Financial Fitness Friday: Teach Your Kids Financial Abundance with Chris Larsen

Hey, welcome back. No problem parents to Financial Fitness Fridays. And today is our first episode of this Friday series. And we're going to talk about when do we start having conversations with our kids about money? If you've asked yourself the question, how do I even begin to teach my kids about money? Like what can I do to personally help my kiddos to set them up for financial success? I took a 20 minute clip from episode 66 with Chris Larson. He is going to help teach us how to have those conversations and some things to consider when we're talking with our kids about money. He's also one of the authors in our first no problem parenting book, Raising Your Kiddos with More Confidence and Less Fear. He wrote a chapter on how to teach your children to be money pros. So check out our book if you haven't gotten that yet. And then also in the episode today,

he's going to share his book and a free resource. There's a website he shares with us, a free resource for how to start having those conversations with your kids and some guidance along the way. Chris Larson from Next Level Income is your go-to. So I hope you enjoyed today's episode, the first of many Financial Fitness Friday episodes to come. All right, Chris Larson, I'm just going to hand over the microphone to you and let you begin with having money or not having money one way or the other. We need to be teaching our kids. So take it away.

Not having money creates problems. Having money creates problems. And, you know, having children that don't know how to deal with money or make money is a big problem as well, depending on what the age is. And look, I'm going to touch on a lot of stuff here today. But if you're listening, you can get a free copy of my book at our website, nextlevelincome.com. And for your audience, Jackie, if you click on the book link, you put your address in, I'll send you a copy as well.

Kind of the blueprint. So if we gloss over anything or you want to learn a little bit more, happy to share that link with you here. But yeah, so I look at my father died when I was five years old. And it took me a lot of years to kind of figure this out, you know, talking to different therapists and reading different research. And I remember reading something one day, I talked about how children who lose parents tend to be more successful. I was talking about this correlation with presidents and leaders and CEOs. And I thought, well, that's interesting. And, you know, as I kind of thought about it and researched it, I'm an engineer by training, my education is in biomechanical engineering, and I also have an MBA in finance. So I'm a numbers guy.

So I think of it like an equation. So if you think about the value of time, whereas you have the number of days on the bottom of that equation and the overall value of time, if you're young, you think you're going to live forever. So if that bottom number is infinity, the value goes down, right? It's basically zero. But as soon as you assign a number to that denominator, the value of your time goes up exponentially, right? So if I said to you, you know, you have 10 days left, you're going to live life much, much differently. So I think as a child, when you lose a parent, I also lost my best friend in college, which I think probably had even bigger impact, but it makes you realize the value of time. So not until I was 41 years old, the same age as my father, when he passed away, and I achieved all these things very close or right during that year that I realized that I had this ticking clock in the back of my head,

if you will. So I think that really drove me towards financial independence, Jackie, because unfortunately, live your passion, do what you love, you'll never work in a day in your life, all of these things. The fact of the matter is, if you want to live life to the fullest, you want to spend time with your kids, if you want to provide them with medical care, if you want to send them to the best schools, feed them the best food, all of these things, if you want to give your children all the best opportunities, you need money. I tell people, if there's one thing that you can do to be more successful in life and live a more abundant life, you have to eliminate scarcity-minded people from your life. You have to. One of the great things about America is we do still celebrate abundance and success. I think it's amazing.

If you want to be successful, especially when it comes with money, that's probably a great place to start is eliminate anyone with a scarcity mindset. And what I mean is people that say, hey, look, if you have this, I can't have this too. The opposite of that is abundance. And that's what we practice at Next Level Income. We give away so much stuff. I was asked by a regulator one time, they said, well, how do you make money with your website? I said, we don't make money with our website. That doesn't make any sense. I said, well, our mission isn't to make money with the website. We have another business that makes money. Our website is there to educate people. And we believe that with education, financial independence, we can empower people to do big things. One of the things that we're going to talk about today are kind of focus on is what parents can do to help their kids and themselves. Yeah. So Jackie, we have a template that we put together. Again, this is on our website. It's free nextlevelincome.com forward slash kids. And what it is, it's five tips that you can use to help educate your children, to help move your children towards financial abundance. And in America today, we do not teach financial literacy. And we actually teach the opposite of what rich people do. So if you listen to Dave Ramsey, and he's got great advice, if you want to be poor, and this is what I mean, pay off your

house, invest in your 401k, buy term life insurance, you know, all of these things, you know, invest in mutual funds, all these things, they work okay, if you want to work till at least 65. And you're you're okay dying with not a lot of money, but if you want financial freedom in your thirties, like I had it with the family, this, I retired with more than six figures of passive income. We live in a wonderful home. We drive new luxury cars. We have two children. My older son goes to private school like that. We live an abundant life through the financial decisions we made.

