This week I encourage you to speak with your children (regardless of their age) about money and get an understanding if they need help.

3 Tips For Teaching Your Kids About Money

Let me preface this topic with, not all kids are the same, not all situations are the same, I will be using techniques that we use for our boys however it is always a work in progress. My goal today is to give you a base to work off of.

Tip #1: How money works (add your kids to your credit cards)

Before we dive into teaching how money works, add your kids to your credit cards, start building their credit score/history immediately!

Alright, now that you have done that, how do we teach our kids how money works. We start with explaining that one must work in order to “get money” (you can use income, pending child’s age). An example of teaching them about “work” is using chores as a form of work, i.e. Monday - Clean Rooms, Tuesday- Do Dishes, etc. and at the end of the week performance will be review and a “paycheck” will be provided. Now I know some of you will go, house chores are not to be incentivized these are just normal day life, I AGREE, however I believe learning the concept of "WORK” outweighs the normal day life of chores, especially earlier on in their youth.

After their “paycheck”, we immediately take 50% and put it into their investing account (we explain this as savings immediately and taxes), the other 50% can be saved/used however they please. This is a vitally important part!!! Think about if you grew up knowing that 50% of what you bring in will be towards taxes and your future savings? Do you know how far ahead you would be in life right now? Now to change to that after years of living off of 90%+ of your income, is like turning the Titanic, shit just takes a long time and then we hit icebergs. So take this time to teach them to invest and save for taxes (lucky for them, their taxes will just stay investing).

I understand this tip seems basic and like obvious, however it’s not easy to stick to that concept and we let our money mindset step in the way, so do what you can to avoid stepping in, let them figure out money, in a healthy way.

Tip #2: Let them Invest How They Want

From experience, this is a very difficult step to take as parents because we don’t want them to “waste” their money or we may not know what is good to invest in or not. I would encourage you to have your financial planner aide in helping. If you do not have one, HOLLER AT ME, regardless keep it simple. Talk to them about what companies they see the most and what they like. For example, our boys love Disney, Jurassic Park and flying on American Airlines…. So it’s simple they buy the stocks in those companies and we review every quarter. Why? Why, do I let them choose what stocks, well first of all children aren’t speculative they will end up saying companies that are large and have great value, because they only see the big names, second at ages 9 & 6, I have ZERO fear that these stocks will be bankrupt.

Stoy…How do I teach about stocks when I know next to nothing? Simple, once they pick a company, you let them know that buying stock is being an owner of that company and when that company does well, your ownership value goes higher, if that company does poorly your ownership value goes down, over the long run these big companies make money. Just keep it simple when you first get started, or again ask your advisor and he can show them a chart.

An Example when Croix told me I had to buy American Airlines for him, Ticker: AAL. Full Disclosure: I also like me some airlines.

The Purple highlighted bar is 3/23/2020, using Croix’s bday money to invest and you can tell AAL has been all over the place but we only review every quarter or so, this get’s kids comfortable with values going up and down.

HUGE REMINDER: Investing is not the end all be all to building WEALTH, the mental side and being able to put money into INVESTING is above and beyond the most important piece.

Tip #3: Kids are Creative, Let Them be Entrepreneurs!

Business ownership sucks but is so fulfilling, trust me! That being said if you are wanting your kids to learn about how money works, then let their creative minds create some sort of business. From lemonade stands, farm stands to yard work, help them go through the steps of creating a business and understanding how it works.

We do this by sitting down and laying out what business they want to do, right now it’s doing a Bake Sale with Farm stand attached. (our crops this year are not producing enough for the family and to sell so but shh don’t tell Lincoln), once they decide what they want to do. You need to figure out the cost of all materials, for example, flour, eggs, sugar, chocolate chips etc. will make X amount of cookies. Thus we can get a cost per cookie of 20 cents, now they know how much it costs them per cookie so they can set the price however they please and understand what their profit will be. In this example, Croix wants to sell cookies for $.50, so he knows he makes $.30 per cookie and wants to sell 100 cookies thus making $30, $15 goes to “investing/taxes” $15 is his “FUN” money.

They have no learned about expenses, income, savings, and organization. What more could you ask for?! Yes will it take time from your day and there’s YES but that also is important because TIME is valuable and is worth $$$.

Now I am an excel nerd so I set them up with their own “bookkeeping” but that’s just me if you want my template let me know!

Next Week’s Issue

School starts next week, WOOHOO! I love my boys but umm it’s time for them to get back into the structure of school!

We will discuss Financial Organization and why being disorganized causes more stress/anxiety than what your actual money causes.

Hottest Tweet of the Week….

Taxable Brokerage accounts are a great way for cash flow flexibility as well as growing your wealth without tying your money up!

#NoBSWealth Clip of The Week

Cannot wait until next week or just want more, check out our podcast @nobswealth and catch us on Youtube. You can always follow me on Instagram and Twitter as well! Or just email me, [email protected].

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