy habits. I
Speaker 1: think helping your kids establish these tried and true money
Speaker 1: practices are going to serve them for years to come.
Speaker 1: You can help them to create this base layer of
Speaker 1: solid habits that they can use to propel their progress
Speaker 1: even more as they get older. It's it's just kind
Speaker 1: of like just again, imagine that snowball, and every single
Speaker 1: time it revolves around it like the first time it revolved,
Speaker 1: it picked up a little bit of snow. But then
Speaker 1: the next time it does an entire rotation, it's picked
Speaker 1: up even more and it continues onward. Yeah, and it's
Speaker 1: all those like we're always teaching our kids these other habits,
Speaker 1: healthy habits right as they're growing up. Rush in your teeth, yeah,
Speaker 1: and like being respectful to your friends, parents, take care
Speaker 1: of your Yeah. I mean I remember having sir and
Speaker 1: ma'am beat into me as a kid, like I had
Speaker 1: to respond to my parents that way. But that's the
Speaker 1: kind of thing that like we're always teach her and
Speaker 1: kids to do stuff like that. But for some reason,
Speaker 1: money habits get left out of the mix for the
Speaker 1: most part. So most kids, they know how to be polite,
Speaker 1: they know how to be kind, they know how to
Speaker 1: take care of their bodies and how to brush their
Speaker 1: teeth stuff like that, but they don't know how to
Speaker 1: take care of their money, and that's a problem. But
Speaker 1: the reality is that kids are malleable. That's another important
Speaker 1: fact that we have to talk about because they just
Speaker 1: soak up information, so dang well, they're ripe to be
Speaker 1: taught some of these things. And so if we miss
Speaker 1: out on the opportunity to teach them when they're young,
Speaker 1: it only becomes difficult the older they get. Their prefrontal
Speaker 1: cortexes are still being developed, so there's a lot more
Speaker 1: elasticity going on that's those brains. And interestingly enough, there's
Speaker 1: some recent research that shows that all of our brains
Speaker 1: actually have more plasticity than scientists previously thought. I think
Speaker 1: it's just came out. Speak for yourself, your brain is
Speaker 1: done developing. Well. I thought this was kind of cool
Speaker 1: that there's some of this research found that people still
Speaker 1: in their sixties and seven, there's more plasticity in their
Speaker 1: brain than they previously thought. They have more ability to
Speaker 1: adapt and learn than was previously assumed. But of course
Speaker 1: kids still have far more ability. They're changing that so
Speaker 1: it's it's much easier to teach them money early on.
Speaker 1: Based on their physiological makeup. They're just going to be
Speaker 1: more susceptible to having these ideas get embedded deeply in there.
Speaker 1: They're gonna stick around, and then they're going to have
Speaker 1: an impact for years and decades to come. Teaching the
Speaker 1: next generation something as important, something that we use on
Speaker 1: a daily basis, something is necessary as personal finance. Doing
Speaker 1: it regularly and starting at a young age is just
Speaker 1: is massively important. Yeah, something else worth mentioning is, man,
Speaker 1: I think that kids actually can help set you up
Speaker 1: for financial success. You know the reason we're talking about
Speaker 1: setting your kids up for financial successes for their own
Speaker 1: well being. We're like, we're doing it for the kids themselves.
Speaker 1: But obviously, you know, when when the stakes get raised
Speaker 1: like this, it does like you could see a benefit
Speaker 1: to you personally, but it could come full full circle
Speaker 1: as well, because even though you may have been able
Speaker 1: to plan as well as you thought you could, you
Speaker 1: never know what kind of curveball's life might throw you
Speaker 1: and down the road, maybe when you're in your golden years.
Speaker 1: Hopefully your kids are in a great position to where
Speaker 1: they might be able to welcome you into their home
Speaker 1: when you are in your later years. Yeah, for sure,
Speaker 1: and so hopefully you're planning well for your financial future.
Speaker 1: But your kids who are financially savvy can help you
Speaker 1: when you become old and infirm, Matt. Which I look
Speaker 1: forward to those days personally, but you're doing it for
Speaker 1: them for you know. I don't know if I told
Speaker 1: you this. Emily and I recently took a marriage test
Speaker 1: and one of the questions that there was one question
Speaker 1: on there that made me smile, and it said are
Speaker 1: you looking forward to growing old with your wife? And
Speaker 1: I was like, heck, yes, I am, Like, I don't know,
Speaker 1: I'm like kind of looking forward to old age. I
Speaker 1: think it's gonna be fun. Yeah, I think it'll be fun.
Speaker 1: I'm definitely still looking forward to like next month as
Speaker 1: as well. I mean, I don't want to come to
Speaker 1: come too fast. Yeah, Yeah, it's gonna it's gonna still
Speaker 1: gonna be good. And hopefully, hopefully my kids are financially
Speaker 1: savvy and they are able to, yeah, support us, not
Speaker 1: not necessarily financial, but to be there for us and
Speaker 1: to be on solid footing themselves. But let's talk about
Speaker 1: how we get our kids to that point, Matt. Let's
Speaker 1: talk about the most important factors that help fast track
Speaker 1: kids to financial success that we can instill in them
Speaker 1: as parents. Now we'll get through our thoughts on that
Speaker 1: right after this. All right, we are back from the
Speaker 1: break and again we're talking about fast tracking your kids
Speaker 1: to financial success and you know, Joe, like, we'll talk
Speaker 1: about some of those specific accounts that you can set
Speaker 1: up for your kids, maybe even how much you should
Speaker 1: be investing for their future. We'll get to that in
Speaker 1: a bit, but first we wanted to touch on some
Speaker 1: aspects that you can begin now like today, where there's
Speaker 1: no income required, you know, in order to get that
Speaker 1: ball rolling, because a lot of a lot of times,
Speaker 1: in particular when it comes to investing, your kids need
Speaker 1: to have that earned income. Or sometimes you're like, man,
Speaker 1: I have an eighteen month old, Like, we're not talking
Speaker 1: about investing yet, since where do I start? And investing
Speaker 1: is a place you gotta get too, but it's not
Speaker 1: the place you start. Yeah exactly. I mean so, so
Speaker 1: I think when most folks, when most parents, in particular,
Speaker 1: when they think about teaching their kids about money, like
Speaker 1: they might instinctively think of maybe just the formal lessons
Speaker 1: that they can teach, right, or or maybe they're thinking
Speaker 1: like there's some kind of like kids and Money program
Speaker 1: that they can sign up for. But we think that
Speaker 1: the behavior that you're modeling for your kids and the
Speaker 1: example that you're setting that that is even more crucial
Speaker 1: because the reality is that what you do well that
Speaker 1: means more over time than than what you say. And so, yeah,
Speaker 1: you want your kids to not only do as you say,
Speaker 1: but you want them to also do as you do.
