RPF0323-Teach_Your_8-Year-Old_to_Earn
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00:00:31.700 | So you've got an eight year old kid and you're concerned about their financial future.
00:00:37.000 | So you want to teach them about money. Well, where do you start?
00:00:40.500 | I suggest that you start with teaching them how to earn and teaching them how to invest.
00:00:46.100 | And I don't think you should wait till 18 to do that.
00:00:48.700 | And I don't think that although, hey, it's a good thing if you want to do it.
00:00:51.800 | I don't think that just opening a Roth IRA for your kid is the ideal way to teach them how to earn or invest.
00:00:59.200 | So what can you do?
00:01:01.100 | And more importantly, what can you do with an eight year old?
00:01:06.500 | Welcome to the Radical Personal Finance podcast.
00:01:24.600 | My name is Joshua Sheets and I'm your host.
00:01:26.200 | Thank you for being with me today. I mean it.
00:01:28.600 | Don't wait till your kid is 18 years old or 28 years old to teach them about money.
00:01:32.200 | Teach them when they're eight. That's what this show is going to be about.
00:01:38.100 | Now, you'll have to take this with a grain of salt.
00:01:41.400 | My kids are two. But hey, I'm trying to get a head start and be prepared for when they're eight.
00:01:54.600 | The genesis of this show came out of a conversation that I had recently with a family member of mine who said,
00:02:00.000 | "Joshua, hey, look, I've got eight year old kids, actually an eight year old young lady, girl,
00:02:05.200 | and I'm saying what can I do to teach my kids about money? Do you have any ideas?"
00:02:10.200 | And I said, "Yes, of course I have ideas. But I can't give them to you over the dinner table.
00:02:15.600 | I've got to actually do something."
00:02:17.000 | So I said, "Well, I'll create a show for you."
00:02:20.600 | And so here on today's show – welcome to all of you who are listening today for the first time.
00:02:25.000 | This is the Radical Personal Finance podcast,
00:02:26.900 | which is a show that's dedicated to providing you with the knowledge, skills, insight,
00:02:33.100 | and daily encouragement that you need to live a rich and meaningful life now
00:02:37.100 | while building a plan for financial freedom in ten years or less.
00:02:42.300 | And one of the most important aspects of living a rich life now is making sure that you're passing on these skills to your children
00:02:52.900 | so that they will be able to surpass you.
00:02:55.600 | I think that's all of our goals as parents is that our children would surpass us.
00:03:01.400 | We want to pass along all of the good and see them come far beyond us.
00:03:06.700 | Today I'm going to give you my ideas on practically what to do.
00:03:10.800 | Today's show we're going to cover three important areas.
00:03:13.100 | Number one, our children need jobs. They need to be employed because they need job skills.
00:03:20.400 | Number two, our children need to build businesses
00:03:22.500 | because they need to learn how to identify the needs and desires in the marketplace.
00:03:26.800 | And number three, our children need to learn how to invest.
00:03:30.600 | They need to know how to buy low and sell high and buy future streams of income at great prices today,
00:03:37.800 | which is the fundamental core of investing.
00:03:41.500 | Now in future episodes of Radical Personal Finance, we'll cover other aspects of training children to handle money.
00:03:47.400 | Today we're not going to talk about what your kids should do with a dollar when they earn it.
00:03:51.900 | We're not going to talk about a lot of those things.
00:03:55.200 | I just wanted to give some ideas for the framework that I'm building of how to train kids.
00:04:00.400 | This is, I must warn you, theoretical on my part.
00:04:04.900 | It's from my personal experience and from my observation, but I have not proven this yet with my children.
00:04:11.100 | I have a two-and-a-half-year-old son and a nine-month-old daughter.
00:04:15.900 | And in their context, we're just getting started, but I haven't done a lot with money.
00:04:20.800 | But this is very important to me.
00:04:22.600 | And so there will be lots of shows on this topic.
00:04:25.300 | I'll interview world-class experts.
00:04:27.100 | We'll cover these details in – we'll cover the subject in detail in future versions of the show.
00:04:35.100 | Those are three categories that I mentioned are the three ways that I separate it.
00:04:40.100 | And I think that we should tackle them in order.
00:04:43.100 | Again, they are one, employment; two, business; and three, investment.
00:04:47.500 | The fundamental foundation of what we need to teach our children is first and foremost employment skills.
00:04:55.400 | Now, this goes against a lot of what I teach about entrepreneurship, and I'm heavily focused on saying how do we help children build business.
00:05:03.200 | I think we should do that.
00:05:04.700 | But here's the reality.
00:05:06.000 | Businesses require an idea.
00:05:10.800 | They require a market, and they usually require some capital of some kind.
00:05:16.500 | Now, is it possible to get off an airplane or a boat or a bus in a new country and set out and start a business with nothing?
00:05:24.800 | Maybe.
00:05:26.300 | But most people don't start there.
00:05:28.300 | Most people start with a job of some sort because the way that we build wealth and earn money is we start with our human capital, our physical skills, our physical ability, whether it's simply the physical ability to get a shovel and dig a ditch or whether it's the physical ability to create brilliant computer code.
00:05:46.400 | Whether it's the physical ability to sell something to somebody.
00:05:51.100 | We usually start – if we're completely broke and have nothing, we start with our physical skills, something that we have to offer.
00:05:58.400 | And so that's what our children are going to do as well.
00:06:01.400 | They're going to start with their physical ability, and the first thing that we need to do is help them to get jobs.
00:06:06.900 | And I think this process should start far earlier than many parents start it.
00:06:12.400 | One of the biggest challenges that we face in the United States of America is the child labor laws, which makes it challenging for us to figure out how do we get jobs for our eight-year-olds.
00:06:24.400 | But I still think we should focus on it.
00:06:29.400 | The cool thing about training children with job skills is if you're parenting with vision, you're already doing it because the things that you're training in your child are the things and the skills that they are going to need to be successful in the employment context.
00:06:47.400 | A good parent always trains their child to be respectful of authority and to submit to authority.
00:06:54.400 | Well, that's the exact skill that they need to succeed in a job context.
