Money Meets Medicine Podcast

MMM 49: How to Teach Your Kid About Money

Wealth has the possibility to be generational. You can pass it to your kids and they can pass it on to their kids. But did you know, that most families lose 90% of their wealth by just the third generation? That’s not a very long time!

That’s why today’s episode is so important. If you pass your money along to your kids but you don’t tell them how they should handle it, it’s most likely going to go up in flames. Now is the time for you to learn everything that you need to teach your kids about money.

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Teaching your kids the right way to handle your money will help them not to squander it away. You’re kids can be good stewards of what they’ve been given and pass it on to bless their children and their children’s children and generations beyond.

Today You’ll Learn

  • How to teach your kids what they need to know about money!
  • Why so many kids lose their parents money.
  • How fun and games can help kids learn about finances.
  • The right ages to teach kids what they need to know.
  • And more!

Episode Resources

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Jimmy Turner 0:04
Of all wealthy families, 90% of them lose their wealth by the third generation 90%. There are many reasons for this, but one of the most important is that there are many parents who struggled to teach their kids about money. So if you have kids or you ever plan to keep listening to learn about five ways to teach your kids about money. Welcome to the money meets medicine podcast where we talk about the personal finance topics you wish you learned in medical school, army host Jimmy Turner. And here's your co host, who was a money nerd from such a young age that he started saving and investing money when he was five years old. Ryan

Ryan Inman 0:39
Inman did us like randomly picked that. That age? Totally. I love it. I mean, I wish I was that cool. Like are that big of a nerd? I don't know. How do you want to phrase it? But I was the the nerdy kid that basically in high school like age 13 onward, I begged my mom to open up a TD Ameritrade account, so I can invest. So love it. Yeah. I mean, it's it's been ingrained in me for a long time just to be a nerd. So it works out. It works out pretty well. But yeah, not not since five. That'd be awesome. Yeah, like, hold on.

Jimmy Turner 1:14
Well, I'm kind of curious. Just before we before we jump in. Have you started teaching your kids about money? And how you for the audience's?

Ryan Inman 1:21
Oh, yeah, no. So there's six and four now, but I started teaching them right when like, why it was like for my daughter was two. She didn't really get much at that point. But why it at about four i think is the age you can really start talking money and relating things to money and how things work. You I started with numbers and then try to relate money numbers. Okay, collections. Yeah, about four is when when I think you can start.

Jimmy Turner 1:49
Okay, so my kids are 10, seven, and four. So have some similarity there at the back end. But all right, well, we'll jump into it in a second. Before we do that, I don't want to skip over an important thing. So shopping for Disability Insurance is super complicated. And if you're wondering if you're getting the best prices and discounts, and make the process even more overwhelming trying to do that this is where pattern can help. Recently, Principal financial, recently, Principal financial announced that their unisex discount is being eliminated at the end of 2020. So this means that the best pricing for most female physicians, most women physicians will disappear December 31st. Women physicians need to request their free quotes today to potentially save 50% or more, you could be confident you have the right policy at the best price possible when you request disability insurance quotes with pattern at the physician philosopher.com slash pattern insurance. So seriously, if you're rolling physician, check this out. If you don't have Disability Insurance before January starts with you'll miss out on a great opportunity. All right, Ryan. So we're talking about money. And kids? Yeah, this is one of my favorite conversations to have, like, I actually have this conversation with people all the time. And usually offline, like not on not on the blog, necessarily, but like friends and stuff who asked about this. And I think it's such a cool topic of conversation, because there's so many things kids can learn from money. Like, it's not just about the money, like this helps with so many things. And so I'm excited to really dive into it and talk about this. And, and really get going. And so I was kind of curious and kind of pick your brain there. So you know, four years old is kind of the number that you started. And, you know, I'll say that. For us. I think it was more around five or six. But the point being that it was actually pretty young. I mean, you know, four to six years old, those are those kids are pretty young, but they're old enough to get it. And now you're not going to you know, have any success, or I didn't at least maybe your kids are prodigies, explaining, like what compound interest is or like what index funds are when your kids are like four or five or six years old? No, that's

