investing teaching kids money

YFP 340: YFP Podcast Replay – How to Teach Your Kids About Money and Investing

Posted on December 28, 2023December 26, 2023 by YFP Media

Dylin Redling and Allison Tom discuss their journey to FIRE and their book for kids on investing and personal finance, sharing practical advice and tips.

Episode Summary

On this episode Tim Ulbrich welcomes Dylin Redling and Allison Tom, creators of Retireby45.com and authors of two books, Start Your F.I.R.E. (Financial Independence Retire Early): A Modern Guide to Early Retirement and Investing for Kids: How to Save, Invest and Grow Money. Dylin and Allison achieved ‘financial independence retire early’ status in 2015 when they were in their early 40’s. Have you ever thought to yourself, I wish I had learned more about the topic of personal finance sooner? If so, that’s exactly what today’s show is all about as Tim interviews Dylin and Allison about their work with their book, Investing for Kids. They discuss practical advice and meaningful activities to help with teaching kids about money and investing.

About Today’s Guests

Dylin Redling and Allison Tom are a married couple living in Oakland, California. After working for 17 years in the tech industry in San Francisco, they left the workforce in January 2015 and never went back.

They own and operate the website RetireBy45.com, which provides inspiration, tips, and resources for achieving FIRE (Financial Independence / Retiring Early) and making the most of the FIRE lifestyle. In 2020, they wrote and published two books: “Start Your FIRE: A Modern Guide to Early Retirement” and the best-selling “Investing for Kids.”

They love food, fitness, and travel. Their goal of “60 by 60” is to visit 60 countries by the age of 60.

Key Points from the Episode

Learn about Dylin and Allison’s book for kids ages 8-12 called, “Investing for Kids: How to Save, Invest, and Grow Money”
Dylin and Allison’s first book was “Start Your FIRE: A Modern Guide to Early Retirement”
Their book for kids is easy to understand with lots of activities and lead by the colorful characters called the Dollar Duo: Mr. Finance and Investing Woman
Career paths and choices led Allison and Dylin to live in the Bay Area of California
When Dylin had pneumonia and was in the ICU for many days, the couple began to ask themselves, “Do we want to work for 25 more year?”
Dylin’s pneumonia experience along with changes in their careers led them to pursue with FIRE (Financial Independence, Retire Early) journey
Because they are passionate about learning about personal finance, they felt inspired to reach a younger audience
Dylin and Allison believe it is important to have a healthy respect for money, even in the age of digital currency
They hope their book can be read with an adult so that it can lead to good conversations about personal finance
Good finances early on can put you in a good position to be in control of future opportunities

Episode Highlights

“So there are plenty of ways to cut costs in your life that are relatively painless, that we’ve talked about all the time, so there are just different ways to do it to achieve FIRE. And some people don’t even choose to do the early retiring like my father is the example. So retirement is really more of the optional part. We’re not saying you have to retire, you have to leave your job and just sit around drinking mojitos all day long, although it’s certainly not a bad lifestyle. But you know, the retiring part is up to the individual. “ – Allison Tom

“So we love our FIRE lifestyle and the fact that we left our W2 jobs in our 40s, but we know it’s not for everybody. But what we do also know is that the concepts of Financial Independence are good for anybody, no matter when you might want to retire. And those concepts are really about doing the right thing with your money. So it starts with saving, it starts with being somewhat frugal — and when we say frugal, we don’t mean living a spartan lifestyle. We just mean not going crazy with money with spending on things that you don’t want or that you don’t need or you feel like you have to keep up with the Joneses and get a brand new SUV every two years.” – Dylin Redling

“I got to college, and then I had my first credit card that I just — oof. It was bad. I did not understand the concept of paying credit cards and interest rates and late fees and minimum payments. And so, you know, I got in trouble with credit cards after I graduated. And it wasn’t until after that that I thought, oh, I really need to learn more about what’s going on here. And so I started watching some shows on PBS, but by then, you know, I’m in my early 20s at that point. My learning took a lot longer for the habits to become engrained in me. So you know, I really do think that if kids could see this stuff earlier, it would be so much more impactful.” –Allison Tom

“That’s the beauty of the time being yours is you can make it whatever you want to do. We also do a lot more work with our community that we never had time to do when we were working. So we’re a lot more invested in our neighborhood, and we spend more time working with businesses in our neighborhood to bring in more business. So having that luxury of time means you can go explore whatever interests pop up.” – Allison Tom

“And so as the educators come up with their curriculum, I think honestly, a lot of adults are really intimidated by personal finance. And so it’s something that seems easy enough for them to cut out of the education system as an elective because well, if they don’t understand it, then kids aren’t going to understand it. And if they’re intimidated by it, then kids are definitely going to not understand it and be intimidated by it, so let’s not even talk about it, which actually is one of the reasons why we thought it was important to write the book.” – Allison Tom

Links Mentioned in Today’s Episode

Episode Transcript

(INTRO)

Tim Ulbrich: Dylin and Allison, welcome to the show.

Allison Tom: Thanks for having us.

Dylin Redling: Thank you very much. Great to be here.

Tim Ulbrich: I’ve very much been looking forward to this interview to talk more about your story achieving financial independence and early retirement and more specifically, the work that the two of you did in writing “Investing for Kids: How to Save, Invest, and Grow Money.” And Dylin, let’s start with you only because we share an Ohio State connection since you’re an alum so go Bucks. Why write a book specifically designed for kids about investing? What was the motivation behind your work?

Dylin Redling: Yeah, well, first of all, go Buckeyes. Yes, a great connection there. It’s interesting because I’ll start off with the interesting fact that Allison and I actually don’t have kids. And so you would think that the impetus would have been we had our own kids and we taught them financial literacy and it inspired us to teach more kids. But in fact, we sort of stumbled into this book. This is our second book. Our first book is called, “Start Your FIRE: A Modern Guide to Early Retirement.” And it’s all about early retirement and financial independence, which that book just poured right out of us because it’s something that we live and we know very well. And what happened was the publisher who we worked with on that book came back to us a couple months after that book was published and said, “Hey, we have an idea for this other book. And it’s investing for kids ages 8-12. And what do you guys think because you know about investing and financial concepts, and we think you guys might be able to pull this off.” And we thought, wow, we don’t have kids, we’re not teachers, we don’t hang out with kids. We have a few friends with kids, but we don’t spend a lot of time with them. And so we thought, man, this sounds really challenging and daunting. But it was during the 2020 year of COVID, so we had a lot of time on our hands. So we thought, let’s just go for it. And we dove into it, and it was very challenging because we wanted it to be interesting for kids and informative and fun but somehow, we put our heads together and we had a really good editing team that helped us with some of the concepts to relate to kids. And that’s — and we just dove into it and we just made it happen.

Tim Ulbrich: And I think you guys did an awesome job. You know, one of the things that stood out to me as my wife and I were looking through this book as parents of four young kids trying to teach this topic of money is that’s it’s very hands-on, it’s relatable, it’s digestible, lots of activities, really cool ideas. You know, I often find myself, especially writing, talking about this topic regularly, presenting on this topic, you take for granted how you learned some of this information along the way. You know, I often think, OK, take a concept like compound interest or, you know, mutual funds or index funds or ultimately trying to determine what your retirement savings goals, any of those concepts, and it’s very easy to get lost in the weeds. And I think it’s often hard to figure out, how am I going to break this down and teach this with my children and really work through this? And so I found myself looking through this, not only learning myself of oh, that’s a really neat way to teach a different concept or a very visual way or a nice activity to apply that information. So I think as I looked through this, whether someone is more advanced in their own knowledge and understanding of personal finance or whether they feel like they could also learn from these concepts, either one I think this book could be a really good guide for them alongside of working with their child. So great work in the work that you put together with the book. And Allison, knowing your background is a technical project manager, I’m curious, I mean, how and why did you catch FIRE — pun intended here — with this topic, not only as an individual pursuit for financial independence but also in wanting to help guide others to the work that you’re doing with RetireBy45.com and with the book “Investing for Kids.” Where does the interest come from?

Allison Tom: Part of it is that my college degree is actually psychology and education. So I had all these grand ideas of becoming a teacher, an elementary school teacher, after I graduated from college. But you know, after a couple of years, it dawned on me that frankly, our teachers are woefully underpaid. And there was pretty much there was no clear financial path for me to continue being a teacher making the salary I was making, so I was living in Boston at the time and I moved back to New York where we eventually met waiting tables, of all things. And we came out to San Francisco on a whim, we were on vacation, we were in our mid-20s, we thought, alright, let’s check out San Francisco. And so I bounced around from career to career and ended up on a consulting company that eventually brought me into the technical world of the Bay Area. But you know, so being a project manager is basically being a glorified teacher. So it’s dropping people, wrangling people to do things that you want them to do but do it in a way that makes them want to be — work as a team and learn from each other. So in a way, it was being a project manager was — it had very similar tendencies as it was being a teacher. And so we had always thought, oh, it would be great to retire early, but we didn’t really know what retiring early meant. We thought, oh, 55, that seems like a really good age to retire. It’s earlier than 65, but it seems so far in the future. And living in the Bay Area, our expenses were so high that we were like, there’s no way, even if we’re making decent salaries between the two of us that we’re ever going to retire. But about 11 years or so ago, Dylin came down with double pneumonia and was in the ICU for about 10 days and in the hospital altogether for almost two weeks. And that for us was a light bulb moment because he was within a 50/50 chance that he would make it. And so you know, after that, we kind of thought, OK, do we really want to keep working for the next 25 years or so? And so we kind of like made it our goal to get out of the rat race as soon as we could. And so we kind of fell into by accident. We can talk about that later, but it just — it kind of was a natural progression from all of the things that we’ve been doing over time.

Tim Ulbrich: Yeah, that makes sense. And I appreciate you sharing some of the background and story. We’ll come back to how you got to that point of early retirement, obviously as I mentioned in the introduction, early 40s to be able to accomplish that goal, and we’ll talk a little bit about how you got to that path, why that was possible as well. And so let’s first dig into some of the book of “Investing for Kids.” Let’s start with the main characters of the book, the Dollar Duo: Mr. Finance and Investing Woman. Allison, tell us more about these two characters, how you came up with the idea, why it was important to the overall text, and how those characters can really help the learner, again, 8- to 12-year-old is the target group here, engage with the material throughout the book.

Allison Tom: Well, first of all, it was kind of funny, today is actually Superheroes Day, so –

Tim Ulbrich: There we go.

Allison Tom: It’s a perfect segue into the topic. We were actually taking a walk one day as we were writing the book, and we were talking about politics, of all things. And we were trying to figure out in the administration, whichever administration, whoever won the presidency, what each president could do to make their administration better. And so we kind of were talking and talking about of all things, the Justice League of America and who we would think would be a good fit for making this country a better country. And so the whole idea of the Justice League, kind of thought, we thought, oh, superheroes. Kids love superheroes. Let’s talk to our publisher about bringing in some superheroes. And we were like, well, I don’t know if they’ll go for that, there’s some extra graphics involved and it could be expensive, but we felt that it would really be a good way for kids to relate to finances. And so we kind of pushed hard for this idea of having superheroes teach kids finance.

Tim Ulbrich: Yeah, and that stood out to me in addition to how visual it is. This does not — especially for a topic like investing, right, can be weighty at times, it can be overwhelming, I often find myself when I’m giving a talk on this topic, starts with excitement often when we think about what the — and then you get into the weeds and you see the eyes gloss over, right, and other things. And this does not read like a textbook in any way, shape, or form. And I’m grateful for that. So thank you for the illustrations, the activities, the superheroes, but I think it very much reads like an interactive, applicable, nuts-and-bolts, important information, but how do I actually apply it and hopefully get excited about this information. Again, we’re thinking about an 8- to 12-year-old of wanting to really hopefully empower them to be excited with this for the rest of their own financial journey. And I very much read this book, as I mentioned, being a father of four boys who also lives and breathes personal finance, I really do often find myself in conversation with my boys about money. And honestly, I struggle at times with making the topic of money tangible and meaningful. And it can feel abstract, especially when I find myself trying to say and teach a principle that I very much understand but it feels more abstract as I talk it out loud and especially when you start to view it through the lens of a child. And so I like how you start the book with Chapter 1 on Money 101. You cover important topics like money doesn’t grow on trees, ways to earn money, a little bit of entrepreneurship in there, which is really cool, the history of money, where to keep money. And so Dylin, here’s the challenge that I’m seeing with my boys. In the age of credit cards, debit cards, direct deposit, online banking, digital currency, electronic payment methods, it can feel difficult to teach a child about money when you don’t see it. Right? There’s very little actual, physical cash and therefore, it can be hard to connect work and I think the opportunities from work with earning money and therefore, the opportunity to then save and see it grow. So what are some tips and strategies as you put this book together as well as the other teaching you’ve done on this topic about how can we teach kids about money in a way that it can be relatable, it can be tangible, and then hopefully it becomes memorable for them.

Dylin Redling: Yeah, you know, that’s a really good point about money being very digital in this day and age. I remember when I was a kid, one of the coolest things was my grandmother would give me and my cousins 50 single dollars for Christmas and for our birthdays. They would come in a little box just big enough to hold those 50 $1 bills.

Tim Ulbrich: I love that.

Dylin Redling: And — yeah, it was really cool. And you know, $50 back then for a kid was a lot of money. And those 50 $1 bills would last a really long time. I would take them into the arcade, into the pizza parlor, whatever. And so maybe one way to do it is to actually bring back physical money. And I don’t think the amount really matters that much. But like you said, I mean, being able to tangibly feel it, see it, and understand it, it helps a lot more if you’re using physical money. And I’ll actually give an example of that we used on our blog and in actually “Start Your FIRE” book. I don’t think we mentioned it in “Investing for Kids,” but it’s a little story I like to tell about a money lesson that I actually learned from Allison when we were waiting tables in New York. So we met in a big restaurant in Times Square, and Allison grew up with a little bit of a better financial education in her household than I did. My single mother was wonderful, but it was all paycheck-to-paycheck, there wasn’t a lot of saving or investing. So I came into our initial relationship not very good at dealing with money. So anyway, we were waiting tables. So all of our money pretty much was in tips. So we would have tons of cash. And I remember just putting the money — I would wad it up into balls, I would stuff it into all four of my pockets because I was busy. And then we would go out afterwards and Allison saw how I was treating my money, and she was like, “What are you doing? How do you even keep track of that? That’s awful.” And so she taught me this little lesson. And she doesn’t even remember this because this was 25 years ago, but it stuck out in my head. And basically, I call it the Wallet Lesson. When you take all of your bills and you put them nicely, neatly in order from small to big or big to small, whatever works, fold it neatly into your wallet. And it’s really simple, but the reason it was impactful for me is because it just got me to think about how to respect and treat money. You know, you work really hard for money –

Tim Ulbrich: That’s right.

