S3E112: How to Teach Kids About Money and Investing at Any Age

Welcome back to Rich Dad Stockcast on your host Deldinian today's episode is about one of the greatest investments you'll ever make. Not a stock, not an option, not even a real estate, but your kids. Now most parents want to leave their children money, but what if the greatest gift isn't money at all? What if it's teaching them how money works so they can create wealth for themselves? And unfortunately, most schools still don't teach investing or cash flow or financial dependents. So today, Rich Dad expert Andy Tanners joining me to discuss how parents can teach their kids about investing at any age and help them develop financial confidence that last really a lifetime. And before we get into it, make sure you head over to stockcastsbonus.com, grab your free investing tools, financial education is one of the greatest gifts you can give your family. Andy, welcome back. Hey, this is, boy, I'm a father first before anything else in my life. You know, father husband, that's a big deal to me. And so this will be really fun to talk about. If you have children or nieces and nephews or young people in your life and you'd like to teach them, this is something I actually do have some experience in extensively. So we've had some really good success in this. So hopefully we can draw out some ideas for folks that will be beneficial then. I'm very excited as someone that has younger kids and getting older. I'm excited to learn from you here. Speaking of experiences, stockcastsbonus.com, some great tools and resources in there for free. What else is in there? Yeah, we have all kinds of resources depending. I mean, you can look at the menu of things. If you're already investor, we have really cool spreadsheets and tools and calculators and trading journals. There's ebooks there that you can download for free. There's webinars you can take to learn more about. We have one real now that I don't remember the title of this, but we show a technique called Clicking Get Paid where you click a mouse and money hits your account and speed a light through a fiber up. Now we're before the stock even moves. Clicking Get Paid is cool. Stuff like that. How to get multiple streams of income off a single stock. How to stack income on top. Yeah, it's just kind of a fun trick to the trade that take more than a podcast to delve into. Podcasts need to be generalized topics and they're not really great training grounds. This can be much more organized and great education, just a better format. If you're serious, the best thing about is we don't charge for those things. It's a great way for people to get to know us and see if they want to get more serious than some of our pay programs later. Start with the free stuff for sure. That only makes sense. When it's free and you're interested and you can help get more money, that's a good deal. So hop over there and that's why we offer it because it's a great, great deal. That's fantastic. It's a fantastic deal. Now, parenting, there's so much to touch here and I'm very grateful for this. They're to set up kind of this first question last last week I was teaching in a live seminar. At the very end, I was speaking with one of the guys and it was an old pastor actually brought five of his grandkids and he was apologetic. He said, "I'm so sorry. I couldn't find a babysitter. I had to bring them here." I said, "I love it. I love that they're here. I love that they're at least getting something through osmosis." My question to you is at what age should parents start teaching investing? When they can talk, we started as soon as they understood language. Even if you back up further, not everyone should have kids. There's no no bill. I know a lot of people that don't want to have kids and more power to you because if you don't want to have it, I'll tell you the difference between me and Robert Kiyosaki. Robert Kiyosaki is ruthless when it comes to teachers in school and it makes them crazy to see the teachers. In my estimation, there's probably some really bad teachers and some probably really good teachers. As a whole, he goes after those teachers in school. Me, man, I go after a fricking parents. When some people look at society's problems, they look at school as a big problem. I'm not saying that it isn't part of the problem. When I look at society, I'm like, where the hell are these parents? These people have no business having kids because they're not stewards. They don't take it serious. They outsource. They're absentee. They don't know how to parent. They don't care about parenting. If you don't have kids, don't have them. If you don't want them, you shouldn't have them. If you want them, look at how societies put together. For 200,000 years, humans have been around now. They think the evolutionary biologists debate on it. I don't know. Even if it was Adam and Eve, bang. It started there 6,000 years ago. Whatever happened, the family unit is how things work. Different things happen in societies