00:06:58.400 | So as you're training your children to be respectful and submissive to you as a parent, you're also giving them the skill that they need to succeed in the job context.
00:07:07.400 | Doubt that that's important?
00:07:09.400 | Well, go find an employer who's hired a disrespectful 16-year-old.
00:07:15.400 | Probably didn't last very long.
00:07:18.400 | As parents, we're training our children consistently to do their work well.
00:07:23.400 | I start with my son and I work with him to say, "Okay, it's time to do toy roundup.
00:07:28.400 | So we need to do this quickly and we need to do this well.
00:07:31.400 | Every toy needs to be picked up.
00:07:33.400 | The room needs to be left in a perfect situation at the end of it.
00:07:36.400 | It's fine to play with the toys.
00:07:37.400 | It's fine to make a mess when you're playing with them.
00:07:39.400 | But at the end of the day, the toys are going to be picked up.
00:07:42.400 | The blocks need to go in the blocks bin, the animals in the animals bin, the trains in the train bin."
00:07:47.400 | And when we're doing it, we're working systematically, progressively so that he's picking them up more quickly.
00:07:52.400 | He's not getting distracted.
00:07:53.400 | Well, is that a life skill?
00:07:55.400 | Absolutely.
00:07:56.400 | Is it important for a child to do that?
00:07:57.400 | Yes, because that's exactly the same skill that's going to be transferred later to an academic context when they're focused on doing their mathematics problems.
00:08:07.400 | But it's also the same skill that a child is going to need for a job.
00:08:14.400 | Focus, attention, being able to stay consistent and follow through on the job when they don't feel like it.
00:08:21.400 | Learning how to overcome the weakness of their flesh when they have a bad attitude and they don't want to go pick up toys but they're still required to go pick up toys.
00:08:29.400 | That's how we teach responsibility and we train that in children.
00:08:32.400 | Doing your work quickly and well.
00:08:34.400 | Categorizing things properly.
00:08:37.400 | These are all important aspects of character and they're the perfect training for job skills.
00:08:44.400 | What else are we training?
00:08:46.400 | Well, hopefully much prior to eight years old, you as a parent have been systematically teaching your child the skills of housework, for example.
00:08:56.400 | So you're working with your son or daughter and you're training them to clean the bathroom.
00:08:59.400 | Well, that's an extremely important skill.
00:09:02.400 | In order to not be a slovenly adult, it's nice to know how to clean the bathroom.
00:09:07.400 | Or perhaps you're training them how to do their own laundry or you're training them how to vacuum the floor.
00:09:12.400 | Of course, we start very simple at a very young age but these are just the normal things that parents are occupied with in teaching their children.
00:09:22.400 | Well, the valuable thing about the work that you've been doing prior to eight – and by the way, I should have said this.
00:09:28.400 | I'm just using eight because that's the age of my family member who asked me the question.
00:09:33.400 | It doesn't matter what – ten, six, whatever.
00:09:35.400 | I think eight, nine, ten is a good transition.
00:09:37.400 | It's right in that transition from child to young adult.
00:09:41.400 | I think about 12 or 13 should be where we should be aiming to treat our children as young adults by about the age of 12 or 13.
00:09:50.400 | It's the historic age of adulthood in many historic cultures.
00:09:54.400 | So eight, nine, ten, we're right on the verge of that and an eight-year-old is perfectly capable of much more responsibility.
00:10:03.400 | Four-year-old, I don't know.
00:10:05.400 | It's a little bit less clear for me there.
00:10:08.400 | So that's why I chose eight.
00:10:09.400 | So as you've been working with your children before this period of time, you've been teaching them specific skills.
00:10:14.400 | It starts with sweep the floor, sweep the porch, vacuum the floor, these types of things.
00:10:19.400 | Well, the cool thing about that is you are now building job skills because guess what?
00:10:25.400 | If you are an expert at cleaning bathrooms, you can actually get a job cleaning bathrooms.
00:10:32.400 | That's where you start to see that transition.
00:10:34.400 | There aren't a lot of jobs available for picking up toys but there are jobs for cleaning bathrooms.
00:10:39.400 | So the first thing I believe that we as parents, if we want our children to earn money, we need to take responsibility for finding them employment.
00:10:47.400 | The earlier the age, the better.
00:10:51.400 | Of course, you as a parent have to judge where is your child in their development, what are they able to handle.
00:10:56.400 | This is going to be a much bigger hassle for you as a parent to do because you're going to wind up doing most of the work.
00:11:04.400 | But if I had an eight- or nine-year-old child, I'm going to be looking actively for employment opportunities for this child.
00:11:13.400 | I must warn you though.
00:11:15.400 | For the application of these things, context matters.
00:11:18.400 | I get a little bit envious of those of you who live in a rural or agrarian society because it seems to me as an outsider that this is so much easier within that context.
00:11:30.400 | There's always need – on a farm, there's always need for a kid to help out with more chores.
00:11:36.400 | There are loads of simple chores that have a specific monetary value and there's always something that you can hire somebody to do.
00:11:44.400 | Whether it's a very simple task, weeding the garden or mucking out the stalls or whatever it is, it's just – it seems in the farm world, children have always been just a blessing and a benefit simply for – in addition – excuse me, for many things.
00:11:59.400 | But one major benefit is their ability to be helpful.
00:12:02.400 | When you translate that into an urban culture, into our modern fragmented society where we all go and do these professional things and there's no integration of family into that, it's much more challenging.
00:12:13.400 | But in my context, kind of an urban/suburban type of realm, where I see a simple application of this would be trying to help my child find a job such as doing some light house cleaning.
00:12:26.400 | So I think that we as parents should step up and should work very diligently to find our children jobs that they can do where they can earn money.
00:12:36.400 | I remember the first time that I was paid for work and – it might not be the first time I was paid for work.
00:12:45.400 | I remember the first time I received a substantial amount of money in excess of $100 for work that I had done.
00:12:51.400 | And within the story, my brothers who were older than me – I was the youngest child.
00:12:56.400 | My brothers were working for a friend of ours who was a carpenter, and they were doing carpentry work for one of his clients for whom they were expanding their house.