So the first question I think that we need to answer Jackie is when do we start talking to kids about money? Like that's the first thing. And the answer is as soon as possible. And what I mean, it's very easy to have these conversations when you go to the grocery store, and you pull out your credit card, or you pull out cash or however it is you're paying, tell your kids what you're doing, tell them how much money it is, explain the differences, you know, the thought process behind the financial decisions you're making. You don't have to tell people like my children do not know how much money I make. They do not know how much money we have in the bank. We don't have those conversations. But let's say, for instance, they say, hey, how much was the car that we bought? I'm going to tell them how much the car is. Because look, they can look it up on the internet today. My boys are 10 and 12. They can look up on Zillow how much your house is worth.

So anything like that, I'm not going to hide from them. I'm going to make it very comfortable for them to have financial discussions with me. And then if you want to really start engaging them, what we do is we pay our children a salary. So this is number two, actually number two on my list. And what we do, we give them a dollar a day and that's their salary. Some people call it an allowance, but we call it a salary. Before you start paying your kids though, start a bank account. Okay. Take them to the bank, actually take them to the bank, you know, and that, and set up an account. If your kids don't have an account, that's the first thing that you can do. And then what we do after we start paying them, the way we initially started teaching them about investing is that we would go to the bank. And if they made $30, you know,

30 days in a month, and they made $1 a day, assuming they didn't disrespect their mother and get $1 taken away or leave the lights on to get $1 taken away. Because by the way, in the real world, if you don't show up, if you don't do your job, if you waste money, you're not going to get paid, right? You know, they have to do their own laundry, they have to make their own lunches, they have to do the dishes, they have to clean the house, you know, all these things are part of being part of our family and they're responsible for that. And then they get to participate.

But then when we go to the bank, whatever they deposit, we match that. So it's kind of like a 401k. So I know how I said, don't invest in your 401k, but how do you teach kids how to invest? Especially, let's say you're like, Chris, I don't have an MBA in finance. I don't understand how the stock market works. I'm not sure even what to invest in. That's okay. It's the concept of compound interest and earning a return on your money that's important. So what we do is we match what they put in. And our rule is save 50%. Whether that's if they get $100 for their birthday or Christmas, they earn, you know, $20 and they put $10 in the bank, we match that.

We do that. It teaches two lessons, right? It teaches one, the importance of paying yourself first. You know, I call it a savings tax. I have a whole blog up on that on my website. I call it a savings tax. So it works for adults as well. But how do you get, you know, how do you get somebody used to doing that? You know, so when they're making a bunch of money, you know, they're already they're already doing that. And then you can actually start teaching them about investing and educate yourself after that point. And I, we started Roth IRAs for our boys because they do some work in our businesses. You can start to pay your children if you have a business, which is great. All those things are really good lessons that you can help out with your kids. Look, a lot of things that I say are kind of opposite of what conventional wisdom teaches. And, you know, one of those is I say, stop investing in your 401k. And people are like, what? So look, if you get a match in your 401k, then great. Put in the amount that you get your match because that's like free compensation. Now it's locked up. You have to do the math on that. But here's a question.

If you have $100,000 today and your tax rate is 20% and you invest that money, you get 10% a year for 30 years and your tax rate in the future is also 20%, if you chose to put your money into a 401k or IRA today, not pay tax and let it grow tax-free at 10% and pay the 20% in the future, would you have more money then? Or if you just paid the 20% today and then put it in an athletic compound after tax, which would give you more money? The answer is the same. If you put your money in a qualified plan, like a 401k or an IRA, you're inherently betting that your tax rate is going to be lower in the future. And there's only two ways for that to happen, right? One, actual tax rates are lower in the future. And if you're listening, put your hand up. My hand's not up,

by the way. Put your hand up if you think tax rates are going to be lower in the future. It can't be. And you know why? Math. It can't be lower in the future. We can't pay for our obligations today with the current tax rates, okay? And you can blame this party or that party do all that. It doesn't matter. The fact of the matter is we need more tax revenue.