Speaker 1: And so one of the things that makes me think
Speaker 1: of is the tone that you're setting when it comes
Speaker 1: to talking about money. And so, for instance, every time
Speaker 1: you talk about money, well, if it's a fight in
Speaker 1: your house, um, I think what you're doing is you're
Speaker 1: setting the expectation that anytime we talk about money like
Speaker 1: this is how it should be talked about. Uh. And
Speaker 1: so I think it's important to not just discuss what
Speaker 1: it is that you're talking about, but how it is
Speaker 1: that you're going about talking about that, because there's a
Speaker 1: chance that your kids might completely push back against that
Speaker 1: and they're gonna say, well, that's never going to be
Speaker 1: what it's like when I grow up. But at the
Speaker 1: same time, this is the expectation that you're setting, and
Speaker 1: I think it can be an uphill battle if you
Speaker 1: are setting that kind of negative tone. That kind of
Speaker 1: negative vibe anytime you talk about money. Right. So one
Speaker 1: example I think we could give to this Matt, just
Speaker 1: in some other area of parenting is let's say you
Speaker 1: enjoy cursing, which is totally fine, Like I don't have
Speaker 1: a problem with that, but U but let's say, are
Speaker 1: you talking about me specifically? Just general example here if
Speaker 1: somebody likes cursing, just love to curse, Yeah, they love it,
Speaker 1: and then they hear their kid cursing and like wait
Speaker 1: a second, no, no, no, you're not allowed to do
Speaker 1: that like this, I thought I taught you better than this. Well,
Speaker 1: the fact is your kids are going to imitate what
Speaker 1: you do. And so even if they don't do it
Speaker 1: in front of you because they know it's gonna get
Speaker 1: them in trouble, they're probably going to use that language
Speaker 1: behind your back with their friends or something like that.
Speaker 1: So the example we set, like how we behave our
Speaker 1: kids are going to imitate that. They're going to respond
Speaker 1: more to what we do than to what we say.
Speaker 1: I just I just think that's ultimately, that's that's how
Speaker 1: they learned how to be. In this word, they learn
Speaker 1: how to be based on how we exist. And so
Speaker 1: you got to think about that. Um so, so, yeah,
Speaker 1: your example matters a lot. I still remember our conversation
Speaker 1: Matt with Jail Collins back in the day, and he
Speaker 1: basically said he gave more credit to his wife for
Speaker 1: how his daughter turned out, even though he wrote like
Speaker 1: a best selling investment book, right, the Simple Path to
Speaker 1: Wealth that like tens and tens and thousands of people
Speaker 1: have read. I don't know if I don't know if
Speaker 1: it's sold a million copies or not yet, but he
Speaker 1: wrote this massively successful. But but he said, no, no,
Speaker 1: my wife modeled it day in and day out for
Speaker 1: our daughter. She deserves the credit. And I think there's
Speaker 1: a lot of truth to that that the modeling matters
Speaker 1: more than the words that are said. Although the conversations
Speaker 1: are important to you gotta have those discussions because even
Speaker 1: if you need to have a little bit of both,
Speaker 1: because like let's say, even even if you handle your money,
Speaker 1: impact will be well, that's just not quite enough when
Speaker 1: we're talking about transmitting that knowledge to our kids, because
Speaker 1: it just it doesn't happen by osmosis, right, It doesn't
Speaker 1: just seep in just because we're doing the right thing.
Speaker 1: It kind of does, but it also kind of doesn't.
Speaker 1: Let's say you have a million dollars in your four
Speaker 1: o one K because you've been a great investor, but
Speaker 1: you never ever ever talk about it with your kids. Well,
Speaker 1: they don't necessarily know that, so you've got to use
Speaker 1: words too, And so we would say it makes sense
Speaker 1: to have more money talks, but to make them actually
Speaker 1: a little more mundane. That might sound a little weird
Speaker 1: to have mundane money talks, but we would say that
Speaker 1: means chatting normally about purchases at the store, about delayed gratification,
Speaker 1: how you're saving up for something, but it's gonna be
Speaker 1: another six months till you can get it, until you've
Speaker 1: saved up the cash to buy that thing without having
Speaker 1: you go into debt for it, answering questions too, and
Speaker 1: a thoughtful way. Kids have questions about money all the time. Yeah,
Speaker 1: I think when you say mundane, that doesn't mean boring conversations.
Speaker 1: It just means like talking about them in a in
Speaker 1: a like day to day kind of way, where like
Speaker 1: the emotion is removed from it, sort of like what
Speaker 1: I was saying earlier too, Like it's it's a desire
Speaker 1: to teach in the every day in the ordinary, And
Speaker 1: you know not for these conversations every time you have
Speaker 1: them to be just charged and loaded with with emotion
Speaker 1: and monumental. You're not going to teach your kid how
Speaker 1: to invest in like one sit down combo, like birds
Speaker 1: in the B style chat, right, It's gonna take like short,
Speaker 1: thoughtful combos over an extended period of time. And and
Speaker 1: like that means including your kids and decisions. Mat I
Speaker 1: don't know about you. Sometimes I have a hard time
Speaker 1: letting my kids do things when I know they're gonna
Speaker 1: make a mess. But but ultimately that's in their best interest, right,
Speaker 1: whether it's yeah, learning to scrape their plates and put
Speaker 1: them in the dishwasher, and I'm like, oh, I guess
Speaker 1: I'll just do it myself because I do it better
Speaker 1: than they do. But I think the same thing is
Speaker 1: true when it comes to including them in money decisions.
Speaker 1: It's like, well, it's gonna be quicker, it's gonna be
Speaker 1: more efficient if I handle it myself. But if you
Speaker 1: want your kids to be money savvy, you're gonna you're
Speaker 1: gonna want to start including them in those money conversations
Speaker 1: along the way, even though it's going to maybe draw
Speaker 1: out the deliberation process. It's gonna make it take a
Speaker 1: little bit longer. Ultimately, it's going to be in their
Speaker 1: best interest if you kind of start including them in
Speaker 1: those discussions and if you value their input. That's right. Yeah,
Speaker 1: And you know, of course all kids are going to
Speaker 1: be different, right, Like you're likely you're gonna have to
Speaker 1: take a different tact with each one. Uh. Like, for instance,
Speaker 1: you might have one kid who's a natural saver, and
Speaker 1: you know, that might make you so proud, like makes
Speaker 1: you feel really good that they're able to stock away
Speaker 1: all that money, but they still need to learn how
Speaker 1: to spend on things that are important to them. And
Speaker 1: of course they'll need to be taught how to invest
Speaker 1: as well. They maybe they're naturally a saver, but they're
Speaker 1: not willing to put that money at risk by investing it.
Speaker 1: And we are going to talk about investing here in
Speaker 1: a little bit. But it's more than just you know,
Speaker 1: like that natural proclivity that a kid might have. It's
Speaker 1: the way that kids learn best that can vary as well.