00:13:06.400 | This house was a few miles away from us and because it was relatively close, I just went along and I went along for fun.
00:13:12.400 | I was perfectly safe, perfectly able to stay out of the way, no danger involved whatsoever.
00:13:18.400 | For those of you who are concerned about OSHA requirements for job site safety, I was perfectly safe.
00:13:27.400 | But they were able to find some simple ways to put me to work.
00:13:31.400 | So I was put to work picking up scrap lumber from beneath where they were sawing and throwing it away and cleaning up trash and sweeping the floor and carrying materials, things like that.
00:13:41.400 | I remember it as being a major event in my life because I never expected to be paid.
00:13:48.400 | But at the end of the week, they were there and the carpenter was handing out paychecks to my brothers and they handed me cash.
00:13:57.400 | And I got a $100 bill for my work.
00:13:59.400 | And I'd never had – in my life, I'd never had a $100 bill.
00:14:03.400 | And I thought, "Whoa, I have $100. This is a lot of money."
00:14:07.400 | And I got that $100 from work.
00:14:11.400 | It totally changed my life.
00:14:14.400 | Maybe that's a little bit of an overstatement.
00:14:16.400 | It totally changed my perspective on money because I realized I could have hundreds of dollars if I worked.
00:14:24.400 | So as parents, we should be looking and seeking to create these opportunities for our children.
00:14:30.400 | And this is our responsibility.
00:14:32.400 | It's unfair for us to wait until a child is 15 years old and then tell them, "Hey, you need to go get a job as a bag boy."
00:14:38.400 | We need to be the ones who are finding them their jobs.
00:14:41.400 | So if I – when I am a parent of an 8-year-old child, what I'm going to be doing is I'm going to be calling my friends, calling families in my church, calling my friends from work, calling some of my friends and saying, "Listen, would you like your bathroom cleaned?"
00:14:56.400 | And what I'm going to do is I'm going to try to arrange for that friend to ask my child to say, "Hey, would you like to do some light house cleaning?"
00:15:03.400 | And guess what? I'm going to probably need to go with them because at 8 or 9 years old, they're not capable yet of fully cleaning a house.
00:15:11.400 | They're not capable of doing an excellent job and having everything perfectly done.
00:15:16.400 | But if I'm working with an understanding friend and I'm willing to go along and help and work with them on that job, we can create an opportunity for employment.
00:15:26.400 | Now, this might be as simple as raking the yard.
00:15:30.400 | Many of us when we were younger, we mowed grass.
00:15:33.400 | I remember for years I would go and mow my grandparents' grass and I received five bucks to cut their yard.
00:15:38.400 | This might be weeding the garden bed.
00:15:40.400 | It might be vacuuming the floor.
00:15:43.400 | At an older age, it might be babysitting or things like that.
00:15:45.400 | But we as parents, the most important thing we can do in this context of training our kids with money, the most important thing we can do is find opportunities for them.
00:15:56.400 | That's what we can do is find those opportunities.
00:16:00.400 | That's so valuable.
00:16:01.400 | So if we can create them or whether we have to create them, whether we have to finance them or fund them or just be aware of them, we can make tremendous opportunities.
00:16:12.400 | I remember another very useful time in my life.
00:16:15.400 | A friend of mine had a bunch of banana plants that are at his house and he had a dump truck load of manure delivered to be spread around the banana plants.
00:16:25.400 | You can get pretty easy to find if you're in horse country.
00:16:29.400 | You can find the people who own the stables.
00:16:32.400 | The stalls are mucked out and they have the wood chips and the manure all mixed up and you can get that stuff and it makes for a great mulch for your banana plants.
00:16:40.400 | So he had several truckloads of that delivered and my parents were paying attention.
00:16:44.400 | I said, "Hey, Joshua can do that," and he asked me if I'd like to do that and I agreed to do that.
00:16:50.400 | So I had a wheelbarrow and a shovel, an excellent job for a young boy, a wheelbarrow and a shovel to go and distribute that and I was paid for my work.
00:16:58.400 | There's a much bigger story behind that because it was an extremely transformative employment opportunity in my life.
00:17:03.400 | We'll save that story for another time.
00:17:05.400 | But it was a great opportunity.
00:17:06.400 | If as parents we're looking for those things and keeping an eye out, we'll come across them.
00:17:12.400 | Now, the reason skills are important, we need to teach our child to build and develop skills which can be applied in the context of work.
00:17:21.400 | The valuable thing about doing some of these work opportunities that don't require much skill is it will probably be motivating for our children to develop higher levels of skill.
00:17:38.400 | Spending several days distributing wheelbarrow loads of horse manure and stall bedding around banana plants thoroughly convinced me that I wanted to do something different with my employment opportunities.
00:17:59.400 | That's a really valuable lesson for a young boy to learn.
00:18:03.400 | Cleaning bathrooms, I did house cleaning work as well.
00:18:08.400 | Another job I had was I worked with neighbors who did construction cleanup.
00:18:12.400 | I'd go out and a new house was built and I'd gotten clean windows and sweet floors and things like that.
00:18:17.400 | Doing that type of work convinced me that I didn't want to do it for a living.
00:18:23.400 | Later on when I was able to work legally within the context of an actual company, I remember working as a tile helper and mixing up buckets of mud and thinset and carrying boxes of tile and beating up old tile floors and grouting floors.
00:18:41.400 | That work convinced me that I didn't want to lay tile for the rest of my life.
00:18:45.400 | These are valuable lessons.
00:18:47.400 | If you can help your 8, 9, 10, 11, 12, 13, 14, 15-year-old learn that, then you might not have to deal with a 22-year-old that doesn't have a clue about what they want to do.
00:18:59.400 | But you can't wait until 22.
00:19:03.400 | We need to teach our children that they need to develop skills.
00:19:07.400 | So we take those skills of just simply being an active member of a family, being a boy or a girl in the household.
00:19:14.400 | We teach those skills of housework.
00:19:16.400 | We're going to be requiring them to vacuum the floors and clean the bathrooms and do their laundry at home.