Okay. Or two, you make less money, which puts you in a lower tax bracket. So again, raise your hand if you want to be poorer in the future than you are today. So if you raised your hand to either one of those questions, continue to invest in your qualified plans, because those are the assumptions. Now, remember, I'm an engineer. The way we solve problems is we look at the assumptions.

I looked at the assumptions. I said, well, this doesn't really make sense to me. So I stopped contributing to my 401k several years ago. So then the question is, what do you do? And this is where, again, I'm in the opposite. We tell our children, hey, take risks early in life.

Take risks early in life. That way you can recover from those risks. That doesn't sound good to me. I want a plan that's going to give me a high probability of success. Think about it like a sports analogy. If you lose a bunch of the early games, you don't even make it to the playoffs.

you're never going to make it to the championship game, right? You want to win as many of those early games. That's why I call my investing strategy, the money ball strategy of investing. I want to hit consistent singles, doubles, get on base, you know, get a triple every now and then a home run. If you got, if you got a little luck thrown in, everything goes well, but people that hit the most home runs struck out the most typically. Okay. I don't like that. I want to get on base as much as possible and I want to make it to the playoff rounds of the championship series. So in life and financial world, what I do is I put together a plan to increase our passive income to cover our basic expenses. Now, once you have your basic needs covered, what can you do with your life? What risks can you take? Do you want to volunteer your time? Do you want to donate the money that you make to a charity? Do you want to go work for a company where the company can 10X its stock when you work for it? You can take those risks later in life. But if you get to that point, you basically have an almost unlimited risk tolerance, which is where we are today.

And that's the problem. We teach children, hey, take these risks early. What people are forgetting is money is a store of your life time in your life. Okay. If you gamble with your money, you're gambling with your time. Most people would agree, hey, is a day or a year when you're in your twenties or your sixties worth more? Young people waste their lives. If you can double your money every five years. That means a day you waste today is worth two years in the future. If you start thinking about money like that, and this is why I tell my boys, you have to respect money, because if you waste money, if you lose money, you're literally wasting whoever's life made that money. Number four, and now we're starting to get into the next level type ways of teaching your children. Have them start a business. We don't teach children about money. We also don't teach children, entrepreneurship, most people. And entrepreneurs, the number one way, I had a gentleman on my show, DJ Van Kern. He works with the Marriott's. He works exclusively with families worth $250 million or more. So a billion dollars or more. He also surveys these families. And most people wouldn't be surprised to hear this, but the number one way that people enter this ultra rich phase is through starting a business, not through inheriting wealth. It's through starting a business. Number two, real estate. So teach your children about starting a business. And also we

can talk about real estate, which if you get my book, I talk a lot about it in there and kind of the strategies that I used, you know, starting at 21, when I bought my first piece of real estate, you know, teach your children, look, you can start businesses online. There's a lot of great resources out there. Or if your children ask you like, Hey, what, you know, my older son, he's, he's an athlete. He's not, he's not a real academic kind of guy. And it's like, well, what are you going to go to school for? My younger son says, I'm going to be an engineer. He knows more about cars than I do. My older son knows more about sports than I do, but he's kind of struggles with thinking about a career. And I said, well, what are you going to do? And he's like, I don't know. I was like, well, you could start a business. You could do sales. Sales is very entrepreneurial. So you can just talk again. If you're not familiar with these concepts,

you can also talk to your children about these concepts or go read a story together about a famous entrepreneur, like what they did, how they started the business. It's not all glamorous. And that's part of the other. Starting a business is hard. Being an entrepreneur is hard. Teaching them about business is very important. Another controversial topic I say is, I don't know if my children are going to go to college. And if you think about this, you as a parent need to take responsibility here. So this is me challenging you as a parent. You must understand how to calculate the return on investment in college. If your child says, hey, I want to go to college, they don't know what they want to do. They want to go to a private school. You've got to figure out what are they going to actually make more. So you hear the statistic. I actually had this. I had somebody want to be on my podcast. I interviewed her and I declined. I said, no, I'm not going to.

