Early Retirement - Financial Freedom (Investing, Tax Planning, Retirement Strategy, Personal Finance)

How To Instill Financial Values In Children

• Ari Taublieb, CFP®, MBA • Episode 241

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Financial literacy starts at home, but teaching kids can be challenging when they develop an abundance mindset and spend everything they make. We explore effective strategies for engaging young people with money concepts by connecting to their existing interests rather than lecturing them about financial terms.

• Growing up around money doesn't automatically create financial literacy
• Sharing personal stories of financial mindsets—from abundance to scarcity
• Making financial concepts relevant by starting with what kids already care about 
• Demonstrating compound interest visually as "free time" gained by investing early
• Finding personal motivation in finance that resonates
• Creating games and experiences that make financial literacy engaging for young minds 
• Connecting investment growth to ownership of companies kids recognize

If you have strategies that worked with your children or teenagers, please share them in the YouTube comments or join our free Root Collective community where we discuss topics like this one.


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Ari Taublieb, CFP ®, MBA is the Chief Growth Officer of Root Financial Partners and a Fiduciary Financial Planner specializing in helping clients retire early with confidence.

“Early Retirement – Financial Freedom” is a podcast produced by Root Financial Partners, an SEC-registered investment adviser. The content provided is for informational and educational purposes only. It should not be interpreted as investment, legal, or tax advice. I may reference planning situations based on real client experiences, but they’ve been simplified for clarity. Always consult your own financial advisor before making decisions.

Listening to this podcast does not create or imply an advisory relationship with Root Financial. Investing involves risk, including the potential loss of principal. Past performance does not guarantee future results. Testimonials and endorsements do not reflect all client experiences and are not compensated. Learn more at our website or by reviewing our Form ADV at https://adviserinfo.sec.gov.

Speaker 1:

Today's podcast episode is different. It's not about you, but it's about your kids or your nieces or your nephews or your friends. This is about how do we ensure they have the same confidence with understanding finances that you do or you may be exploring. So this was prompted by a comment that was left in what's called the Root Collective. That is our free community. That was left in what's called the Root Collective. That is our free community. I'm going to read the comment now, and then I will be going through an example as well as sharing some transparent, fun feedback regarding the topic, and I'll have a final favor that I'm going to ask from you guys today. So this was a comment and they started a thread that says advice to teenagers slash young adult children and, by the way, if you're watching on YouTube, you can see this comment right here. If you are listening, I'm going to read it. So, no matter how you digest the content, you don't get more one way or the other. So this says here advice to teenagers slash young adult children. Just found listening to root talks how to overcome the scarcity mindset and start spending in retirement.

Speaker 1:

That's an episode that my partner, james, and I did recently, where we talked about. Why is it we still have trouble valeting, even if we have enough money? Well, that's because, inherently, like that's money that we knew could have grown more for us and so like that's almost like throwing money in the trash. But then there becomes a point, and James shared the example of he used to never valet going to baseball games in San Diego, and then he would be driving around for an hour and then miss the game. So at what point do we pay for these things? So, moving on, he says, my wife and I grew up lower middle class and I was the first in my family to go to college. We struggled but ended up doing well for ourselves, which now makes spending money difficult. Through podcasts like these, we're slowly starting to spend more. Thank you, ari and James. Podcasts are helpful. Please keep it up.

Speaker 1:

We have a single child, recent college graduate, who is starting out on her own, and we have tried to show her good money management, budgeting, the value of saving for her future, et cetera. Yet she continues to have the opposite the abundance mindset spending everything she makes, the abundance mindset spending everything she makes. This makes it a challenge for us to spend even more as we continue, as we feel she is still learning from our habits. I know she will figure it out, and this is really our problem, not hers. I've also mentored eighth graders for the last 15 years and see this abundant mindset growing worse each year.

Speaker 1:

What advice does anyone have on how to teach financial responsibility and balanced spending to teenagers, slash young adults? So my first favor is the podcast app iTunes, spotify, iheartradio, google. Wherever you're listening, you can't comment easily. So if you would like, I would request you, if you don't mind, to drop a comment on YouTube. You can keep listening, but if you have any advice, whether it be, hey, I showed my child or teenager or friend this one game and it really just clicked for some reason and I found that's what was effective. Let people know, because they want to hear from you at the same rate, probably more than they want to hear from me. So go in the comments on YouTube. If you're watching on YouTube, you can just drop it right now. If you don't have one, that's okay.