Dylin Redling: And if you don’t treat it well, you don’t respect it, you know, that $50 might not seem like a big deal. But when it gets to $100,000 or $500,000 and you don’t have that same respect and feel for what that money represents and how hard it was to earn it, you’re not going to put it and treat it and save it and protect it as well as you could.

Tim Ulbrich: Such a good example of a behavioral move, right? The number of dollars didn’t change, but how you treated them, how you respected them, how you viewed them, and I think many of our listeners, we talk on this show often that I believe personal finance, it’s about the math and it’s about the behavior, and both of those are very important and some of those types of moves or here, teaching kids in that way, I think can be very powerful as well. Allison, Chapter 2, save your money, you have an activity titled “Be an Interest Rate Detective.” I love this. I thought this was a really cool interactive activity where you challenge the reader to work with an adult to research interest rates for a local bank savings account, a CD, so a Certificate of Deposit, and an online savings account. So again, this was just one of many example activities you have throughout the book, but why is an activity like this so important in terms of someone being an interest rate detective to experience and go through as they begin their journey of understanding some of the basics of investing?

Allison Tom: So part of it is we wanted all the activities to be something that kids could do with the adult in their life. And we didn’t assume that every child has a parent because we know in this modern day and age that families are different nowadays, and you might have two moms or two dads or a grandmother or grandfather or a guardian of some sort. So we wanted something that people could do together with — kids could do together with someone else. And we thought, oh, it’s going to be interesting because banks are closed during COVID. When we were writing the book, it was right in the heart of shelter in place. But we thought, well, you know, kids have access to — most kids have access to a computer, they can at least walk around to a local bank and banks always have their advertisements on their windows with their interest rates. But we thought it would be an interesting way for kids to see what is in their environment and practice some good behaviors like oh, what does interest rate mean? What is APR? Those are, they’re jumbled letters and so you actually learn what the acronym stands for. And so we want to make sure that kids could kind of connect their physical world to their these abstract ideas about money. So all these activities are kind of a way to get kids to start thinking about it, and we were like, oh, kids aren’t really going to want to do activities, it’s extra homework. So we tried to make them fun and things that they could actually do and feel like they were learning something.

Tim Ulbrich: And I think this was a good example where the activity really, to me, is a rabbit hole of other learning, right? So if you go to the bank and do this activity, just like you suggested, Allison, it leads to other conversations and questions like, what is the federal reserve? And what is an insured account? What does that mean? You talk about that in the book, you know, how do you explain the federal reserve? What is compound interest? Why is that so important? What is principle? What’s interest? What do terms mean? And I think it, again, leads to further conversations, which obviously hopefully spark some motivation and curiosity to learn more on this topic. Dylin, in Chapter 3, Introduction to Investing, you cover very important topics, you know, why to invest, risk v. reward — and I love the Risk-o-meter throughout the book, that was really neat — liquidity, the importance of conducting research, and connecting back to my previous comment about the difficulties teaching a child about money when it may not be tangible, you can’t see it, can’t feel it type of a mindset, I think this is another area where parents may feel challenged to teach a child the importance of investing when again, it might feel somewhat abstract and here, we’re talking about delayed gratification, right? So not spending money on something today that has an instant reward. I think back to my childhood, it was driving to the corner store, buying baseball cards, buying candy, you earn the money, you spent the money, you saw the reward instantly. So here, the activity on investing, which I thought helped to really drive this concept further, you talk about an activity of picking a stock and really going through that process of understanding what’s involved there. So talk us through that type of an activity, what’s involved in that, and why that’s important to help a child relate to the concepts of investing.

Dylin Redling: Yeah, sure. It’s interesting because I can also relate it to how Allison and I do our own investing. And most of what we do, to be honest, are buying mutual funds and index funds. We don’t do a lot of single stock buying. However, there are some advantages to just helping a child or anybody, really, think about, well, if you were to buy a single stock, what would the thought process be when you do that? We actually just wrote an interesting post on our blog just about a week ago where we had $10,000 that we wanted to experiment with. And what we did is we selected five different stocks to invest that $10,000. So $2,000 per stock. And I went through the process in that blog post of why we would do this. And it wasn’t to get rich quick or to see what would happen in a week or a month. This particular blog post talked about a one-year time frame. And it’s the same with the activity for the child. I think we used a shorter — a relatively short time frame so they could at least measure their success. At the end of the day, investing, as you know, as your listeners know, it’s very much a long-term process where you’re investing over years and decades. But again, to get the child to think about some of the things that you might want to think about with whether you’re investing in stocks or any sort of investment, what are the things that go into that thought process? And so getting back to that blog post I wrote, some of the stocks that I suggested that we test out, one was a blockchain ETF. So now that bitcoin and other coin-based just went public, those are things that we wouldn’t necessarily invest in directly. But a blockchain ETF is an example of a way you could dip your toe into that technology. So that was the thought process there. Another example was a cruise company, NCL, Norwegian Cruise Line. Now that COVID is starting to disappear and everyone’s getting vaccinated, people, there’s this pent-up demand to start traveling again. So we thought, hey, in the next year, NCL may actually start to do really good. And they even have a program where if you have 100 shares, you get extra bonus points. And so the idea is to think about all the different aspects to that investment, like how does it relate to what’s going on in the world right now? And what other pros and cons are there to that investment?

Tim Ulbrich: Yeah, and I think we share your philosophy. What I heard there is our planning team often says a good investing plan should probably be as about boring as watching paint dry.

Dylin Redling: Right.

Tim Ulbrich: At the end of the day, it’s about a long-term play. But I like this activity as a concept. You know, I remember I had a great Econ101 teacher that had us do a similar activity. And it’s very memorable because it also leads to many other conversations like well, what type of influence does my marketing have? Or I thought this was going to go this way, and it didn’t go this way. Maybe I had some overconfidence in my selection of things. So why is diversification important? So I think, again, reading it and doing it, two very, very different things. And I think people experiencing this firsthand, especially you think of an 8- to 12-year-old, a very kinesthetic learner, right, hands-on experience that moment, be able to learn through that experience. Allison, as I went through the book, many times I thought to myself, man, what if I would have had some of this information earlier? What if I would have had this in middle school or high school or perhaps even earlier? And shoutout to my parents, who did an awesome job of the foundations, grew up in a small business, felt like I had a little bit of a head start. But outside of some K-12 programs and in higher education, I would say it’s largely absent, maybe some elective courses or some opportunities. And so I can’t help but think like, why aren’t we doing more of this? Why aren’t we covering more of this in a K-12 education? I mean, this type of book, this type of experience, these types of activities would be a home run in teaching kids about money. Here, we’re taking 8-12 investing, but obviously we all know it’s broader than that as well. So question here, I’m not asking you to solve the personal finance educational system woes, but why do you think this is not more foundational to our educational system in terms of personal finance education?

Allison Tom: Right. So I think part of it is that our generation didn’t really learn this either. And so as the educators come up with their curriculum, I think honestly, a lot of adults are really intimidated by personal finance. And so it’s something that seems easy enough for them to cut out of the education system as an elective because well, if they don’t understand it, then kids aren’t going to understand it. And if they’re intimidated by it, then kids are definitely going to not understand it and be intimidated by it, so let’s not even talk about it, which actually is one of the reasons why we thought it was important to write the book. We didn’t get this education when we were growing up. I know my parents are second-generation immigrants. And so the money lessons that they learned were from their parents, who grew up during the Great Depression. And as immigrants coming over to this country, they just pooled their money and they saved and they saved and they worked 20 hours a day to make money and then they would maybe invest it in the bank, although plenty of my relatives didn’t even bother with that. So my lessons growing up were save and save and save and save. I had a little piggy bank, and I would put all my coins in from the piggy bank, but that was the only thing that I learned. And so it wasn’t until I got to college, and then I had my first credit card that I just — oof. It was bad. I did not understand the concept of paying credit cards and interest rates and late fees and minimum payments. And so, you know, I got in trouble with credit cards after I graduated. And it wasn’t until after that that I thought, oh, I really need to learn more about what’s going on here. And so I started watching some shows on PBS, but by then, you know, I’m in my early 20s at that point. My learning took a lot longer for the habits to become engrained in me. So you know, I really do think that if kids could see this stuff earlier, it would be so much more impactful. You know, I’ve talked to a girlfriend of mine, her daughter is 17 and she read the book and she was like, “Yeah, you know, I’m going to start doing the savings plan when I get a job.” My friend was laughing because she’s like, my daughter doesn’t have a job. But she was just like, she got inspired by it, and I thought, oh, if we could just get kids to learn this stuff sooner –

Tim Ulbrich: Yeah.

Allison Tom: All the great things we could do with them. So hopefully. Hopefully.

Tim Ulbrich: Yeah, and I love that, to that point, Allison. I think it was early in the book, you have the reader go through an activity where they identify problems, things that could be improved upon, right? And one of the things I often say is that any business is a solution to a problem, and that solution is one that people care about and are willing to pay for. And you know, I love that because I think for a child, like if they can think about, what are some things that could be done better? You know, one of them you proposed in the book, which was really cool because we recently just bought this — or actually we got it as a gift for our kids from our family — is you mention like chess. Really hard game for kids to play, kids to learn. Why isn’t there a solution out there that can make chess easier to play? Sure enough, there is. There’s a card game where you draw cards, you learn the basic moves of chess. So things like that, I think you’re inspiring some of the creative thinking, the problem solving, and laying some of the seeds of entrepreneurship or even for those that don’t own their own company, which would be the vast majority of folks, intrepreneurship, how can you be a problem solver within your organization? And how can you create solutions that make you a valuable asset within that organization? I want to shift gears a bit to connect some of the work that you have in “Investing for Kids” with what you cover in your site, Retireby45.com. You mentioned your other FIRE book as well. And I got the impression that you both, you believe that everyone could put together — especially an 8- to 12-year-old reading the “Investing for Kids” book — put together a plan for FIRE, again Financial Independence Retire Early — by the age of 45. So Dylin, our listeners know firsthand that time in the market equals success, and that compound interest, as you mentioned in the book, is the eighth wonder of the world. So we know the math is possible if someone starts at an early age. But why do you think it’s important that someone plans for FIRE by the age of 45?

Dylin Redling: Whether you’re able to retire in your 40s or your 50s or you do a traditional retirement in your 60s or even beyond, Allison’s dad, for example, is 70 now — or slightly older — and has no intentions of stopping working even though Allison suggests that he stop and enjoy life. But he’s got a job that he really loves. And so there’s a lot of people out there that are like that. So we love our FIRE lifestyle and the fact that we left our W2 jobs in our 40s, but we know it’s not for everybody. But what we do also know is that the concepts of Financial Independence are good for anybody, no matter when you might want to retire. And those concepts are really about doing the right thing with your money. So it starts with saving, it starts with being somewhat frugal — and when we say frugal, we don’t mean living a spartan lifestyle. We just mean not going crazy with money with spending on things that you don’t want or that you don’t need or you feel like you have to keep up with the Joneses and get a brand new SUV every two years. So there’s that, and of course investing wisely. And you know, we have another story that we write out on our blog, which kind of I think can be somewhat inspiring to people who are in their 20s and maybe haven’t really done anything with their finances yet. We, as Allison alluded to earlier, kind of our story is we met in New York and then we moved to San Francisco. And we were in our mid-20s at the time. And we still hadn’t invested a dollar yet. And it wasn’t until our late 20s that we got “real jobs” with a 401k plan and that sort of thing. And so it wasn’t until our late 20s that we really started investing. And our entire investment life cycle, if you will, was about 17 years from our late 20s to our early 40s. And in that time, we just were so diligent about dollar cost averaging, we did — we invested into both our 401k, our IRA, and a taxable account once we got some extra income literally on a weekly basis for years and years and years, no matter what the market was doing. Through the 2001 .com crash because we’re both working in that industry and of course through the ‘08-’09 recession. Never stopped. And so those kind of habits, again, are good for anybody no matter what your retirement goals are, just really those financial habits are going to put you in a great position.

Tim Ulbrich: Yeah, and I’m glad you shared that, Dylin. One of the questions I had for you was I read your story of not really late 20s, early 30s getting serious about investing, but retired or achieving FIRE by 43, 44, so short window of time, right? We tend to think of a very long trajectory of savings. You mentioned 17 years. So my question was what was the secret sauce? And if I heard you correctly, it was tax-advantaged accounts, 401k’s, IRAs, some taxable accounts and dollar cost averaging and being consistent. Is that fair?

Dylin Redling: Yeah. You know, a couple other things we did — we did the phrase “side hustle” is really popular now. But when we did it, we just called it a side business. This was in the mid-2000s. I came up with an affiliate marketing business that I ran on the weekends. And it ended up being a third income for us. So there’s things like maximizing your income. And then another concept — I’ll shoot it over to Allison to talk about — is geographic arbitrage. And that helped us kind of move about nine years ahead of schedule. Do you want to talk about how we did that?

Allison Tom: Sure. So geographic arbitrage has a lot of different meanings in the — for people. And the gist of it is that you leverage your current salary and move to a lower cost location. And so most people think that is oh, I’m going to make my United States salary and move to Thailand or Costa Rica, where the cost of living is exceedingly low. We did it by moving from San Francisco to Oakland, California, which geographically is a 10-mile difference but at the time, we were able to save about 50% on our housing costs.

Tim Ulbrich: Wow.

Allison Tom: So yeah, it was pretty insane. For being 10 miles away, two or three train stops away on our BART system, we were able to pay off our condo in Oakland in cash by selling our place in San Francisco, which alleviated all the mortgage payments, the increase in property payments and our insurance went down as well. So that, Dylin calculated later, saved us probably about nine years of working because our mortgage in San Francisco was so astronomical that just cutting 50% off just pushed us into the financial independence sphere that much sooner. So it’s things like that. Obviously not everybody is going to be able to save 50% of their housing by moving 10 miles away, but there are other ways to do it. You can do things like house hacking where if you have space on your property, you could build an extra unit and rent it out or if you have an extra bedroom, you could rent it out and have a roommate or Airbnb it. So there are ways tod do it without going through the extreme example that we had. So there are plenty of ways to cut costs in your life that are relatively painless, that we’ve talked about all the time, so there are just different ways to do it to achieve FIRE. And some people don’t even choose to do the early retiring like my father is the example. So retirement is really more of the optional part. We’re not saying you have to retire, you have to leave your job and just sit around drinking mojitos all day long, although it’s certainly not a bad lifestyle. But you know, the retiring part is up to the individual.