Ryan Inman 3:44
not the point, though. accurate, that's not really the numbers back to certain things and ways that they can so your wife is a teacher could probably tell us a little bit more, unlike when they're learning functions, like really kind of kick in. I mean, I know they're a sponge, and they're learning language and all sorts of stuff. You know, early on, but from like a financial standpoint, purely, I would say about four was when both my kids really snow I started at two with Ruby, right? This is like I'm gonna see what we can do. But she was mostly the patient at the time. I think I told you the story where I walk in the room and why it's got the little plastic forceps and he's like strangling his sister. And he's like pinching her belly. What are you doing? It's like, I'm taking out her appendix. And she's like, over here waving. And I'm like in so I got to save so much for school because they're both probably going to be doctors. I mean, a lot of trouble. But why it has a really big interest in math and numbers. So we make it a game we add basically when we're driving to school when we're having lunch or having dinner together. He wants me to ask him math problems. And Ruby's kind of picked up on that too. So when one kid gets it, even if she's not super interested, what she's definitely not as interested as he is. We're talking math and numbers. Then when we can relate it to something that is of interest to them. So a great example this year, with COVID, we didn't really get to have Halloween, like the normal sense. So we made a big scavenger hunt. And they still got to go through and find all this candy. And we gave them a certain number of random numbers, like 87 pieces each or something crazy. And so this is what you can do. And then once you hit this number, like then, obviously let your sister go find more. But then we came in and I showed him like daddy tax, right? relate all the things out. I said, Okay, these are daddy's favorite candies. So here's 10% that goes away. And he's like, 10%. Like, yeah, it's daddy tax. So like, when you work? Uncle Sam, the government wants to have a piece of what you do. He's like, really? Like, yeah, it doesn't sound very fun, right. But that's how they pay for roads and for your school. And for things like that, like, I don't pay for your school. The government technically subsidize pays for your school because I pay taxes, which is the same thing I'm doing to you right now you live in my house. So in order to do that, you have to pay me and candy. Oh, okay. Like he got it instantly. It was like as soon as like related to candy, which he actually doesn't really like candy. But the connection was made. So if you can relate things, working with math and numbers, and then related to something that they like, like, iPad time, maybe, hey, you can work a certain amount of chores, opening unloading the dishwasher, whatever, you earn five minutes of time, what's five plus five plus five? Well, 15, great. That's how many minutes of iPad time you get, because you did these three chores, it's still not money, but it's getting more familiar with math, which then relates it back to something that they like. And that's how you kind of really start bringing the principles in at a really young age.

Jimmy Turner 6:44
Yeah, and so I just want to point out a couple of things there. One, you made learning fun, and this is one of the my favorite reasons to discuss this is one of the reasons why it is one of my favorite topics is that there are so many life lessons to learn from money and and as with anything that you're ever going to hear coming out of my mouth, it's not about the money. Like it's about all the lessons they can learn from that. And, and the tools that you can, you know, teach them to use through money. Like it's, it's everything else, but it's so important. So like, you just talked about taxes, right? And, and the importance of growing up and understanding what tax is and how your school gets paid for and how roads get built, how parks get built, and how public, you know, other public things you get to enjoy are there. And so like, it's super fun. And the second thing I'll mention is the timing of it. So I think it's cool. And I think it's really perceptive of you as a dad, that you noticed when they started to be interested in this stuff. So why it started diving into the math, you know, and for me, when grace got to about the age of five or six, she started asking me about, about businesses, like how do businesses exist? Like how to, you know, like, how does that how does that play stay open? Or, you know, how do we have a house? How do we make payments for our house? Like start asking just all sorts of questions about because she sees like the exchange of credit cards, like you know, like putting them in machines and paying for stuff, and then you get to take it home. So she started asking about all that stuff like, like what happens when you put the credit card in that machine? Like, why do we get to take the thing after you do that. And so, nowadays, when you don't see like actual cash being transferred, like it's a very abstract concept. So like, if you're not careful about it, all the kid sees is like, Oh, you put a credit card in a machine, he get what you want. Like, that's not the lesson you want your kids learn. So it was it was about around the age of five or six that she started asking those questions. And so I didn't really force it, until then, you know, and then and then once she got interested, we we set up a system and I think this is going to be fun for us to discuss because we may have differing opinions on this, which I always think is great, I think multiple things is good. You may also be on the same side, I have no idea. But we you know it is for us what we do is we pay our kids $1 per year they are old each week for jobs. So like you know, Grace is 10 so we would give grace or about to be done. So we would give Grace $10 per week for her to do her jobs, you know, and that might involve doing what traditionally called chores you know, so dishes or other things around the house you know and to help the family as a family you know, we work together to accomplish our goals and we pair $10 and then when she gets paid her $10

Unknown Speaker 9:14
she takes

Jimmy Turner 9:16
$1 goes to giving you know in our case he goes to our church except for the last 10 months since we haven't been in church because of COVID and then you know the other first second dollar I will say the second or third dollar go to savings and then she gets to keep seven or $8 and that is her way of knowing okay gosh, you say first you give first and then you spend what's left and and that teaches so many so many cool things because of the structure of that a that you're supposed to say first and then spend second that's an important lesson she's learning at a young age. And the second thing which I think is really cool that will actually maybe get people that are listening excited, is when we go to the store. like everybody's had that moment where your kid like throws himself on the on the aisle and like starts having a temper tantrum because they can't have a toy or whatever, like they start screaming. And like I've seen parents handle this in all sorts of different ways and like, and Lord knows I'm not a perfect parent. But this has made it a little bit easier because when we give grace money, and she goes and sees her lol dolls or glamper, or whatever she's into, she loves lol dolls these days. How much they cost grade? Oh, it's got it's $15. Okay, do you have $15? No, I have $8 because that's how much I got paid this week. Okay, so how many weeks you're gonna have to save up to get that like, Oh, I guess off to say what for two weeks to get the 16 bucks is to buy the $15 toy. And it immediately because of that, just to me, it just makes logical sense shuts the conversation down, I don't have to like deal with my daughter whining or like her not understanding like she very much understands if you do not have money for something to buy, it means you can't afford it and you don't get it. And so my daughter now very much understands. If I want something that's just a random spur of the moment toy, I have to save up for a few weeks to get it. And it deals with entitlement. It deals with whining it deals with I mean, so much good has come from the fact that my daughter now understands the principle that you have to put in work, to generate money to then have the things that you want after you save for them. And like I can't tell you the number of lessons that comes from that, oh, there's