at different levels. The best place to learn something culture is more powerful than policy and culture is huge. That's how people learn how to, you want it with mom and dad and learn how to stab a fish with a spear and how to cook it. The apprenticeship and the journeyman starts with mom and dad showing the kids how to do stuff. The family unit and the breakdown of that, society, there's a lot of crappy parents out there. There's some really awful ones. As Robert will go off on schoolteachers, I'll say schoolteachers, who the hell said it's their job? My job. I will not relinquish my opportunity and let a schoolteacher, schoolteacher is going to help my kids, my kids have had great ones. Life changed. Especially their coaches have been life changing. Even then, I will not relinquish my right. Not just my duty, but my right to be the teacher of the most importantly. I'll let those smart guys teach a math. They can teach a math. But goodness and resilience and toughness and hard work and communication and love and unselfishness and all the things that matter the most, that's dad's job. It's not the college freaking professor's job. When you start bringing this up about teaching your kids about money, that is the ideal person of anyone on planet earth to teach kids about money is mom and dad. That goes for darn near anything that's worth while that you be serious about being a teacher and a parent. There's my ran on that and we get that out of the way. We can answer the question now. When you start, when they can walk and talk. That's when we started. I love that. Now, you got a couple of boys, amazing young men. They're going on to doing great things right now as we speak. Obviously, it's the fruits by their fruits. You shall know them. Now, backing the train up a little bit when they were younger and they're starting to learn what were some of the money lessons they learned early on? Was it assets versus liabilities? Was it cash flow? What did you start instilling it into the early age? I will be indebted to all the rich dad family forever because my kids grew up rich dad. There's probably not another set of kids on planet earth that grew up more rich dad than my kids because Robert would invite them. Kim would, I just fabulous. We would travel all over the world. My son is eight years old, standing on a stage in Argentina with a flip chart and a mic teaching financial education at age eight on Zach started young too. As soon as they could speak, we started to. I'll give you a chronology. The first thing we started with was with a lemonade stand when they were about four. We made it great. Overdid it, lied to overdo everything. These guys would throw themselves in a front of a moving bus to Stella 50 St. Glass lemonade. The lesson was very simple. That's how money comes. Having a product and service and you taught inequality and capitalism is so important because it's inequality. Inequality is so much better than equality and see I say that and someone will take that snippet right there and then put it out there and someone is going in the comments right now. Someone will go to that and they'll say but let me explain what this is. What inequality is in capitalism. In order for someone to part with fifty cents, you've got to give more than you take, or they won't part with it. If they look at that lemonade and they don't think the lemonade is worth more, has to be in equal, has to be worth more than money in their pocket. An iPhone has to be worth more than the thousand bucks or whatever it costs to get one. So the reason people make a trade with cash for product is inequality. The product has to have a greater, on the scale, right, the thing that bounces thing. The value of that product has to be heavier and the cash has to be lighter. So you receive more than you gave. And the entrepreneur has to give more than he receives. So the first lesson is you need to give more than you receive. You need to give out more value than you take in if you're going to be successful. That seems weird because how can that work? Well you make it up in volume with some, our Brook Minister Fuller said, "The more people that I serve, the more effective I become. And if I can serve the massive, I can own a stock like Apple. I'm making that inequality massive because now I'm selling iPhones all over the world, 300 million iPads. Boom. Off it goes." And that's how it works. So that was the first lesson was a little emanate stand to look, boys. You want to make money. You better give more than you take in this life. You have to give more than you take. Steve Jobs gave more to the world than he took. Jeff Bezos, Stephanie Kelton is nutty and she has her little book, The Defts of Myth and her nice little frickin' fantasy. She goes after Jeff Bezos and how many swimming pools do you need? That just shows. He gave a lot more to the world than he took. Warren Buffett gave more to the world than he took. And even what he had, he's given that out again. So it's always unequal with the