Tim Ulbrich: Yeah, I’m glad you said that, Allison, because I know many of our listeners love what they’re doing as pharmacists and they worked hard, and they got a doctorate degree and they have student loan debt and they invested in that education. And so my read is that many pharmacists are captivated by the idea and the power of financial independence. And you know, I believe that’s a goal we all should strive for for a variety of reasons with RE, Retire Early, being one of those perhaps reasons, but other things as well in terms of why that financial independence may be important. So nine years, nine years was estimated from that one decision, which I’m coming full-circle, Allison, about what you shared at the beginning of Dylin being in the hospital with double pneumonia. And when you start to think about the value of time, I mean, nine years and doing some of those calculations and what does that mean for one’s personal situation, I think that’s a really powerful example of taking something that can be mathematical or objective and looking at it in a different mindset. If we were to make this move or this move, what does that mean for us in terms of timeline to retirement, working part-time, pursuing another opportunity, what does that mean for one’s goals towards financial independence? I’m glad you discussed geographic arbitrage because one of the things we see in our profession in pharmacy is that unfortunately, a pharmacist’s income usually does not translate with cost of living. So here I am in the Midwest and that income for a pharmacist in the Bay Area might be a little bit more for a similar role but nowhere near the cost of living difference between Columbus, Ohio and San Francisco, California. So I think this is a move, especially for many of our listeners that might be saying, you know, ‘I’m making a decent income, but I’ve got a lot of work to do on student loans, I want to invest, I want to buy a home, I want to do this or that. And at the end of the day, there’s only so much income.’ So is a move, whether it’s near, within 10 miles, or something a little bit more significant, is that an option that somebody may be able to pursue? Allison, what have you guys been doing since achieving FIRE? You know, what’s been the goals, what’s been the priority, how have you been spending time? I think that’s one of the other common objections that comes up is like, if I retire at 45, like I don’t even know what I would do with my time. Tell us a little bit about that journey since you guys have achieve FIRE.

Allison Tom: So it’s funny, we — so we FIREd quite by accident. We were both working in tech startups, and Dylin got laid off and then I got laid off about five weeks afterwards. And so we kind of took the time after we were both laid off to travel a little bit. That was one of the things that two people who are working can’t always schedule, coordinate their schedules, to take some time off. And so we thought, alright, this is the perfect time. We went to Europe for two weeks and did a cruise around the Mediterranean and had a blast and then came back and thought, alright, we’ve got to get back to work. So we went about — we went on interviews and we just saw just how miserable people were at their jobs. Just so stressed out, and I interviewed with this one guy who was like, “You need to tell me who said this about us so I can go talk to them.” I’m like, I don’t want to work for you. You’re scary. And so you know, the three months turned into six months and then nine months and then Dylin figured out kind of like back of the envelope math, figured out that we could actually retire without having to go back to work anymore. He stumbled into the 4% Rule, which we still hadn’t at that point heard the term FIRE before. You know, the first few years we did a fair amount of traveling domestically. Like we would go back to visit his mother and my father, who both live on the East Coast, which is one of the things you just don’t get time to do when you’re working is spending time with family. And so you know, if we would go back East, we would maybe spend two days with each parent because they don’t live that close to each other. And now, we can actually go and spend a week with each parental unit. And that makes a big difference because, you know, they’re getting older and living across the country, it’s harder to connect with them. So we do a lot more slow travel where we don’t have to feel rushed between people. And then it’s funny because we — our retirement has changed as time goes by. So for people who are concerned that oh, what am I going to do with my time? Your time is yours. You can now make your own schedule. And that, to me, is the beauty of not just financial independence, it’s financial freedom because you can choose what you want to do. And so you know, the first two years were traveling domestically, the second two years were more about traveling internationally. And we had two cats that passed away at 19. So for us, they were like our kids. And so we did not do a lot of traveling away from them until they passed on. And so once they did, we’re like, alright, we’re going to go crazy and go travel around the globe. And so the last — and then the last two years have been focused on writing books and going to financial conferences and kind of learning from others and then applying that and communicating out to audiences like yours. That’s the beauty of the time being yours is you can make it whatever you want to do. We also do a lot more work with our community that we never had time to do when we were working. So we’re a lot more invested in our neighborhood, and we spend more time working with businesses in our neighborhood to bring in more business. So having that luxury of time means you can go explore whatever interests pop up. So you know, did we ever think that we would be working with small businesses two years ago? Probably not. But now we are, and we’re advocates for small businesses in our neighborhood, and that’s something we would never have thought we would have done when we first retired.

Tim Ulbrich: That’s very cool. And I read as well your goal of 60 by 60. Sixty countries to visit by the age of 60. If I understand it, you’re about halfway through. Looking forward to following your journey. I’m hopeful you’ll be blogging about it along the way as well. Dylin, I’m going to throw the last question I have over for you. And one of the things I think about when it comes to early retirement and achieving financial independence or the FIRE movement is that it really does require delayed gratification and at times, you mentioned the word frugality earlier. And that frugality can be at various levels. As you mentioned, we’re not necessarily talking spartan type of frugality. My question here though is how do we strike the balance? You know, whether it’s for ourselves or teaching our kids about saving and investing to take care of our future selves but also valuing and making sure we understand that it’s important that we enjoy some of the money along the way as well. I find myself often struggling with this individually of, OK, I know I need to take care of my future self and probably sometimes I do that at the expense of the experiences and the enjoyment today. And I think striking this balance is really important. What are your thoughts on that?

Dylin Redling: You know, I’ll actually plug a couple of other books besides ours that I really like. One is “A Simple Path to Wealth” by Janelle Collins, which I highly recommend. And another one is actually one of Allison’s favorites. It has a funny title, it’s “I Will Teach You to Be Rich” by —

Allison Tom: Ramit Sethi.

Dylin Redling: Ramit Sethi. And we saw him speak. He was a keynote speaker at FinCon a couple years ago. And one of the things that he said, which really resonated with me and it goes to your question, is spend liberally on things that you enjoy. But hold back aggressively on things that are not important to you. And it’s a very simple concept. But again, it goes directly to your question, and it’s really — maybe you or your kids or whoever’s thinking about this makes a list. Here are the things I’m passionate about. Here are the things that I really enjoy. I love travel, I like eating out at restaurants, I like entertainment, sports, whatever it is. And I’m going to set my budget to focus on those things. I’m going to be OK — maybe I’ll go to a World Series game because I’m a huge baseball fan. Or I’m going to set a goal to go to every baseball park in America. You know, whatever that goal might be. Conversely, think about the things that aren’t that important to you like maybe a brand new car is not important to you, so you drive your car for 10-20 years and you really just never focus on spending a lot of money on that. And so those are the concepts that I think are something to really think about. And for us, that’s what we’ve always done. When people look at our lifestyle from the outside or even some of our friends, you know, they may think, wow, we’ve always lived in pretty expensive apartments — or condos or houses, so they might think, wow, they spend a lot of money. But if you look a little deeper, like we had a car for almost 20 years. We had a Volkswagen Jetta. We just recently got a new-to-us couple years old Toyota Corolla. So there’s an example where we just — you know, having a brand new car wasn’t that important to us. But again, we have the 60 by 60 goal. So travel is really important to us. And we have no problem spending that extra money to go travel for a few months and really try to see the world because that’s something that we’re passionate about. That being said, when we do travel, we try to — we don’t stay at four-star hotels because part of our kind of nature is to also find some deals here and there and to just spend consciously, to just spend our money kind of wisely.

Allison Tom: We prefer to spend money on the experiences rather than the hotel room that we’re putting our suitcase in.

Tim Ulbrich: Yeah. And I was at that keynote that you were at, and with Ramit, and I’ll never forget it. I mean, the concept that he talks about in “I Will Teach You to Be Rich,” money dials, right, is find the things that are of value to you and dial it up. And find the things that are not and dial them down. And you know, I remember hearing that, and I was like, heck yeah. It just makes so much sense. And you know, to the comment of experiences and even the literature really showing happiness related to money, it’s experience and giving typically are the areas where we see that biggest connection. So Allison and Dylin, I really appreciate you guys taking time to come on the show. Kudos on the work here with “Investing for Kids,” I really enjoyed it, as well as the work that you’re doing at Retireby45.com and your other book, “Start Your FIRE: A Modern Guide to Early Retirement.” As it relates to the book “Investing for Kids,” I hope our audience will pick up a copy of this, available at Amazon, Barnes & Noble, many other online vendors as well. I really did find it engaging, it was rich with relevant information, practical exercises to apply the information, as I mentioned, certainly does not look, feel, or read like a textbook. And so I think many in our community are going to find it helpful. What’s the best place for our audience to go to follow the work that the two of you are doing?

Dylin Redling: Well, our — I’ll plug our website, and I’ll have Allison plug our Instagram account. Retireby45.com is our website, and we blog there on a once or twice a month with a fresh new blog post, and we have a bunch of stuff on there, courses and other things. And then Allison’s been working on really putting together a pretty cool Instagram account.

Allison Tom: So we have Instagram and Twitter both @retire_by_45. Yeah, it’s been an interesting challenge trying to get into the social media, the social media space.

Tim Ulbrich: Very good. We will link to both of those in the show notes as well as the Retireby45.com as well as the books that we’ve mentioned, not only your books but the others that you referenced as well. So the two of you, thank you again very much for your time. I really appreciate it.

Allison Tom: Thanks, Tim. It’s great.

Dylin Redling: Thanks.

Allison Tom: O-H

Dylin Redling: I-O

Tim Ulbrich: I-O!

Dylin Redling: Thanks, Tim. Great talking to you.

Tim Ulbrich: As we conclude this week’s podcast and important reminder that the content on this show is provided to you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment. Furthermore, the information contained in our archived newsletters, blog posts and podcasts is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analyses expressed herein are solely those of Your Financial Pharmacist unless otherwise noted, and constitute judgments as of the dates published. Such information may contain forward looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer. Thank you again for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 311: Raising Money-Savvy Kids

Posted on June 8, 2023October 5, 2023 by Tim U

Julia Myers, PharmD discusses strategies for teaching kids about money, all the way from elementary age through young adults. This episode is sponsored by First Horizon.

About Today’s Guest

Julia Myers is a practicing pharmacist and pharmacy leader at the University of Missouri Health Care in Columbia, Missouri. Julia received her Doctor of Pharmacy degree from the University of Wyoming School of Pharmacy and her Masters in Business Administration from the University of Tennessee- Knoxville. Her 15-year career encompassed clinical and leadership roles in community pharmacy, ambulatory care, health system, and specialty pharmacy. In 2020, Julia was recognized as a member of the Class of 20 Under 40 by Columbia Magazine for her achievements in medication affordability, specialty pharmacy, and overall community impact. After experiencing a life-changing medical event, Julia semi-retired in May 2022 and is now pursuing her best life focusing on family, lifelong learning, and travel. Julia enjoys spending time outdoors, reading and writing, and raising 5 children with her husband Brad. Follow her on social @Juliamyersrx

Episode Summary

Less than half of parents feel confident in what they are teaching their children about money. Even fewer regularly discuss money with their kids. Julia Myers is a practicing pharmacist and pharmacy leader at the University of Missouri Healthcare. During this episode, sponsored by First Horizon, we discuss how the type of money household you grew up in influences your financial management today. We explore strategies to teach your children about money across the full spectrum of ages, from early childhood to young adulthood. Julia weighs in on the loss of generational wealth, why mistakes are the best teachers, and how self-reflection can lead you to better equip your children to build their financial futures. Throughout the show, Julia offers practical tips on approaching money conversations with your family and empowering your children.

Key Points From the Episode

An introduction to Julia Myers, practicing pharmacist and pharmacy leader.
The Pharmacist Home Loan offered by First Horizon Bank.
How Julia’s career journey in pharmacy has led to her current role.
Where her interest in the topic of kids and money began.
Julia summarizes her vision to help families build a legacy of generational wisdom.
Julia’s perspective on what is taught in the classroom and how parents need to take it further.
Why it is important not to project your feelings about financial habits onto your children.
The loss of generational wealth today.
Why we often learn the most from mistakes,
The importance of self-reflecting on the money scripts you were raised with.
Applying different strategies to different age groups.
Resetting ‘I deserve’ to ‘I am responsible for’.
Explaining money to your elementary school-aged child.
Discerning between ‘need’ and ‘want’.
Introducing delayed gratification to pre-teens.
Bringing the financial conversation into dating and marriage with your adult children.
Where to find Julia’s 5 Family Financial Conversation Starters online.

Episode Highlights

“I inspire and empower families to expand their legacy beyond generational wealth to generational wisdom.” — @juliamyersrx [0:06:36]

“‘Someday’ always happens. How are you preparing and being intentional for that someday?” — @juliamyersrx [0:14:29]

“They’ll say, ‘Well, what’s money for?’ and I say, ‘Saving, spending, and sharing or giving.’” — @juliamyersrx [0:28:48]

“Generational wealth without wisdom is playing the lottery. It’s leaving your legacy to a lottery rather than being intentional and passing it on.” — @juliamyersrx [0:34:04]

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[0:00:00.4] TU: Hey everybody, Tim Ulbrich here, and thank you for listening to The YFP Podcast, where each week, we strive to inspire and encourage you on your path towards achieving financial freedom.

This week I welcome Julia Myers onto the show to talk about a topic near and dear to both of us, kids and money. Julia’s a practicing pharmacist and pharmacy leader at University of Missouri Healthcare. After experiencing a life-changing medical event, Julia semi-retired in May of 2022 and is now pursuing her best life focusing on family, lifelong learning, and travel.

During the show, Julia and I talk through how an understanding and awards of the type of money household that you grew up in plays an important role in the money script you are passing down to the next generation. Furthermore, we discuss strategies to employ teaching kids about money, ranging from elementary age to young adults.

If you are looking for one-on-one financial planning, look further than the team at YFP Planning. Whether you’re just getting started in the middle of your career or nearing retirement, our team of certified financial planners and tax professionals are ready to help.

You can learn more about our financial planning wealth management and tax services by visiting yourfinancialpharmacist.com. All right, let’s hear from today’s sponsor, First Horizon, and then we’ll jump into my interview with Julia Myers.

[SPONSOR MESSAGE]

[0:01:17.2] TU: Does saving 20% for a downpayment on a home feel like an uphill battle? It’s no secret that pharmacists have a lot of competing financial priorities, including high student loan debt, meaning that saving 20% for a downpayment on a home may take years. We’ve been on a hunt for a solution for pharmacists that are ready to purchase a home loan with a lower downpayment and are happy to have found that option with First Horizon.

First Horizon offers a professional home loan option, AKA, doctor or pharmacist home loan that requires a 3% downpayment for a single-family home or townhome for first-time home buyers, has no PMI, and offers a 30-year fixed-rate mortgage on home loans up to USD 726,200. The pharmacist home loan is available in all states except Alaska and Hawaii and can be used to purchase condos as well. However, rates may be higher and a condo review has to be completed.