Speaker 1: It makes me think, like, for instance, it is your
Speaker 1: kid more of a visual learner or an auditory one,
Speaker 1: Like can you just have a conversation with them about stuff,
Speaker 1: or is it helpful for them to see things, Because
Speaker 1: if that's the case, like maybe playing a board game
Speaker 1: like Monopoly, like that might help to generate a great
Speaker 1: money discussion if they're able to see, I don't you know,
Speaker 1: all the properties lined up, but they're they're holding that
Speaker 1: play money in their hand. And so just keep that
Speaker 1: in mind because if you're using ineffective methods of teaching
Speaker 1: your kids, it might feel like trying to to put
Speaker 1: a square peg in a round hole. Yeah, for sure
Speaker 1: that the method matters. You're gonna adapt it to each kid.
Speaker 1: You're not gonna be able to just like take the
Speaker 1: exact same route with with everythingle Let's say you have
Speaker 1: multiple kids. Some some people choose have one. That's great.
Speaker 1: But with Matt, we've got three kids. They're all different.
Speaker 1: You've got four, I've got three, and they're all different,
Speaker 1: and so we I have to kind of approach them
Speaker 1: uniquely in those conversations based on their personality and based
Speaker 1: on kind of their bent when it comes to money,
Speaker 1: and you can't. You can't. Just like, honestly, I feel
Speaker 1: like I've learned so much from reading this The biophy
Speaker 1: on on Warren Buffett. But like one of his mistakes
Speaker 1: I feel like as a parent is he just assumed
Speaker 1: that his kids were gonna be just like him. And
Speaker 1: as far as their natural tendency to want to dive
Speaker 1: into business and to be a self starter, uh, it
Speaker 1: took them multiple decades to get to that point to
Speaker 1: where they're making uh I think what he would call
Speaker 1: savvy money and business moves. But like, I feel like
Speaker 1: that would be an instance where he just assumed that
Speaker 1: they're gonna be just like him, and that's just not
Speaker 1: the kid. I think a lot of parents assume that,
Speaker 1: and then once you especially if you have a few,
Speaker 1: you're like, wait a second. They're all different, and maybe
Speaker 1: they have little bits and pieces of of me and Emily,
Speaker 1: but they also are completely themselves in some anyways. And
Speaker 1: I don't really expect them to turn out just like
Speaker 1: me or even anywhere close necessarily. But before kids can
Speaker 1: do anything with their money, Matt, they've got to earn
Speaker 1: some of it, right, And I think that's crucial to
Speaker 1: help your kids form a connection between money that comes
Speaker 1: into their lives and the work that it takes to
Speaker 1: get it. This is just another one of those massively
Speaker 1: important lessons that it takes when it comes to fast
Speaker 1: tracking your kids to financial success, because I don't want
Speaker 1: my kids thinking that they get money just because they're alive.
Speaker 1: Just because they breathe doesn't mean they get money in
Speaker 1: their bank account or that I give them cash straight
Speaker 1: into their hands when they ask. So yeah, we would
Speaker 1: say it's important to take some steps to help your
Speaker 1: kids think of creative ways that they can earn money
Speaker 1: for things that they end up wanting. You don't have
Speaker 1: to necessarily help them with like a lemonated stand or
Speaker 1: bake sale every single weekend or anything like that, Like
Speaker 1: that's putting too much pressure on yourself and there's no
Speaker 1: need to go that hardcore. But you might want to
Speaker 1: make it like a quarterly goal or something like that
Speaker 1: to to help them with ideas that can generate income.
Speaker 1: And so much that depends on their age. Older they get,
Speaker 1: they can probably do this on their own. They don't
Speaker 1: even need you. Let's say they're eleven, twelve, thirteen. There's
Speaker 1: things that they can do in the neighborhood to make
Speaker 1: money that don't necessarily have to involve you coming up
Speaker 1: with the idea of participating with them. Uh and and
Speaker 1: so much depends on their intrinsic desires to We've done
Speaker 1: things like selling hot cocoa, or we've done art sales
Speaker 1: where the girls like they make their own art and
Speaker 1: then they put it out for sale at the end
Speaker 1: of the driveway, or just selling old toys like right
Speaker 1: and are there are their toys that they've had that
Speaker 1: they've gotten for holidays over the years and birthdays that
Speaker 1: they feel like they could part with and they'd rather
Speaker 1: have the cash than to have these toys that they
Speaker 1: don't play with anymore. These are all kind of great
Speaker 1: ways to teach them how to make money, the value
Speaker 1: of a dollar and stuff like that, But are really
Speaker 1: so much of it starts with helping them find ways
Speaker 1: to earn money and understand that that is the main
Speaker 1: way that money comes into your life. Totally. Yeah, I
Speaker 1: think kind of thinking about these things creatively with your kids,
Speaker 1: it's it's sort of the gift of entrepreneurship. Yeah, Like
Speaker 1: the ability for you to impart upon your kids the
Speaker 1: knowledge that they could potentially earn money in all all
Speaker 1: of these different types of ways. I think that's that's
Speaker 1: an incredible lesson that we can help train our kids
Speaker 1: in as well, but on on that note, allowances, let's
Speaker 1: talk about that because I think a lot of folks
Speaker 1: like this, this question always comes up when we start
Speaker 1: talking about helping kids to handle their money effectively. And
Speaker 1: you know, I think allowances can be a good idea.
Speaker 1: You know, ensuring that your kids have money to to save,
Speaker 1: to spend, invest to give money like that puts the
Speaker 1: concepts that you're discussing into practice for them. Uh So, yeah,
Speaker 1: get you know, giving your kids a set amount of
Speaker 1: money each week based on their age, that that can
Speaker 1: be smart. But it's also important to to create a
Speaker 1: distinction that there are just going to be some chores
Speaker 1: they're they're gonna be some tasks out there that they
Speaker 1: have to help with just because they're part of the family,
Speaker 1: not because uh it's something that they're going to get
Speaker 1: paid for. Uh. And so keep that in mind. But
Speaker 1: it's a fine balance to strike when you are um basically,
Speaker 1: what we're focusing on are the different practices of what
Speaker 1: you can do with money once you haven't in hand.
