Teaching Kids Financial Responsibility and Investing Opportunities

Teaching children financial discipline includes giving, saving, and spending in order, as well as matching savings and investing contributions.

### Teaching Kids Financial Responsibility Through Matching and Behavioral Training
* 💰  The process of teaching kids about money starts with instilling the concept of **giving, saving, and spending** in a specific order.
* 🎓  At age 15, children can open a custodial Roth IRA with earned income, with parents providing **dollar-for-dollar matching contributions**.
* 🚗  Making kids pay for **half of their first car** helps them understand the **value of money and work**.
* 🎯  The goal is to create a mindset where kids naturally prioritize **saving and investing** over spending.
* 💳  For teenagers, opening a student credit card and paying it off monthly can help build **credit history** and **financial discipline**.
* 📈  The earlier these financial behaviors are established, the more likely kids are to **carry them into adulthood**.
* 🔗  Additional resources like the "**wealth multiplier tool**" and the book "**Millionaire Mission**" can provide guidance for parents looking to teach their kids about money.

[Music] Hunter's question is up next. Ready for it? Yes, I am. He says, When and how did you start the matching process with your kids? I love the idea and would like to replicate it. So, can you talk a little bit more about your purpose and then the actual how-to regarding that? Before I talk about the matching bow, do you want to talk about something you've done with your kids even before it kicked the strategy of different pots? Yeah, so my kids are at the age right now. You know, my today, today actually this day is my daughter's ninth birthday, which is super, super exciting. So, we've not gotten into the realm of talking about matching or funding custodial Roth or anything doing that. But what my kids have learned, and this is something that we have tried to drill into them from a very early age, is that whenever money comes into our possession, there are three things that we can do with it, and there's an order to which we do them. We give first, we save next, and then we spend after that.

and so I just want them to understand. I want her to know that if she gets a birthday card from an aunt and it has a check in there, I want her mind to immediately connect, okay, I know this money came in. I'm going to give first, and then I'm going to save, and then I'm going to spend, so that I can create that behavior. Now part of that inside of that little saving bucket is, okay, what do I do when I save? And this is where you have some experience actually teaching your kids how to save and how to invest. Well, yeah, I mean, it's part of Bo talked about the muscle memory part of understanding how to get into good financial disciplined behaviors, but I like to also now get the behavioral side. And one of the things I recognize very early on with my oldest daughter, who coincidentally happens to be sitting in the room right now, which is kind of fun, um, in the studio, but um, when she was 15, I still never forget, I did a show.

can probably go find it out there in our archives. Um, on how to get your 15-year-olds to start saving and investing. And as soon as she started babysitting, doing things, um, you know, that earned money, I said, Hey, look, just like your employer. I mean, we're not the ones that came up with this idea because your employer does the same thing. They try to prime the pump of good decision-making and they say, Look, for every dollar you give me, I'm either as an employer going to give you 50 cents on the dollar or dollar for dollar matching. I'm like, Well, we're a generous group around the Preston household, so I do dollar for dollar matching, um, into my daughter's saving and investment accounts, the custodial Roth. Now look, you're limited to the total amount they make of earned income is what you can contribute up to the annual limits. So, but that's okay because back to what Bo was talking about, you're going to have, give, you're going to have, save, and then

you're going to have to spend if you want your children to feel like it's okay to spend. There's nothing wrong with, you know, seeing the fruits of your labor. But for me, it started at 15 in my household. I also did other things with making her pay for half of her first car when she started driving. And then what I loved is that as her work grew, because you do want your children to see the fruits of working, she then worked at Chick-fil-A for a while. And it's kind of fun to see her kind of let this thing keep going even though the siphon and priming the pump has worked. She's still taking advantage of us, and I love that. That's a financial mutant mindset. Because I mean, it was probably within the last two to three weeks she did something for us where she watched her sister while Jennifer and I went on an extended weekend. And I paid her some money for doing that, and she's like, No, no, you

just keep it, but let's fund Up's put it in that Roth account, and I was like, okay, I love it, it's still sticking um, so, so get it in there, get the behavior, that's what you're trying to do, because I think sometimes people think, hey, I'm going to have all these resources, I'm going from a legacy standpoint, I'm going to be able to give my kids money, but if they don't have the behavioral St, you'll find that it's somewhat empty, there's no, no different than a lottery, a windfall winner, you got to get the actual Behavior and the mindset right, so that your children are actually productive with this money, otherwise, I think I worry that they come into this or they find out about find out about it later and they make all those mistakes of consumption and and and all the empty things that I worry about with money versus being responsible and actually letting the money work for them, yeah, two things, I'll just I'll tag on right there, I think even if your kid is is Young