To check out the requirements for First Horizon’s pharmacist home loan, and to start the pre-approval process, visit yourfinancialpharmacist.com/home-loan. Again, that’s yourfinancialpharmacist.com/home-loan.

[INTERVIEW]

[0:02:29.7] TU: Julia, welcome to the show.

[0:02:31.4] JM: Hey, thanks so much for having me. It’s such a pleasure.

[0:02:34.7] TU: I’m very much looking forward to this conversation. You and I had a chance to connect a couple of months back after I learned about your passion for personal finance. It was really a great conversation, where two personal finance nerds were in their element, not only talking personal finance but also shared interest in kids and money, which is our topic here for today’s episode.

Julia, before we jump into today’s topic, kids and money. Tell us more about your career journey in pharmacy starting with what led you into the profession and the work that you did after graduating from the University of Wyoming.

[0:03:06.4] JM: Yay Tim, and thanks so much for having me, excited to share my story today. I got into pharmacy the way most students do, they wanted to help people. I spent a summer in the mini med school program while in high school and realized I very quickly did not want to see another dead body again.

So I headed out to the University of Wyoming, I was a student-athlete for my first year on the swimming and diving team. So, fun fact about me, and then I jumped right from the pool into the library and worked for four years at the University of Wyoming, I got my PharmD and I came out of school with a really clear passion of I want to make money and I don’t want to waste time doing the residency.

So I told my professors and my mentors and preceptors, I want to get out, do clinical work, and make retail money and everybody looked at me and said, “I don’t think that’s possible” and I did it. So I moved to Phoenix and worked for a chain pharmacy there and then very quickly got in the world of HIV and was a clinical pharmacist one day a week in an infectious disease internal medicine primary care clinic, spent seven years in Phoenix and wanted more.

I kind of wanted to stretch my wings and grow in a leadership capacity because what I did in my clinical role was explain to my chain why what I was doing with adding value to what they were doing and I figured, “If I can do that for one chain, why not do that for more?” I moved to Columbia Missouri where I’ve been for the last 12 years at the University of Missouri Healthcare.

I started off as a retail pharmacy manager, managing our hospital-owned pharmacies for our health system and then I started our specialty pharmacy program, some ambulatory pharmacy programs called patient medication liaison technician career ladders, and then most recently, was sort of able to semi-retire and about two years ago, I moved into a part-time kind of consulting role and got really passionate about getting clear on my family values and my vision and that led us to what we get to talk about today.

[0:05:05.6] TU: I love it. I love it. Now we share two, I was a competitive swimmer growing up, so we have another shared connection right there as well. So were you a swimmer or a diver? What was the –

[0:05:13.8] JM: I was a diver. Springboard and platform. I never competed 10-meter but I trained 10-meter. We did Christmas training at ASU in 10P and that’s what made me fall in love with warm weather in the winter because we were swimming outside in December.

[0:05:27.1] TU: So where does your passion and interest in personal finance, where does that stem from and more specifically, the interest you have around this topic, which is kids and money?

[0:05:36.6] JM: I think the passion came from working hard translating into money. That’s the value I grew up with, one of four siblings in my family and we had enough but there were always people around me that had less and always people that had more and I was just fascinated by this concept, and as a mom myself, we’re a blended family of five kids, we range in currently, ages from first grade to a freshman in college and all the grades in between.

And what I found is the things that I learned growing up had a similar look and feel to what I was teaching my kids and then at the same time, there’s a lot of gaps and a lot of opportunity, not a lot of information on you know, when and how and what are some of the more tactical ways that we can engage children in conversations so that they can raise themselves up and move out of the house eventually.

It shouldn’t be a surprise that kids when they grow up that they move out and that is what I’m so passionate about. So to kind of summarize, I inspire and empower families to expand their legacy beyond generational wealth to more generational wisdom.

[0:06:44.8] TU: I love that. I love that vision and the clarity around that vision and you know, it’s going to be fascinating to hear your experiences, first grade to freshman in college. We’ll talk more towards the latter half of this episode about strategies, you know, activities, ideas, conversations we want to have based on you know, age groups and where people are at in the journey, so you’re living it, right?

The spectrum is there and my eldest is turning 12 years soon so you’re going to be able to share some wisdom with me as well, which I’m really looking forward to.

What does the data tell us, Julia? You know, I have a sense in my conversations that this topic is becoming more comfortable. It still feels like it’s somewhat of a taboo topic, although generationally, that feels like it’s shifting but conversations in the household around money.

You know, I often share with people, probably for many, it’s what’s unsaid, sometimes what’s said but what’s unsaid that we often, you know, carry some of those behaviors, some of the stress, the anxiety or perhaps some of the positive behaviors as well but what does the data tell us in terms of how often these conversations are happening in the household as we engage with our kids around money?

[0:07:51.9] JM: Yes, that’s probably the second most important question to ask. The first one is, “Have you had the talk with your kids at home?” and then the other one would be, “Have you had the talk about money with your kids at home?” So about 42% of parents feel confident that their kids are going to be able to manage their finances successfully.

So less than half of parents, just in general, across the board. 24%, about a quarter of parents regularly talk to their kids about money, so that’s really interesting. If you ask young adults, so 18 to 29-year-old young adults, only 39% really feel confident in their ability to manage their finances, and the most staggering of all is going to be 70% of wealthy parents worry their children will become entitled as a result of their inheritance.

So, so many pharmacists and pharmacist couples, dual-income couples, financially free, they retired early, they’ve reached independence and they are worried that their kids are not going to know what to do or even worse, become entitled because of that inheritance.

[0:08:57.1] TU: And you see the seesaw effect. I think you’re speaking to some of it in a literature, where you know, you often may see this in terms of someone who is you know, first generation you know, college or you know obviously, had to work very hard for what they have and then we get to a point of financial independence, they’re building wealth, and they’re worried about that shifting back to the next generation.

So you can see some of these patterns go back and forth. I’m curious to hear your thoughts. There are states, we see an expansion across the country, it’s happening with more states requiring personal finance education in K through 12 but from your experiences, you know, how much of this do you think is valuable foundation from a classroom experience versus you’re just at home?

You’re living life, you’re having dinner conversations, you’re at the grocery store, you’re working through the budgets. Again, you know sometimes I even notice my kids are picking up on Jess and I, my wife having conversations that they weren’t even intended to be a part of but I can tell they’re picking up things and it feels like that learning environment is really where the richness is happening of this topic coming to life.

But perhaps there’s also value in some of the foundational education that we’re seeing, you know hopefully, more in the higher education level as well but also in the K through 12. What are your thoughts there?

[0:10:11.7] JM: Yeah, I agree, it’s an all of the above model. So you can learn and different children learn in different ways. I have a saver at home and you probably have one somewhere in your bunch as well, where everything that they can get their hands on about learning how to save money and save money, and so that topic comes very naturally for us to talk about.

However, I have another one that is a very creative brain, can’t keep $100 in his pocket past Christmas morning. Yet, they receive that same kind of foundation in their academic journey or didactic kind of classroom journey. I love what you said about sharing and kind of pulling them into those conversations.

I will also say that there’s financial literacy and then there’s common sense and as parents, there’s not a textbook that tells us how to do this. We’re all writing this individually, just like our financial plan, your family dynamic is not something that you can find, and check out a library and check all the boxes.

So as you approach these topics and areas, sometimes parents can be the best storytellers, what did you do growing up or how are you raised or what were some of the maybe dumb decisions you did with money and how do you share those in a way that is more memorable and meaningful to your kids. So I think it’s both.

[0:11:29.6] TU: It’s interesting, you just talk about a saver and a spender and perhaps you’ve got others that are in between that or more balanced. You know, I see the same in my boys. My oldest, classic saver, my second born, much more creative, you know, if there’s a need in the moment, you know, I’m going to spend the money.

But what’s interesting is, I find myself projecting my tendency, my feelings around what’s good or bad onto them and I’m trying to be very careful of that and I think that’s one of the things I want to talk about here for a moment is that as a financial personal finance nerd, as someone who is focused on you know, saving for the future as we often say on this podcast, we really believe a good financial plan balances living a rich life today and saving for the future. Both have value.

And I tend to put too much weight into the future at the expense of today, and I think that being careful of both the projection but also attaching the positive or the negative emotion, you know, to the behavior. So you know, I could very easily affirm in my oldest, “You’re doing a great job saving” right? Because that resonates with me.

But I think there’s a period where he’s really going to have to learn, you know, that it’s okay to invest in experiences and make sure that we’re present and how we’re spending money today and perhaps with my, you know, second born that – or he’s enjoying more the moment and the present that we can work on also focusing on saving for the future.

So I’d just be curious to hear your reflection on thoughts of what you’ve experienced both projecting your personal finance scripts behaviors on your kids and how you can help balance some of that conversation.

[0:13:00.7] JM: Great points and I couldn’t agree more. I think when you attach emotions to money, it’s kind of like as a parent, you want to talk about eating healthy or managing your time well but you don’t want to obsess over it, you don’t want to make that all that you talk about at all and so I like to think of money as just a currency, something that you exchange for something that you want.

Whether it’s food or whether it’s time, to me, those really stand out as important to balance. Knowing that how you were raised, everybody has kind of things that they came up with or you know, they remember the one time you went out to eat growing up because it was your birthday and all the rest, you did home-cooked meals and there will be times that as families, you make decisions and choices and you might share with them why you’re doing that.

Why you drive a used car instead of a new car or whatever it is that’s important to your financial plan, pulling the kids into those conversations but then also sharing with them more under the hood of why to me is really important because children today, if you’re listening to the podcast, they’re very likely to be growing up in a different socioeconomic class than how the parents were, than how you and I were raised and I see that creep up everywhere.

I see that as that “E” entitlement word but then I counter it with money is not a four-letter word either. Money doesn’t solve all of these problems and when you put this like a prize, dangled it, you know, someday, always happens. How are you preparing and being intentional for that someday? As parents, kids are going to grow up, we blink and they’re in grade school and we blink and they’re graduating and we blink and they’re moving out of the house, hopefully.

And so at the same time, that someday is going to come and you only have so many days, weeks, months, with them to impart all of this knowledge. So figuring out what’s important to you at home, how do you share those stories and share them well and it takes a little bit all the time.

[0:15:02.4] TU: That’s beautiful, I love the wisdom there. Julie, when we talked to – a few months back, you mentioned a concept that I thought about often since that conversation, which was around the loss of generational wealth. Tell us more about what you see there or what the data shows in terms of the transfer of that wealth and how it may be lost.

[0:15:21.7] JM: Absolutely. Some people call what you’re talking about, that transfer is the short sleeves to the shirt sleeves generation. So basically, folks that are able to become financially independent, retire early, fire movements, they are generating a lot of wealth, and 70% of the time when it gets passed down to that first generation, it will be spent or consumed or divided up in a way that is not materially passing down to the next generation. 70%.

[0:15:52.6] TU: That’s wild.

[0:15:53.7] JM: Taking a generation further, so you and I will have grandchildren maybe someday or grandnieces and nephews, 90% of our wealth that will be passing down will not be material for that grandchildren generation. So you see this in the movies, you see this in Hollywood, right? Wealth is lost because of the shift in generation and there’s a couple of things that really play into that, which is just fascinating and it all comes down to just three really basic things.

Lack of financial literacy. If your kids are growing up without having to worry about where their food comes from and their basic needs, they may or may not be as literate in being an adult. I call it life lessons in adulting, that’s my job as a parent. I think also another thing that plays into that is lack of clear financial goals and expectations. As a parent, what are you expecting your child to do? Do you expect them to never have to work again?

So that short sleeves that you’ve created that they grew up in, might mean that they’ve got to go back to work mid-life or after they graduate. They don’t have just a very expensive piece of paper that’s their diploma, they actually have to use it and then the third and final one I think we as parents but also society, the world we live in today, especially, you know, in the US economy would be that sense of entitlement or that sense of complacency.

That inheritance is going to take care of everything or on the flip side, the government is going to take care of everything, or student loans will all be forgiven and it will all be fine. So those real three things are a big part of how generational wealth is just kind of lost and that’s where I really focus on generational wisdom, in addition to or expanding upon generational wealth.

[0:17:38.2] TU: I love that, right? Because the generational wisdom can transform, lead into generational wealth but sustainable generational wealth, which is really exciting and I think we do have some very unique circumstances right now that make sense that if there’s not some of the lessons learned or the experiences, some of the hard knocks, right? If you will of getting punched in the face and kind of figuring out what you need to do differently.

I always share that in my journey paying off way too much student loan debt and making some you know, very significant but obvious mistakes as I now look back on, “Yeah, well of course, I could have done that differently” those are all valuable lessons at a very early stage of my career that there were some costs to them but if you look at that, in terms of the lessons learned and how you’re able to grow from that over the next 30 to 40 years, there’s some gratitude to those mistakes as well and some of the learning that it can happen in that also.

[0:18:31.4] JM: Absolutely. As parents, sometimes we want to protect the kids and we want to block and tackle from life and then we, when we reflect upon our own experiences, that’s often where we learned the most, was when it was hard and navigating with your kids where our safe places to make mistakes versus where those will follow you for a very long time or be much more detrimental or impactful.

[0:18:53.3] TU: And we’ll talk about strategies here in a bit but I think that’s the mindset I often try to carry is, you know, even as they potentially make some mistakes and learn and you know, maybe there’s some emotion or tears that come from those mistakes, it’s within a very safe sandbox that they’re playing right now and so this is the place, this is the time, you know, to stretch their wings a little bit and let them learn from those mistakes along the way.

Julia, I think we would both agree that it’s important to do some self-reflection on our own experiences with money, the money scripts that we grew up with, the stories that we tell ourselves related to money before we even think about how we’re going to execute and teaching our kids. So tell us more, not only in your own personal experiences but what you’ve read and worked with others, why is understanding these money scripts, what we carry around, the stories we carry with us is so important as we think about teaching our kids about money?

[0:19:45.3] JM: I think it starts with, “Are you a saver or a spender?” Like just knowing that that inherent side of you means there’s somebody else on the other side of the table or the other side of the aisle. Maybe it’s your partner that you’re just kind of at odds with and you’re trying to understand, “Well, from my perspective, it’s this and from their perspective, it’s that.”

For me, I think it’s growing up with what’s the value of money and in an age where I grew up, it was a lot of you work hard for money and you put in your hours and you clock in and you clock out, and then at the end of 60 years, you can retire and so I carry that with me and I find that when I start telling those stories, the average time of employment for someone who is in their 20s is less than a year, right?