Speaker 1: That's what I feel like an allowance focuses on. But
Speaker 1: you still want to keep them receiving that money. Very
Speaker 1: close to the concept of working for that money. Otherwise,
Speaker 1: I think if you use allowances ineffectively, it can have
Speaker 1: a negative impact, right, like making it feel like that
Speaker 1: money just falls out of thin air. So first tying
Speaker 1: that money to the work that they're doing, and then
Speaker 1: focusing on those other practices as well, like like you know,
Speaker 1: like I mentioned, spending, saving, investing, giving. I think it's
Speaker 1: really important too for parents to set budgets for certain
Speaker 1: things that they spend money on, and then if their
Speaker 1: kids want something it's more expensive, say all right, that's
Speaker 1: gonna come out of your money. So I mean, my
Speaker 1: parents did this with me really well, when like buy
Speaker 1: and sneak or something, Remember your sneakers. Yeah, it's like
Speaker 1: like listen, there's a money threshold that they're gonna spend
Speaker 1: if I want the fancier ones, I got to come
Speaker 1: to the table with my birthday, Christmas allowance money whatever
Speaker 1: that is, And so that made me rethink. It helped
Speaker 1: me realize the value of the thing that I wanted.
Speaker 1: And lots of times I took the cheaper item that
Speaker 1: my parents would fully subsidize, and on occasion I would
Speaker 1: pony up the extra dough to get the exact item
Speaker 1: that I really wanted so much depending on how much
Speaker 1: money I had and how valuable that thing actually was.
Speaker 1: But not those Scottie Pippens. The Scotty Pippens I did get,
Speaker 1: Oh you did? I did? That was like the one
Speaker 1: fancy pair of Yeah, and they were awesome, but they're
Speaker 1: worth it. They were worth that was your craft. I
Speaker 1: still remember those things that age twelve, but that's while
Speaker 1: shoes kind of where my my craftier equivalent at that point.
Speaker 1: But those are the kind of discussions I think that
Speaker 1: are really fruitful is saying, like, listen, we've only got
Speaker 1: this much money to allocate towards a school book bag
Speaker 1: or whatever it is, and it introduces the idea of scarcity,
Speaker 1: but like the fact that there is only so much
Speaker 1: money so or at least only so much money that
Speaker 1: we're willing to spend, right, Because that's the other thing
Speaker 1: as well, is it's not to put this fear that
Speaker 1: we're going to run out of money, like before your
Speaker 1: kids and some with some families that might definitely be
Speaker 1: the case. But in other cases you probably have plenty
Speaker 1: of money that you could buy an extra pair of
Speaker 1: shoes or a different jacket or something like that that
Speaker 1: your kid might, but it's about being honest and saying, well,
Speaker 1: this is how much we're willing to spend beyond that
Speaker 1: that's on you. And by the way, so we're talking
Speaker 1: about earning and talking about allowances, let's talk about like
Speaker 1: especially as kids get older. I think it's important to
Speaker 1: mention high school jobs here because, uh, we think of
Speaker 1: those as being a really good thing and that a
Speaker 1: lot of kids should probably be working at that point
Speaker 1: in time. And the reality, Matt, when you look at
Speaker 1: the numbers, is that fewer kids are actually doing this.
Speaker 1: Something close to fewer young folks are working in high
Speaker 1: school than was the norm decades ago. I think some
Speaker 1: folks would say, you've got the whole rest of your
Speaker 1: life to work, why would you want to get started
Speaker 1: when you're fifteen. Don't don't ruin his childhood, right exactly?
Speaker 1: I mean, I guess I get that response, like it
Speaker 1: makes sense to me, But I would say, I would retort.
Speaker 1: I would say, there's there's like a host of skills
Speaker 1: like time management, of working with the team, personal responsibility,
Speaker 1: learning to like look an adult in the eyes, those
Speaker 1: kinds of things that a kid is able to learn
Speaker 1: if they have a real after school job that they
Speaker 1: might not be able to learn in the same way
Speaker 1: at least at home. That I would say the most
Speaker 1: important benefits that you get of working at that age,
Speaker 1: they go just way beyond making money. It's not about
Speaker 1: the five dollars and fifteen cents an hour MATT that
Speaker 1: I made when I was fourteen working at the fast
Speaker 1: food restaurant across from across from my school. But it's
Speaker 1: about all those other intangible benefits that served me that
Speaker 1: like I had to learn at an earlier age, and
Speaker 1: I feel like they paid massive dividends moving forward when
Speaker 1: I like went into an actual career. Yeah, it's not
Speaker 1: like you set yourself up for success with uh your
Speaker 1: minimum wave right said job, it's not about them. It's
Speaker 1: less about the money, right, No, I wasn't that even
Speaker 1: really investing that money. It's it's barely helping buy like
Speaker 1: the cheapest car possible. It's not one of those things
Speaker 1: in the car maybe covered your gas is literally an
Speaker 1: eighteen hundred dollar Toyota Corolla or whatever, but it's uh
Speaker 1: or no, it was a camera. They just were the
Speaker 1: signs of Corollas back then. But those are the kind
Speaker 1: of things that like, it's it's not about the money,
Speaker 1: It's about all those other things I learned, showing up
Speaker 1: on time, getting the job done, doing stuff I didn't like,
Speaker 1: like squeezing lemons. I was the worst. All right, Well,
Speaker 1: so earning money that is the first step, right, but
Speaker 1: let's talk about what you do after that, and hopefully
Speaker 1: that includes saving a good portion of that earned income.
Speaker 1: One great tactic to incentivize your kids savings is by
Speaker 1: paying what we would call an astronomically high interest rate,
Speaker 1: which is a great way to help them to understand
Speaker 1: that their money, that he can make money, even if
Speaker 1: it's just sitting around. That is exactly what we did
Speaker 1: with our oldest daughter. We were sitting down and I
Speaker 1: was paying her two weekly in order for her to
Speaker 1: understand that this was something that she could do that
Speaker 1: would actually move the needle. Because I remember when I
Speaker 1: was a kid going to the bank and Dad, no,
Speaker 1: we we opened us savings account. I don't know what
Speaker 1: rate that they're they're they were paying, but I was
Speaker 1: only earning like pennies. And I just remember even at
Speaker 1: the time, thinking, I don't think this is like teaching
Speaker 1: me the lesson you think, because I had like zero
Speaker 1: desire to to continue to save more money, but finding
Speaker 1: a way to help those lessons to sink in and
Speaker 1: then help your kids as well to consider what it
Speaker 1: is that they're saving for. I think that can be
Speaker 1: helpful as well. Again with with our oldest, she's a
Speaker 1: really content child, uh and there's not it doesn't seem
Speaker 1: like there's a whole that that she wants, and so
Speaker 1: I've kind of been surprised at the fact that, uh,
Speaker 1: we're having to trying to like prod her a little
Speaker 1: bit and be like, hey, you know, this is something
Speaker 1: you could potentially get, kind of like dangling some of
Speaker 1: these carrots in front of her in order for her
Speaker 1: to be more ambitious. It's good overall. I think it's
Speaker 1: a good thing that she's content, But when it comes
Speaker 1: to being like an aggressive saver, it's not necessarily stoking
Speaker 1: the fire, you know what I'm saying. But you know,
Speaker 1: all savings eventually become expenses as well, because what is
Speaker 1: it that you're saving up for it, Well, it's typically
Speaker 1: spend money. And so I think part of this is
Speaker 1: helping your kids to consider some of these different spending
Speaker 1: decisions so that you know they don't end up buying
Speaker 1: things on a whim that they're going to later regret. Yeah,
Speaker 1: I mean, I think I mentioned a couple of months
Speaker 1: ago taking my oldest nine year old to to Costco
Speaker 1: and she wanted this like squishy mellow pillow thing, and
Speaker 1: I think it was eighteen dollars, I don't remember, but
Speaker 1: it was a spur of the moment, and so we
Speaker 1: said she had zero desire to have that until she
Speaker 1: saw She had never talked about getting one of these before.