great capitalist. They're always giving more than they take. That's why they are where they are. So that emanates down with that first lesson up. You must give more than you take if you want to find success. It's got to be unequal, got to be unequal, got to give more than you take. It's got to be unequal. You won't make it. Well, let's get into the second lesson from your boys here in just a second. Let's go to Quick Break here. Teaching kids about investing isn't about turning them into stock analysts. It's about teaching them how money works. So when we come back and he's going to share some practical ways, parents can introduce the investing and encourage good financial habits and help their kids build confidence around money. And don't forget, go to stockcatsiponus.com, download your free investing resources. There is a, this is a great place for families to continue to learn together. It's great stuff there. Stick around. We'll be right back. So far, it's been great. I needed a source where I could really enrich my education through stocks. I didn't really have an avenue for it. And it's helped me a lot to simplicity has really gotten me on the track to where I enjoy the learning as well as it's really solidifying in my mind. And like, they're not just trying to sell you something. They really care about the people that are in the course. And they really do care about you and your personal goals and what you want to do is to help you and your family and whatever your goals are in life through that. So it's really been great. Welcome back to Rich Dad's stockcast. Okay. But I've seen pictures of the lemonade stand. It was absolutely amazing and I don't think you ever did it. I think it was amazing. We over did it. You said a standard that's a lot of, that's hard for any other lemonade stand to be. Now what's the next step? Okay. So Warren Buffett has a lot of quotes and people quote him all the time. You know, be fearful when people agree to be fearful, fearful, you know, diversification is an answer to ignorance, all these Buffett quotes, right? You know, if you have IQ points, sell them because temperament's more important than IQ, all that stuff. My favorite Warren Buffett quote is the two pronged quote. There's really two things you say, but there's a hidden gem in it, people miss. And I'll probably destroy the quote even though it's my favorite one because it's long. But here it goes. The ultimate irony of the investment business is that an obstetrician will deliver babies better than husband, wife. If you take Dennis as a whole, they will fill teeth or remove teeth better than the patients tried to do it themselves. But in the investment world, someone who believes in American business and will seek out the lowest way to participate in business and do it consistently will achieve results that exceed those of professional investors or of the Wall Street professionals as a group. It's the only thing that I can think of where the average person can outdo Wall Street. That's the essence of the quote, right? Now most people think that is a declaration that you can do better yourself than Wall Street can. And there's a gem in there that I think people miss and it is, it is why that is my favorite buffer quote. Now listen when you say it goes, someone who believes in American business, now list this, this where people miss it. And we'll seek out the lowest way to participate in business and be consistent. What does it mean to seek out the lowest way to participate in a business? You hear that quote and it's right there word for that part of it is word for word. What does it mean to seek out the lowest way to participate in business? Because if you do that consistently, you'll outperform Wall Street. That's a great question, right? What does he mean when he says that? Well, I'll tell you what he means. Stock ownership is the lowest way to participate. So give me a stock I own. We mentioned Apple, okay, great. I don't work there. I own shares. I don't do the marketing. I don't build the iPhones. I don't do the R&D. I don't do the accounting. I don't drive the trucks. I don't run the stores. I don't do the sales. I collect a dividend. That's my level of participation. I collect profit. So the second lesson is we taught that work and value brings money in lemonade stand. And they would go out there and guess where when we would do it the best, we'd work when everyone else was playing. For example, the biggest day of the year for lemonade stand, year in and year out, they knew they would make hundreds and hundreds of dollars on the 4th of July. If you were willing to work, when everyone else was not, then you were going to make a lot of money. So they had this work ethic idea. I said, now what if we could buy an asset and not work, but other people did and the value still came? What if we decided to participate at the lowest possible level where we don't do any work now? We simply collect to share the profits. And they're like, what? We don't have to go and do