Ryan Inman 11:16
so many lessons. And the thing is, is if you take away from the very top, like highest level of what you're teaching, is you're giving them money. So they can actually mess around with it. make mistakes when it's $15 and not 15,000 or 150,000. Like you're you're teaching them how to use money early, which is a huge thing and being able to save and earn and obviously all that good stuff, my son has this piggy bank and I sent it to you a while back, I don't know if he ever ended up getting it for the kids or not. But it basically for those listening trying to picture this, I'm going to be probably really bad at describing it. But it's essentially three little slot piggy bank. And one side is for like basically giving one side is for savings. And one side is for spending. So anytime my kids earn something, they basically need to put something into each one. Now my son is is understood that if well, he likes the saving one. And he kind of gets the spending one and he'll he'll kind of dabble in it. But if he puts it in the giving one, then he can turn around and give it to a sister. So then it turns out I'm like, Oh, one more, we got to give it to other people. And he's like, but sisters, other people. We're, we're working on that concept. That's cool. Yeah, I love it so much. But the piece where you're talking about what the concept of credit cards, you put the credit card in, you get this object out, they'd see that I mean even at for my daughter understands these these concepts. I think we're gonna have a really big issue as a society with basically people that are in their mid to late 30s and older that are having kids right now, or excuse me and younger and having kids right now. Because we're going to Apple Pay and Google pay and you move your phone to the thing and it does it you walk by and it pays something like it's crazy how convenient things are getting. And if we're training our kids, that money is just this convenient thing. It's just a tool, you just throw it here and it's done and disregarded and treated like it's trash, then we're going to have a lot of issues from a spending standpoint with our kids, if they never learn it. So as much as I hate cash, and I don't keep cash. I mean, my wallet is like super tiny. I'm showing it to Jimmy here because it's like super tight. It's like for credit. It's three credit cards in a driver's license. It's like literally, Jimmy's got like, they want have probably bought a cash in their doctor. Now.

Jimmy Turner 13:41
It's like a stands a wall without money. Yeah,

Ryan Inman 13:43
love it. So the idea of me going to the bank or to the ATM and getting cash is like painful. I really don't like it. But I realized that if I don't do this and teach my kids with actual dollars, I'm really doing them a big disservice. The game of Monopoly, like it sounds silly, but like I want to like create monopoly, but remove all the fake money and put real money down and like play with my kids with real money right now they had they were given by the, the neighbor as like an IT WAS why its actual birthday gift was medical monopoly. It's like super old. It's actually a really crappy game. Like, from a medical standpoint, my wife, let me know. But the idea of it is really interesting. You have to get patients and then you charge the patients and you have different illnesses and different things in pharmacies and drugstores. And my kids love playing it. And they're just tossing the money around. And it's like, I know, they're not learning the concept of this is money, right to do this, but they're at least earning learning the other concepts around it and then later on, I'm gonna have to come back and tie in how that is actual money to then buy these things that then in turn make you money. But monopoly should be like everyone's favorite game for a kid because that will get them to learn a lot of life's lessons. And I feel like if we use real money in it Now I'm not saying go get like $10,000 and replace all the money in theirs with with actual, like real money but maybe dumb it down by a degree of 10 I think that as soon as my kids probably when Ruby's like six or seven, I'll introduce that game and at least start to teach them about how you buy things things can earn rent and revenue and using real money to do Yeah,

Jimmy Turner 15:26
well what Wesley and grace and I, so my seven year old about to be 10 year old nine definitely monopoly and, and have fun with that. And I think that in and of itself may not be super helpful other than the idea of like rent and then building properties and then that getting you more revenue and more cash flow and, and,

Ryan Inman 15:45
like play the game, you have to then turn around and explain the game and like why you're putting these houses and why you add more houses. And then why you build an exchange and like level up to a hotel, you get through how that works. If you just play the game to play the game, I mean, just like operation, you play the old school game, right? I mean, fine motor skills, great. But if you actually sit there and like my wife didn't explain, like what each of these body parts are, and what they do, and the functions, like the kids get that now my daughter's favorite book at a four year old is literally the human body book that they bought with all these crazy. I mean, it's kind of disgusting, but she loves it. And that's that's her reading book at night, we read like a body part at night.

Jimmy Turner 16:26
But I was gonna follow up with that is that I think that monopoly can be helpful if you're tying this in with the importance of real cash, like you were saying, and, you know, and, and I am careful about mentioning that right now, just because there is a pandemic and you know, handling physical cash, like I don't know, if that's a good or a bad idea at the moment. But generally speaking, you know, I think that's the best way to teach kids about money. And, and it's interesting, because, you know, something that we've talked about and kind of hit out a little bit, and this is, you know, maybe a more controversial topic, and I have the opportunity to offend a bunch of people right now. So can't pass that up. You know, as the the idea that job versus an allowance. And, you know, for us, we've always treated things like jobs, because we want our kids to know that when you put in hard work that you get paid, and then you can use that money to save to give and to spend. And so we've never in our house called something and allowance. And the reason why is because we don't like the the credit card phenomenon is a problem that's bad enough in and of itself, where we've just separated money from work, where it's just like this plastic card or metal card, you insert, it just magically produces money that you get, you get to buy stuff with. And so there's already multiple levels of separation between the idea of work getting a paycheck that goes into a bank account that gets spent on a plastic card, and is electronic transfer funds from your bank to your credit card, like all of that is just so abstract for a kid. But when you make it very real, and you say I'm going to pay you for a job, and the beautiful thing about that, and maybe one of the biggest reasons that I've done that is that we've done that is that it's turned my kids, and I think this is awesome into little entrepreneurs. So my kid will come up to me and they'll be like, like in the glamper example, or you know, Grace, like, No, I have $8 it cost 15 like, Alright, Grace, well, how much money you need, she's like, I need seven bucks. All right. She's like, Dad, I got a proposition for you.

