Teaching Your Kids (of ALL AGES) About Money

Will your children be able to manage money responsibly as adults? Not sure? The school system is terrible at teaching financial concepts....and most of us are uncomfortable talking about money...to anyone. So how are your kids learning about money if you aren't talking about it? ...and by kids we mean both children that live under your roof and those that are adults! In this episode we discuss practical tips you can use to educate your family about money. Hopefully you find this Father's Day edition of the podcast helpful. We cover:

• How to teach young children about money and saving

• Modern approaches to "allowance" and giving money to kids for expenses

• Sharing your "money values" like giving and generosity with your children

• Tips for teaching teenagers more advanced concepts like college planning and investing

• Navigating difficult money conversations with adult children

• Instilling your values in adult children to build multi-generational family legacy

TranscripT:

hey everybody. Welcome to the six figure investor. We're so excited that you're listening today. We're talking about something that's near and dear to our hearts, right? It is, it is near and dear to our hearts and a lot of other things we're recording.

What are we? Two days after father's day? Better, late than ever than basically not better late than ever. I think, you know, we could have done this last week, but we had recession to talk about last week. So that's true. I wanted to do something a little bit different, a little bit more on purpose. We're gonna talk about things other than just technical economics and financial planning tips on this podcast.

And so I thought nothing better than father's day to get into a topic like that. The topic being. Rich dad, poor dad, the topic being fathers and money. A little, a little bit of rich dad. Poor dad. No, I think father's day is a good time to reflect on the real lessons that we teach our kids, both what we explicitly say and what we do.

And if we don't talk about money, if we don't teach our kids about money, they're not gonna learn anything about money. And so but I think a lot of people, money is an uncomfortable conversation to have even amongst adults with your spouse period. So talking to your kids about money is just like a whole nother level that we're not gonna go to.

So I thought just giving some some tips and some Helpful insight on things that we've done that have worked and things that I've seen others do that have worked would help folks teach their own kids about money and instill some of those values that they wanna be behind. So that's great. I cannot wait to tell stories about my own father and, and money money.

he's gonna really appreciate that. I maybe should have asked permission first, but I don't think he'll mind some of these stories. We don't, we don't ask permission on the podcast. So if you've been in our lives before you might end up on the podcast and we may or may not ask you for permission first, awesome.

All right, everybody. Welcome back to the six figure investor. We're excited to be here talking about passing down lessons on money, and we're a few days you know, post father's day at this point and thought it would be a good dialogue to have this week on the podcast. As I was reflecting on this episode over father's day weekend, while watching the us open and having copious amounts of cobbler.

I wanted to talk about something that I don't think we talk about enough and that's talking about money to our kids. And, and like I mentioned in the opener no one is comfortable talking about money study after study illustrates that point. Right. We would rather talk about almost anything else other than money, but if we don't talk about it, How do our kids learn about it?

They know what we tell them. They know what they watch us do. If we don't talk about our money, if we don't show them what we do with our money, how are they supposed to learn? If you remember high school, you took some economics classes in high school, and you probably, if you're like me, you think back about how woefully inadequate that was on personal finance.

So there's nowhere else that they're gonna learn about money other than you. We're gonna talk about younger kids today that are still under our roof, how we can teach them concepts about money and instill some of our values. But we're also gonna talk about older kids as well. As kids age, the learning isn't over it shifts from.

Basics to learning about saving and generosity and, and things that that we need later on in life. That sounds great.

So Brian, we've got a five year old, a three year old and a one year old in our house. Yes. How should we teach them about money? I think with younger kids, you start with the basics, just like anything else and the basics around money. Is cash that's right.

The old school, actual paper money that some of you may not have seen in several years. You've got your cryptocurrency wallet, right? You you're like cash. What is that? How do I use that? You need to let your younger kids see you paying for things with cash, and it doesn't have to be everything you don't have to walk around and only pay with cash.

But go to the grocery store. When they're with you, pay with cash, go get a snack, pay with cash. We get a coffee pay with cash. Show them and talk to them about this idea of, I have a $5 bill and I'm going to buy. Good or the service with with that $5 bill. Yeah. I feel like at this point you're like basically talking about the basics of math.