Speaker 1: I think she already had one, Like it's conra Nickels, Like,
Speaker 1: she's got so many stuffed animals, it's hard for me
Speaker 1: to be like, great, yeah, let's spend money on this.
Speaker 1: But it's her money, so she gets to choose those things.
Speaker 1: But we have a forty eight hour role. And so
Speaker 1: I was like, listen, if you really want this, two
Speaker 1: days from now, I will bring you back here and
Speaker 1: we will get this squashy mellow and it's all yours, like,
Speaker 1: spend your money on it, but well, let's make thoughtful
Speaker 1: purchasing decisions. And so two days later she remembered it
Speaker 1: and she wanted it. I was assuming she was going
Speaker 1: to completely forget about it, but no, she was like, no,
Speaker 1: it piqued my interest. This is the thing I want
Speaker 1: to spend my money on, and I think it's okay.
Speaker 1: Then I took her back when we got it. But sometimes, uh,
Speaker 1: teaching your kids money about how to use money effectively,
Speaker 1: it's gonna take a little more from you because that
Speaker 1: I had to drive back and and it actually let
Speaker 1: her get get the eyem that she wanted. But it's
Speaker 1: that's that's what it takes though. It takes patience and time,
Speaker 1: and I think oftentimes we're not willing to give it
Speaker 1: that kind of time, you know, Like that's the like
Speaker 1: I was thinking about when we were talking about the
Speaker 1: ability for kids to learn things because their minds are
Speaker 1: more malleable. I was reading some up on that, and
Speaker 1: oftentimes it's because kids are willing to explore, and exploring
Speaker 1: takes time. And as adults, we I mean, we often
Speaker 1: times have so many different responsibilities and tasks that we
Speaker 1: have to get done. We don't explore. We just immediately
Speaker 1: jumped to conclusions, we make our decision, and essentially we're
Speaker 1: kind of closing off our mind from the ability to
Speaker 1: making some of these new connections. It does take just
Speaker 1: a little bit more time, and you know, Another aspect
Speaker 1: I think as you're teaching your kids about money is
Speaker 1: just to keep in mind who you surround yourself with,
Speaker 1: like specifically who your kids are friends with, as this
Speaker 1: will either have a positive or negative impact on their
Speaker 1: understanding of some of these lessons. So, for instance, it's
Speaker 1: going to be harder to make that connection between working
Speaker 1: really hard and earning that money if they're friends are
Speaker 1: getting everything handed to them on a on a silver platter. Uh.
Speaker 1: And so this might not be something that you discuss
Speaker 1: with them directly, but it's just something to keep in
Speaker 1: mind as it. You know, I think it will tint
Speaker 1: how they see everything, not just in how they earn money,
Speaker 1: but then also how they spend money, because you know,
Speaker 1: Selma might see some of her friends with those and
Speaker 1: they're like, well, they get those all the time. It's
Speaker 1: sort of the like the song that's just kind of
Speaker 1: playing in the background. Um, it's it's it's that's the
Speaker 1: water that we live in. And oftentimes we're not even
Speaker 1: aware of their desires or what they think is normal
Speaker 1: or acceptable exactly. And it is to a certain extent
Speaker 1: you don't have you don't have full control over this.
Speaker 1: You don't have full control over who they're gonna be
Speaker 1: friends with and they're going to experience thing is so
Speaker 1: part of that is how you talk about it when
Speaker 1: they do. Like the other day, I think I mentioned
Speaker 1: again I don't know if I talk about this on
Speaker 1: the show, but someone's like, I want an Apple Watch
Speaker 1: and we're like, what are you? What are you talking about?
Speaker 1: That's crazy? Those are really expensive. Um, but we're not
Speaker 1: an Apple family anymore. Well, and like Emily has this
Speaker 1: like fake smart watch that cost twenty bucks on Amazon
Speaker 1: and she's like, Mom, you've got one, and and I'm like, no,
Speaker 1: I don't. I've got a fake twenty one that you
Speaker 1: know that That just tracks a couple of basic things.
Speaker 1: And so having those conversations be like one, well, just
Speaker 1: because one of your friends has one doesn't mean that
Speaker 1: everybody's got it. And to just because even if all
Speaker 1: your friends had it, that doesn't mean that's what our
Speaker 1: family does. And you have to have those family values
Speaker 1: and have the ability to have those discussions even when
Speaker 1: their friends are living life in a different way financially.
Speaker 1: There's a family culture you're trying to establish, and that's
Speaker 1: that's important. Yeah, I mean, yeah, there's there's a lot.
Speaker 1: So you said that, like you don't always have control
Speaker 1: over like who your kids become friends with, and that's
Speaker 1: totally true, but we do have control over the environments,
Speaker 1: like generally speaking, that we in the neighborhood that you
Speaker 1: live in the neighborhood, and even just like how we
Speaker 1: approach consumption, right, like if you are always at the
Speaker 1: at the store, and that's maybe how you know mom
Speaker 1: or daddy how they like to relieve a little bit
Speaker 1: of stress, you can maybe go to the store, you
Speaker 1: buy something new. Uh, that all of these things, I mean,
Speaker 1: this goes back to the example that you're setting for
Speaker 1: your kids. But if you are surrounding them with consumption,
Speaker 1: well chances are that's going to be something that they
Speaker 1: tend to revert to. But yeah, you know, like a
Speaker 1: lot of these lessons can begin at a really young
Speaker 1: age before they're earning an income, but once they do
Speaker 1: have a job, once your kid does have an earned income,
Speaker 1: they can start investing for their future. And so we're
Speaker 1: going to talk about teaching your kids to invest which
Speaker 1: accounts are best for them, plus thinking about college costs
Speaker 1: as well. We get to all of that right after this.
