Everyone is a product of where they focus their time and energy, right? As you can tell from this blog, much of my focus is on personal finance, especially financial independence. In my personal life, much of my focus is parenting two boys, ages 5 and 6.
Getting them started on a path of financial independence is inevitable. Given their age, we are working with simple things like chore charts and saving money for special toys.
One of my biggest concerns is the changes in the world. When I growing up in the 80s, I knew programing a computer was the future. Nowadays, retail stores and newspapers are closing. The automotive industry may nearly disappear as robot, on-demand cars may mean car ownership and driver jobs are a thing of the past. Artificial intelligence promises to disrupt more markets.
I know that most people think new jobs will be created. That’s probably true, but who knows if enough good jobs will be created. It seems that the current trend is replacing journalist jobs with influencer jobs. That should concern us all.
We can’t change where the world is going, but we can help prepare my kids. Here are a few things that we’re doing:
Teach Core Life Skills
This is a no-brainer. Some skills never grow old and can directly influence your bottom line. Here are the first two skills that came to mind. If you can think of more, I’d appreciate it if you could please drop me a line in the comments.
Food is often one of people’s largest expenses. It doesn’t have to be. Eating out at restaurants is expensive. If you know the basics of cooking, going out to eat is less appealing.
We’ve got the kids enrolled in an after-school cooking class. They might not be learning much. (I’m still waiting to be served breakfast in bed.) However, they are learning and enjoying it. Those are the important things at this age.
In conjunction with learning cooking, I hope to teach the boys how to shop to save money. This will include updated versions of the following articles:
Being able to manage and limit one of their largest expenses can only help their financial bottom line in the future.
I’m not handy at all. I can’t fix anything. I can barely work a screwdriver. If something breaks, I have to write a check.
That’s not good, especially for landlords like us. If you are good at fixing things and home improvement in general, you can create a lot of real estate opportunities with just sweat equity. You can fix up the house and move repeating the process over and over. You may even be able to keep the money tax-free when you sell. It may be a long time before artificial intelligence replaces carpenters and plumbers.
Perhaps someday, one of their jobs could be a managing our real estate “empire” and we could pass money and equity to them over time. I haven’t figured out exactly how this arrangement would work, but in theory there’s an opportunity there.
For now, I just want my kids to be better than I am with any handyman stuff. Home Depot has “kid workshops” once a month, but we haven’t had a chance to get to one yet. They also have workshops for adults, so maybe it’s not too late for me to learn a thing or two to pass on.
I don’t think I’ll have to focus on teaching them too much about personal finance. I half suspect that they’ll learn it from osmosis perhaps like I did from my mother. However, I can give them a couple of boosts.
If they don’t master personal finance from osmosis, they can fill in the gaps with my Ultimate Guide to Financial Freedom. I’m hopeful that when they are older they’ll give their old man 10-15 minutes to read the Cliff’s Notes to financial success.
As a practical matter, I recently wrote about their kid Roth IRAs which will give them a head start in saving for retirement.
Education is one of the foundations for a high-earning career. We’re investing a lot in private school now in hopes that it will set them on a great path for the future.
I’m still not sure that’s an optimal investment. For example, an episode of Teen Titans Go! (one of my favorite kid shows) brings up the idea that investing in a rental property is better than college. I don’t agree, but it’s an interesting topic. Of course, the Teen Titans teach a lot of personal finance.
Finally, it’s helpful that the the best financial independence book is actually a kids book.
One of things that I’m hoping to balance is giving an opportunity versus handing them too much. That’s why they are earning their kid Roth IRAs by picking up dog poop. That’s also why I think they would have to be property managers before they reap the benefits of the rental properties.
All of these are good skills to have. I’m sure the kids will a lot of them up as they grow. I wasn’t handy at all when I was young, but now I’m much better. Education is very important to me too. It’s something you can fall back on.
Lazy Man says
I saw you repair the driveway on your blog recently and I was like, “Whoa, I could never do that!” Maybe if I had a YouTube video and some practice I could.
One thing that I think is missing is making sure the kids manage their own money. What I mean by this is take XX% of all money they get (birthday, Christmas, jobs, etc.) and put it in the bank (I did 50%). This is to be used by them for big purchases. Secondly, make them responsible for their own stuff. Don’t buy them candy on a whim, don’t buy toys, etc. You provide food, shelter, clothes, and the basics. They want more, they have to earn/save for it. Third, as they get older, don’t give them money for dates, movies, etc. for them to have fun. Make them earn it. When my son was 16, I made it clear he had to earn his own gas money while I provided the car and insurance. He wanted to drive over hells half acres, it was him who had to pay the $4 a gallon for gas. He wanted to go on a date, he had to pay for it. Savings helped. So he would pull money from the bank that he got from his birthday or job and that was what it was for.
Lazy Man says
That’s definitely a very important piece of the puzzle. They are just getting to the point where they can earn money and buy things that they want.
Rowan Clifford says
Giving your kids the best start in life is a very noble pursuit. However, it’s very subjective.
For some it could be taking over the family business, for others, it could be training to be a doctor or lawyer.
For me, it’s none of the above.
For me, I want to give my kids the framework for living a free and fulfilling life, and from my subjective viewpoint, that framework doesn’t come from being an employee for somebody else.
I plan on teaching my kids the entrepreneurial skill sets needed to create wealth and build their own financial freedom early on (hopefully by the age of 14).
As a starting point, I’ve been teaching them how to make a YouTube channel and build an audience. Learn the concepts of what money actually is and the concepts of investing and saving. Also teaching them the principles of selling and how to bring value to the world.
The world is going to be a VERY different place in the next 20 years when our kids grow up, and I don’t think that the standard curriculum served up at most schools is going to be a breeding ground for excellence in an era of exponential digital advancement.
As I mentioned, everyone has their own viewpoint on how best to prepare their kids for the future. But, the most important thing is at least be asking these questions and then taking action.
Thanks for the post, it really got me thinking.
Lazy Man says
It’s really had to saw where jobs are going to be in the next 20 years. I like the idea of learning the audience/visual/communications, such as YouTube. I don’t think communicating ideas effectively will ever go old. I think many traditional school subjects will form the base of that.
Like most anything that’s far off in the future, it’s best to aim in one broad direction, but then fine-tune your focus each year in the short-term with the best possible moves you can make.
Abigail @ipickuppennies says
The cooking (and eventual handyman) classes are brilliant. If I’d been more involved in cooking as a kid, I might not find the task so onerous now. And while my mom set a good example in trying to be handy, she didn’t have any hard skills to teach so I didn’t grow up particularly handy either. I’ll try small stuff, but the big stuff I have to leave to the professionals, and that gets costly!
Ryan Rollins says
I love this post…I’m finding myself in a similar spot as well.
My oldest is about to turn 4 and I really want to start introducing her to the concept of money and basic management skills like saving. I find myself struggling with where’s the best place to start.
Any tips that worked for you? Thank you!
Lazy Man says
About to turn 4 is a little early to do too much with money concepts. Maybe you want to work on concepts of bartering/trading stuff at that point.
As she gets older maybe look into my favorite personal finance book, which is actually an old kids’ book – https://www.lazymanandmoney.com/the-best-personal-finance-fire-book-youve-never-heard-of/