And so as we’re hiring pharmacy technicians or as I’m talking to my kids about their first job, you know, the longevity piece is just so very different, and so I think reflecting upon your own stories, maybe you grew up in a scarcity mindset or an abundance mindset or maybe you grew up with Dave Ramsey or you grew up with Robert Kiyosaki, both very different approaches to debt but asking yourself those questions, “Do I think debt is bad?”

“You know, do I think being rich is good?” and then asking your kids those questions that you get very, very different answers. The types of charities that I’m interested in are so very different than my kids and it’s based on maybe some o those stories you told yourself or what you were exposed to growing up and always remembering that the stories our children are telling to your grandchildren and then well after you’re gone, are going to not include you.

So what are you doing today to make sure that they’re either seeing or being part of some of the things that you’re passionate about and then realizing that their freedom and their flexibility is, they’re going to do whatever they want anyway and so you could just hope and pray that they are making the wise choices rather than just the easy choices and our job as parents is navigating those experiences.

[0:21:51.6] TU: Yeah, and I think this validates to me what you’re saying, you know, obviously if you’re talking about kids and money certainly but also even in our own financial plan, whether you’re DIYing it, working with a financial coach, working with a financial planner, it’s so important to peel back the layers here and understand the why behind so many of the decisions that we make or don’t make, right?

You ask some great questions, how do I feel about debt? Does debt have a good connotation, does it have a bad? And you gave the spectrum, right? Dave Ramsey to Robert Kiyosaki, leverage to no debt and what I often share with folks is we have to understand and be honest with ourselves about how we feel without judgment to it before we can enact a plan that’s going to take that into consideration.

Take your future goals into consideration, establish what your risk tolerance is, and maybe there’s some movement on that over time but you know I think often, we carry a lot of judgment around those terms, right? Debt and leverage and how do we feel about that and you know so often, that we’ll go back to the stories that we’ve told ourselves, the experiences that we’ve had along the way.

I would love, Julia, if we could spend the remainder of our time breaking down and picking your brain on how we might begin to approach or think about approaching this discussion of kids and money in different age groups and I’m going to be eagerly awaiting to hear what you have to say about the elementary age and pre-teens because that’s where my boys are at but also that we could talk for a bit about teens and young adults.

I think I love that you consider this as a journey from elementary to young adults and certainly, there’s a lot of work to be done along the way. So let’s just go through this one by one and thoughts you have on you know, within each age group, what are some areas that we might want to focus on. Are there specific types of activities or teaching strategies that we might employ? So let’s begin with elementary age.

[0:23:41.3] JM: Absolutely. So I think you start about mindset shifting, right? So you talk about, “Okay, this is the lesson you need to learn, and here’s the competency that I’m going to use to asses can you perform this task or this skill?” I think there’s an art and a science to it.

So as we got through these different ages, just like what the financial plan age isn’t everything, money isn’t everything and so it’s going to have a different experience. Each family is going to have a different experience. If you’ve never had the talk with money, that talk with your kids. Don’t feel overwhelmed. I want you to feel encouraged and inspired and empowered to pick one or two of these.

Please don’t try all of these, day one, you’ll get, you know, eye rolls and, “Mom, this is a fad and this is going to go away” or that’s not how we do it but what’s different. So lean in and start with that mindset shift of, “I deserve” is often something you’ll hear your kids say. All the ages say it, “I deserve.” We as adults say it, right?

I went to college and I have a PharmD, “I deserve…” Let’s reset that as we go through these, into, “I am responsible for.” What am I responsible for? That kind of gives you some accountability along with that and then when talking with kids and you might have had this question like, “What do you want to do when you grow up? What do you want to do?” And tying everything about what you do as what generates money or what you do as your value in society.

Let’s shift that. Who do you want to be? I’ll say that again not “What do you want to do but who do you want to be?” and if we can approach some of these life lessons with that in the background, the tactical pieces I think come a lot easier. Meal times are my favorite, everybody’s all together, we’re a big family, we have five kids and sometimes you will get the most random of conversations, and other times you’ll get different perspectives.

So I would encourage everyone if you have a regular meal time, maybe you had it a lot during COVID, we’ve kept it since COVID like that’s our protected family time but find a time that kind of works for you but meal time are great to cover some of these topics and especially in elementary. We’ll jump in there first, explaining money like what is money and why do I need it, like why is it so important, right?

How do you really break it down that it’s just a reality of life and it’s important to understand in the way that you learn all these other things about science and math and reading like money is inherently in there. If you study social studies like lots of governments have problems with money, lots of people have problems with money. Why are they fighting over this, can’t they just share? That’s a really great question.

Understanding where money comes from, as our generation I say it usually just was money comes from hard work and that’s an easy answer. As we get into the digital age and as we get into passive income and some of these more advanced topics, I think I am starting to shift my vocabulary a little bit. It is not just hard work but smart work, so how are you working smarter and not harder, which sometimes will come back to bite you when they’re doing their homework and they’re like, “I just worked smarter and not harder.”

So making sure that if even in the elementary age you are paying for chores or you are paying some sort of an allowance, that’s a hot topic, that you are paying for the behaviors you want or you’re incentivizing the performance that and the effort. So it might not be that they clean the windows perfectly but if they worked really hard on it, you want to reward and encourage that just as much as straight As on a report card.

If it was super easy, that might be a different level that each kid and each situation is going to be different.

[0:27:21.4] TU: I have found, Julia, with my boys, high energy, I have found that engaging them and teaching them through engagement is where I find the most value. So there certainly are, you know, we’ve got a regular dinner time at home and as you highlighted well like topics of conversation are very fascinating at the dinner table and what directions we may go and so that occasion will come up and often it will be you know, my son or one of them over here as my wife and I talk and ask a question and bringing them into that conversation.

We’re out at the store and they are asking questions or you know, I’ll never forget my oldest, whose soon to be 12 when he was four or five, we were at the grocery store and he looks at me and he says, “So dad you used that card and then you get what you need” and I was like, “Oh” like lots to talk about here, right? Of credit and debit and how money gets on a card and you know when I grew up I remember vividly my mom paycheck to the bank, cash went into envelopes, we spent from the envelopes.

You could see the direct connection from work to the paycheck to the money to the spending and with all the advances and positives that have come from obviously the technology and what that affords us, you know that could be harder to grasp onto at a very young age like in elementary age.

[0:28:39.0] JM: And I think the envelopes is a great way to do it, especially at the elementary age and I say that money has you know, three purposes because they’ll say, “Well, what’s money for?” and I say, “Saving, spending, and sharing or giving.” Some people use sharing, some people use giving and then I will invite them into that conversation to say, “Here is an example of here’s how we’re spending our money today” or “Here is how I’m saving my money” or Here is how I’m giving or sharing.”

Having those conversations with them about, “Well, where would you like to share your money, where would you like to give some of your money?” or okay, each had a birthday, “What’s an amount that you’d like to save?” “I don’t want to save any of it” “Well, we’re going to talk about you know, how in that envelope you’ve got to have something, and before your birthday, you said that you wanted to have half of it in your savings envelope.”

So it is less about the amount, it is less about compound interest at this age. It’s more about can they see those dollars and can they see them adding up overtime and going to the bank is fascinating. How many kids have actually ever been into a bank, turned in the coins and they count it for them and then they give them a piece of paper and like, “It’s worth this much.” You know, my saver was concerned that he had to turn in all those coins.

He’s like, “Why? I want them back, I just want to know how much is in there” and then like, “No honey” “They went into a machine and they’re not coming back.”

[0:30:04.6] TU: Yes and explaining some of that banking, I had a very similar situation with one of my boys where I think they got cash, maybe it was a check for their birthday and we put it into an online savings account and the view was, “It’s gone, I just gave my money, what the heck?” like it’s gone and you know then you get into all types of conversations about banking and interest and all that when the time is right but it can be very confusing. What about pre-teens and teens? What are your thoughts there?

[0:30:29.3] JM: I think pre-teens and teens, understanding that money is not just for saving, spending, and giving but stepping it up a notch of it’s to provide for your needs and your wants and discerning the difference between what do you need and what do you want and I say a lot if they jumped on this podcast would say the same thing is, “Mom and dad will always provide our needs but we’ve got to figure out how we’re going to work for our wants.”

So we’ll always provide for your needs but we’re going to work together to figure out how to provide for the wants and so I think that those responsibilities and accountability are learned behaviors. If they’ve never had to count back change or they’ve never had to shop from a budget before, now is the time to start pulling in maybe some of that vocabulary, back-to-school shopping depending on if you’ve got boys or girls, there’s different shopping expectations already in the pre-teens.

Annual subscriptions or they think that Netflix and all of the streaming things are just – they just come with the TV, right? So every time you have these little opportunities, you get a new piece of technology and you’ve got to upload it or buying in the app store and currency like they want Roblox dollars, right? They want to figure out how to do this, so often it’s getting under the hood even further to explain like why something was purchased and just as importantly, why didn’t we purchase it and then have them kind of identify, “How do you think that aligns with our family values?”

How do you think that aligns with what we’re doing? Especially in the pre-teens these are some of my favorite situations and tell me if these resonate with you at all is, “Buy this, you can afford it, right?” and so maybe an alternative would be, “We want to spend it differently.” So they see the neighborhood you live in, they see maybe not the background you came from but what they are experiencing today.

The schools they go to, the friends they have, the sports or the activities they’re doing, the extracurriculars, all the blessings that are around them like doesn’t mean that we’re going to continue to fill all of your wants. We as a family are going to spend it differently, “But Mom, I need it. I need it.” “Well, is this a need or is this a want?” having some of those conversations. “I really want this like I really want this.”

“Okay, well, what are you willing to do to earn it?” maybe it’s through good behaviors, maybe it’s through money, figuring out what that currency is, maybe it’s screen time. You know, figuring out what that currency is so that they can identify making wise choices with the results and the outcome that they want and sometimes that’s delayed gratification. Sometimes we make them wait until payday on Friday after they did their chores.

Probably don’t do that at elementary but pre-teens probably could start thinking about a little bit of delayed gratification and then one of my favorites is on the flip side, it’s not just on the spending side but the saving side when they see how much something is. “Well, I could never save that much.” “Okay. Well, how long do you have to save?” So when something starts to get more zeros behind it, especially in your pre-teens.

If you shop for them for Christmas or birthdays like the zeros get bigger and so I will often ask, “How long do you have to save, and what are we going to do to match funds or what are we going to do to think outside of the box?” So my favorite has to be this funny story about, “Okay. Well, we’re saving. Can I just buy a whole bunch of lottery tickets and that will be my investment?”

So we had the conversation about how lottery tickets are not retirement, lottery tickets are not an investment, and that just you know, and we explained how it works and how can you just win a lot of money and what does that mean and so sometimes, I tie back just generational wealth without the wisdom is playing the lottery. It’s leaving your legacy to a lottery rather than being intentional and passing it on.

Pre-teens to me probably should get a bank account. There are many rules around minor bank accounts in different ways to do it, tons of information out there. I am not the expert, I don’t have referral or affiliate links, find something that works for you. Some people have investment accounts, some people let them see it but pre-teens if they are part of the process, they’ll see it’s not easy to just have a bank account.

So even if it’s the exercise of creating a new one, now is a good time. I do think before you get into anything digital like a debit card or credit card even, probably not a pre-teen credit card, physical money. Spending USD 20, giving them a budget and I often let them keep the change, so I let them start to be a little more price-conscious of, “Okay, we’ve got USD 20 to feed three people. Who gets a soda and who doesn’t?”

They will be like, “Ooh, I don’t want a soda, I want an ice cream.” “Well, it spends differently when you got to keep the change” versus “If mom is just going to pay for it and you can have whatever you want.” So I think yeah, pre-teens is really where the rubber hits the road and you start to get the varying personalities that show up, just meet them where they are. There is not a right or wrong, money lessons come sooner than later for some and later for others.

[0:35:29.8] TU: Yeah and what I’ve observed and you have the experience with teens and young adults that I haven’t got to yet is you know, I can see with my oldest who will 12 here this summer like really in the last year, year and a half, the questions are coming forward, the light bulbs are going off, the signs are there, wanting more independence or responsibility and kind of leaning into that and stepping into that.

But I can already tell, his three little brothers are perhaps going to get there a little bit faster because guess what? He’s paving the road, you know we’re working through that with him and you know the other three are naturally involved in those conversations that are asking questions and I think that just speaks to the difference between them, meeting them where they are, and you know really engaging in the conversations along the way the best that you can.

One of the things I’ve heard others do with teens especially later teens or maybe in that gap before they start earning their income if they are working a job is to start shifting some of the dollars that maybe you know you’re going to spend back-to-school clothes if you have a budget for your kids or it could be for certain more the discretionary types of expenses that you know are going to be accounted for in your budget.

But to start to shift those dollars and the responsibility of those spending of those dollars to them for management, for learning, for getting to some of the realizations that you’re talking about here of how far might the dollar go, is it a soda, is it ice cream, some of these decisions and I really like that stepping stone and obviously once you start earning and come, I think that comes to light even a little bit more.

But if I know I am going to spend USD 100 for my 14-year-old on back-to-school clothes, can I give them to him to manage that and kind of work through that as well? What are your thoughts on that?

[0:37:14.7] JM: I love that idea and we’ve actually grown into that. So it started with athletic shoes because you know at some point the ones that you buy for them on sale or clearance just don’t cut it and you know we’re very privileged and blessed to have that problem and so I would give them a dollar amount for their shoes. Anything more than that had to come out of their budget.

I am providing for your needs, you have to queue us if you will, to the want and then that has evolved into the bigger things like prom. You know, you’re going to have to pick between are you doing your hair or your nails and new shoes or eating out. We’re going to give you a set dollar amount and then this year when prom came around, it was, “What about inflation?” because I just reset with the same amount from last year and –

[0:38:00.3] TU: Well, if they’re asking about inflation that’s a good sign so.

[0:38:03.8] JM: I thought that was very entertaining or to the other one that did not go to prom, he’s like, “Do I just get to keep it if I don’t go?” “You bet, that’s for you if that’s what you want to focus on and do instead and do a different social activity.” It is interesting the way that money spends when it has ownership that’s belonging to the kid and that ownership I think is really important.

At this age, especially in teens maybe they’re too busy with extracurricular or they’re too busy with their academics to have a job or a part-time job. I think there’s a balance here and are you working because it’s you need to provide food on our table for us at home? Probably not, maybe it is, and that’s okay, but for us, we actually encourage them to volunteer in something they were passionate about.

It’s a safer place to fall if they no-call no-show. It’s a safer place to interview. It’s less competitive, especially where maybe there is some social apprehension or during COVID there was not a lot of face-to-face interaction. So where these common sense skills and we would actually pay them for their volunteer hours, whether it’s through church or whether it’s through the community organization or the senior center and really encouraging them to take a risk of something they’re interested in outside of our family bubble.