Yes. Yeah. It is. It really, it ties into what they're learning , in school and math, but you know, debit cards and, and all of that, it's a really abstract concept to, you know, even, , late elementary school kids and middle school kids. And so the idea that you. You know, you just swipe a card and you get whatever you want.

Right. We don't want, we don't want to instill that as a, as a mentality, we might have already instilled that as a mentality pays even worse. When our kids go through the grocery store line, they want just take my debit card and just tap it on the machine. It lights up. We get to go on through like, yeah. I mean, you don't even have to put a Pindo, right?

Yeah. Just put you wrong. They love. Putting that card up to that machine or in that machine, they really do love it. So let 'em count some cash out some coins, if you have coins or bills and, and pay with it. And we'll just give them a better sense of I have money and I'm giving that over to someone else in exchange for, I think what, you know, just building on what you're saying here, because we have been having some conversations about money with our five year old you know, just like they're learning math with manipulatives, like.

Real figures. They're counting things out. There are three cars, there are seven blocks. There are two dices, those kinds of things. Having the physical money is really helpful. And I think what's what I was observing in. Just even having that conversation with our daughter is even the coins and things themselves are abstract in a way, because they're learning that relationship that a dollar is a hundred pennies and a quarter is 25 pennies.

And so you really. Have to instill these basic sort of fundamental concepts before you can move on from there. Yeah. A hundred percent. And then once we've got this understanding of cash and money and sort of exchange of value, then I think you can introduce the idea of saving. And for that I recommend good old fashioned piggy bank.

We went to a pottery store earlier this year. And the girls picked out piggy banks and they painted them and they had a great time making works of art on piggy banks and those things got killed and now they're in their rooms. And ever since then, I've noticed money disappearing from my wallet. And I find it later in the piggy bank the good news is they don't know how to actually open the bottom of the bank yet.

So they like to put stuff in the piggy bank and they're just accumulating assets of their P bank. Our oldest is accumulating a lot of assets cause she's lost like seven teeth at this point. Yeah. So the two fairies been blessing her with things to put in her piggy bank. Yeah. Precisely. So but they like saving and they, and, and they have this idea, this concept of I have money.

I know I can go to the store and I can get stuff with it. And I'm putting it in my piggy bank for some unknown reason. Right. . What, what I actually like doing is take them to the store first.

Let them find something that they want, that they like, right. Talk to them about how much it costs and then help them relate that to their piggy bank. You know, if there's a mermaid doll that they want and it costs eight bucks, right. You've got empty the dishwasher four times earning $2 per time to have enough money in your piggy bank for the doll.

When you have enough saved, we will come back. Well I think you just intro introduced a concept there that we hadn't talked about yet, which was like this idea. You know, exchanging your work or labor for income as it relates to a household and this idea of allowance. Or paying people for doing chores.

I'm pretty sure a year ago, our oldest thought that money was a magical thing that just came out of my wallet when she turned it upside down and sort of pour it out of there. Well, she's not that unlike her mother. Who do you wanna tell the story about when we went to get our marriage license, you should tell the.

So Brian and I went to get our marriage license. I don't think I can tell the story about myself. We went to get our marriage license. So we go to city hall or where it, yeah, of course. And this is, this is ages ago, more than 10 years ago. And they, they still required either cash or check of course, which we had neither because we were gonna, you know, swipe our debit card.

And so we go outside to the ATM so we could get some cash to go back inside the city hall in Marietta, Georgia. We put our ATM card in. Wait, wait, clarification point, Brian put his ATM card in the ATM. I put my ATM card in the machine, put my pin number in until I want cash. And then Zach just grabs the cash out of.

Out of the drawer when it gets dispensed and I get my card back and then I think I said something like, and this is how it's gonna be, I guess. So that's how it went down. And I would say that our daughters don't fall far from the tree. Yeah. Precisely. So, but, but I do think introducing this idea of work is really good.

And, and it doesn't have to be super complicated things. They don't need a list of 25 chores. They have to do every week, but it's just this idea of , we work, we do things with our time. And sometimes things we don't necessarily like we do those things, we earn money and then we're able to exchange that money for.