Speaker 1:

I'm going to explain what I would do in today's video. So that's my first kind of favor that I'll ask and this topic advice to teenagers, young children. There's tons of different topics like this in that root collective, that community, which is free, by the way. So if you want to see what other people are saying, there are people talking about health and how to spend money and all different topics. So check it out there. Now, when we talk about financial planning, the first thing and I'm going to just kind of it'll be a little silly, but I'm going to talk in a way that I'm two people, so I'm going to essentially be role playing two different people so you can see how these conversations generally go with children or family members or friends that want to get invested in finances. And I do it in a pretty similar way, regardless of someone's six years old or 15 years old when I'll do it, and so I want to at least make sure you get to hear that approach.

Speaker 1:

But first it's important to know the background. So I grew up around money. That's different than a lot of advisors. For example, my partner, james James, grew up where money was not in the household and he's like hey, like there's a lot of stress and I imagine it's largely because there's not a lot of money, and so you know he grew up not always going hey, I get a new baseball bat, or like. Those are very rare things Now. James played rugby in college, went to Pepperdine, got a scholarship. He put himself in an incredible position.

Speaker 1:

But it's not like he grew up around money. He grew up where money was stressful, money was tight. His father came across a Dave Ramsey total financial money makeover book and then all of a sudden his dad didn't make more money but there was less stress because financial literacy increased. So that was his story. Wasn't a ton of finances, not means to that? But I found with literacy there was more peace. Mine was different. Mine was I grew up around money.

Speaker 1:

My parents were great at making money. They made a lot of money, but there was always stress and there was never a plan. So being great at making money is very different from being great with money and there was never a plan. So being great at making money is very different from being great with money. And there was so much stress that I would feel guilty all the time because it was like hey, if I'm spending this, you know if I want a new soccer cleats, my parents would, yeah, go do anything you need. I'd be like okay, but like it doesn't really feel logical at some point, but like, so I just like wouldn't buy things because I'm like it just feels wrong. And so we all have these weird biases and heuristics when it comes to money, which is why I love the book psychology of finance and psychology of money, which, yes, those are two different books. There's a lot of these books on behavioral finance and why we think the way we do regarding money and, if that's of interest, I encourage you to check those out. With that being said, check out Morgan Housel, by the way. He's beautiful the way he writes with these things.

Speaker 1:

But the reason I'm going to give you this example is because it might hit in a way that resonates. So this was someone who came to me who was how old were they? I want to say they were like 11 or 12. I don't know what grade that is I should but I think they were 11 or 12. So I think that's like middle school. I want to say, like you're 14 or 13 or 14 when you're in ninth grade, so I think middle school.

Speaker 1:

And a client came to me and say, hey, can you talk to my child about investing and get them into it? And if I went to them and said, hey, so like you need Roth IRA and it's like tax-free growth and like it's the best account. So, like, just like I know you already have one, probably, but like, trust me, like, make sure you max it out, go get a job, don't hang out with your friends, no-transcript. So that is not an optimal approach. It's the same logic. That is the reason that you might be interested in finances but your spouse or partner might not be.

Speaker 1:

Because what I'll see is I'll see a couple say come on, honey, let's go update our 401k investments. They care about retirement early, they care about making sure that you don't run out of money. But the 401k investments, that's how you do those things. But that first person isn't connecting that. So, instead of, hey, let's go update our 401k investments, don't you see the importance of a good asset allocation? Let's look at how much we should have in international versus real estate, versus small caps. You'll put your spouse to sleep. So what you need to do in that case is go. Hey, honey, let's just dream big for a second. Like, how much would we love to spend in retirement? Okay, 10 a month on travel 15. Let's even start like, looking at like, if we were to downsize, what would that even look like Out of the finances into the dreaming and then going okay, honey, so like now, if we want to like, do this we need. So we decided we need 150,000 a year, fill our dream life. What are we on track for now? And then you're getting them curious. You need them to take initiative.

Speaker 1:

If you tell someone a bunch of stuff, they're not going to do it. So for a child or a friend or a family member, you'll want to tweak this a little bit, but the general framework is I will go to them and I will say look, what's like, you're the. When you think of buying something and I'll do like this and I'm kind of dramatizing it for, just you know, comedic relief, or not even relief for comedic effect or hyperbole, whatever, I'll go what's like? What's the favorite thing you've ever bought? And I'll even say, hey, that wasn't even perfect English that question. But like, literally like what's the? What's something you can think of? That's the, what's something you can think of, that's the favorite thing you've ever bought.