For us, that worked, that might not work for all families, but the value of hard work to me says you can also see that in volunteering, less about earning a paycheck per se.

[0:39:36.9] TU: So knowing you have a freshman in college, let’s talk about the young adult phase, right? Our work isn’t done when they’re a graduate from high school, and I think maybe these are exciting but also tricky conversations, increased level of autonomy and independence, you know, maybe less direct control and observation of decisions that are being made. What advice would you have for folks here as it relates to parenting young adults when it comes to money?

[0:40:02.8] JM: Something does not magically happen when they turn 18 from a cognition standpoint; however, in the letter of the law, they are now fully-functioning voting adults and they will tell you all about that as well. So funny story, a week after my now 19-year-old turned 18 and I share this story with permission, she came home and said, “Hey, I was at the dentist and I signed this thing, I am getting Invisalign,” and I saw the bill, and I saw the paper and the copy.

I said, “Why did you sign this?” she goes, “Well, they said that I should.” Okay, so when it comes to common sense and in all households, there will be those things that you come home and you’re just like, “As long as we can recover from this, I think this is going to be okay.” So it turned out there was a conversation and that she was part of that customer service call that just said, “Oh, that was an estimate, not a real one.”

“We would never have them just sign away and not be able to pay for it,” but I thought that was really interesting that something magical happens and that we, as parents, if you’ve got a senior now, you probably have four or five weeks left of lessons with them, weekend dinners or weekend events. If you’ve got a middle schooler, you might have a few hundred weeks left, that’s it, and so very quickly, you realize you ran out of time before you ran out of things to teach them.

So get the big things right as it relates to what is a value or piece of your family. What are the big things? Are they signing for student loans solo or not? Are you cosigning a credit card for them or are they getting it themselves? Are you walking them through safe ways to navigate borrowing money for whatever it is that they want? Are you making them save up cash for a car or not?

Used cars are expensive these days, and the conversation I had was, “I can’t come up with USD 5,000 in a year and live,” and I’m like, “Well, it’s 13.27 a day” and she’s like, “Oh, okay. We might be able to do that eventually” and so I think that it comes with the financial lessons along with the legality. The problems get bigger as they get bigger, and the risks get bigger. So something as simple that you and I might do, like call customer service and cancel an overcharge.

Where are they looking to see that there were overcharges or incorrect bills? Are they Venmo-ing each other and hitting the purchase icon? That means that you paid your friend actually less because they kept a percentage of it. So what are the technical pieces navigating? Opening a Roth IRA is something that we did with our now 18-year-old, but that is not something I can do on her behalf.

She’s got to do it, and then we can walk through how do you transfer funds, how do you match those funds, all of those things that just magically happen that we learned overtime I think, is compounding in a quick way for young adults for sure. Vehicle research, how many of them have ever been into the DMV? They took their ACTs online, you know? I remember we have two drivers in the house now and both of them were just amazed at the amount of people and the types of people that waited to the last minute, or they’d never had a license, or that there wasn’t a fast pass.

They’re used to being able to buy things as a fast pass or early boarding, and they’re like, “Can’t you do that here?” “Hmm, let’s talk about entitled just a little bit. We’re going to stand here and talk and have a conversation because cellphones aren’t allowed in the line,” and so all the things you’re doing as an adult, renewing insurance premiums, homeowners insurance premiums, pick one thing, teach about it, talk about it and then at some point, it’s going to be teaching them to navigate those landmines.

What are those keywords to really look for or watch for that can be powerful and it can be dangerous? Buying things and investing in yourself, buying assets even though young kids know, “We buy assets not liabilities,” but do they really know what that means? Comes to fruition when you have more zeros in your bank account as a young adult. Whether it’s from a big giant student loan refund or at the beginning of the semester, you’ve got to live on it.

There is a difference between buying assets and just consumerism. There is a difference between signing and cosigning, especially to people you’re not married with or especially with roommates, having a written financial plan and then sticking to it. At the beginning of the semester, you say you’re not going to spend at all, but by the first week of Christmas, if you are hungry and you’re coming home for food and laundry, let’s have some conversations, or you didn’t budget for laundry because these places say, “laundry included.”

But they didn’t realize, funny story, that they are coin-operated laundry and you have to go now and cash in cash for coins for coin laundry. So that’s where that common sense piece comes in, but really safe teaching moments, where are the things that they can kind of slip up on and be okay and where is it when there is a car accident, and you walked away because you didn’t think there was anything worth calling your parents about is a different conversation.

Where does the deductible come from when the car hits the garage? Those things happen, and as parents, we want to jump in and fix and there may be some lessons there that we want to slow down a little bit and say, “We can financially fix this but what’s the lesson here that we might be avoiding if we’re not encompassing them in those conversations?” As kids get older, they start dating, and they date seriously, and for all of the singles out there, prenup is a scary conversation.

Inheritance is a scary conversation but as it takes you into your dating life and your long-term life, I think those in the financial world say, “You know, your best and biggest investment is a healthy and happy marriage” or a healthy and happy cohabitation. Whatever those are, really can have lifelong consequences, especially as it comes to large inheritances and different things like that.

You also have a luxury tax on families that have a lot of wealth associated, either with their name or with their family or with the reputation that they have and you’re going to be targeted for lots of things that might not be as altruistic as you would think and being aware of those and how do you have those healthy conversations. Insurance plans, everybody has a will, I hope if you’re a listener.

If you don’t, stop what you’re doing and start with that and then you have to talk with your family about it. Our kids know that we have a black book, unfortunately, it’s black, that has all the things in it and they know about it and they know that every once in a while, we’re going to have to pull this out and talk about it and not because it’s something we want to pretend doesn’t exist but because that’s part of being an adult too, it’s thinking about us getting older.

[0:46:45.2] TU: So much wisdom there, Julia, that was fantastic and I think it connects to many other topics as well. You know, you talked about estate planning, you mentioned the cosigning, you know just so much to think about the insurance side of the plan and what’s really jumping off the page to me, especially as we think about the conversations with our kids at all stages is really the ability to have an open dialogue and a conversation, which goes back to the foundation we’re setting, the relationships that we have along the way.

To your point, there is going to be more topics and we probably have time to cover with our kids, especially if we’re getting a later start on this and so how can we build to that trust, some of the foundation, the open conversations that when those difficult conversations or situations happen and they’re out of the house and they’re at college, you know we have a foundation to work through those and make sure we’re addressing the lessons to add to the wisdom, right?

Wisdom to the generational wealth as you said earlier, I think is such a powerful way to view this. Where can folks learn more about you, follow your journey, connect with you as they hear this episode?

[0:47:49.0] JM: Absolutely. So you can find me on all the social medias, Julia Myers RX, and if you’re interested in a free download, I’ve got five family financial conversation starters for all ages at generationalwisdom.co, that’s generationalwisdom.co. I would love to connect with you, hear your journeys, share your stories, as parents our job is big and we find support with each other in sharing these stories and these conversations. So looking forward to keeping in touch.

[0:48:21.1] TU: Awesome. We will link to those in the show notes. So Julia, thanks so much again for joining the show.

[0:48:25.6] JM: Thank you so much, enjoy your day.

[END OF INTERVIEW]

[0:48:27.8] TU: Before we wrap up today’s show, I want to again thank this week’s sponsor of the Your Financial Pharmacist Podcast, First Horizon. We’re glad to have found a solution for pharmacists that are unable to save 20% for a down payment on a home. A lot of pharmacists in the YFP community have taken advantage of First Horizon’s pharmacist home loan, which requires a 3% down payment for a single-family home or townhome for first-time home buyers and has no PMI on a 30-year fixed-rate mortgage.

To learn more about the requirements for First Horizon’s pharmacist home loan and to get started with the preapproval process, you can visit yourfinancialpharmacist.com/home-loan. Again, that’s yourfinancialpharmacist.com/home-loan.

[DISCLAIMER]

[0:49:11.8] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and it is not intended to provide and should not be relied on for investment or any other advice. Information on the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archived newsletters, blog post, and podcast is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analyses expressed herein are solely those of your financial pharmacist unless otherwise noted and constitute judgments as of the dates published. Such information may contain forward-looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.

Thank you again for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 202: How to Teach Your Kids About Money and Investing

Posted on May 6, 2021November 2, 2022 by yfpadmin

How to Teach Your Kids About Money and Investing

On this episode, sponsored by Insuring Income, Tim Ulbrich welcomes Dylin Redling and Allison Tom, creators of Retireby45.com and authors of two books, Start Your F.I.R.E. (Financial Independence Retire Early): A Modern Guide to Early Retirement and Investing for Kids: How to Save, Invest and Grow Money to the show. Dylin and Allison talk about their FIRE journey and share practical advice and meaningful activities to teach kids about money and investing.

About Today’s Guests

They own and operate the website RetireBy45.com, which provides inspiration, tips, and resources for achieving FIRE (Financial Independence/Retiring Early) and making the most of the FIRE lifestyle. In 2020, they wrote and published two books: “Start Your FIRE: A Modern Guide to Early Retirement” and the best-selling “Investing for Kids.”

They love food, fitness, and travel. Their goal of “60 by 60” is to visit 60 countries by the age of 60. They are halfway to their goal with another 10 years to go!

Summary

Dylin Redling and Allison Tom, creators of Retireby45.com and authors of Start Your F.I.R.E. (Financial Independence Retire Early): A Modern Guide to Early Retirement and Investing for Kids: How to Save, Invest and Grow Money, join Tim Ulbrich on this week’s podcast episode. In this interview, focused on their book, Investing for Kids, Dylin and Allison share their creative process and some of the practical and meaningful activities that can be found in the book.

Allison digs into some of the motivations behind Investing for Kids and talks about why they choose to have superhero protagonists. She explains that she and Dylin not only wanted to make the book educational for kids, walking them through basic concepts of personal finance, but also wanted the activities in the book to be fun and exciting for kids to participate in rather than having those activities feel like more homework.

Dylin and Allison also share their own experiences, growing up with different financial knowledge and money lessons, and how those experiences plus a series of calculated financial decisions brought them to be able to retire in their early 40s. Dylin and Allison remark on their time as retirees and the freedom that they have been afforded because of it. Their goal of “60 by 60” is to visit 60 countries by the age of 60. They are already halfway to their goal!

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Dylin and Allison, welcome to the show.

Allison Tom: Thanks for having us.

Dylin Redling: Thank you very much. Great to be here.

Tim Ulbrich: I’ve very much been looking forward to this interview to talk more about your story achieving financial independence and early retirement and more specifically, the work that the two of you did in writing “Investing for Kids: How to Save, Invest, and Grow Money.” And Dylin, let’s start with you only because we share an Ohio State connection since you’re an alum so go Bucks. Why write a book specifically designed for kids about investing? What was the motivation behind your work?

Dylin Redling: Yeah, well, first of all, go Buckeyes. Yes, a great connection there. It’s interesting because I’ll start off with the interesting fact that Allison and I actually don’t have kids. And so you would think that the impetus would have been we had our own kids and we taught them financial literacy and it inspired us to teach more kids. But in fact, we sort of stumbled into this book. This is our second book. Our first book is called, “Start Your FIRE: A Modern Guide to Early Retirement.” And it’s all about early retirement and financial independence, which that book just poured right out of us because it’s something that we live and we know very well. And what happened was the publisher who we worked with on that book came back to us a couple months after that book was published and said, “Hey, we have an idea for this other book. And it’s investing for kids ages 8-12. And what do you guys think because you know about investing and financial concepts, and we think you guys might be able to pull this off.” And we thought, wow, we don’t have kids, we’re not teachers, we don’t hang out with kids. We have a few friends with kids, but we don’t spend a lot of time with them. And so we thought, man, this sounds really challenging and daunting. But it was during the 2020 year of COVID, so we had a lot of time on our hands. So we thought, let’s just go for it. And we dove into it, and it was very challenging because we wanted it to be interesting for kids and informative and fun but somehow, we put our heads together and we had a really good editing team that helped us with some of the concepts to relate to kids. And that’s — and we just dove into it and we just made it happen.

Tim Ulbrich: And I think you guys did an awesome job. You know, one of the things that stood out to me as my wife and I were looking through this book as parents of four young kids trying to teach this topic of money is that’s it’s very hands-on, it’s relatable, it’s digestible, lots of activities, really cool ideas. You know, I often find myself, especially writing, talking about this topic regularly, presenting on this topic, you take for granted how you learned some of this information along the way. You know, I often think, OK, take a concept like compound interest or, you know, mutual funds or index funds or ultimately trying to determine what your retirement savings goals, any of those concepts, and it’s very easy to get lost in the weeds. And I think it’s often hard to figure out, how am I going to break this down and teach this with my children and really work through this? And so I found myself looking through this, not only learning myself of oh, that’s a really neat way to teach a different concept or a very visual way or a nice activity to apply that information. So I think as I looked through this, whether someone is more advanced in their own knowledge and understanding of personal finance or whether they feel like they could also learn from these concepts, either one I think this book could be a really good guide for them alongside of working with their child. So great work in the work that you put together with the book. And Allison, knowing your background is a technical project manager, I’m curious, I mean, how and why did you catch FIRE — pun intended here — with this topic, not only as an individual pursuit for financial independence but also in wanting to help guide others to the work that you’re doing with RetireBy45.com and with the book “Investing for Kids.” Where does the interest come from?

Allison Tom: Part of it is that my college degree is actually psychology and education. So I had all these grand ideas of becoming a teacher, an elementary school teacher, after I graduated from college. But you know, after a couple of years, it dawned on me that frankly, our teachers are woefully underpaid. And there was pretty much there was no clear financial path for me to continue being a teacher making the salary I was making, so I was living in Boston at the time and I moved back to New York where we eventually met waiting tables, of all things. And we came out to San Francisco on a whim, we were on vacation, we were in our mid-20s, we thought, alright, let’s check out San Francisco. And so I bounced around from career to career and ended up on a consulting company that eventually brought me into the technical world of the Bay Area. But you know, so being a project manager is basically being a glorified teacher. So it’s dropping people, wrangling people to do things that you want them to do but do it in a way that makes them want to be — work as a team and learn from each other. So in a way, it was being a project manager was — it had very similar tendencies as it was being a teacher. And so we had always thought, oh, it would be great to retire early, but we didn’t really know what retiring early meant. We thought, oh, 55, that seems like a really good age to retire. It’s earlier than 65, but it seems so far in the future. And living in the Bay Area, our expenses were so high that we were like, there’s no way, even if we’re making decent salaries between the two of us that we’re ever going to retire. But about 11 years or so ago, Dylin came down with double pneumonia and was in the ICU for about 10 days and in the hospital altogether for almost two weeks. And that for us was a light bulb moment because he was within a 50/50 chance that he would make it. And so you know, after that, we kind of thought, OK, do we really want to keep working for the next 25 years or so? And so we kind of like made it our goal to get out of the rat race as soon as we could. And so we kind of fell into by accident. We can talk about that later, but it just — it kind of was a natural progression from all of the things that we’ve been doing over time.