That we want in life. And, and the earlier they sort of understand and, and, and can grasp those concepts. I think the better off they will be served as they get into middle school and high school and, and ultimately down the road to college. And then, as adults, right. When we see adults now that are spending Theif and are spending more than they're making a lot of that goes back.

You know, well, I've always had parents and they've always just given me money and it's been okay. And then all of a sudden, when the parents aren't there anymore, when the money tree's not there anymore, they can't figure out how to live with that needs. And so instilling those concepts early is, is really, really important.

As, as kids age, yeah. This might be getting a little bit further down the road, but I had a friend in high school when I was a senior in high school. I had a friend whose parents gave her. Kind of like an allowance, but it was a lot of money. It was basically the allotment of money that they would spend on her care.

Yeah. Her clothing, her food, all of those kinds of things. And they made her at that point operate against her own budget. Mm-hmm and stay within her own means because they wanted her to have that experience before she went off to college of living on the amount of money that she would need to live on.

And. Making decisions and prioritizing expenses and not overspending and all those kinds of lessons. I thought. You know, even as a senior in high school, I thought was a very interesting approach to teaching her about money. Cause they basically put her on her own budget. Yeah. I think when, when your kids are in middle or high school, the same principles apply.

So, when older kids are in middle and high school, they can do work around the house lawn mowing anybody I'm really excited about. Our one year old and getting him to move from the pre Walker Walker lawnmower to the real lawnmower outside.

I think this will be great fun, and I can sit and watch as my lawn is meticulously. Mode, hopefully. But they, they can do chore around the house and I think the old way of doing things was like, if you do X, you get Y I think for us, I know as we work through this with our kids getting a little bit older, I think there's just this more of this concept of you have to participate in the household and participate in the household means you're going to do.

Certain things. Right? So for one person who might be helping with dinner might be cleaning up, it might be , helping clean around the house, keeping areas of the house clean can be outside stuff as well. And then they get a salary or, an allowance every week for doing that. It doesn't have to be sort of the old school, like.

You emptied the dishwasher tonight. So we're gonna check off the chart and you know, you can have your $2. I think when kids are younger, that sort of stuff is helpful, cuz it helps instill the name to do that when kids are older and they're more responsible, I think it's really actually healthy to move to this world of you just participate in being part of our family around the house.

And part of that means that we, as parents are going to be generous to you. We're gonna give you money that you need to do things, but then you're responsible and accountable for what you. With that money. So you can think about how you want to do that different ways, but it's still this idea of you have money and you then have to choose what it is you wanna do with the money.

It's a funny story in a very similar vein. That's kind of how it worked in my house, growing up and our allowance on a weekly basis was a dollar and 10 cents. Yep. And my dad set that amount because he said that he wanted the allowance to be big enough where on a weekly basis you could buy a soda and a candy bar.

And I'm pretty sure with the inflation talks we've been doing lately, we need a lot more than a dollar and 10 cents to buy a soda and a candy bar. Yeah. A candy bar. Yeah. There you go.

And the reason that he gave us a dollar and 10 cents outside of the soda and the candy bar was because. He wanted to also teach us tithing. And so he would hold back the 10 cents from the dollar and 10 cents. like a paycheck deduction. Yeah. So it was basically more like a household tax that supposedly went to good, but I don't necessarily think my dad ever put the dime in the tithing bucket, but yeah.

That kind of introduce that concept of, of giving and, and ti depending on, you know, what your house's perspective is on that. Yeah. And so I think with our children, once we have spending and saving down, whether they're younger or older, then you can introduce the concept around generosity. So for us, that's based on our faith.

It, but this is the opportunity to instill in your children. , the things that are important to you around money. So for us, we teach that we're just caretakers of the money that we have. You know, richly blessed with and we save and we give, and we spend it responsibly. God's been generous to us.

And so we're gonna be responsible and generous to those around us. And to those people that are in our community. And it's, I think it's a really great opportunity to get them involved in those things. When you have younger kids, I mean like the shoebox projects from Samaritan's first around the holiday, Get 'em involved.

