School Doesn't Teach Money, It's On You | Series 5.3

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Welcome to the EnjoyMore30s Family Finance

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podcast. The only podcast dedicated to making life more

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enjoyable for young families by hitting on the financial topics

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that tend to weigh on us, stress us out, and distract our focus

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from simply enjoying life.

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Hello and welcome once again to the EnjoyMore30s

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Family Finance podcast. We are in the third episode here of the

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Your Kids Money Mindset series. We have I would say what is

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probably the most important episode of this entire series

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that we're going to go over. And that's what your

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responsibilities are when it comes to really teaching your

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kids about money.

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As always, if you like what you're hearing, please make sure

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to subscribe, follow us on Apple podcasts, any of those apps out

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there, wherever you listen. Clicking a star leaving that

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review really helps us reach the literally millions of other

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young families out there just like you. Last week, we

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discussed many different ways you could save for your kids,

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and education in particular and it really boiled down to two

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main trade offs that you're going to have to decide between.

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Do you more value flexibility, meaning the ability to use funds

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for college, or anything else you really might want to for

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your children? So think weddings, think houses, cars,

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all that kind of stuff. Or are you of the mindset of going all

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in on trying to maximize that college or school specific

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funding? So if you haven't checked out that episode yet,

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definitely do that soon.

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Today's episode, though, is titled School Doesn't Teach

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Money, It's On You, where we're going to cover just how much is

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really on your shoulders as parents because nobody's really

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telling you how important it is that you talk to your kids about

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money. And so building that financial literacy, that

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practical application, and more than anything I would say is

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really that healthy mindset and relationship when it comes to

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money. So if you think back to your own schooling, you know,

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raise your hand as you're listening to me here. How many o

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you guys had financial literac classes? I'm guessing there ar

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no hands up, zero. It was t e same for me. I there w

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s a personal finance class w ere they taught you how to balan

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e a checkbook and other ery outdated things like that.

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And from what I've heard, what I can tell, what I can see, t

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at's pretty much exactly the ame today. I've one, let's call

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im an extended family member, wh is involved in the school sys

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em, and told me once that there ere some kind of a basic finan

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ial literacy seminar as part of the freshman orientation. And t

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at, you know, is the most I've ver heard of. I don't know why

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hey designed it for freshmen, who are eight years away likely

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rom earning any money at all. But still, that was the most

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've ever heard of anybody d ing trying to help kids out

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ith financial literacy, lear ing some things about money

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hat would actually be practical and useful to them down the road

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So overall, this first par is simple. And it's really the

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oal of the entire episode. And that's for you to realize

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how much is on your shoulder as parents. And in my opinion

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at least, it's close, if no at exactly 100% of it.

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Now, one of the great things that was taught to me in my life

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was that everyone is going to form an impression of you. One

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way or another, they're going to have some kind of an impression

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of you by you interacting with them. You can either just

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completely accept that as is, kind of just let those chips

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fall wherever they may fall, or you can attempt to actively

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influence that impression. So if you think of whatever the last

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job interview was that you went to, you didn't just wear, you

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know, one shoe and that comfy 20 year old sweatshirt with stains

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all over it. No, you wanted to look good, you wanted to look a

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certain way to influence that person who is going to be

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interviewing you and deciding whether or not they wanted to

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give you the job. So you wanted it to be positive in the way

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that you looked. If you went there and you were all

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disheveled, they would say this person doesn't care and that

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would be the impression that they would form of you. So when

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it comes to your kids, they're going to form some relationship

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with money. They may turn out to be spenders, they may be savers,

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they may be completely oblivious and just ignore it fully. And

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all those are possible. The point though, is that some

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relationship is going to develop. So you can either let

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it come together however it happens again, letting those

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chips fall maybe wherever they may, or you can attempt to

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actively influence what that end result may be.

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So what can you do to help as parents? The biggest thing you

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can do is to expose your kids to anything to do with money to any

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degree that you're comfortable with. You don't have to open up

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the entire checkbook and give them monthly statements. But we

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have this notion in our society that finances are too taboo. We

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have to hide it from our children, not burden them with

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those things. But sharing with your kids gives that opportunity

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for them to start to learn. Kids absorb and emulate more than you

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think. If that wasn't true, we wouldn't be, you know, so afraid

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of turning into our parents. You know, whenever I say to my

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children, they, at some point, parrot back out to me at some

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point in the future so I have to watch what I say. And you know

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every parent talks like that, everybody parent, everybody's

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parent says, 'Oh, you know, at some point, we have to be really

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careful what we said around them, because they would just

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repeat it out in the open.' And it's not just what they hear and