00:19:20.400 | We take those skills and we translate them out into the job marketplace working for other people.
00:19:24.400 | Then they learn that they can take skills and earn money.
00:19:27.400 | Then we look for opportunities for them to learn and enhance other skills.
00:19:31.400 | And with this process, we teach our children how to get jobs.
00:19:37.400 | We teach them that they need to have skills, apply those skills where an employer is going to value them, and they get paid.
00:19:46.400 | That's what the job marketplace is.
00:19:48.400 | I'm going to reemphasize before moving on to business.
00:19:52.400 | I'm going to reemphasize my point to those of us who are parents.
00:19:55.400 | This will be far more work than simply giving our kids money.
00:20:02.400 | It will be much harder for you as a parent or me as a parent to find our child jobs, to take our child to those jobs,
00:20:15.400 | to supervise our children within those jobs to make sure that they're working to an acceptable quality,
00:20:21.400 | to teach them within the context of those jobs the social skills that they need to get along with a difficult fellow co-employee or a difficult boss,
00:20:30.400 | and to bring them home.
00:20:32.400 | It's going to be far more difficult for us to do that than it is just to give them money.
00:20:38.400 | But if we just simply give our child money – today I'm not commenting on the value of giving money or not giving money.
00:20:44.400 | But if we just give our child money, we rob them of the opportunity to learn how to work.
00:20:51.400 | So pay attention and find those jobs.
00:20:56.400 | I didn't realize this when I was a kid.
00:20:58.400 | It's one of the things I'm most thankful for my parents of working hard to provide for me.
00:21:02.400 | I didn't realize all of the work that my parents did to allow me to have job opportunities.
00:21:07.400 | But now I see it.
00:21:09.400 | I think of some of the work that I did and I had these Saturday jobs and my dad would take me there and then come and get me.
00:21:16.400 | Well, that was a real disruption to his weekend.
00:21:21.400 | But it allowed me to go at an early age and learn to work, learn to report to various bosses, learn to work within the context of the employment, the professional employment world.
00:21:33.400 | I learned a lot.
00:21:35.400 | And I failed at many of those things, but I failed while it was still safe.
00:21:40.400 | So I dealt with difficult bosses while my parents could still be the safety net underneath me instead of trying to deal with a difficult boss as a 23-year-old for the first time.
00:21:50.400 | Let's move on to business.
00:21:54.400 | I think we also have a responsibility if possible – perhaps responsibility is too much of a word.
00:22:01.400 | I think if possible we should be teaching and training our child to look and develop businesses because job skills are great and job skills are useful.
00:22:10.400 | But I also want my children to be aware of how to start and develop and build businesses.
00:22:17.400 | And the idea is they need to look for needs and desires in the marketplace.
00:22:22.400 | What an entrepreneur does is they simply find a need or a desire in the marketplace and they satisfy that in a profitable way.
00:22:30.400 | This can start from a very early age.
00:22:32.400 | The old-fashioned lemonade stand is a perfect example of it.
00:22:36.400 | Now, if a lemonade stand will work in your context, do it.
00:22:40.400 | One key that I see is I don't think that we need to worry about any of these businesses lasting.
00:22:47.400 | If you put up a lemonade stand with your kids in your front yard and if you can avoid the municipal authorities coming with their badges and guns and telling the kids to take it down, which, yes, that does seem to happen more frequently than we might like.
00:22:59.400 | But maybe it's not as frequent as – the reason news stories are written about it.
00:23:03.400 | But if you can avoid that and your kids can set up a lemonade stand, the neighbors will buy some lemonade probably on Saturday morning.
00:23:10.400 | It's not that they wanted the lemonade.
00:23:11.400 | They just wanted to support the lemonade stand and they'll probably do it the second week as well.
00:23:15.400 | But that's probably not going to be an ideal business to manage for many years.
00:23:20.400 | That's okay.
00:23:22.400 | There's still a benefit in that process.
00:23:25.400 | And so as parents, one of the things that we can do is look for these opportunities, suggest them and lead our children in it, put up the capital, put up the work, help with all of the details, and then allow our children to profit from it.
00:23:42.400 | Here are some simple ideas that I think could be helpful.
00:23:45.400 | Let's start with lemonade stand.
00:23:47.400 | If your child is of an age where they could mix up a jar of lemonade and set up a table, look for a context and suggest it.
00:23:56.400 | Look for some way, whether it's in conjunction with a garage sale or whether it's in conjunction with the marathon, local 5K or marathon that goes in front of your house or something.
00:24:05.400 | Look for some way to set that up.
00:24:07.400 | And then as a parent, tell them, "I'll go ahead and I'll front the money.
00:24:12.400 | I'll be your investor.
00:24:14.400 | I'll invest the money up front so we can buy the materials.
00:24:17.400 | We can buy the lemons, get the water, buy the sugar."
00:24:20.400 | Put up those materials.
00:24:22.400 | Teach them how to set it up, how to make some signs.
00:24:24.400 | You buy the markers.
00:24:25.400 | You buy the pens and all those things.
00:24:27.400 | Set up the table.
00:24:28.400 | Make an attractive display.
00:24:30.400 | Price the lemonade.
00:24:31.400 | Teach them about sales.
00:24:33.400 | Have them sell the lemonade.
00:24:35.400 | And then do an accounting afterward and charge them what it costs you.
00:24:39.400 | If they used plates and cups, charge them for the cost of those plates and cups.
00:24:43.400 | Teach them about profit.
00:24:44.400 | Teach them how to keep books.
00:24:46.400 | A 9-year-old is perfectly capable of keeping accounting books.
00:24:51.400 | I'm not talking about a fancy computer program.
00:24:55.400 | Just keep a piece of paper, how many sales, total gross revenue.
00:24:59.400 | Pull out the expenses.
00:25:01.400 | As parents, obviously, I think it's probably a good idea for us to buy the 5-pound bag of sugar
00:25:06.400 | and then just charge them for the half a pound they use.
00:25:08.400 | They don't need to try to figure out how to get their business to scale.
00:25:11.400 | But teach them that with lemonade.