maybe your kids are not quite 15 or 16. They're not doing they. They don't have the earned income. They can't do the custodial Roth. I still think that this mindset works even if you just are matching what they're putting into a savings account. You can still come up with that idea. Hey, I'll pay you chores around the house and whatever you decide. We're going to go to the bank. We're going to deposit to savings. And I'll match whatever you do. I think you can do that. And then what I think is so amazing is that we live in a world where as soon as kids become adults, like once you hit age 18, the entire Financial world is ready to just pounce on them and take advantage of them and have them make poor decisions. I had a dear friend who's also a client reached out to me yesterday. Said hey man, I want. I heard that I can add my oldest daughter as an authorized user on the credit cards and it'll start building.

her credit history. And I said, Yeah, that is true and that's certainly something you can do. But let me tell you what I did that I might recommend. Rather than adding her as an authorized user onto one of your cards, what if you guys went to your local bank or local credit union and asked if they have a student credit card that you can open, right? So you go open a student credit card. It'll be a super low limit. It'll be like a $200 or $500 limit. And you open a credit card in her name with her. And then once a month, she goes out for a meal or she goes out to a movie or whatever, she uses that credit card once a month. And then she pays it off every single month so that she actually gets in the habit not just of being able to use a credit card but actually thinking through, 'Okay, I'm swiping this today. I know that the next 30 days I got to pay it off and I have to go through the process of logging in and paying it off.'

whatever that is I said, I think if you do that, it's going to be so much more valuable to her because not only will she begin building her credit history, she will begin understanding, oh yeah, there's a process. Because odds are, if you add her as an authorized user, she's probably not going to be involved with like paying it off. If you can get her involved in like the paying it off part, I just think that by the time they're out of the house and out on their own, they're likely going to be set up for success there. Another thing, just for the motivation side, I would go to money.com resources, look at the wealth multiplier tool. And then if you're looking for a road map or a foundation for, hey, how do you launch, how do you actually get your kids CU, you hear about the concept Failure to Launch. I think this is a good guide, getting the mindset, getting the math. Go check out Millionaire Mission. It's out available everywhere now and um, and and I think it will help out with filling in those.

blocks of what you're hoping the motivation and mindset of your children will be

When and How Do I Start the Matching Process with My Kids?

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The speaker's strategy for teaching kids about money involves a three-step process: give first, save next, and spend after that.

They aim to instill the behavior of prioritizing giving and saving before spending.

The speaker also emphasizes the importance of teaching kids how to save and invest from a young age to establish good financial habits.

The strategy focuses on creating financial discipline and behavioral understanding in children.

Teaching Teenagers About Saving and Investing

Parents can encourage their 15-year-olds to save and invest by offering dollar-for-dollar matching contributions to their custodial Roth accounts.

This strategy helps the teenagers learn the value of hard work and financial decision-making.

Involving teenagers in earning money and making them contribute to expenses, such as paying for half of their first car, can help instill a strong work ethic and a "financial mutant mindset.

Teaching Children Financial Responsibility

It's important to focus on teaching children the right behaviors and mindset towards money, rather than just relying on leaving them a financial legacy.

Even at a young age, matching their savings or involving them in financial activities can help instill a sense of responsibility.

As children approach adulthood, the financial world is ready to take advantage of them, so it's crucial to equip them with the knowledge to make sound financial decisions.

Building Credit for Your Child: A Financial Strategy

Suggest opening a student credit card with a low limit for the child to use and pay off monthly to build credit history and financial responsibility.

Encouraging the child to be involved in the repayment process can better prepare them for financial independence.

Additional resources such as the wealth multiplier tool and Millionaire Mission can provide a roadmap for teaching financial literacy to children.

Fostering Motivation and a Positive Mindset in Your Children

Encouraging a growth mindset can help children embrace challenges and persist in the face of obstacles.

Praising effort over ability can motivate children to develop a strong work ethic and resilience.

Teaching children to set realistic goals and celebrate small victories can nurture a positive and motivated mindset.