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repeat when they're really young. So when you show them or

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even just speak to them about how you pay bills online or how

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you save into your work plan every month, or why you started

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to use a credit card versus cash or vice versa, or whatever

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system you have for budgeting. Or maybe even better, how about

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some of the mistakes that you made with money when you were

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younger? You're opening their mind to start thinking to even

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some small subconscious degree about money. And you know, I

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shared in a previous episode, how my Grandpa Joe used to put

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money in envelopes for all his expenses. So here's my grocery

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envelope, here's my mortgage envelope. His daughter's

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remember that. All five of them, remember that. So I've spoken to

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others who used to write out their bills on an envelope every

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month, add it up, send out the checks, their kids remember that

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too. I don't know if it's now because so much stuff is done on

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the computer, that it's not out in the open as much. But that

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doesn't mean that your kids can't see it. Show them that

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Excel sheet, show them something. And if you have

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really young kids like me, it's more just showing them that

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money is this somewhat intangible thing that exists.

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I'm sure you play, you know, grocery store. I guess for me,

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it's it's Trader Joe's, because that's the only grocery store my

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kids really know. Adding up that pretend cost and seeing if you

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have enough money. So seeing how money isn't infinite is a great,

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you know, play exercise to go through with them.

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I mean, personally, I probably learned the most when I was 16

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years old, and had my first job working at CVS. My best friend

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growing up, his name was Peter, he worked there and you know, so

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I decided to work there, too. You were paid whatever the

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minimum wage is at the time, and from a 16 year old's

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perspective, I had to work pretty hard for basically no

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money. And I learned working for money is hard. And for me, that

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was easy motivation to want something a little bit more than

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that. So everything that I just went through is having to do

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with that mindset, respect for money and what you were

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spending.

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However, you know, when you're trying to teach your kids about

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money growing, there is another really cool way to go about it.

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If you do have children that have reported income, so not

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under the table income from the restaurant, or whatever it might

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be, but real reported income, that makes them eligible for a

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retirement account, or specifically what I like to go

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through a Roth IRA. Now a Roth IRA, as you may know, from other

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episodes, they go tax free, no tax deduction when you go in,

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but they all grow tax free. So let's say Johnny earned $2,500.

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You know, either Johnny or mom and dad as an incentive can put

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up to that same amount, up to $2,500 in the Roth IRA. Whatever

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you earn, that's now the amount that you qualify for, up to the

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$6,000 a year limit if you're under 50 years old. Now, that

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may not seem like a big deal when Johnny is 16 years old but

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that $2,500 would come out to over $100,000 of fully tax free

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income if we assume an 8% rate of return, when Johnny turns 65.

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"You see this account I set up for you, Johnny, with the

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assumptions on making this is actually $100,000 for your

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retirement."

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So again, the goal for this episode is to realize that the

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relationship your children will eventually have with money, that

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responsibility that's fully on you. They're going to develop

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some money mindset one way or another. Is it going to be from

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TV, their friends, some music video of a guy throwing money

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out of a car window? You know, what is it going to be?

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Something is going to influence them and start subconsciously

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setting up these expectations and these relationships when it

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comes to money. So the last person it could be is you.

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Remember that any exposure will make a greater impact on them

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than you may know. Remember how when they were you know two

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years old and starting to talk, they would repeat everything

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that you said. It's getting in there even if they don't

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necessarily show it in the in the moment. So really, you know,

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put a very high price very high priority on setting that example

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and that exposure for your kids is the best advice I could give

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there.

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Thanks for tuning in today and join us for next week's episode

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called What a Nice Gift! where we're going to cover all things

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gifting, from how much you can gift to what happens if you go

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over that limit, to interesting ways to consider making the most

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of that gifting money to kids.

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Overall, if you're able to implement what we cover today

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and every day, fantastic as always, less to worry about them

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before and he could focus more on enjoying life. If you are

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wanting help with these things though or have questions you

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need help in clarifying. Check out the Ask Joe section on the

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show's website www.enjoymore30s.com. That's

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EnjoyMore30s.com. Until next week, thanks for joining me

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today and I look forward to connecting with you again soon.

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The conversations on this show are

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Joe's opinions and provided for general information purposes

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only. They do not constitute accounting, legal, tax or other

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professional advice for your specific situation. You should

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always seek appropriate advice from a financial advisor,

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accountant, lawyer or other professional before acting upon

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any content or information found here first. Joe is affiliated

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with New Horizons Wealth Management LLC, a branch office

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of TFS Securities, Inc., and TFS Advisory Services an SEC

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registered Investment Advisor member FINRA/SIPC.