the work. I go, nope. I go pick a business that you wish you were the owner of. My younger son, and he didn't understand what wokeness was, but I let him do it anyway, is he goes, and I don't mean awokeness in the sense that we shouldn't appreciate inequalities. I'm talking about the nutty kind that is like crazy and he buys Disney. All right, you want to buy it, buy it. So you go to Disneyland, he's like, look at these lines. This is awesome. You know, we must be making lots of money. Oh yeah, you are. My other son shows McDonald's, so those are the first two stocks they own, so they went from lemonade stand to shareholders and they learned what it meant. Now they get money being made by doing nothing, but they're still offering value because they own the business so they get off of the value is still in inequality. People need to think that that Disneyland experience is worth more than the $500 in their pocket because it's a hundred bucks just to buy lunch in that place, right? They have to feel that's worth more than the money. So they still get to participate in that balance, but they don't, they participated the lowest level which is ownership. So the second lesson was transitioning from working in a business in the S quadrant where they were sole proprietors, right? They were never employees, we didn't do that quadrant. We just went from self employed to investor where now you took your lemonade money and you took that lemonade money and you switched to the other quadrant by buying a company. Now the next step really important was they didn't know how to do math. And this is where I think Robert Kiyosaki because they do understand cash flow and you don't need to know any math because all you need to know is arrows. And if you look in the book, Ristad Pordad, there's no math in there. It's arrows. So they learned how cash flow worked conceptually without having to know any amounts. and we would get out and drew the arrows. So before they even knew how to count money or do any math, they understood directions of cash flow patterns and where cash flow to what a good one looked like, what a lousy one looked like. After that, we started planning a cash flow where we'd team up. Marcy would go with David, I would go with Zach, and mom and dad did the math, but the kids made the decisions and they made mistakes and learn and learn. So by the time David was eight years old, Robert could call him up on stage and he'd look at a deal that was just diagrammed, fairly medium level deal, several refinances and adding new buildings and all the stuff and several rounds of financing and he got up there and he goes, well, they didn't start out with an infant return but they got there eventually and he walked us through it. Walked the whole town crowd in Argentina through it at eight years old, why? Not because he was brilliant. He's just like any other kid. My kids aren't, you know, look at their genetics for crying out loud. Look at their parents, you're like, no, no, no. And that must have worked with the genetics department. But the level of the education was brought down to them. It wasn't that they went up and were brilliant, you know, there's these Wiz kids and that's what the papers wanted to make him into. Like, they're Wiz kids, no, they're not. They're down here with everybody else's kid but the education was brought down to them instead of accepting their intellectual rise to that. The simplification of the education. So that happens with games and lemonade stands and examples with mom and dad and, you know, he's probably, I don't know, like, I don't, David probably won't even talk to him. The Zach was watching Disney Robin Hood, the Fox, the, you know, Robin Hood's a Fox and there's all these animals and Prince John is like a tiger or something. But we're on our way to go to Ruth Chris and then he goes, Dad, where are we going to go? We're going to meet with a tax advisor. He goes, what's a tax advisor? Well, he's some people call him a accountant. So he goes, what's an accountant? I go, well, the accountant's the guy that makes it. So we don't pay too much taxes. He goes like Robin Hood and I go, yeah, something like that. Then later we're watching Obama was on the TV he goes, who's that, I go, that's Prince John. But the fact of the matter is, is we involve them and all these things and we involve them. Then when they were a little bit old or probably 10, 12 years old, we bought this syndication, they had had their own money. And we said, let's take some of your money. You're not allowed to do it 'cause you're not an incredibly investor, but we'll sneak you in with mom and dad. I'll take a little bit of your money, combine it with mom and dad's big money and then you can be part of this syndication. So now they're interested in their properties that they own, the stocks that they own. And then when they got to the eighth grade and they finished eighth grade, that got their first. It was COVID year in 2020. And I said, we're not burning a basketball year 'cause