I don't think you're a good fit. She was kind of shocked. And the reason is she taught children, she taught parents how to get money, like how to get funds for college, like how to pay for college. And I said, well, that's great. I said, but who do you think should go to college? And she basically said everybody. And one of the statistics she quoted was that you make a million dollars or more, a little bit more than a million dollars over the course of your lifetime if you go to college than if you don't? And I said, well, yes, but at the average cost of college, if you just invested that money at a low rate, it was like, I think it's 8% is in the calculation, if I recall correctly, you'd have like $1.3 to $1.5 million. And I said, so actually what you're telling me is it's not worth it. Listen, I'm not saying your children should not go to college. Don't get me wrong. I'm not saying you should not take advantage of all these resources out there.

My point is, you need to educate your children so that they can figure out what choices to make when they go to college. You know, should they get a scholarship? Should they go to a state school? You know, if you go to in-state versus the school, right, you know, that has the best football team right across the state line, are you going to make better connections?

Are you going to have a better chance of getting a job or making more? What about the careers you study? you know, if you're able to put together a plan where you're able to create passive income, which is that's, that's our, you know, our mission at next level income is provide education opportunities for financial independence. Okay. So take advantage of all the resources that we have, but if you can put a plan in place where you actually are financially independent, you have this freedom where you can take a different job, where you can work less, where you can be like, like you and me, Jackie, where you spend more time with your kids, where you coach their teams, where you take them to school, you make them dinner, you have all these moments. There's also the flip side of having money and not enjoying it. And that's the scarcity mindset that we started our conversation with. There's a great book called Die With Zero. And it's written by a hedge fund manager. And again, he bucks the conventional wisdom. But you also need to learn how to spend and enjoy the money that you have. Because I've known people that they don't spend their money, they make millions of dollars a year, and they don't enjoy it. And that's no way to live either. It really isn't. You know, I crave the experiences that that I expose my children, my family to, you know, life is it's it's out there to be lived.

If you're born in America, I feel like you have the duty to make as much money as possible, but also enjoy your life as much as possible. Because there's people all over the world that don't have that opportunity. So don't be, don't be guilty. If you have money, be respectful of it and look for those opportunities, because I think whether you say it's your God-given, you know, right, but also your duty, you know, if you have those resources to do it for us, like my wife and I, we're not, we're not big on things. She's an architect. She's, you know, very kind of design oriented. So she likes nice clothes. She doesn't spend a lot of money, but we like to travel. We like experiences. We like good food. So if we go to the grocery store,

we're probably going to go to Whole Foods and maybe it costs us $50 more than if we went to grocery store around the corner, but that's, that's really important to us. So I don't feel any guilt when it comes to that. So there's this overlying feeling of guilt, right? Like I feel guilty. If I spend this money, figure out what's important to you and then teach yourself to be comfortable spending money on those things. Then the flip side is, let's say you do not have money, right? And you can't experience life the way you want it. You have to get out of the habit if you're in that situation of saying, oh, we can't afford it. We don't have the money to do that. We're looking at other people that do it. So if you listen to the story that I just told, and you're like, wow, I don't like this guy because he's kind of rubbing this in my face. You got to get away from that. You have to start asking, how can I do that? Who can I learn from to figure out how to make that happen? Those are the things. That's the change and shift in thinking. And the problem is,

if you have a scarcity mindset, when you start to have money, you're afraid of losing it. And it's like the team that's afraid of losing the game when they're a couple runs up. You don't want to be in that position because now you're playing not to lose. You want to continue to play to win the game of money and more importantly, the game of life. If you want the five tips that we talked about today, Jackie, it's nextlevelincome.com forward slash kids. I didn't have money to invest.

I had to go make money. So the first step in all this is to figure out, like you said, it's okay to work hard. It's okay to make money, but then you got to figure out what the rich do, how to keep it and then ultimately how to grow it. So as you teach your kids these lessons and you help to set them out on a better life, do the same for yourself. Help teach yourself these things because the more successful you are, the easier it is to help teach your kids these same rules of success.

You know, we love teaching people about financial literacy and what better way than to start with our next generation. All right, that's it for today's episode of the No Problem Parenting Podcast. Hey, thanks guys for tuning in. If you found value in today's episode, click the subscribe button and share it with other parents who might need a little boost. Stay connected on our socials by following at No Problem Parents for more parenting tips and get your free download of the 60 ways to respond to your kids without losing your cool.

Go to noproblemparents.com. Until next time, remember, your confidence comes from embracing both successes and setbacks. So take a deep breath, embrace the chaos, and remember, you got this.

Thank you.