Let 'em go earn money for things. Go sign up to, to give the shoe boxes, go figure out what they have to get, go to the store, do the stuff. Right? Same thing. Like the local food bank can do that year round. They can go to the store, they can understand the need. They can buy the stuff and then they can take and drop it out so they can be involved in the process of the giving in addition to sort of the funding source for the giving.

And then as they get older, let them get involved in. In choosing what those things are. Right? So as your kids are in middle and high school, there may be things they wanna do. Maybe they want to sponsor a compassion child or something like that. So let them get involved. In what those sort of generosity things are.

Cause it will teach them to be, you know, generous people certainly long term, but it will teach them to be engaged in, in giving the things that they really care about. And I think it will help them learn those concepts as opposed to,, someone just saying, you're going to give to X or you're going to give it to church or else.

Right. You know, there's a time and a place for those kinds of conversations. But it doesn't have to be when you're nine. Right? So, so let them have some say, I think in, in what the giving projects are. And, and they'll be really engaged in those and, and you guys will have some really cool family times around some of those as well.

One, one other thing when your kids are in the middle and especially in high school show them how you're saving for college and for their. If you're opening custodial accounts or 5 29 plans, you can show them what you're doing, how you're investing you can include them in meetings with your financial team on those specific assets.

Maybe that's not the right time to tell them about everything you own, but they can certainly be part of that. It might even help hold you accountable to saving more. If you have to explain to them what you're saving. Green light has a really good podcast that older kids can listen to called million bazillion.

That's right. Million bazillion will link in the show notes. For kids that are middle and high school talks about lots of good financial topics as well. For older kids, I have a story. Okay. What you're story? One of my earliest recollections of money. Is that my grandmother gave me a bond. I think it was to save for college.

Like she used to give us these things that kind of look like checks. Yeah. Mm-hmm do you know what I'm talking about? Savings. Yes. Yes, exactly. She would give us college savings bonds for like our birthdays and stuff. Yeah. They're they're just basically, they basically would go in like a, I don't know, like a photo holder.

You can still get them, like collected them over time. Yeah. You don't have to get the piece of paper and put it in the photo holder, but you can still buy them today. So. It was one of my earliest experiences with money with, with money and with saving. Yeah. Yes. Again, really abstract, right? Because it's like, you have this thing and in that case, you're you have a, you've paid for a thing and the government's gonna give you more money down the road at some period of time.

And you're, I didn't even have that part of it. I was just like, okay, it's my birthday. Grandma gave me a piece of paper. We gonna put in a photo book. That's gonna pay for my college, like 20 years from now. . Yeah, exactly. But with, I think having those conversations. With your kids when they're in middle and high school, around how you're saving for them, how you're playing for them you know, can be really helpful both to show them that you're saving right.

And teach them that value. It will also help when you get ready to start talking about college and thinking about college, when you get to those conversations, when they're a junior or senior, maybe a little bit before then in high school. And, you know, they're, they're thinking about going to do underwater basket weaving at the most expensive private university, in the.

State, and then, you know, but they've got that in their mind. And then they've also got man, mom and dad have been saving like a lot of money over the last few years for me to be able to go to college. So I really want to do that. Right. So I think it will help you know, create some concepts of value there.

As your, as your kids get older, I think the other thing about that season of life, that middle school, high school years, I remember my parents taking me to get my first checking account at a bank. Like I had gotten. Babysitting money or something. I don't know some good missed minors. Can't open checking accounts.

That's not true. You like kids under 18 can open checking accounts can open savings accounts can open brokerage accounts as a, as a parent, you'll have to co-sign on those accounts, but you can absolutely open accounts for your kids and your kids can go with you and they actually can open the account.

So I did that. I think I was maybe 14, 13 or 14 years old, probably when I opened my first account. And I don't know what I put in there. Babysitting money, I guess. Because that was like sort of my one job in high school and stuff was I babysat. But I think one of the things looking back that I wish I had experience with before I went to college is when I went to college.

That was kind of like the first time I got a credit card and I kind of wish I'd had more exposure to that concept before I was like, out on my own.. Because I don't know, there were a few things that.

mom and dad. I love you if you're listening to this, but like kind of were missed in my high school education of like life. One of them was how to pump gas. The other one was how to turn your lights on.