we're not gonna play basketball games or not burning your freshmen. We're not going to ninth grade, not playing hoop, that's bogus. So I said, why don't you do homeschool with dad and mom? We learned real estate, taxes, stocks, options, business. And we studied those five topics at home one-on-one for a year. And by the time he was, and my son is sold options and had cash flow ever since. Well two years later when David hits, he goes, hey, there's no COVID, but I wanna do it too. So we homeschooled them both and they both know how to cash flow the stock market through options selling and also more elaborate things. And they finished the year. So yeah, I'm pretty serious about it. And there's a reason you wanna teach your kids about money. That way when they get older, they don't move back in with you. (laughing) It's a fair point right there. It's a fair point. So great kids, I love 'em, I'm biased. But they know more, it was so funny when he got in the high school, my son took the accounting class. And we go to parent-teacher college. It's this sweet teacher, she was so nice. She goes, look, I don't know if your son's interested in accounting, but he absolutely needs to be a accountant. He says, she goes, I've never seen anyone that just has a natural vision of how a cash flow in accounting and balance sheets and income savings. She goes, I've teached a lot of time. He really should be, he's gifted. He just understands accounting really well. And I just, we didn't say anything. Well that's nice. I'm not saying, that's very good. She goes, no, really, I mean, you should see this. He gets it. Well, it's because that's my responsibility, not hers, to teach her about money. And besides, we have Tom Willwright. I mean, if Tom Willwright, my kids love Tom. Tom is like an uncle to my kids. And he's why they get good grades, not me. And my grades were horrible, but Tom had good grades, so they want to be like Tom. And when you're taxed advisors, Tom Willwright, and he's willing to talk shop with your kids, they're gonna be pretty good too. And Kenny, and Than Merrill, and Garrett Sutton, and the Lanans, and Blair Singer, and Kim Keyes, all these people, just it was unfair advantage. - I love that final question for you. And if parents want to raise financially confident kids, what's the first step that they should take for themselves? Cash flow game, cash flow game, hands down. Cash flow game, nothing else is close. Get the cash flow game. I don't know how much it costs, it doesn't matter. Because the cash flow game is about 10% of the cash flow games on the board, moving pieces around, landing on stuff, drawing cards. That's 10% of the game. 90% of the game is understanding the financial statement. And there's three parts to it. There's an income statement of balance sheet and the statement of cash flows. Understanding that, it's monopoly isn't even close. That's played on the board, right? You have a little paper money. This is played on a financial statement which helps people understand cash flow. And I have had, probably the guy that's done the most cash flow games in history is Darren Weeks. He's probably beat me at that. I'm number two, I'm pretty confident and I'm probably number two in the guy that's conducted more seminars and cash flow games next to Darren. And I've had people that are PhDs and I can't freaking figure that out. 'Cause their brains are so complex that you put some simplen from, they're stupified. I've had people that are accountants that can't play that game because of how school teaches accounting is supposed to have well-builder-see accounting. And so that by far, by freaking a mile, you want financially smart kids, you go buy that cash flow game and just go get it. Go to Rich Dad's site or whatever and I don't make any money when you go to Rich Dad's site and do that, I don't care. But that is the answer. By freaking a mile cash flow game, buy a mile. - I love that. Well, listen, your children may not remember every birthday present you ever gave them, but they'll remember the lessons that gave them confidence and opportunity and financial independence. When you teach a child how to invest, you're not just helping them to build wealth, you're helping them to build a future. And again, huge thank you to Andy Tanner for sharing these practical ideas on raising the next generation of investors. And if you want to continue your financial education, head over to stockcassponents.com right now. You'll find free tools and resources designed to help every investor of every age to build confidence and financial intelligence. And if you enjoyed today's episode, make sure you like it, subscribe, leave us a review. Share this episode with a parent or a grandparent or a teacher or a mentor who wants to prepare the next generation for financial success. Thanks for listening to Rich Dad's stockcass on your host, Delany. Stay smart, stay invested. And we'll see you next time. Thanks, Del. - This podcast is the presentation of Rich Dad Media Network.