Tim Ulbrich: Yeah, that makes sense. And I appreciate you sharing some of the background and story. We’ll come back to how you got to that point of early retirement, obviously as I mentioned in the introduction, early 40s to be able to accomplish that goal, and we’ll talk a little bit about how you got to that path, why that was possible as well. And so let’s first dig into some of the book of “Investing for Kids.” Let’s start with the main characters of the book, the Dollar Duo: Mr. Finance and Investing Woman. Allison, tell us more about these two characters, how you came up with the idea, why it was important to the overall text, and how those characters can really help the learner, again, 8- to 12-year-old is the target group here, engage with the material throughout the book.

Allison Tom: Well, first of all, it was kind of funny, today is actually Superheroes Day, so —

Tim Ulbrich: There we go.

Allison Tom: It’s a perfect segue into the topic. We were actually taking a walk one day as we were writing the book, and we were talking about politics, of all things. And we were trying to figure out in the administration, whichever administration, whoever won the presidency, what each president could do to make their administration better. And so we kind of were talking and talking about of all things, the Justice League of America and who we would think would be a good fit for making this country a better country. And so the whole idea of the Justice League, kind of thought, we thought, oh, superheroes. Kids love superheroes. Let’s talk to our publisher about bringing in some superheroes. And we were like, well, I don’t know if they’ll go for that, there’s some extra graphics involved and it could be expensive, but we felt that it would really be a good way for kids to relate to finances. And so we kind of pushed hard for this idea of having superheroes teach kids finance.

Tim Ulbrich: Yeah, and that stood out to me in addition to how visual it is. This does not — especially for a topic like investing, right, can be weighty at times, it can be overwhelming, I often find myself when I’m giving a talk on this topic, starts with excitement often when we think about what the — and then you get into the weeds and you see the eyes gloss over, right, and other things. And this does not read like a textbook in any way, shape, or form. And I’m grateful for that. So thank you for the illustrations, the activities, the superheroes, but I think it very much reads like an interactive, applicable, nuts-and-bolts, important information, but how do I actually apply it and hopefully get excited about this information. Again, we’re thinking about an 8- to 12-year-old of wanting to really hopefully empower them to be excited with this for the rest of their own financial journey. And I very much read this book, as I mentioned, being a father of four boys who also lives and breathes personal finance, I really do often find myself in conversation with my boys about money. And honestly, I struggle at times with making the topic of money tangible and meaningful. And it can feel abstract, especially when I find myself trying to say and teach a principle that I very much understand but it feels more abstract as I talk it out loud and especially when you start to view it through the lens of a child. And so I like how you start the book with Chapter 1 on Money 101. You cover important topics like money doesn’t grow on trees, ways to earn money, a little bit of entrepreneurship in there, which is really cool, the history of money, where to keep money. And so Dylin, here’s the challenge that I’m seeing with my boys. In the age of credit cards, debit cards, direct deposit, online banking, digital currency, electronic payment methods, it can feel difficult to teach a child about money when you don’t see it. Right? There’s very little actual, physical cash and therefore, it can be hard to connect work and I think the opportunities from work with earning money and therefore, the opportunity to then save and see it grow. So what are some tips and strategies as you put this book together as well as the other teaching you’ve done on this topic about how can we teach kids about money in a way that it can be relatable, it can be tangible, and then hopefully it becomes memorable for them.

Dylin Redling: Yeah, you know, that’s a really good point about money being very digital in this day and age. I remember when I was a kid, one of the coolest things was my grandmother would give me and my cousins 50 single dollars for Christmas and for our birthdays. They would come in a little box just big enough to hold those 50 $1 bills.

Tim Ulbrich: I love that.

Dylin Redling: And — yeah, it was really cool. And you know, $50 back then for a kid was a lot of money. And those 50 $1 bills would last a really long time. I would take them into the arcade, into the pizza parlor, whatever. And so maybe one way to do it is to actually bring back physical money. And I don’t think the amount really matters that much. But like you said, I mean, being able to tangibly feel it, see it, and understand it, it helps a lot more if you’re using physical money. And I’ll actually give an example of that we used on our blog and in actually “Start Your FIRE” book. I don’t think we mentioned it in “Investing for Kids,” but it’s a little story I like to tell about a money lesson that I actually learned from Allison when we were waiting tables in New York. So we met in a big restaurant in Times Square, and Allison grew up with a little bit of a better financial education in her household than I did. My single mother was wonderful, but it was all paycheck-to-paycheck, there wasn’t a lot of saving or investing. So I came into our initial relationship not very good at dealing with money. So anyway, we were waiting tables. So all of our money pretty much was in tips. So we would have tons of cash. And I remember just putting the money — I would wad it up into balls, I would stuff it into all four of my pockets because I was busy. And then we would go out afterwards and Allison saw how I was treating my money, and she was like, “What are you doing? How do you even keep track of that? That’s awful.” And so she taught me this little lesson. And she doesn’t even remember this because this was 25 years ago, but it stuck out in my head. And basically, I call it the Wallet Lesson. When you take all of your bills and you put them nicely, neatly in order from small to big or big to small, whatever works, fold it neatly into your wallet. And it’s really simple, but the reason it was impactful for me is because it just got me to think about how to respect and treat money. You know, you work really hard for money —

Tim Ulbrich: That’s right.

Dylin Redling: And if you don’t treat it well, you don’t respect it, you know, that $50 might not seem like a big deal. But when it gets to $100,000 or $500,000 and you don’t have that same respect and feel for what that money represents and how hard it was to earn it, you’re not going to put it and treat it and save it and protect it as well as you could.

Tim Ulbrich: Such a good example of a behavioral move, right? The number of dollars didn’t change, but how you treated them, how you respected them, how you viewed them, and I think many of our listeners, we talk on this show often that I believe personal finance, it’s about the math and it’s about the behavior, and both of those are very important and some of those types of moves or here, teaching kids in that way, I think can be very powerful as well. Allison, Chapter 2, save your money, you have an activity titled “Be an Interest Rate Detective.” I love this. I thought this was a really cool interactive activity where you challenge the reader to work with an adult to research interest rates for a local bank savings account, a CD, so a Certificate of Deposit, and an online savings account. So again, this was just one of many example activities you have throughout the book, but why is an activity like this so important in terms of someone being an interest rate detective to experience and go through as they begin their journey of understanding some of the basics of investing?

Allison Tom: So part of it is we wanted all the activities to be something that kids could do with the adult in their life. And we didn’t assume that every child has a parent because we know in this modern day and age that families are different nowadays, and you might have two moms or two dads or a grandmother or grandfather or a guardian of some sort. So we wanted something that people could do together with — kids could do together with someone else. And we thought, oh, it’s going to be interesting because banks are closed during COVID. When we were writing the book, it was right in the heart of shelter in place. But we thought, well, you know, kids have access to — most kids have access to a computer, they can at least walk around to a local bank and banks always have their advertisements on their windows with their interest rates. But we thought it would be an interesting way for kids to see what is in their environment and practice some good behaviors like oh, what does interest rate mean? What is APR? Those are, they’re jumbled letters and so you actually learn what the acronym stands for. And so we want to make sure that kids could kind of connect their physical world to their these abstract ideas about money. So all these activities are kind of a way to get kids to start thinking about it, and we were like, oh, kids aren’t really going to want to do activities, it’s extra homework. So we tried to make them fun and things that they could actually do and feel like they were learning something.

Tim Ulbrich: And I think this was a good example where the activity really, to me, is a rabbit hole of other learning, right? So if you go to the bank and do this activity, just like you suggested, Allison, it leads to other conversations and questions like, what is the federal reserve? And what is an insured account? What does that mean? You talk about that in the book, you know, how do you explain the federal reserve? What is compound interest? Why is that so important? What is principle? What’s interest? What do terms mean? And I think it, again, leads to further conversations, which obviously hopefully spark some motivation and curiosity to learn more on this topic. Dylin, in Chapter 3, Introduction to Investing, you cover very important topics, you know, why to invest, risk v. reward — and I love the Risk-o-meter throughout the book, that was really neat — liquidity, the importance of conducting research, and connecting back to my previous comment about the difficulties teaching a child about money when it may not be tangible, you can’t see it, can’t feel it type of a mindset, I think this is another area where parents may feel challenged to teach a child the importance of investing when again, it might feel somewhat abstract and here, we’re talking about delayed gratification, right? So not spending money on something today that has an instant reward. I think back to my childhood, it was driving to the corner store, buying baseball cards, buying candy, you earn the money, you spent the money, you saw the reward instantly. So here, the activity on investing, which I thought helped to really drive this concept further, you talk about an activity of picking a stock and really going through that process of understanding what’s involved there. So talk us through that type of an activity, what’s involved in that, and why that’s important to help a child relate to the concepts of investing.

Dylin Redling: Yeah, sure. It’s interesting because I can also relate it to how Allison and I do our own investing. And most of what we do, to be honest, are buying mutual funds and index funds. We don’t do a lot of single stock buying. However, there are some advantages to just helping a child or anybody, really, think about, well, if you were to buy a single stock, what would the thought process be when you do that? We actually just wrote an interesting post on our blog just about a week ago where we had $10,000 that we wanted to experiment with. And what we did is we selected five different stocks to invest that $10,000. So $2,000 per stock. And I went through the process in that blog post of why we would do this. And it wasn’t to get rich quick or to see what would happen in a week or a month. This particular blog post talked about a one-year time frame. And it’s the same with the activity for the child. I think we used a shorter — a relatively short time frame so they could at least measure their success. At the end of the day, investing, as you know, as your listeners know, it’s very much a long-term process where you’re investing over years and decades. But again, to get the child to think about some of the things that you might want to think about with whether you’re investing in stocks or any sort of investment, what are the things that go into that thought process? And so getting back to that blog post I wrote, some of the stocks that I suggested that we test out, one was a blockchain ETF. So now that bitcoin and other coin-based just went public, those are things that we wouldn’t necessarily invest in directly. But a blockchain ETF is an example of a way you could dip your toe into that technology. So that was the thought process there. Another example was a cruise company, NCL, Norwegian Cruise Line. Now that COVID is starting to disappear and everyone’s getting vaccinated, people, there’s this pent-up demand to start traveling again. So we thought, hey, in the next year, NCL may actually start to do really good. And they even have a program where if you have 100 shares, you get extra bonus points. And so the idea is to think about all the different aspects to that investment, like how does it relate to what’s going on in the world right now? And what other pros and cons are there to that investment?

Tim Ulbrich: Yeah, and I think we share your philosophy. What I heard there is our planning team often says a good investing plan should probably be as about boring as watching paint dry.

Dylin Redling: Right.

Tim Ulbrich: At the end of the day, it’s about a long-term play. But I like this activity as a concept. You know, I remember I had a great Econ101 teacher that had us do a similar activity. And it’s very memorable because it also leads to many other conversations like well, what type of influence does my marketing have? Or I thought this was going to go this way, and it didn’t go this way. Maybe I had some overconfidence in my selection of things. So why is diversification important? So I think, again, reading it and doing it, two very, very different things. And I think people experiencing this firsthand, especially you think of an 8- to 12-year-old, a very kinesthetic learner, right, hands-on experience that moment, be able to learn through that experience. Allison, as I went through the book, many times I thought to myself, man, what if I would have had some of this information earlier? What if I would have had this in middle school or high school or perhaps even earlier? And shoutout to my parents, who did an awesome job of the foundations, grew up in a small business, felt like I had a little bit of a head start. But outside of some K-12 programs and in higher education, I would say it’s largely absent, maybe some elective courses or some opportunities. And so I can’t help but think like, why aren’t we doing more of this? Why aren’t we covering more of this in a K-12 education? I mean, this type of book, this type of experience, these types of activities would be a home run in teaching kids about money. Here, we’re taking 8-12 investing, but obviously we all know it’s broader than that as well. So question here, I’m not asking you to solve the personal finance educational system woes, but why do you think this is not more foundational to our educational system in terms of personal finance education?

Allison Tom: Right. So I think part of it is that our generation didn’t really learn this either. And so as the educators come up with their curriculum, I think honestly, a lot of adults are really intimidated by personal finance. And so it’s something that seems easy enough for them to cut out of the education system as an elective because well, if they don’t understand it, then kids aren’t going to understand it. And if they’re intimidated by it, then kids are definitely going to not understand it and be intimidated by it, so let’s not even talk about it, which actually is one of the reasons why we thought it was important to write the book. We didn’t get this education when we were growing up. I know my parents are second-generation immigrants. And so the money lessons that they learned were from their parents, who grew up during the Great Depression. And as immigrants coming over to this country, they just pooled their money and they saved and they saved and they worked 20 hours a day to make money and then they would maybe invest it in the bank, although plenty of my relatives didn’t even bother with that. So my lessons growing up were save and save and save and save. I had a little piggy bank, and I would put all my coins in from the piggy bank, but that was the only thing that I learned. And so it wasn’t until I got to college, and then I had my first credit card that I just — oof. It was bad. I did not understand the concept of paying credit cards and interest rates and late fees and minimum payments. And so, you know, I got in trouble with credit cards after I graduated. And it wasn’t until after that that I thought, oh, I really need to learn more about what’s going on here. And so I started watching some shows on PBS, but by then, you know, I’m in my early 20s at that point. My learning took a lot longer for the habits to become engrained in me. So you know, I really do think that if kids could see this stuff earlier, it would be so much more impactful. You know, I’ve talked to a girlfriend of mine, her daughter is 17 and she read the book and she was like, “Yeah, you know, I’m going to start doing the savings plan when I get a job.” My friend was laughing because she’s like, my daughter doesn’t have a job. But she was just like, she got inspired by it, and I thought, oh, if we could just get kids to learn this stuff sooner —

Tim Ulbrich: Yeah.

Allison Tom: All the great things we could do with them. So hopefully. Hopefully.