Unknown Speaker 18:22
Or, like, what's that

Jimmy Turner 18:25
she's like, I will go lay pine needles in the backyard. Because I know that we need to, we need to put straw down, you know, not pine needles with straw, you know, down in the bedding for the for the flowers and stuff. And so I will go and do that for $10. And I'd be like, I'll pay you five. And she's like, seven, I'm like, deal. You know, it's like it teaches her how to negotiate it teaches her how to be a little entrepreneur and to to bring value into the world provide a service that someone needs to get paid for that and then to go get what you are saving up your money for. And so I think that, like the idea of it being a job, and having entrepreneurial mindsets like I didn't become an entrepreneur until I was in my mid 30s. And the skill set that I've learned from running a business has been able to be I've been able to apply that over so many other areas of my life that like I don't know what my kids are going to become like I don't know, if they're going to be you know, doctors, lawyers, teachers, if they're going to you know, work at a restaurant like a beautician electrician, I have no idea what they're going to do. But I do know that every single one of my children will be entrepreneurs, they will be able to understand business, they'll be able to understand the idea of owning your own and the benefits of that. And and because we've always called it a job, we're gonna pay for this job. I feel like that has naturally taken place. It's been a very natural way of thinking for them. I didn't even have to teach her that.

Ryan Inman 19:47
Yeah, so it's interesting to hear you say I want to remind me of a story. My son I was getting to sleep, we read a book, and we were going in I was just trying to get him to go to bed and he sits up and he says he Dad when I get as old as you, will you work for me? And I said, Well, I work for you. Yes. Yeah. And so what would we do? Because I don't care where you work for me. I said, Sure, buddy, like, absolutely will work for you. Like he's already getting like at six now maybe he doesn't know the true meaning of that and what that kind of entails. But I feel like he does because we let him select the jobs that he wants to do. You know, we can say, hey, you can do this or this. Both are needed. Which one do you like more? You know, and we don't really give allowance. It's it's more of just still trying to build those. The the ideas are the foundation right now. But when we look at things that he wants to buy, that's when we come back and sometimes, you know, for, like uncle Nick, who's a physician, it's Oh, by the way, this is like such a funny story. So don't go Nick. You know that he's a doctor like mommy he has no he's not a doctor. You went to residency with mommy, they did fellowship all this stuff together. And he's like, No, he's not. Only mommies can be doctors.

Unknown Speaker 21:02
I love it. Love it.

Ryan Inman 21:03
I love it so much. Yes, keep that idea, son. I love that. So uncle Nick is apparently not a doctor, Uncle Nick thought that was very funny. But don't go Nick even $10 for his birthday. So he basically had to separate it all out. And then he said, You know, I want to buy this this thing on Amazon. And I'm like, catching more and more of this, like on Amazon on Amazon, like, and now my daughter's like, hey, look in Amazon. I'm like, oh, man, the branding is so crazy with, you know, the logo. It's like how the golden arches are like, the most, you know, recognizable logo in the world. Like, it's pick up on that stuff, super young. And now a pandemic. And things are coming and ordering a lot of stuff on Amazon because we don't go out and buy things out in the store. Although I tell Taylor, where your scrubs when you go to the store because no one will actually talk to you or get near you. That's totally true. It's like just still wear a mask. But but it's just you got to be really, really careful. Because even at a super young age, the kids understand male person, that box, that logo, Amazon, I buy everything on Amazon Amazon's on the computer, they want to get on the computer and they want to look at Amazon. It's that powerful and impactful even at four. And we're still very careful. We limit screen time, screen time has been a lot worse during the pandemic, but like they had very little screen time. But even that they they get in so Ruby, or why it will want something and immediately it's like, well, I can go Can you go on Amazon open your phone? It's this one right here. They show me like, even if they don't we've never done that before they knew the logo, like so the the piece I'm trying to bring up here is the branding is real. The marketing isn't even existed, we were able to select our own shows and not have ads. Which by the way, was another funny conversation when I was like, Hey, you know, when mommy and daddy were this age, like, you turn on the TV news watched whatever was there? What? Like, yeah, we didn't get to select what we want. What do you mean? Like pick things on demand? I can watch a movie. But we had to put in a VHS tape. And what's that? Like? And I brought up a wall? That's huge, I guess. Oh, funny. Yeah. But I was wanting to say like, just Everyone, be careful with your kids in the messaging and the signals you're giving even the ones that you don't think are there because the branding is really powerful. And if you're letting them see this at an early age and not explaining it, you're doing a lot of harm to them.