00:25:13.400 | And then talk about what are some other products that we could create.
00:25:19.400 | Could we bake some bread?
00:25:21.400 | Most of us, if you're involved in a work scenario or if you're involved in a church
00:25:27.400 | or involved in a community group, start baking some bread and selling some homemade bread.
00:25:30.400 | And then the key would be you can't do that forever, but you could do bread one week.
00:25:37.400 | You could do cupcakes another week.
00:25:39.400 | The next week you can make strawberry jam at home.
00:25:42.400 | There are all kinds of little ideas that if we worked with our children
00:25:47.400 | and helped them to look for opportunities, we can take these things and distribute them.
00:25:52.400 | And this will teach them about business.
00:25:54.400 | Look for needs and desires in the marketplace.
00:25:58.400 | The reason this is important and the reason it should be done in conjunction with employment opportunities
00:26:05.400 | is so that the child can learn the difference between profits and wages.
00:26:12.400 | If your child is making $5 an hour to go and clean your neighbor's and friend's bathrooms
00:26:19.400 | or they're making $5 a bathroom or something like that, however you work out the compensation,
00:26:25.400 | and then you go and you can see they learn that they can sell cups of lemonade for $2 a pop,
00:26:32.400 | and at a busy time when there's a garage sale going on on your block, they can make $50 in a day,
00:26:39.400 | they might start to realize that profits are better than wages.
00:26:44.400 | That's a valuable lesson to learn.
00:26:47.400 | So now when you're teaching your savings lessons and you're teaching them the way that building wealth works
00:26:53.400 | is you work a job so that you can earn wages and then you save your wages so that you can invest
00:26:58.400 | and build business and earn profits, now your lessons actually mean something.
00:27:06.400 | So look for business opportunities and try to help your children develop business opportunities.
00:27:13.400 | In some ways, this is more difficult than it's ever been.
00:27:18.400 | And primarily there I'm talking about the urban lifestyles that most of us live
00:27:23.400 | and the legislation and rules and litigious society in which we live that make it difficult for your child
00:27:30.400 | to gain employment in the public market until they reach a certain age.
00:27:35.400 | With minimum wage laws, your child at 10 years old is not worth $7.25 an hour.
00:27:41.400 | So they can't effectively compete because of minimum wage laws.
00:27:45.400 | They can't legally work because of child labor laws in most occupations.
00:27:49.400 | They can't work in certain hours, things like that.
00:27:52.400 | So it's difficult for children to be able to go out and gainfully employ themselves.
00:27:57.400 | But if you actually look at the flip side, there are so many opportunities now for children to develop businesses and take skills.
00:28:07.400 | What would be some simple examples?
00:28:09.400 | Sitting behind me on my bookshelf, I got a big bin filled with CDs that I've been meaning and meaning and meaning to rip to the computer so I can get rid of these CDs.
00:28:19.400 | And I just never – I haven't made it a priority. I haven't decided to do it.
00:28:23.400 | That's the perfect work for a 10-year-old boy or girl to take my bin of CDs, take my hard drive.
00:28:31.400 | They rip them all and they return to me the hard drive.
00:28:34.400 | There's probably tons of pictures.
00:28:36.400 | I'd like to have all my pictures scanned and be done with this other bin filled with pictures.
00:28:40.400 | That's a good job for a 10-year-old boy or girl.
00:28:43.400 | It's a good business.
00:28:45.400 | They can go around your community, find your coworkers, things like that, and look for little things like that that they can do that are valuable.
00:28:52.400 | As a child develops technical proficiency, hopefully if your children are this age, doing things like they've got a camera.
00:28:58.400 | You're giving them a camera or giving them a smartphone to help them to create videos.
00:29:02.400 | Now maybe they can go and they can find somebody like me who has all these little video clips and they can stitch them together and make home movies.
00:29:08.400 | Or they can find people's old home movies and learn how to edit them together.
00:29:11.400 | There are all types of these little things that can be done on a local level.
00:29:15.400 | And then the cool thing is that your child can take that to a global level.
00:29:19.400 | And I don't know what all of the terms of service and whatnot are for Elance and all these online services.
00:29:27.400 | But a lot of them, a 12-year-old can compete just as effectively as a 32-year-old.
00:29:34.400 | So it's actually a really great time when you look at it in that perspective to help your child build employment.
00:29:44.400 | One of the jobs that I did when I was a kid, I don't know how old I was, but there was a friend of ours who had written an autobiography.
00:29:50.400 | And this man was old school.
00:29:52.400 | He had written it on a legal pad and I was hired to type it.
00:29:55.400 | And so this was incredibly useful to me because it was a major catalyst for my learning to speak, learning to type more quickly.
00:30:03.400 | And I got the stacks of several legal pages of the manuscript and I typed it out.
00:30:08.400 | Well, in today's world, I could take that exact same skill and I could market that on a global basis, whether it's transcription, verbal transcription.
00:30:18.400 | It doesn't matter to me whether a 10-year-old transcribes my shows or a 30-year-old transcribes my shows.
00:30:24.400 | I just need the shows transcribed and I just need a file.
00:30:27.400 | Well, as a parent, you and your children can figure out a way to do that.
00:30:32.400 | Please be careful.
00:30:33.400 | Protect them appropriately, perhaps if they're going to do work like that in order to satisfy the terms of service of a freelancing site.
00:30:42.400 | You need to make sure that you are the parent of the one who is doing it all.
00:30:45.400 | Maybe you need to be the one who's communicating.
00:30:47.400 | Be careful.
00:30:48.400 | Be sensible.
00:30:49.400 | But recognize the fact that through the connectivity of today's world, your children can access the global marketplace in a way that's never before been possible.
00:31:01.400 | So they can build a business, look for business opportunities, look for ways to take those hobbies that they're interested in and say, "Can you take this hobby to the next level?"
00:31:10.400 | When I was a kid, I had an interest in leatherworking.
00:31:13.400 | You take little hammer and tools and you take those and punch leather things and people make saddles and leather bags and all that stuff.
00:31:22.400 | I was never that good at it.
00:31:23.400 | But that type of thing is something – it didn't hold my interest enough to get to a business.