Speaker 1: All right, let's keep going we want our kids to
Speaker 1: be to be money savy. We want our kids be
Speaker 1: able to handle money well. We want them to be
Speaker 1: confident in their abilities to use the tool that is
Speaker 1: money to help them throughout life. We want our kids,
Speaker 1: we want every hid of money listener want their kids
Speaker 1: to be confident with money too. And again it's something
Speaker 1: that doesn't get taught or it's on us to be
Speaker 1: able to make sure that they have that ability. But
Speaker 1: let's talk about how to invest, because that is one
Speaker 1: of those things like getting your kids started. The earlier
Speaker 1: the better right on the investing front. But this isn't
Speaker 1: typically something that you're gonna be covering with them when
Speaker 1: they're in grade school. This is maybe like slightly more advanced,
Speaker 1: and they also don't typically have the money to get
Speaker 1: started investing in some of these concepts I've talked about
Speaker 1: with my fourth grade at this point, because like when
Speaker 1: we talked about investing, and we're gonna talk about plans
Speaker 1: and saving for college in a second, but she when
Speaker 1: she asked me whether or not I was saving for
Speaker 1: her college, I was like, yeah, a little bit. I
Speaker 1: am saving a little bit, and here's how it works,
Speaker 1: and it's actually I'm actually investing for your college. It
Speaker 1: was a perfect chance to talk to her about investing
Speaker 1: in how it works. But uh, yeah, you're really one
Speaker 1: of the things you're gonna want to focus on, I think.
Speaker 1: But for you get to the mechanics of the accounts
Speaker 1: and stuff like that, is you want to talk about
Speaker 1: maybe how amazing compounding returns can be. Because to me,
Speaker 1: that's the thing that can hold somebody's imagination because it
Speaker 1: is a pretty impressive concept. And the better you can
Speaker 1: paint that picture, the more it can can help connect
Speaker 1: the dots. I think for your child to understand what
Speaker 1: you're doing when you're investing, and and then also to
Speaker 1: be able to talk about how you yourself are investing,
Speaker 1: like one of those one of those convos where uh, like,
Speaker 1: how you're directing your dollars and why. But I think
Speaker 1: the older they get, the easier it becomes to cover
Speaker 1: that ground intellectually. But it also gets easier to help
Speaker 1: them then funnel money into an account, start tracking their progress, uh,
Speaker 1: and then helping them get excited about growing that money
Speaker 1: for their future. That's so true, man. Yes, let's talk
Speaker 1: about which accounts are best for kids to start investing in.
Speaker 1: And this may not come as a surprise to most
Speaker 1: folks out there, but our favorite, of course is the
Speaker 1: rath I ra A. This account can help kids start
Speaker 1: investing super early. But the thing is they have to
Speaker 1: have an earned income in order to be able to
Speaker 1: stalk away money into this account. But that doesn't necessarily
Speaker 1: mean that they've got a legit job at like a
Speaker 1: fast food restaurant where you know, at the ages eight
Speaker 1: or something like that, it's legal. Yeah, maybe they should,
Speaker 1: but mowing lawns, babysitting like that counts as earned income
Speaker 1: as well. Working as a poolboy like that's like as
Speaker 1: a twelve year old, that's something. One of the ways
Speaker 1: I got creative working in the neighborhood is taking care
Speaker 1: of people's pools, testing the water. I got really good
Speaker 1: at making sure that pH man we nailed it. Like
Speaker 1: I added those droplets of die or I don't know
Speaker 1: what was in it, but I made the solution match
Speaker 1: the color, and that told me how many additional chlorine
Speaker 1: sticks they needed. But you take that earned income, uh,
Speaker 1: and then you're then able to start putting some of
Speaker 1: that money within a roth Ira account. But the max
Speaker 1: that they can stock away into these accounts is six
Speaker 1: thousand dollars for this year next year, But they're also
Speaker 1: capped at their earned income level, right, and so let's
Speaker 1: let's say they only make bucks. Well, that's now they're
Speaker 1: seeling of what they can contribute to that account. So
Speaker 1: you gotta keep that in mind as well. But there
Speaker 1: are many reasons that we love the rath I RA.
Speaker 1: For one, it's it's super flexible. Right if your kid
Speaker 1: wants to tap some of those funds to say, like
Speaker 1: buy a house in their twenties, that's something that they
Speaker 1: can totally do. But it's also the best from a
Speaker 1: tax perspective. They'll be sheltering decades worth of returns from
Speaker 1: taxation going this route, while they are most certainly going
Speaker 1: to be at the lowest tax bracket they'll ever be
Speaker 1: in their lives. Yes, in their entire lifetime, it's never
Speaker 1: gonna be better than that, exactly. So yeah, this is
Speaker 1: a perfect time if they have earned income, to get
Speaker 1: started on that rath. And the cool thing is you
Speaker 1: can actually help them make that happen, not just by
Speaker 1: like literally taking them to the website, helping them fill
Speaker 1: out the information and starting that custodial wrath. But one
Speaker 1: other thing we want parents to consider is if you
Speaker 1: have the financial ability, and that's not everyone is to
Speaker 1: make a matching contribution when your kid opts to prioritize
Speaker 1: their future by sticking money in that rath. Let's say
Speaker 1: they're like foregoing the now in favor of the future
Speaker 1: because you have with them about investing. That's great and
Speaker 1: it's worth celebrating. But let's say they do make something
Speaker 1: like six thousand dollars in a given year, we would
Speaker 1: say that you should offer, if you can, again to
Speaker 1: stick three thousand dollars of your own money into their
Speaker 1: retirement account. If they opt to invest three thousand bucks
Speaker 1: of their own money. And this is a couple of
Speaker 1: things I think you know. It helps them understand that
Speaker 1: they're gonna likely have other matching options in their working career,
Speaker 1: none of them are going to be as generous as
Speaker 1: the one that you're giving them, but helps them realize, okay, cool,
Speaker 1: This is actually kind of part of the mechanism of investing.
Speaker 1: Employers often contribute sometimes dollar for dollar based on what
Speaker 1: you contribute, and helps get them ready for that. But
Speaker 1: it also makes it far more likely that they're going
Speaker 1: to be excited to do it. Because who doesn't get
Speaker 1: excited about free money? And so if you're like, hey,
Speaker 1: you should totally do this, and guess what, not only
Speaker 1: should you do it, but I'm going to help incentivize
Speaker 1: you to do it. It's going to create some excitement
Speaker 1: around the process, which is good. That's what you want, Like,
Speaker 1: you want your kid to be to get to be
Speaker 1: pumped about investing for their future, and it's kind of
Speaker 1: hard to do that. But free money is one of
Speaker 1: the ways I think that that you can act. Will
Speaker 1: you do that? And then you can kind of track
Speaker 1: the progress together. Download the app on their phone so
Speaker 1: they can log in, not robin Hood hopefully so they
Speaker 1: can like day trade, but you know where they can
Speaker 1: see the progress of their accounts over time. And then
Speaker 1: you guys can have you know, regular or monthly or
Speaker 1: quarterly discussions abou kind of what's going on with their
Speaker 1: account and and how much they're investing and stuff like that. Yeah,
Speaker 1: I think one of the reasons matching can be just
Speaker 1: an exciting thing for kids as well as because let's
Speaker 1: say a kid earns six thousand dollars, Well, they're not
Speaker 1: gonna want to put every single dollar into that roth
Speaker 1: Ira like where they've got no spending money. It's like,
Speaker 1: all right, cool, I made six thousand dollars of this
Speaker 1: summer and you're like, all right, let you go ahead,
Speaker 1: slide all that money over into that new wrath Ira.