When you drive in the dark, the third one was. Managing money that you can't see, basically. Yeah. So like credit cards, investments, things like that. We didn't really talk about those things. It, the conversations about money in my household growing up were much more around like fiscal money, like to your point about cash and savings accounts and those kinds of things.

And so it wasn't until I was kind of out of my parents' house that I learned about. The forms of money that you cannot see. Yeah. And, credit cards are tough because you can't open a credit card until you're 18. So for most people, they don't get their first credit card until they go to college. We can do a whole nother episode on that.

I do actually think it's a good thing for people to open credit cards and just start building credit when you're in college. I would rather you open it and like stick it in a drawer and never use it. But, but that's not something you can do when you're younger, but you can open brokerage account.

And opening your own savings accounts, checking accounts, opening your own brokerage accounts, even if there's only a few hundred bucks in there for a few thousand dollars in there and learning how to invest helps introduce some of those abstract concepts that you know, can be valuable download.

So, yeah, and I think, you know, I think even in some ways, times have changed since then in that. I think that cards are a lot more ubiquitous. Yes. Than, than they were at the time.

Awesome. I wanted to switch a little bit to older kids and adults. Same principles apply to older kids and adults. That they do to younger kids, just in a little bit different ways. If you don't talk about money, they won't learn anything from you. It's, it's amazing how many situations I've been in, where parents are leaving.

Their adult children assets inside outside of a trust can be millions and millions of dollars can also be, , a thousands or a few hundred thousands dollars. It doesn't have to be this massive amount of money. They expect that their children are gonna do certain things carry on sort of generosity or things that have been true of their family, but they've never had a conversation about it.

Not one conversation and then they're not around anymore. All of a sudden, and you know, nobody knows what to, with the money. Right. And so having those conversations, even as your kids get older is really, really important.

So as your kids get older and you age as well, we recommend having family meetings. Your kids should have an understanding of what your assets are, where they are and what will happen when you're gone. And this is particularly impactful if you're generous as a family if there are assets there that are intended to benefit your church, benefit your community to do any number of things in society and, and you want those things.

To be cared for and to continue to you know, be taken care of that way when you're gone. Then you need to talk about that while you're still here with your kids. And, and this can be some really impactful times, I think, as a family to get around a table and talk about how you're gonna give today.

It doesn't all have to be for 10 years from now, 20 years from now, 30 years from now. But how you're gonna steward those assets, how you're gonna do that, even as adults. Right today. And, and it's an opportunity for your grandkids even at some point to get involved and, and talk about how you're being generous and how you're giving as a family and start to instill those values, even two generations down from where you are today.

And if, if you're a little skittish about sort of opening up the, the checkbook, if you will, to the family, here's the secret, all that information is gonna get shared with your adult children eventually. Anyway there aren't really any secret. Having a conversation about inheritance and long term planning early on will help you instill those values.

And it'll decrease conflict of uncertainty in the estate process when you're not around to help. So unless there's some really unique situations there, and there are exceptions for every people where maybe that doesn't make sense to include everybody, but generally that whole process goes smoother when, when those conversations are had ahead of time.

And they, they are challenging. I'm I I'd be remiss if I said that they weren't. But your advisors, your attorneys CPA. They can help you navigate those difficult conversations with skill. They've done it before. No family is perfect. Every single family that I've ever worked with has the same set of concerns.

And so they probably have had those conversations before they can help you navigate those things. And they'll have experience to win in those, in those different conversations. So, so when we think about generosity and teaching our kids about money, I think there's things that we can instill all the way from early pre elementary school, elementary school, all the way.

So they're outta the house in college and then later on in life as adults. Awesome. So I think we talked about a lot of great things today. I don't have a four summary list of, of all the stuff that we talked about, but I, I would say this just in closing if you're not actively thinking about how do I share my values around money with my children.

Whether that's saving and investing, being generous then I would encourage you to do that, start thinking about how you can do that and, and take some active steps to do that. And if you have questions about how to do it, reach out to somebody that you work with reach out to an advisor that you trust that you know well and ask them for ideas.

They probably would love to help you have some of those conversations with your kids.

Sounds great. Thanks for sharing Brian. And thanks for listening friends. We'll see you again next week.