00:31:28.400 | But if your child has an interest in those types of things, that can be done to create products.
00:31:32.400 | You can take a hobby.
00:31:34.400 | You can take an interest and you can use it to create a product which can be sold.
00:31:37.400 | So encourage these things.
00:31:39.400 | Fund these things.
00:31:40.400 | Even if you have to – especially at an early age, you have to front the money and it winds up being a losing proposition.
00:31:46.400 | Recognize that what your child is learning is far more valuable than the money they're earning.
00:31:55.400 | People talk about spending money on education and there are many parents who will save $100,000 for their kid's college education.
00:32:06.400 | But they won't spend a couple hundred bucks to fund the child's hobby or they'll discourage the child who's losing money instead of figuring out a way to just make it work.
00:32:16.400 | Invest in your children at an early age and guess what?
00:32:19.400 | You'll never have to deal with a $100,000 bill.
00:32:22.400 | Finally, third category, investment.
00:32:26.400 | I believe we should be looking to teach our children how to buy low and sell high.
00:32:32.400 | There are probably a lot of ways that this can be done, but it should be done and it should be taught.
00:32:39.400 | Teach your child how to keep their eye out for a market imbalance, something that they can get for cheap or free and something that they can sell.
00:32:49.400 | If you go and you study the history and stories of various entrepreneurs who were considered to be prodigies, extremely successful, unusually successful,
00:33:00.400 | often what you find is as a kid they always found little opportunities, whether it was the guy who went out with a snorkel and fins and combed the pond at his local – at the golf course development that he lived in as a kid,
00:33:15.400 | got the buckets of balls out of there, and then resold those buckets of balls as practice balls to the golfers, whether it was the kid who bought cards, baseball cards or action figure cars in the – in one end of town, in the poor end of town and sold them at the rich end of town.
00:33:34.400 | You always find that kids have these things that made an impression on them, and they were investing.
00:33:39.400 | They were buying low and selling high.
00:33:41.400 | Well, you can wait for it to happen circumstantially, and it might, or you can be proactive about it.
00:33:47.400 | I don't know what the opportunity is in yours, but here are a couple – in your area, your place, but here are a couple of ideas that stand out to me.
00:33:55.400 | First, I am amazed at just simply what could be done of getting things for free and then reselling them.
00:34:03.400 | My wife is the world's greatest curb diver.
00:34:07.400 | I try to give her a run for her money, but she is way better than I am.
00:34:10.400 | Over the last couple of weeks, I took a bit of a spring break.
00:34:13.400 | I repainted this table that we found on the side of the road.
00:34:16.400 | We were out shopping for rental houses, and she found this table, and it was this old wood table that was – it was – but we liked it because it was huge.
00:34:27.400 | It was 10 feet long, and I like to have a big table so we can have lots of people at our dinner table.
00:34:31.400 | So it's a 10-foot-long table, but it's kind of this old wood, and it was covered with this really nasty coating that was all flaking off and whatnot.
00:34:38.400 | So we tossed it up on the roof of our minivan.
00:34:40.400 | We brought it home, and I spent a couple of days over the last couple of weeks refinishing it and painting it for her.
00:34:45.400 | So I chipped it down, sanded it down, and then painted it.
00:34:49.400 | It's a beautiful white now.
00:34:50.400 | I could turn around and sell that table for – I don't know.
00:34:55.400 | I don't want to overestimate, but at least 100 bucks, probably more.
00:35:00.400 | I've sold enough stuff on Craigslist.
00:35:02.400 | I could probably sell it for much more because I've transformed it.
00:35:04.400 | Now, it's a little bit unusual, but we find this stuff all the time.
00:35:08.400 | She takes kids out on walks, and she always comes back with stuff she plucked off the trash pile.
00:35:14.400 | Guess what?
00:35:16.400 | My son is not quite capable of understanding the – he's not quite money-conscious yet.
00:35:26.400 | But within a couple of years, man, I'm going to have that kid pulling things off the trash pile and flipping them on Craigslist.
00:35:32.400 | He's going to learn to buy low and sell high, and you can't buy much lower and sell much higher than getting it for free and selling it for 10 bucks.
00:35:41.400 | But there are so many things like that.
00:35:44.400 | Now, we live in this kind of middle class, lower middle class type of neighborhood, and it seems like the lower middle class people throw way more stuff out than the lower class and then the upper class do.
00:35:55.400 | You got to get into this like rental communities where people are really transient.
00:35:59.400 | They throw all kinds of stuff away.
00:36:00.400 | But the point is there's an opportunity right here literally with my neighbor's trash piles to buy low, sell high.
00:36:07.400 | Now, is it meaningful for me to do that?
00:36:09.400 | No.
00:36:10.400 | I can't go and build a business that makes any difference at all plucking things off a trash pile and selling them for 10 bucks.
00:36:16.400 | It's irrelevant.
00:36:18.400 | But for my 6-year-old or my 8-year-old, it's very relevant.
00:36:25.400 | What about going to garage sales and finding deals and finding a way to flip them?
00:36:30.400 | When I was young, I – did I ever fix up a bike and sell it?
00:36:35.400 | I can't remember if I did or not, but I know we found a few times.
00:36:39.400 | I refinished a couple of bicycles and we find these bicycles and sand them down and get spray paint and spray paint them and fix them up.
00:36:46.400 | Well, if you can figure out how to get that into the market, you can make some money off of it.
00:36:50.400 | My favorite quote on teaching kids with money was Jim Rohn.
00:36:53.400 | He said, "I teach kids to have two bicycles, one to ride and one to rent."
00:36:58.400 | Isn't that kind of an important lesson to teach a kid?
00:37:01.400 | Teach your kid to have two bicycles, one to ride and one to rent.
00:37:05.400 | Teach your kid to have two houses, one to live in and one to rent.
00:37:09.400 | It starts young.
00:37:10.400 | There's no reason to wait.
00:37:12.400 | So teach them about investments.
00:37:14.400 | Teach them to buy low and sell high.