Speaker 1: That's gonna be really discouraging when it comes to the
Speaker 1: ability to kind of realize some of those tangible benefits
Speaker 1: of having worked that job in the here and now.
Speaker 1: Like it makes me think about a craft Bier equivalent, Like,
Speaker 1: you want to be smart for the long term, but simultaneously,
Speaker 1: you want to make life enjoyable in the here and
Speaker 1: now as well, and you want to help your kids
Speaker 1: know how to do that to strike the balance exactly. Yeah,
Speaker 1: speaking of helping your kids, you can help them to
Speaker 1: build a solid credit score as well. That's something that
Speaker 1: we would encourage you to do. Is something to be
Speaker 1: attentive to. And so you can do this by making
Speaker 1: sure that your your child is an authorized user on
Speaker 1: your credit card. That can help you to achieve that.
Speaker 1: But only do this if you if you pay off
Speaker 1: that card on time and in full every single month
Speaker 1: at the end of every building cycle at the very least.
Speaker 1: If not, you could actually be hurting your kids fledgling
Speaker 1: credit file. But here's the thing. You don't actually give
Speaker 1: them access to your card, and so by adding them
Speaker 1: as an authorized user, they get all the benefits of
Speaker 1: having that credit to their name without any of the
Speaker 1: headache to you if you were to have a kid
Speaker 1: with a credit card. But by doing this, the credit brrers.
Speaker 1: They start to build this file on each kid that
Speaker 1: you that you do this for, and you're building a
Speaker 1: solid credit history for them before they've even had the
Speaker 1: ability to even get their own credit card. This is
Speaker 1: a highly underrated, I think tip for a lot of
Speaker 1: folks out there, and something that could totally give your
Speaker 1: kids a leg up for sure. Agreed, Yeah, building that
Speaker 1: credit file now, getting them started in the right direction,
Speaker 1: having an actual to score a decent credit score when
Speaker 1: they graduate high school, that's pretty cool and that's something
Speaker 1: you can do pretty easily. Again, like Matt said, though,
Speaker 1: as long as you're handling your own credit, well, that's
Speaker 1: the only time you want to do that, because you
Speaker 1: don't want to set your kid up for with having
Speaker 1: a bad credit score when when they graduate. But on
Speaker 1: the credit no, Matt, it's it's also important that our
Speaker 1: listeners help their kids protect their credit, and that means
Speaker 1: that you should be freezing their credits. Right. But here's
Speaker 1: the thing, you might not even take this step for yourself,
Speaker 1: and so it's important to do that also. Uh So, yeah,
Speaker 1: free your own credit, right, we want you to do that.
Speaker 1: You've actually got an article on our website that will
Speaker 1: link to that includes the links to the credit bureaus
Speaker 1: in order to get this done. Interestingly enough, it's a
Speaker 1: little bit different process for minors than it is for
Speaker 1: fully grown adults, and so the realities it's not going
Speaker 1: to take very long, but this article is gonna help
Speaker 1: basically hold your hand and help you get your credit frozen,
Speaker 1: get your kidsredit credit frozen, and I don't know, maybe
Speaker 1: ten or fifteen minutes to freeze everyone in your family's credit.
Speaker 1: And basically what this does is it's just preventing someone
Speaker 1: from opening up credit in your name or in your
Speaker 1: kiddo's name. And so we want to make sure that
Speaker 1: you get this done because not only are you trying
Speaker 1: to help them build a solid credit score for their future,
Speaker 1: you want to make sure that nobody's gonna be able
Speaker 1: to hijack their credits in order to do like nefarious
Speaker 1: things with it. That's right. Yeah, Okay, let's talk about
Speaker 1: college for a second. Uh, we've we've done entire episodes
Speaker 1: on college and specifically how we think it's overrated. I
Speaker 1: think that was episode fight. We would recommend you go
Speaker 1: listen to that one if that sounds interesting to you.
Speaker 1: But the value of a college degree, it certainly can
Speaker 1: be massive for a lot of folks. Degrees are also
Speaker 1: not as valuable as they used to be as well,
Speaker 1: and so the key then is to talk with your
Speaker 1: kids about the value proposition of higher education. Uh, you
Speaker 1: want to look at the costs. You want to you
Speaker 1: want to look at what that will get you, Um,
Speaker 1: what you think that might be able to earn you
Speaker 1: down the road. You've got to have a degree, of course,
Speaker 1: to become like a lawyer or a doctor. Uh, it's
Speaker 1: going to be helpful for other jobs out there as well,
Speaker 1: but engineers. Yeah, but it's not completely necessary, right for
Speaker 1: a lot of other careers that that your kids might
Speaker 1: want to embark on. And so the key to making
Speaker 1: college worth it is by keeping costs low and to
Speaker 1: help your kids make this important decision. It's important to
Speaker 1: have these conversations over the years. Uh, not just you know,
Speaker 1: after they've had ten years of percolating thoughts in their
Speaker 1: head as to, you know, what higher education and what
Speaker 1: college might look like for them. You don't want them
Speaker 1: to get seventeen years of thinking one thing in their
Speaker 1: mind and then all of a sudden, a year seventeen,
Speaker 1: you're like, oh, by the way, this is what we're thinking. Yeah,
Speaker 1: you don't have the acceptance letters. Someone in the mail
Speaker 1: basically being like nope, to expensive. Note. Don't want it
Speaker 1: to be a surprise. That's a wrong way to handle it.
Speaker 1: But you've got a bunch of years to kind of
Speaker 1: talk about that and to kind of start helping your
Speaker 1: child think forward about that process and and think about
Speaker 1: a budget for that as well, so they make a
Speaker 1: decision that's reasonable for the family finances and reasonable for
Speaker 1: their future that they're not getting saddled with a bunch
Speaker 1: of debt, because you want to prevent that as well.
