Teaching Kids Financial Literacy for Future Wealth Creation

Young Money's seven-year-old is on the right track to becoming a millionaire through saving and investing.

### Guiding a Young Millionaire: Financial Education for Kids
* 💰  Young Money's seven-year-old is already on the right path to wealth by **saving 20% of his allowance**, which is matched by his parents.
* 📈  A dollar saved by a seven-year-old has the potential to grow to **$322 by retirement**, making early savings **incredibly powerful**.
* 💵  To become a millionaire, this child only needs to **save $26 a month**, while saving **$52 a month** could lead to being a **double millionaire**.
* 🎓  Teaching children about the purpose of money is crucial, emphasizing that it is a **tool to achieve life goals** rather than just a means to wealth.
* 🍬  The marshmallow test analogy highlights the **importance of teaching children about deferred gratification**, which is **essential for financial success**.
* 💡  Parents should encourage a balanced understanding of money by incorporating **saving, spending, and giving** into their children's financial education.
* 👨‍🍳  As children grow older, gaining work experience is vital, as it teaches them about **work ethic and human interactions**, which are key components of **financial success**.
* 👏  Kudos to the seven-year-old for recognizing the value of **saving and investing**, a brilliant start to a **financially savvy future**.

[Music] all right. I have a good question coming up from Young Money. We've got to get to it. Is he a rapper? I don't know. You should ask him in the chat if you're Young Money, if you're a rapper. Let us know. Let us know. Come. He says, My seven-year-old is a huge fan. Start 'em young, right? And he had Us open in utma to put savings and put 20% allowance in, which we match. That's great, isn't that great? He said, Uh, so he wants to be a millionaire. This seven-year-old. Is he on the right track? How does one know if he's on the right track to become a millionaire at any age? Well, so one Kudos do you. Whatever you guys are talking about at home is awesome for like, you know, uh, do you know what the wealth multiplier is for a seveny? I'd like to know now just to give everybody context. I lose my mind, and I even named a company 88 times over because when I found out that for a

20-year-old $1 has the potential to become $88. Um, I like that number because it Deloreans and all kinds of other cool stuff too, but um, but for a seven-year-old, a dollar has the potential to become $322 by the time they retire. So it's, I mean, that's so much more even powerful than the 20-year-old. And here's what's crazy. What was that number? 393? Oh no, $322. 322. And to be a millionaire, he only needs to be saving and investing $26 a month. If he, for all my trolls that think that we don't take into account inflation, if he wants to be a dose millionaire, he needs to be saving $52. What I think is crazy is that he said he's putting 20% of his allowance into this outa, and the parents are matching it. So $1 for him doesn't just turn into that, it turns into double that amount, which is awesome. And I think a really interesting thing, Brian, you and I talked

about this. We did the um marshmallow test with our kids early on, right? And well, I didn't find out until after. Oh, you never did? I never did. So, I did the marshmallow test for my kids, you know, where you essentially, you sit them down at a table and you put, we didn't do marshmallows, we did, I think, um, either Skittles or jelly beans or M&M's, some sort of candy. You did the thing where, hey, you put it in front of them, hey guys, I'm going to walk out. If you don't eat this and I come back, uh, I'll give you two jelly beans or two or whatever the candy was. And you know, for my oldest, no problem. She would have sat there for a week 'cause she understood that. My youngest, I didn't get the instructions out before she was chewing, right? Like that was just the way that it went. It's very unbrand for your children. It's unbelievable. And so, what I think is great about kids for parents

you need to recognize very early on when it comes to finances how your kids view money and where their strong suits are and where their weak uh where their weaknesses are. It doesn't sound like Young Money your child's going to have any problem with like deferred gratification and saving for the future and building. So what you probably want to begin teaching them and want to begin talking to them about us hey what's money for hey money is not a goal being a millionaire is awesome that's cool but why why do you want to be a millionaire what do you believe that being a millionaire will do for you and hopefully they begin to recognize and realize at a very early age that money is nothing more than a tool that allows us to do the things that we want to do to focus on the things in life that really matter cuz it sounds like your kid is going to just Crush these saving and accumulation and building and deferred gratification the ingredients to wealth creation your kid has down. So while you want to play into that and you

want to foster that, and you want to encourage that. You also want to recognize, okay, well, having a well-rounded understanding around money is an important thing too. It's why my kids are not incredibly different from your kids' age. That's why we do give safe spend whenever money comes in. I love that they want to save some, and I love that they want to put it away, but I also encourage them, Hey, we also give, and it's okay to spend if there's something that you want. It's okay to spend money on there, and there's an opportunity cost associated. So, I think not just teaching them to save, but teaching them how to be well-rounded with money is a huge thing that you can do to help get them moving in the right direction and started on the right track. Yeah, by the way, kudos to your seven-year-old for realizing the arbitrage situation, is that they could actually expand their allowance by just giving 20% towards saving and investments, and you guys will match it.

dollar for that. That's actually a brilliant, efficient use of money. Here's your next thing as a parent, next milestone to pay attention to, because I think it's important. Do exactly what Bo talked about with the give, save, spend. So, start understanding that money is just a tool and going beyond that. But then the next thing you need to fire up on and to create the super financial mutant that you're creating is understanding the correlation to work ethic. And that's what I would encourage as your seven-year-old gets closer to 14, 15 years of age. Let them go work in fast food or something else, because not only does the value of going to work very powerful, but also just dealing with the general public is a superpower in life as well. When you work and deal with people from all walks of life, good people, bad people, mean people, there's something pretty magical about experiencing that and understanding how human nature works a little bit better. I still, um, I, there's a reason I really

judged my oldest daughter to go work fast food, and I encourage most people to work food service at some point in their life just so they get a little taste of that. I think it will serve you well for years to come.

My 7-Year-Old Wants to Be a Millionaire—UTMA and 20% Savings Enough?

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The Money Guy Show

A Seven-Year-Old's Path to Millionaire Status

A seven-year-old's dollar has the potential to grow to $322 by the time they retire, making early saving and investing crucial.

To become a millionaire, he only needs to save and invest $26 a month, while $52 a month could make him a double millionaire.

The child's strategy of saving 20% of his allowance, with parental matching, effectively doubles the impact of his savings.

Teaching Kids About Money and Delayed Gratification

The speaker conducted a version of the marshmallow test with their kids using candy, revealing different approaches to delayed gratification.

The oldest child excelled at waiting for the reward, while the youngest struggled.

The speaker emphasizes the importance of recognizing each child's financial strengths and weaknesses early on and teaching them that money is a tool to achieve their goals, rather than an end in itself.

Fostering a Well-Rounded Understanding of Money in Kids

Teaching kids about money should include saving, giving, and spending, while also recognizing the opportunity cost.

Encouraging a strong work ethic through part-time jobs can provide valuable life experiences and a better understanding of human nature.

The parent's approach of matching the child's savings and investments is a brilliant way to expand their allowance and teach financial responsibility.

Working in fast food is encouraged for personal growth and life experience.

It provides valuable lessons that can benefit individuals for years.

The author believes that everyone should have a stint in food service at some point in their life.