00:37:17.400 | And then teach them how to buy streams of income at great prices
00:37:21.400 | because the fundamental function of investing, the reason that we invest, the reason that we buy an asset is because it's going to return to us a stream of income at some point in the future.
00:37:32.400 | The present value of a stock is the discount, is the discounted value of all the future cash flows of the company.
00:37:41.400 | So we can teach our children that within the context of stocks, but we can also teach them that within the context of – well, I'm struggling for my example on this.
00:37:55.400 | But the key is how can we help them to buy cash, to find that?
00:37:59.400 | Can they rent out video games?
00:38:01.400 | Can they buy a video game and instead of just playing and having it themselves, can they rent it to their friends for a cheap price?
00:38:08.400 | Pay attention and see what you become aware of.
00:38:13.400 | These lessons go deep.
00:38:15.400 | As I close today's show, I'll share another story and emphasize why these things are important.
00:38:22.400 | The reason that we need to teach our children employment skills, job skills and help them find jobs and the reason we need to teach them to pay attention to the market for businesses and help them find and develop and do businesses
00:38:36.400 | and the reason we need to teach them investment skills, teach them how to buy and low, sell high is not because they're going to make and keep a lot of money as children.
00:38:46.400 | If they do, awesome.
00:38:48.400 | But it's unlikely.
00:38:50.400 | The reason we teach them those things is so that they will be paying attention to the marketplace and so they'll understand how the world works.
00:38:59.400 | I am absolutely astounded when people talk to me like, "Oh, I need to get a job."
00:39:04.400 | "What skills do you have? What do you bring the employer?"
00:39:06.400 | "Oh, I don't know."
00:39:08.400 | "Well, go get some skills and then go market those skills to the employer because it's not your employer's job to teach you the job skills."
00:39:14.400 | "I want to start a business."
00:39:16.400 | "Okay. What problem or need or desire are you trying to solve in the marketplace?"
00:39:20.400 | "I don't know."
00:39:22.400 | "Okay. Well, go look for a problem and then solve it and then you'll have a business and all the rest of the stuff will work out."
00:39:28.400 | These lessons go deep.
00:39:31.400 | I'll just share one more lesson from my past.
00:39:33.400 | If any of this resonates with you, you'll have to give the credit to my parents because I know they worked hard to do this for me.
00:39:39.400 | Some of it – but a lot of this is from my experience and then also just my observing.
00:39:43.400 | But these businesses don't need to last for the lessons to be valuable.
00:39:50.400 | You'll often hear me share about all these things I worked at, learned at all these jobs.
00:39:55.400 | I learned laying tile that I didn't want to lay tile.
00:39:58.400 | I didn't want to spend my life on my hands and knees putting things on the floor and making money off.
00:40:03.400 | It's hard work.
00:40:04.400 | I didn't want to do that hard physical labor.
00:40:07.400 | But I learned that at an early age and that motivated me to go on and study more so I could do a different type of work.
00:40:16.400 | It also built the confidence into me that if I want to rip out the tile in my bathroom, I can do that.
00:40:23.400 | I learned by working on a farm that I liked the farming lifestyle but I didn't like driving a lawnmower every day.
00:40:30.400 | I learned when I was out working with – I worked landscaping with a landscaping crews.
00:40:36.400 | I learned out driving a weed eater and driving a lawnmower that, hey, this is really good but I want to do something different.
00:40:42.400 | I learned when I was teaching wakeboarding and water skiing as kind of one of these birdbrain high school jobs that I didn't want a job that didn't engage my brain because here was the thing that was the most fun and I was bored silly.
00:40:52.400 | So because I learned those things, I was able to make better career decisions as a 20-year-old.
00:41:00.400 | From the businesses that I learned, I learned – from the businesses that I operated and ran, none of them made me a lot of money.
00:41:06.400 | But I learned a little bit about business and learned to watch out for it.
00:41:09.400 | One story that made a huge impact on me, when I was a kid, when I was 10 years old, we moved to more of a semi-rural environment.
00:41:18.400 | My neighbor down the road, kind of a redneck guy, he raised rabbits and he would raise them and butcher them for his family and he would sell the meat.
00:41:25.400 | So I got into that.
00:41:27.400 | I had never been raised in that kind of country context but I thought it was interesting and so I did that and I started raising rabbits.
00:41:33.400 | He helped me build a rabbit hutch and he sold me my first couple of does and so I started raising rabbits.
00:41:40.400 | I had this business where I would raise – I would raise the rabbits and I would butcher them and I would sell them to my friends.
00:41:47.400 | I would sell them to my parents.
00:41:49.400 | He would eat them and I would sell them to my parents.
00:41:52.400 | I could sell my rabbits for five bucks and so I had built this herd.
00:41:58.400 | At one point, I had over – counting young, at one point I had over 50, 60 rabbits, something like that.
00:42:03.400 | But because I had started with these meat rabbits, all of my rabbits were white and they were – I can't remember if it was California, New Zealand white or some – California.
00:42:12.400 | I can't remember the breeds.
00:42:13.400 | But they were all white and they were very cute.
00:42:16.400 | But white rabbits all kind of look alike.
00:42:19.400 | One time I had the idea.
00:42:20.400 | A friend of mine was a beekeeper and they rented a stall at the local green market.
00:42:25.400 | One time I had a bunch of rabbits and for whatever reason, I thought – it was near Easter and I thought, "I wonder if I could sell these rabbits as pets."
00:42:32.400 | So I loaded up my eight or ten rabbits of babies that I had that were weaned and able to be sold, took them down to the green market.
00:42:39.400 | And about six of them were white and the others were spotted and brown and black and had different spots.
00:42:47.400 | And I decided to price them at 20 bucks a piece because it was early.
00:42:51.400 | I figured I would drop my price.
00:42:52.400 | Hey, at the end of the day, I'm going to sell them for five bucks if I have to take them home and sell them for meat.
00:42:57.400 | And I sold out in the course of perhaps an hour very quickly.
00:43:02.400 | I sold all of my spotted and colored ones at 20 bucks a pop.
00:43:07.400 | And I made more money by selling my rabbits alive in an hour than I had in weeks of selling them for meat.