Jimmy Turner 23:30
Yeah, we're at our in laws the other day and Anna Ruth, our youngest she a commercial came on, because it was just old school TV. And she's like, Daddy, where's my show? I was like, and she's like, Where's my show? There's something else on now. And we're like entering on a commercial. And she's like, I don't like commercials. It was like the funniest. They try to explain this to a four year old, you know, dealing with the snippy attitude first. But, you know, it was it was it was just so that's what I realized the same realization you just came to and, and I completely agree. And I think there's two ways, at least in my mind to deal with this. Or maybe there's two things that come from setting goals is what I should say. And one of them is helping deal with that problem. So if our kids want to buy something that is a little more expensive, obviously, they're gonna have to save a little bit. And in addition to that, what we've done now since they get money, whether from like birthdays or whatever, like, you know, that happens for kids, right? We'll tell them like, hey, if you want to buy something that costs more than like 10 or $20, that's fine, but you have to wait two weeks to do it. And we tell them like and the reason why is because we want you to make sure that you are buying the right thing we can do research we can look into the best possible version of the bargain that you want to buy for you know, or the you know, whatever toy it is at the moment and and we make them make conscious decisions where they you know, compare and contrast different things. And it slows down down the process from the swipe right on Amazon phenomenon that happens both in adults and in children, because that's what the child's really seeing, right is that you just click a button and thing shows up. You know, if you're live in San Diego like you two hours later, you know, and where we live. Two hours, it's really scary. You know where we are today. You know, and so fix,

Ryan Inman 25:18
I mean, come on a day.

Jimmy Turner 25:19
Yeah, bro, we're way out here, can never find me. But

Ryan Inman 25:23
I'm a nerd.

Jimmy Turner 25:26
But like, the thing is, is like, that's, that's one way to do that. But when you're setting goals, and like think about things that way, one thing that I would I would say is you can take that they take that idea that goal setting, you know, waiting two weeks or a week. And even if it's like five days, you wait five days for some period of time. But you can take that idea too far. And then completely discouraged your kid from saving, because the the the amount that they have to save to get their goal is so far out in the future. Like, if they're making $4 a week, you know, it's going to take 52 weeks to save up for that one little toy that they want, you know, and like, you know, that's a bad example says 200 bucks. But the point being that, like, you want to make their goals achievable. You just want them to learn the principle that you work for your money, you get paid. You give your spend, or excuse me, you give you save, and then you get to spend if you don't have enough, you save it. And then hopefully in two or three weeks, you get to buy what you want. Right? And like just those little ideas. And and the caveat that I want to throw out there with this idea. Is that what a lot of parents do, and I don't think that they this isn't wrong. There's no there's no style of parenting, by the way, we're talking about parenting and kids and money and stuff. I should probably say this at the very beginning that like whatever you're doing is fine. Like, as long as you're trying to teach your kids go

Ryan Inman 26:40
away. Wait half an hour and do it good.

Jimmy Turner 26:42
I know, right? I probably had half the half the people probably already unsubscribed for our podcast. But if you haven't tell your people. Yeah, that's right. So if you haven't tell your all your other friends to subscribe, because we just lost half of people. But the you know, whatever you're doing is fine. Like just just the idea of being intentional with your money and teaching your kids about money is is is probably enough. But these are just some ideas that we're throwing out there. One idea, I will say that that is has been important to us has been consistency. And so like it, my kid comes up to me like, Hey, I really want this toy, they don't have enough money, like I do not give them the money. I do not bridge the gap with the Bank of mom and dad. Because I don't want to teach my kid to use credit to buy things.

Ryan Inman 27:21
Well, your oldest is I think at the age, you can start doing this and using credit, credit card, but the credit of dad or mom. And what I mean by that is let's say you're tarjay, right, you're at Target your girl sees she sees this $20 toy, and she has $8 on her. But she knows that she has $30 if she saved up at home, or if she didn't bring her money, no, she's going to store and she needs to do and wants to buy something and you know she has the money. Well, it cost $20. But since she didn't have your money, it's going to cost you $22. The extra $2 is the interest, because you weren't responsible enough to bring your money to the store to then turn around and buy and you had to borrow money from me to do it. And the interest rate I charge is $2. To do one, she'll never forget to bring money again. And hopefully she's smart enough to go. I'll go get it the next time we're here next week with mom or dad, right?

Jimmy Turner 28:16
You're totally right, that's so smart.

Ryan Inman 28:18
But you can turn around you can actually teach them how interest works directly to the toy that they want and not big dollars. And it's not like you're gouging your kid, whatever you do not forgive the interest, do not go home and be like nope, just Just kidding. make them pay it and make them pay it immediately go run into the house, right as we get out of the car, go get your $2 bring it to me Hold out your hand, let them count the $2 say thank you very much. And then later on during the week, offer them some special project that they can earn a few bucks back. Right The object is isn't like take money from your kid. The object is to teach them about interest when it's dollars, and it's your dollars. And it's just to understand, like, you need to be responsible. You need to carry your money. If you're going to spend money. You can't borrow money because you don't have it right now. Even though they have it. They don't have it right now. And you're teaching them about interest in probably about 10 or 11 is the age you can start that concept.