Tim Ulbrich: Yeah, and I love that, to that point, Allison. I think it was early in the book, you have the reader go through an activity where they identify problems, things that could be improved upon, right? And one of the things I often say is that any business is a solution to a problem, and that solution is one that people care about and are willing to pay for. And you know, I love that because I think for a child, like if they can think about, what are some things that could be done better? You know, one of them you proposed in the book, which was really cool because we recently just bought this — or actually we got it as a gift for our kids from our family — is you mention like chess. Really hard game for kids to play, kids to learn. Why isn’t there a solution out there that can make chess easier to play? Sure enough, there is. There’s a card game where you draw cards, you learn the basic moves of chess. So things like that, I think you’re inspiring some of the creative thinking, the problem solving, and laying some of the seeds of entrepreneurship or even for those that don’t own their own company, which would be the vast majority of folks, intrepreneurship, how can you be a problem solver within your organization? And how can you create solutions that make you a valuable asset within that organization? I want to shift gears a bit to connect some of the work that you have in “Investing for Kids” with what you cover in your site, Retireby45.com. You mentioned your other FIRE book as well. And I got the impression that you both, you believe that everyone could put together — especially an 8- to 12-year-old reading the “Investing for Kids” book — put together a plan for FIRE, again Financial Independence Retire Early — by the age of 45. So Dylin, our listeners know firsthand that time in the market equals success, and that compound interest, as you mentioned in the book, is the eighth wonder of the world. So we know the math is possible if someone starts at an early age. But why do you think it’s important that someone plans for FIRE by the age of 45?

Dylin Redling: Whether you’re able to retire in your 40s or your 50s or you do a traditional retirement in your 60s or even beyond, Allison’s dad, for example, is 70 now — or slightly older — and has no intentions of stopping working even though Allison suggests that he stop and enjoy life. But he’s got a job that he really loves. And so there’s a lot of people out there that are like that. So we love our FIRE lifestyle and the fact that we left our W2 jobs in our 40s, but we know it’s not for everybody. But what we do also know is that the concepts of Financial Independence are good for anybody, no matter when you might want to retire. And those concepts are really about doing the right thing with your money. So it starts with saving, it starts with being somewhat frugal — and when we say frugal, we don’t mean living a spartan lifestyle. We just mean not going crazy with money with spending on things that you don’t want or that you don’t need or you feel like you have to keep up with the Joneses and get a brand new SUV every two years. So there’s that, and of course investing wisely. And you know, we have another story that we write out on our blog, which kind of I think can be somewhat inspiring to people who are in their 20s and maybe haven’t really done anything with their finances yet. We, as Allison alluded to earlier, kind of our story is we met in New York and then we moved to San Francisco. And we were in our mid-20s at the time. And we still hadn’t invested a dollar yet. And it wasn’t until our late 20s that we got “real jobs” with a 401k plan and that sort of thing. And so it wasn’t until our late 20s that we really started investing. And our entire investment life cycle, if you will, was about 17 years from our late 20s to our early 40s. And in that time, we just were so diligent about dollar cost averaging, we did — we invested into both our 401k, our IRA, and a taxable account once we got some extra income literally on a weekly basis for years and years and years, no matter what the market was doing. Through the 2001 .com crash because we’re both working in that industry and of course through the ‘08-’09 recession. Never stopped. And so those kind of habits, again, are good for anybody no matter what your retirement goals are, just really those financial habits are going to put you in a great position.

Tim Ulbrich: Yeah, and I’m glad you shared that, Dylin. One of the questions I had for you was I read your story of not really late 20s, early 30s getting serious about investing, but retired or achieving FIRE by 43, 44, so short window of time, right? We tend to think of a very long trajectory of savings. You mentioned 17 years. So my question was what was the secret sauce? And if I heard you correctly, it was tax-advantaged accounts, 401k’s, IRAs, some taxable accounts and dollar cost averaging and being consistent. Is that fair?

Dylin Redling: Yeah. You know, a couple other things we did — we did the phrase “side hustle” is really popular now. But when we did it, we just called it a side business. This was in the mid-2000s. I came up with an affiliate marketing business that I ran on the weekends. And it ended up being a third income for us. So there’s things like maximizing your income. And then another concept — I’ll shoot it over to Allison to talk about — is geographic arbitrage. And that helped us kind of move about nine years ahead of schedule. Do you want to talk about how we did that?

Allison Tom: Sure. So geographic arbitrage has a lot of different meanings in the — for people. And the gist of it is that you leverage your current salary and move to a lower cost location. And so most people think that is oh, I’m going to make my United States salary and move to Thailand or Costa Rica, where the cost of living is exceedingly low. We did it by moving from San Francisco to Oakland, California, which geographically is a 10-mile difference but at the time, we were able to save about 50% on our housing costs.

Tim Ulbrich: Wow.

Allison Tom: So yeah, it was pretty insane. For being 10 miles away, two or three train stops away on our BART system, we were able to pay off our condo in Oakland in cash by selling our place in San Francisco, which alleviated all the mortgage payments, the increase in property payments and our insurance went down as well. So that, Dylin calculated later, saved us probably about nine years of working because our mortgage in San Francisco was so astronomical that just cutting 50% off just pushed us into the financial independence sphere that much sooner. So it’s things like that. Obviously not everybody is going to be able to save 50% of their housing by moving 10 miles away, but there are other ways to do it. You can do things like house hacking where if you have space on your property, you could build an extra unit and rent it out or if you have an extra bedroom, you could rent it out and have a roommate or Airbnb it. So there are ways tod do it without going through the extreme example that we had. So there are plenty of ways to cut costs in your life that are relatively painless, that we’ve talked about all the time, so there are just different ways to do it to achieve FIRE. And some people don’t even choose to do the early retiring like my father is the example. So retirement is really more of the optional part. We’re not saying you have to retire, you have to leave your job and just sit around drinking mojitos all day long, although it’s certainly not a bad lifestyle. But you know, the retiring part is up to the individual.

Tim Ulbrich: Yeah, I’m glad you said that, Allison, because I know many of our listeners love what they’re doing as pharmacists and they worked hard, and they got a doctorate degree and they have student loan debt and they invested in that education. And so my read is that many pharmacists are captivated by the idea and the power of financial independence. And you know, I believe that’s a goal we all should strive for for a variety of reasons with RE, Retire Early, being one of those perhaps reasons, but other things as well in terms of why that financial independence may be important. So nine years, nine years was estimated from that one decision, which I’m coming full-circle, Allison, about what you shared at the beginning of Dylin being in the hospital with double pneumonia. And when you start to think about the value of time, I mean, nine years and doing some of those calculations and what does that mean for one’s personal situation, I think that’s a really powerful example of taking something that can be mathematical or objective and looking at it in a different mindset. If we were to make this move or this move, what does that mean for us in terms of timeline to retirement, working part-time, pursuing another opportunity, what does that mean for one’s goals towards financial independence? I’m glad you discussed geographic arbitrage because one of the things we see in our profession in pharmacy is that unfortunately, a pharmacist’s income usually does not translate with cost of living. So here I am in the Midwest and that income for a pharmacist in the Bay Area might be a little bit more for a similar role but nowhere near the cost of living difference between Columbus, Ohio and San Francisco, California. So I think this is a move, especially for many of our listeners that might be saying, you know, ‘I’m making a decent income, but I’ve got a lot of work to do on student loans, I want to invest, I want to buy a home, I want to do this or that. And at the end of the day, there’s only so much income.’ So is a move, whether it’s near, within 10 miles, or something a little bit more significant, is that an option that somebody may be able to pursue? Allison, what have you guys been doing since achieving FIRE? You know, what’s been the goals, what’s been the priority, how have you been spending time? I think that’s one of the other common objections that comes up is like, if I retire at 45, like I don’t even know what I would do with my time. Tell us a little bit about that journey since you guys have achieve FIRE.

Allison Tom: So it’s funny, we — so we FIREd quite by accident. We were both working in tech startups, and Dylin got laid off and then I got laid off about five weeks afterwards. And so we kind of took the time after we were both laid off to travel a little bit. That was one of the things that two people who are working can’t always schedule, coordinate their schedules, to take some time off. And so we thought, alright, this is the perfect time. We went to Europe for two weeks and did a cruise around the Mediterranean and had a blast and then came back and thought, alright, we’ve got to get back to work. So we went about — we went on interviews and we just saw just how miserable people were at their jobs. Just so stressed out, and I interviewed with this one guy who was like, “You need to tell me who said this about us so I can go talk to them.” I’m like, I don’t want to work for you. You’re scary. And so you know, the three months turned into six months and then nine months and then Dylin figured out kind of like back of the envelope math, figured out that we could actually retire without having to go back to work anymore. He stumbled into the 4% Rule, which we still hadn’t at that point heard the term FIRE before. You know, the first few years we did a fair amount of traveling domestically. Like we would go back to visit his mother and my father, who both live on the East Coast, which is one of the things you just don’t get time to do when you’re working is spending time with family. And so you know, if we would go back East, we would maybe spend two days with each parent because they don’t live that close to each other. And now, we can actually go and spend a week with each parental unit. And that makes a big difference because, you know, they’re getting older and living across the country, it’s harder to connect with them. So we do a lot more slow travel where we don’t have to feel rushed between people. And then it’s funny because we — our retirement has changed as time goes by. So for people who are concerned that oh, what am I going to do with my time? Your time is yours. You can now make your own schedule. And that, to me, is the beauty of not just financial independence, it’s financial freedom because you can choose what you want to do. And so you know, the first two years were traveling domestically, the second two years were more about traveling internationally. And we had two cats that passed away at 19. So for us, they were like our kids. And so we did not do a lot of traveling away from them until they passed on. And so once they did, we’re like, alright, we’re going to go crazy and go travel around the globe. And so the last — and then the last two years have been focused on writing books and going to financial conferences and kind of learning from others and then applying that and communicating out to audiences like yours. That’s the beauty of the time being yours is you can make it whatever you want to do. We also do a lot more work with our community that we never had time to do when we were working. So we’re a lot more invested in our neighborhood, and we spend more time working with businesses in our neighborhood to bring in more business. So having that luxury of time means you can go explore whatever interests pop up. So you know, did we ever think that we would be working with small businesses two years ago? Probably not. But now we are, and we’re advocates for small businesses in our neighborhood, and that’s something we would never have thought we would have done when we first retired.

Tim Ulbrich: That’s very cool. And I read as well your goal of 60 by 60. Sixty countries to visit by the age of 60. If I understand it, you’re about halfway through. Looking forward to following your journey. I’m hopeful you’ll be blogging about it along the way as well. Dylin, I’m going to throw the last question I have over for you. And one of the things I think about when it comes to early retirement and achieving financial independence or the FIRE movement is that it really does require delayed gratification and at times, you mentioned the word frugality earlier. And that frugality can be at various levels. As you mentioned, we’re not necessarily talking spartan type of frugality. My question here though is how do we strike the balance? You know, whether it’s for ourselves or teaching our kids about saving and investing to take care of our future selves but also valuing and making sure we understand that it’s important that we enjoy some of the money along the way as well. I find myself often struggling with this individually of, OK, I know I need to take care of my future self and probably sometimes I do that at the expense of the experiences and the enjoyment today. And I think striking this balance is really important. What are your thoughts on that?

Dylin Redling: You know, I’ll actually plug a couple of other books besides ours that I really like. One is “A Simple Path to Wealth” by Janelle Collins, which I highly recommend. And another one is actually one of Allison’s favorites. It has a funny title, it’s “I Will Teach You to Be Rich” by —

Allison Tom: Ramit Sethi.

Dylin Redling: Ramit Sethi. And we saw him speak. He was a keynote speaker at FinCon a couple years ago. And one of the things that he said, which really resonated with me and it goes to your question, is spend liberally on things that you enjoy. But hold back aggressively on things that are not important to you. And it’s a very simple concept. But again, it goes directly to your question, and it’s really — maybe you or your kids or whoever’s thinking about this makes a list. Here are the things I’m passionate about. Here are the things that I really enjoy. I love travel, I like eating out at restaurants, I like entertainment, sports, whatever it is. And I’m going to set my budget to focus on those things. I’m going to be OK — maybe I’ll go to a World Series game because I’m a huge baseball fan. Or I’m going to set a goal to go to every baseball park in America. You know, whatever that goal might be. Conversely, think about the things that aren’t that important to you like maybe a brand new car is not important to you, so you drive your car for 10-20 years and you really just never focus on spending a lot of money on that. And so those are the concepts that I think are something to really think about. And for us, that’s what we’ve always done. When people look at our lifestyle from the outside or even some of our friends, you know, they may think, wow, we’ve always lived in pretty expensive apartments — or condos or houses, so they might think, wow, they spend a lot of money. But if you look a little deeper, like we had a car for almost 20 years. We had a Volkswagen Jetta. We just recently got a new-to-us couple years old Toyota Corolla. So there’s an example where we just — you know, having a brand new car wasn’t that important to us. But again, we have the 60 by 60 goal. So travel is really important to us. And we have no problem spending that extra money to go travel for a few months and really try to see the world because that’s something that we’re passionate about. That being said, when we do travel, we try to — we don’t stay at four-star hotels because part of our kind of nature is to also find some deals here and there and to just spend consciously, to just spend our money kind of wisely.

Allison Tom: We prefer to spend money on the experiences rather than the hotel room that we’re putting our suitcase in.

Tim Ulbrich: Yeah. And I was at that keynote that you were at, and with Ramit, and I’ll never forget it. I mean, the concept that he talks about in “I Will Teach You to Be Rich,” money dials, right, is find the things that are of value to you and dial it up. And find the things that are not and dial them down. And you know, I remember hearing that, and I was like, heck yeah. It just makes so much sense. And you know, to the comment of experiences and even the literature really showing happiness related to money, it’s experience and giving typically are the areas where we see that biggest connection. So Allison and Dylin, I really appreciate you guys taking time to come on the show. Kudos on the work here with “Investing for Kids,” I really enjoyed it, as well as the work that you’re doing at Retireby45.com and your other book, “Start Your FIRE: A Modern Guide to Early Retirement.” As it relates to the book “Investing for Kids,” I hope our audience will pick up a copy of this, available at Amazon, Barnes & Noble, many other online vendors as well. I really did find it engaging, it was rich with relevant information, practical exercises to apply the information, as I mentioned, certainly does not look, feel, or read like a textbook. And so I think many in our community are going to find it helpful. What’s the best place for our audience to go to follow the work that the two of you are doing?

Dylin Redling: Well, our — I’ll plug our website, and I’ll have Allison plug our Instagram account. Retireby45.com is our website, and we blog there on a once or twice a month with a fresh new blog post, and we have a bunch of stuff on there, courses and other things. And then Allison’s been working on really putting together a pretty cool Instagram account.

Allison Tom: So we have Instagram and Twitter both @retire_by_45. Yeah, it’s been an interesting challenge trying to get into the social media, the social media space.

Tim Ulbrich: Very good. We will link to both of those in the show notes as well as the Retireby45.com as well as the books that we’ve mentioned, not only your books but the others that you referenced as well. So the two of you, thank you again very much for your time. I really appreciate it.

Allison Tom: Thanks, Tim. It’s great.

Dylin Redling: Thanks.

Allison Tom: O-H

Dylin Redling: I-O

Tim Ulbrich: I-O!

Dylin Redling: Thanks, Tim. Great talking to you.

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