00:43:19.400 | And I said, "What on earth am I doing?
00:43:21.400 | I am – I'm a fool for doing this."
00:43:23.400 | But then I sat there with my six little white bunnies that hadn't sold for hours and nobody wanted my white rabbits because they weren't – just they didn't – they didn't invoke that emotional response in the kids.
00:43:36.400 | And the kids walked by.
00:43:37.400 | They're cute but they're not as cute as the nice spotted and colored ones.
00:43:42.400 | And I went home and I shut down my rabbit business.
00:43:45.400 | I think I sold the rest of them.
00:43:47.400 | But I shut down my rabbit business because I learned that the whole thing – I was totally in the wrong business.
00:43:52.400 | I was doing this commodity business and yet here was this luxury business that I could make way more money with way less work.
00:44:00.400 | And I didn't have to deal with the unpleasant nature of butchering my rabbits.
00:44:04.400 | It's an extremely unpleasant job.
00:44:07.400 | So, much more pleasant to sell them as pets knowing they're going to be – hang out and have these long good lives than it is to sell them as meat.
00:44:15.400 | That lesson went deep and I've never looked at businesses the same.
00:44:19.400 | I always pay attention.
00:44:20.400 | Do I want to be in a commodity business or do I want to be in a luxury business?
00:44:24.400 | I really done my market research.
00:44:27.400 | I only had my rabbit business for a couple years.
00:44:30.400 | But it was very useful.
00:44:32.400 | I made a little bit of money.
00:44:34.400 | I probably – I don't know.
00:44:35.400 | Maybe I broke even.
00:44:36.400 | Maybe I lost money.
00:44:37.400 | Who knows?
00:44:38.400 | I wasn't very good with my accounting at that time.
00:44:39.400 | But I learned to take care of them.
00:44:41.400 | I learned these skills and I learned these business skills.
00:44:44.400 | The lesson has continued on with me for many years.
00:44:48.400 | And that's why we as parents should be involved with getting our children these opportunities.
00:44:54.400 | Because we give our children a major leg up.
00:44:57.400 | It's almost unfair.
00:44:59.400 | Because so many parents don't pay attention to their kids and they just toss their kids money.
00:45:04.400 | And they don't give their kids the opportunity to develop or learn any of these things.
00:45:09.400 | So you fast forward a decade and you look at the difference between the person whose parent just tossed money at them and they're like a – I shouldn't be – I need to watch my words here.
00:45:23.400 | They're like a poor helpless lamb when they face the job market as a young adult because they've never been in it as compared to somebody with some experience who's not overwhelmed by it.
00:45:44.400 | That's as gentle and as kind as I can be of many of my peers and their competitiveness in the job market.
00:45:54.400 | Now, we have the opportunity to change these things.
00:45:57.400 | And I think we owe it to the next generation to teach them.
00:46:06.400 | So with regard to teaching and training our kids with money, consider.
00:46:11.400 | Number one, get them jobs even if you have to fund the job behind their back.
00:46:17.400 | That's still better than not.
00:46:18.400 | If you've got to go to your neighbor and say, "Listen, I know you just cleaned your bathroom.
00:46:21.400 | But can I please give you some money for you to hire my kid to do that?"
00:46:25.400 | If they're seven years old and they're going to leave the bathroom worse or if you've got to – they've got to be hired to do the bathroom.
00:46:29.400 | You come in just like we do with our little kids.
00:46:31.400 | Give them – they cleaned up the toys and the toys are – they're all in the wrong place.
00:46:35.400 | But we come in in the beginning, the beginning stages of training.
00:46:37.400 | "Atta boy. Atta girl. This is great. This is fantastic."
00:46:39.400 | And then they go in the next room and we fix everything.
00:46:42.400 | That's fine at an early age.
00:46:44.400 | If that's what you've got to do, get your kids working.
00:46:47.400 | Get them earning jobs.
00:46:48.400 | Get them looking for opportunities.
00:46:50.400 | There are lots more creative ways that I haven't covered.
00:46:52.400 | But get them jobs.
00:46:54.400 | Help them start little mini micro businesses and help them look out for investment opportunities to put their capital to work.
00:47:03.400 | Then you can sit back and watch joyfully when they're doing million-dollar deals down the road.
00:47:09.400 | And you don't have to worry about sustaining them and supporting them for the rest of your life.
00:47:14.400 | And as your virtual financial advisor, I commend to you that that might be something worth considering.
00:47:19.400 | That's it for the show today.
00:47:22.400 | I hope you've – I hope this has been useful to you.
00:47:25.400 | Lots more content coming in the future as I go through these phases with my own kids.
00:47:29.400 | I'll try to share some stories.
00:47:31.400 | I'm just not – I'm watching, but I'm not quite there as far as with my 2-1/2-year-old.
00:47:36.400 | And we'll see what happens.
00:47:38.400 | I haven't decided fully what we're going to do as far as the saving, spending, giving, and how we're going to allocate these things and percentages.
00:47:45.400 | I have some ideas.
00:47:46.400 | But as time goes on and as we cover more of these things, I'll share those with you in the future.
00:47:52.400 | So those are some of my ideas.
00:47:55.400 | But get out there and get through it.
00:47:57.400 | We've got a huge opportunity.
00:47:58.400 | If you are a parent who has done some of these things or who has ideas and thoughts on this subject, I would ask you, please come by the blog post for today's episode at RadicalPersonalFinance.com and share your ideas with me.
00:48:11.400 | I love to do this.
00:48:12.400 | If you've got resources that you've loved, I'd love to get a vigorous conversation going on this topic.
00:48:16.400 | So please tell me your ideas.
00:48:18.400 | Send me your resources.
00:48:19.400 | Post them as a comment on today's show.
00:48:21.400 | I would really love to have that.
00:48:23.400 | Thank you all so much for listening to today's episode of the show.
00:48:25.400 | If you would like to continue hearing more shows like this because you care about financial freedom for yourself and your family, please make sure you subscribe to my podcast with my free mobile app.
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00:49:18.400 | Until tomorrow, have a beautiful day.
00:49:21.400 | [Music]