Unknown Speaker 29:14
Yeah, girl, she's

Ryan Inman 29:14
smart enough. I think she could I think she get that concept real fast to go down like this.

Jimmy Turner 29:20
Yeah, you know, that's a really good idea. We should start we start doing that. And I appreciate you mentioning the idea because that's that's totally true. I think I think she's definitely at the age where where she could totally wrap her head around that and a lot more and, and I've actually also started approaching the concept because our the conversation because you know, Grace, my oldest when she was Gosh, it's probably been what a year or two now since she recorded the disclaimer for the show. But every week we we have the disclaimer at the end of the show. That's by my oldest little girl. And, and she is you know,

Ryan Inman 29:49
she's getting up for the job.

Jimmy Turner 29:50
She's a voice actor, right. And so, you know, starting this year, I'm probably going to start paying her you know for each episode, you know, kind of like a road

Ryan Inman 29:59
apps literally gonna start paying her fee for her voice for the claim around the show. And it's not something I've seen. So to make sure we're like really crystal clear, you can't pay her $50 a show to turn around and do it. But like $5 a show, or $10 a show potentially, could be. And then I know like maybe where you're going with this, but I've done the same thing with with Ryan and Ruby on the Monday and Friday show for financial residency. And and I'll pay them it's going into their Roth IRA, which Taylor hates that idea. I'm like, do you understand the compound and I could show her all the math. She's like, and I don't care. And I'm like, Oh, you know, what? Why Ruby, they're gonna care when they're like, 12

Jimmy Turner 30:39
Well, but I think it's really cool. Because, you know, I thought I start thinking about this a little bit, and a lot of it actually enough to talk to, you know, an account about it. But yeah, so same thing, paying grace that money. And, you know, and we kind of got a late late headstart on grace, late headstart, that's an oxymoron. Got a late start on saving for college. Because I, you know, honestly, when she was she was young, like, super young, I didn't know anything about money back then. I was I was financially illiterate. And on either

Unknown Speaker 31:07
foot, yeah,

Jimmy Turner 31:08
yeah, that's true. That's, that's still in that check. So but now, it's like I, you know, we're saving for her 529. And, you know, wesleys and Anna Roos. And so because of that, I've, I've, you know, got an idea of what we're going to have. But the other thing is that I've thought about doing, you know, the Roth IRA, like you're mentioning, and, and like worst case scenario, like though, like if this is the worst possible way to use your Roth IRAs to help your kid pay for college, which, by the way you are allowed to do, then like, you know, now grant, I don't want them to do that I want them to save their money. And I want them to, you know,

Ryan Inman 31:42
and that's like, horribly tax inefficient, so like, don't do that. But like, that is way better of an option than either one. or two, actually, this is a way better option than number two, which would be to get sold, or buy, quote, unquote, some whole life insurance to cover for your kid like, No, no, no, no.

Jimmy Turner 31:59
Right? Right. And so I just mentioned that because like, you know, if it happens, helps your brain wrap around, like the okayness of doing this now, even though they're not, they should probably shouldn't touch the money for 60 years, they can actually use that for college. So if that helps you or your spouse or your partner, you know, really wrapped around your head around paying your kid and putting it into an IRA instead of, you know, giving it to them to spend. And the other thing too, you can do, and I'm totally going to do this, when my kids get old enough to like work for other people, like they start mowing lawns or, you know, they start, you know, becoming a server at a restaurant or something like that, I'm going to tell them, Look, we're going to pound away money into your IRA, and whatever you take home, I want you to put it in your IRA from your earned income. And I will match that from the dad side. So you make $5,000, during, you know, during the year doing serving or whatever, we're gonna put that $5,000 in an IRA, I'm gonna pay you $5,000 in my pocket, right? So that you're still saving the money, you still get to

Ryan Inman 32:52
feel like you earn the money and get to pain, you will give them a credit of fun things that they can do. And you will keep track of what that is because you can't pay them technically on that piece. But yes, also i'm

Jimmy Turner 33:03
saying is that they're going to take their earned income put into an IRA, and then I'm going to give them wonderful daddy

Ryan Inman 33:09
hair, but it's cool.

Jimmy Turner 33:11
That's not tax fraud. They're not gonna give 15 grand per kid,

Unknown Speaker 33:16
I'm kidding.

Jimmy Turner 33:18
But all this to say like, you could take this concept of teaching kids and tax fraud, apparently, to as as farther apart sense as you can. And so it starts with teaching about money at a young age, you know, just the concept of buying and buying things with money and cash to, you know, compound interest, and eventually, the IRA and then eventually index funds and watching them let that grow. The one thing that I have wrapped my head around Ryan, and I'd love to hear your take on on this, because I know that you did this as a kid is, I don't know, if I really want to give my kids fun money to like, you know, play around with like individual stocks, just so they can learn that, that it doesn't work, because that's actually kind of pretty addictive. When the ones that do well, and so, you know, I want my kids to grow up being shrewd investors, and, you know, teach them about index funds, for example, but, you know, I don't I just don't know, I haven't wrapped my head around, like whether I'm gonna let them you know, do it like individual stocks and that sort of thing inside their, their custodial IRA, for example, just so they can see things grow and not grow or fall or, you know, go into the abyss. You know, like, I know, you started doing an introduction like 15 so I

