After I completed my formal college education and entered the “real world,” I went on to work in real estate, insurance, housing, and eventually mortgages and private equity management. Through each of these work experiences, I learned more about financial and investing topics that directly relate to everyday life.
Surprisingly, even for an accounting major like me, “real world” financial management hadn’t come up much very often in school. Where were discussions or lessons on budgeting, taxes, financial planning, insurance, investing, etc.?
Personally, it worries me. If some of these topics aren’t covered early on, especially those related to personal finance, what negative habits will our youth form by the time they’re adults?
As I mentioned in my last article, “My 3 Favorite Real Estate Investing Strategies (and a Plug for Old-Fashioned Discipline),” I also owe a lot to my mom, who instilled certain principles in me at a very young age and taught me to be disciplined and prepared.
And so, my approach with my own children was to try to engage them with these subjects as early as possible in hopes that some of it would be retained into their adult lives. It’s tough, though. As parents, we’re often busy, overwhelmed, and downright exhausted.
Here are a few ways I’ve tried to teach my sons (and now my grandson) about real estate investing and personal finance.
How to Invest in Real Estate While Working a Full-Time Job
Many investors think that they need to quit their job to get started in real estate. Not true! Many investors successfully build large portfolios over the years while enjoying the stability of their full-time job. If that’s something you are interested in, then this investor’s story of how he built a real estate business while keeping his 9-5 might be helpful.
5 Strategies for Teaching Your Kids About Finance & Investing
1. Learn by doing together.
As a real estate investor, I’m continually pursuing education. In fact, after 30 years in the business, I’m still learning every day.
Over the years, I’ve tried to involve my kids in what I was learning or what I was doing. For example, when my youngest son was in high school, I was taking a class online on how to trade options, and I asked him to take the class alongside me. I even had him invest some of his money alongside me, and he was able to see firsthand how to trade.
2. Hire your kids.
I also employed my youngest son to help me do my taxes, mainly by sorting receipts and assisting with bookkeeping (paid labor, of course!). He would often ask questions like, “Is all this work worth it?” and I would then proceed to show him how much money was saved through legal deductions.
As you can imagine, he became even more curious as to how I invested that money from the tax savings to increase my passive cash flow. Luckily, by the time I was 42, I was able to show my kids the real path to financial freedom since I no longer needed earned income to get by.
3. Relate games to real life.
When my eldest son was younger, I was running my own painting business and would often take him with me on job sites and to renovate my flips and rentals. So, he was no stranger to the construction world, and today, he runs his own construction business.
Now, when I get to babysit my grandson, I’ll sometimes take him over to visit his dad at work. Sometimes, this is after we’ve just played Robert Kiyosaki’s Cash Flow for Kids game, which models things like how to invest in rental properties. He’ll ask me questions like, “Pop Pop, is this a good deal? Will this make me money?” Needless to say, I love those conversations.
When we visit his Dad, I’ll tell him, “See, your dad fixes up houses just like in the game.” Or maybe I’ll take him by one of my rentals and say, “Look, I bought this house as an investment. The money I make from those who pay rent to live there is more than what I pay the bank.”
In all of this, I’m showing my grandson that the rules of the game he enjoys are also real.
4. Encourage good habits.
I don’t think it’s ever too early to start encouraging good saving habits. For example, I’ll even pay my grandson to do certain chores for me, and then I’ll follow up with him to see if he paid himself first.
I’ll be asking how much he saved or invested, how much he donated at church or to charity, and what he did with the remaining balance. He may have spent some of it on video games, but then I ask him how much all those used video games are worth, and more importantly, were they really a good investment? At least it gets him thinking about it.
5. Invest on their behalf.
When my youngest son was entering college, he asked my wife and I to cover the cost. We could have easily done so, but I thought that maybe it was another learning opportunity. Instead, I told my son that I would help him pay his student loan back. To do that, after graduation we bought a mortgage note with a payment that was equal to the payment amount of his student loan, but we paid a fraction of the total balance, and he used the passive income to cover his monthly payments.
Related: How to Teach Your Kids All the Money Lessons They Won’t Learn in School
The other great thing about this note investment is that the loan term is much longer than that of his student loan, so he’ll continue to receive payments even after his student loan is paid off in full. In turn, he’s also learned more about how to use investments to cover expenses.
How About You?
So what strategies have you employed to teach your kids about personal finance and investing? If you haven’t yet, maybe it’s time to start thinking about it.
Please share your experiences below!