Speaker 1: Like we see the horror stories right and left mat
Speaker 1: of kids being just graduating with ridicu this amount of debt,
Speaker 1: not being able to find a job in the career
Speaker 1: field that they've chosen, and it's tough sletting right, having
Speaker 1: a loan payment, that's the size of a mortgage payment
Speaker 1: and not having the income to back it up. That's
Speaker 1: what we want your kids to avoid. If you want
Speaker 1: your kid to be set up for financial success, that
Speaker 1: might mean going to college, but it definitely means avoiding
Speaker 1: a ton of student debt in the process. And and
Speaker 1: that's why we don't recommend saving for college in a
Speaker 1: account as a must do for most folks. That's it's
Speaker 1: an important thing to mention as well, Like it's it's
Speaker 1: already true that there are easier ways to pay for
Speaker 1: college than for your own retirement. Right. They don't make
Speaker 1: scholarships sadly for sixty five year old retirees. If they did,
Speaker 1: that would be awesome, But your child might qualify for
Speaker 1: scholarships for different ways. They could do work study, like
Speaker 1: they're all sorts of different ways to help pay for
Speaker 1: the costs of college. And so it's more important for
Speaker 1: you to prioritize your own funding your own retirement accounts
Speaker 1: than it is to fund their college savings account. And
Speaker 1: at the same time, we'd rather see most folks spending
Speaker 1: more money on killer experiences for their children, like stuff
Speaker 1: like art classes and sports and going to sporting events
Speaker 1: are educational trips. Maybe it's a family trip to Washington,
Speaker 1: d C. To see all the Smithsonian something like that,
Speaker 1: like which are all free, by the way, they're all free,
Speaker 1: and the plane ticket of the car ride is gonna
Speaker 1: cost you money, so is the hotel. But that's a
Speaker 1: really cool kind of thing like that. That to me
Speaker 1: means more than saving up more in a five account
Speaker 1: to reduce the cost of college when there are so
Speaker 1: many other ways to help pay for it, and so
Speaker 1: many other thoughtful UH approaches you can take to reducing
Speaker 1: the cost. And there are certainly like tax advantages to
Speaker 1: investing with within a five nine, but there are a
Speaker 1: lot of folks who should avoid them, at least until
Speaker 1: they're maxing out their own retirement accounts in the first man.
Speaker 1: I'm not sure if if our listeners saw the most
Speaker 1: recent stats from the Brookings Institution, but they say that
Speaker 1: it's gonna cost dollars to raise a kid, and this
Speaker 1: is before college as well. This is a lot of money,
Speaker 1: you know. Although we do think that you can probably
Speaker 1: get by UH with less by spending less money up
Speaker 1: here's the rub. We are often so focused on giving
Speaker 1: our kids the best stuff, right, like we want them
Speaker 1: to have more than we had. We want them to
Speaker 1: for their childhood to maybe be better than what we experienced.
Speaker 1: And that's completely understandable, but I think we can take
Speaker 1: that instinct too far and instead of working with them
Speaker 1: to provide some financial literacy in their lives, like a
Speaker 1: meaningful personal finance education will go so much further than
Speaker 1: brand new gadgets, right, rather than some new sneakers like
Speaker 1: you like your Scottie's sin Joel's right. But I mean
Speaker 1: the reality is that if your kid is confident about
Speaker 1: how to handle money, they're gonna be light years ahead
Speaker 1: of their peers um and that confidence then we'll radiate
Speaker 1: I think outwards into other areas of their lives as well.
Speaker 1: It's like the superpower that will it'll stick with them
Speaker 1: for decades to come, and it's something that you're gonna
Speaker 1: be able to start instilling in them even now at
Speaker 1: the very early age, like they might like barely even
Speaker 1: know how to talk or to even listen to what
Speaker 1: you're saying. But I promise all of these lessons, the
Speaker 1: example that you're setting, the tone that you're said within
Speaker 1: your household anytime you talk about money, all of these aspects,
Speaker 1: all of these lessons are working to get your kids
Speaker 1: on that fast track to financial success. And it really
Speaker 1: is an amalgamation of a lot of small things over
Speaker 1: an extended period of time. Right's. Unfortunately there's no like
Speaker 1: magic bullet, there's no special potion or anything. But we
Speaker 1: barely sort of touched on it. But it takes patience,
Speaker 1: you know, And it takes a willingness from a parent
Speaker 1: to be able to pour into their kids, uh, and
Speaker 1: to be able to find those opportunities to teach them
Speaker 1: in the everyday moments. And often times we just want
Speaker 1: to like, yeah again, just sign them up for sign
Speaker 1: them up for some some sort of program and for
Speaker 1: life to be easy for us. Like you said, we
Speaker 1: want to optimize everything, and that often means not having
Speaker 1: those conversations that are necessary to teach the next generation
Speaker 1: how to do the right thing for their future and
Speaker 1: with their money. But let's get back to the beer, Matt.
Speaker 1: This one was do It in october Fest from Odd Story,
Speaker 1: which is out of Chatta, New Good, Tennessee. What were
Speaker 1: thoughts on this beer? It was really tasty, man so
Speaker 1: in october Fest. So that meant that this is a
Speaker 1: mars en So it's just a it's a darker lagger,
Speaker 1: and in particular, if you are new to the craft
Speaker 1: beer scene, I would totally recommend that you look up
Speaker 1: either in october Fest or Marzen, because it's going to
Speaker 1: have some of these bready elements that I think you
Speaker 1: might be drawn to. Oftentimes, when folks are trying to
Speaker 1: get into craft beer and there they start off with
Speaker 1: like some of these crazy I p a S and
Speaker 1: they're just like, oh man, it's just way too bitter.
Speaker 1: I I cannot handle that. I'm like, well, yeah, no,
Speaker 1: I'm not surprised at all, like an I p A
Speaker 1: that that is an acquired taste. By the way, is
Speaker 1: it even legal to drink in october Fest in November?
Speaker 1: But I don't know. We're doing it anyway. You're allowed
Speaker 1: to breaking the craft your last today? Did you dig
Speaker 1: this one? Yeah? I liked it. I thought it was
Speaker 1: yeah MALTI. It had like some toasted notes, like a
Speaker 1: little bit of a caramel vibe, the nice little dry
Speaker 1: finish and october Fest or not. I like it when
Speaker 1: they come around every year. I don't drink a whole
Speaker 1: lot of them. They're not like a go to style.
Speaker 1: They're usually like they're a little bit reserved for me
Speaker 1: in their flavors, but they always fit the season. Yeah,
Speaker 1: they do always remind me of the Christmas to all
Speaker 1: dry crackley leaves on the ground exactly. No, it fits
Speaker 1: like I was glad to have this one today. I
Speaker 1: never thought about that. They kind of taste the way
Speaker 1: that leaves smell. Yeah, you know, like you kind of
Speaker 1: like walking if you're hiking in the woods or walking
Speaker 1: along the sidewalk and there's a bunch of dry leaves
Speaker 1: and you can kind of the sun's kind of beaten
Speaker 1: down on them and you can smell them. Marzin kind
Speaker 1: of reminds me of that. Are you go? All right?
Speaker 1: I like it a perfect, perfect weird for today. All right,
Speaker 1: all right, that's gonna do it for this episode. For
Speaker 1: folks who want the show notes, you can find those
Speaker 1: up on our website at how to money dot com.
Speaker 1: That's right, But buddy, that's going to be it until
Speaker 1: next time. Best Friends Out, Best Friends Out.