Ryan Inman 34:26
was like, 13, and I made every mistake in the book. And you know, people are like, Oh, you're a financial planner. You knew everything. I was like, No, Hell no, I didn't know everything. I traded penny stocks in high school, like a tree. I bought all sorts of crap made all sorts of mistakes. But I learned how all the markets work. I was again a nerd and I'm not saying everyone has to do this. But you bring up a good point. Do you let them trade individual stocks when we know, right with Nobel Prize winning research that that is a bad idea that you will likely lose compared to or just not beat. The market might not lose money, but you won't perform As well, especially over time, the way I look at the Jimmy is they've got their IRA money, that they're earning money. And they're saving, and they're doing it the right way, you are controlling their portfolio, you were explaining everything and had an index funds work, all that stuff. But I also think that you are, let's say, I'll use myself, I'm going to open up a taxable account. And I'll use one of these because now robo advisors and everything else super easy Robin Hood or whatever, it doesn't matter if one is kind of like my, my one that I like in terms of all the tech solutions out there. Because you can buy fractional shares, make it easy, I'm going to put some money in there, and I'm going to teach my kids, and we're going to pick stocks that are fun. And like show them, Hey, this is why it moves. This is what market cap is, this is what dividends are, this is how this works. And I'm going to show them that this one or say five stocks, maybe we'll put $100. And whatever it is, it's not about the money. It's about what you're buying, and how you're allocating showing them. And save. Now, these, you already own these because they are over here. Inside, that you already own these, they're over here inside the bucket that we are investing in index funds, or doing this with play money that I've shown them like separating out and the play money is going to be literally like one or 2% of whatever's in the IRA, right? Want to show them that comparison in terms of size, we can have play money, but it's going to be a very small amount, and the rest of it is going to be done correctly, then I'm going to be able to explain individual stocks, how it all works, how you already own these things, and be able to kind of do but all have the account myself. And then I'll have their money be the Morse not safe, safe, the bad word, but the the stuff that's invested correctly.

Jimmy Turner 36:39
Yeah, and we haven't gotten there yet. But that's my mind has already started crossing that road. Because

Ryan Inman 36:44
for years in order to really get to that point, but you can you can work and have her help her work and save and get to that point. And like the money that she learned from the show here with, you know, being the amazing voice actor and reading our awesome disclaimer, like that stuff goes in, and it adds up really, really fast. I mean, $500 a year, from ages five to 18, it's going to be hundreds of 1000s of dollars compounded, you know, by the time they're 65. Now granted hundreds of 1000s of dollars, by the time they're 65 is probably like $100,000 in today's spending. But it doesn't matter. Like the fact that it's there, it's gonna be a good nest egg they can use for a long, long time. You mentioned having jobs and things that you're doing with the kids. One of the things and I'm not saying this is the right thing by any means. But one of the things that it was my grandpa that always did this with my mom. And then my mom did this with my brother and I was while we were in school, school was our job. That was the thing. Like if I wanted to go get a part time thing, or mow lawns or whatever, I could earn extra money. But they didn't really encourage it. Because they encouraged me to get good grades. And so I was paid. And it was very different. I can't remember all the numbers over the years. But if I received an A, I got, let's say $5 the starting number. Yeah, I got B, I got $2. If I got a C, I got nothing. And if I got a D, everything that's in my bank account goes to them. Like that was a D, if I got a D, which I never did. But if I you because I was terrified. I was like you didn't tell you my money, no way or guitar for that. But if I ever got a D, everything that I had went to them and start over. So I was terrifying for me. Like always got A's and B's because I wanted to make sure in the money. But that was that was the thing. They didn't want me to lose focus on the real stuff at hand, which was learning and doing well in school and having good grades. And I mean that kept all the way up through college. The numbers just got bigger. And that was always going to be my spending money unless I decided I wanted to earn more money, which I did in high school little odd jobs here and there. Worked for actually a financial planner shredding paper. Very early man. It's like random stuff. But then I took that extra money. That wasn't my school money that I'd earned from my grades. And that's what I opened up TD Ameritrade because I was like, well, it's fun money. Let's just see what I can do and see if I can hit a home run. That was interesting. But yeah,

Unknown Speaker 39:20
didn't hit the home run.

Ryan Inman 39:22
Oh, I had a lot of home runs. Like it was kind of scary and addicting on how that worked. Cuz like you buy something, and it quadruples because you bought a penny stock. And in three days, the diagne like oh my God, look how easy this is. It was not easy. You don't win all the time.

Jimmy Turner 39:38
Yeah. And that's what I talk to people about is that just when when you go into the investment side of things, just be cautious because that is addictive. Like

Ryan Inman 39:48
it's also like I was in high school in the late 90s. So that was right as the tech boom was happening. So NASDAQ was going through the roof. And so I'm like oh, I put money in into literally anything. Oh, I make 20% like, this is cool. This is easy, right? And it taught me a lot of bad things. My mom's over here going, it's not that easy. I'm like, What are you talking about? This is super easy. Like, aren't you guys just like rolling in cash over here? Like, this is a joke. Like, straight Hey, Mom, look at that trade. She's like, analyzing all my stuff. Shouldn't What did you bought? Do you even know what this is? I'm like, No, but it moved. And I made money. Like, that's horrible, horrible things. But I mean, I'm 13 and 14. So I could have been spending that money, like a normal kid, but

Jimmy Turner 40:31
not? Well, you know, and I think that well, but that's part of the lesson, right? So like, just, you know, to kind of round this out to close out the show it I think it's important to mention that. It's also important for kids to learn that, you know, mistakes are gonna happen, you're gonna make financial mistakes, you're going to, you know, spend money on things that you shouldn't you're going to invest in some things that maybe you shouldn't like, and you're like my penny stock getting delisted. That was that was real awkward, right? Yeah, exactly. Oh, this

Ryan Inman 40:59
is go, Oh, I lost all Oh,

Jimmy Turner 41:02
there it goes. And so but but do it, when it's when the stakes are low, like Ryan was mentioning earlier, when we're talking about $100, not $100,000, or a million dollars, is so so important. And, and I think this ties in a really important concept to when it comes to student loans later on in life, right? Because I can tell you, from my perspective on student loans, when I was in medical school was that it was just, you know, as a reference to earlier, Monopoly money, it was just money that, you know, didn't really exist or count and didn't, you know, I'd have to pay it back someday, but I was gonna make so much money, it didn't matter. And, and like, these were all things that were mindset pieces, ideas in my head that were wrong about money. Because, you know, honestly, no one really ever talked to me about it. And so I think that if you're showing up as a mom or dad, and you're, you're intentionally teaching your kids about money, you're doing just fine. Some of these ideas in the show, hopefully, were helpful for you to kind of sort out where you want to go and what that's going to look like. And it's probably going to look different for you than it does for Ryan, it does for me. And I think it's a beautiful thing. So you do what's right for your kid for your family. But hopefully, you got some some ideas from the show in terms of, you know, what you can be doing in your house, in your home with your children to teach them about money. Or if you have nieces, nephews, or any other children that are in your life,

Ryan Inman 42:13
my kids are totally gonna take out debt to pay for college, even if I have it fully funded, they're gonna take it all out, like and I'm not telling them that they have money there. until they're done because I want them to take school seriously. And to do that seems weird, but I'm going to make it so they understand that there's consequences with taking out debt and that they, you know, will try for scholarships and whatever else they can do, but you know, that they're going to be you have to be responsible for themselves. And then at the end all, I'll say, but, you know, we were also diligent, like we've been saving, some will pay for it at the end, we'll see how bad the damage is. And then hopefully, we can help them as much as we could. But I want them to, to not think like, Oh, mom and dad say for this, like, whatever, I'm just gonna go take pottery.

Jimmy Turner 42:57
Yeah, and I think you know, that that may be a show in and of itself, right paying for college. So but yeah,

Ryan Inman 43:03
a lot of it and there's, yeah, we could do a whole show because there's, there's gonna be a rude wake up call for the colleges or for all of us. Yeah, call is either not going to be worth it, or the college is going to have to charge a whole lot less because for your school right now,

Jimmy Turner 43:17
I just did the projection for someone going to UCSD and their child's for, it's gonna be over $350,000 I believe it man, I believe it will bite off that that big bite and in a show. But for those of you that joined us this week, appreciate you listening and joining in Make sure to share this show with another physician family, this can really go a long ways in terms of helping them figure this stuff out. And so hopefully, you found the show helpful. And if you are in the market for looking for disability insurance, particularly if you're a woman physician out there, please remember that the rates will go up in January. And so if you're looking for disability insurance, whether a woman or a male physician, reach out to pattern at the physician philosopher.com slash pattern insurance, we can be confident get the right pie, right the price and write policy that best suits your needs.

Ryan Inman 44:06
Yeah, that's not some click Beatty thing either like I'm screaming this from the rooftops principle a few years ago and made it so meta medical students and residents and fellows, they couldn't get a unisex rate, our gender neutral rate. And now they're actually doing that with just all attendings, their, their book of business, if you will slanted too many too much to the gender neutral rates, there are too many females that were going for unisex rates. And so now they've got to write the wrong essentially, is how this is working. So unfortunately, not only they're going to make this more expensive for females, they're actually going to make it cheaper for males to get more males to use principle. So males are actually going to get a discount after the first year. Females your discount is right now and you're about to get a whole lot more expensive in the 2021 and onwards. So it's a great read for the show, but it's it's actually true like please go get this coverage. If you You're a female physician listening right now.

Jimmy Turner 45:03
Alright grace, we're gonna let you deal with that disclaimer that we're gonna pay for

Ryan Inman 45:07
mono.

Jimmy Turner 45:10
Alright everybody, thanks for joining this week Make sure to send feedback our way Jimmy or Ryan at money needs medicine comm love to hear from you guys and make sure to tell your friends, hit subscribe and we'll see you next week.

TPP

2 Comments

  1. Stephen

    Love everything about this! Gotta go find 3 jars for each kid!

    Reply
  2. Aaron

    Great show. My 12 and 10 year old listened with me.

    When making contributions to my kids Roth IRA what kind of documentation do I need to keep?

    If they make 1200 a year babysitting, being paid cash, and they put it in the account, how do I prove they actually had that income? Do I need to?

    How much can they make before we need to file their taxes?

    Reply

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