Speaker 1:

And this person was like an Xbox and I said why? And they answered quickly. Some people like can't even answer it and they're like because I can hang out with my friends and play. I go, so hanging out with friends, that's like important to you, and you know they're 11 or whatever. And like, yeah, like that's literally my whole life is kind of like, is this like going to be a waste of time? I'm like, ok, like, how did you pay for the Xbox? And he's like well, I've been shoveling snow and so I've been doing that and you know, I saved up enough and I bought the Xbox. And so I said, ok, why is it that you bought that Xbox instead of the PS5? And so like, first of all, I'm showing interest as best I can in things he likes. And he's like, well, because, like, my friends don't have the PS5, so it's not gonna be compatible.

Speaker 1:

And I pretended to kind of know what he was talking about there and I said, oh, of course you know, no, I didn't say that. I said okay. So like, when you bought it, were you like hey, this was like money well spent, were. You like, hey, I'm caring about what you're thinking, and that's everyone. Everyone wants that. So now they're like okay, I get this person cares. And he said honestly, like I just wish I had it sooner, like there wasn't like, oh, my gosh, I felt so good buying this on my own money. And if my parents would have bought it, it just wouldn't have felt as good, like I was very confident this person would have been equally happy if their parents bought it for them and they didn't work for it. It was just like this is how this kid knew he was going to get it.

Speaker 1:

So I said, okay, um, how, like, what age do you think you want to retire at? And he's like, uh, like I don't know, like 70. I said how about 80? He's like, okay, 80 is fine, I go about 90. He's like, yeah, whatever, like I'll probably be dead by then. Anyways, I said all great points, so like what do you even want to do for work? And so obviously like once again, more interest.

Speaker 1:

But also kind of putting these retirement words in there, he's like, look, I think I don't know for sure, but like I'm pretty good with computers, so I'm probably gonna do something. Like I don't know, like it sounds kind of lame, but maybe I'm going to do something software related and I don't know. And I was like how could you know? You know you're 11. And I said hey, but like let's assume all of a sudden, not saying this is the case. But like you're working, I'm just gonna pretend you're 40 for a second and you have a super cool beard and you're like the Xbox champion of the world and you have to work. But you just got invited to like the coolest Xbox tournament with all of your friends and I'll I'll pause and he'll be like uh-huh. So now he's interested. That's my first uh-huh Cause normally it's been kind of a little attitude, you know, like I'm never going to retire, I'm never going to die, or like who cares, or that kind of thing.

Speaker 1:

And once I get an uh-huh I'm going okay, now I'm in. So now that I'm in, I go imagine once again you're 40, playing with all your friends. You're going to rent out a movie theater what's the biggest screen you've ever played on, by the way. And then he'll be like oh, I don't know, I just play at home. And I'll go imagine the tournament is in a was based off one of the games he told me and he's like okay, like he's now like wow, I've just made money. Exciting. And I didn't talk about money in the slightest.

Speaker 1:

So there's, I'm going to finish the story, but there's not a quick fix to this. This is not one where it's like three questions kids interested in money? You have to show your interest in them, you have to let that grow and then you can start going in deeper and deeper. And this is the same way, by the way, I work with clients regarding different topics. So now he's into Xbox. He's thinking he sees himself in a theater. I go okay.

Speaker 1:

Now what I'm going to do is I'm going to explain to you the most boring thing you've ever heard in your entire life, but I think it's cool. So I'm just going to ask you to listen to it for a minute. Ready Time me. He goes go, because who doesn't like games? I don't care if this person's 30.

Speaker 1:

I would do the same thing. I wouldn't say it with the same words, but same concept. I'd say okay, there's something called a Roth, don't worry about it. Just know, roth is cool. Who's this Roth guy Doesn't matter.

Speaker 1:

If you have a Roth, it's a really cool account. You get to avoid some taxes later in life. Don't worry about the details. Here's what's so cool. There's a maximum. It's not unlimited. You think that you could put as much into the best account ever. No, that'd be cheating. That'd be like using an Xbox and PS5 to play. That's not. You can't do that.

Speaker 1:

So we're just going to say it's 5,000. Really it's more than that and I'm going to let you guess. In a little bit we're going to look up what the max is together. But $5,000, let's assume that's the most you're allowed to put in. If you put $5,000, screw it, you're a cool guy. We're going to move it to 6,000. You put 6,030 years. What is that? What's 6,000 times 30? And I'll make them answer and they'll go 180. I go great, you put 180 in. If that grew and we're just going to say it grew at 10%, what the heck is percent? Who cares? 10%, if you grew that money at 10%, it would be worth a million dollars, which means you put 180 in and it's worth a million, 820,000, all of that growth.

Speaker 1:

You didn't do anything, you did not have to work. That is what I think is cool. What do you think? And some people go. That's cool. Some people go, that's kind of fast. Some people go. You kind of lost me and I'll go.

Speaker 1:

And in this case this kid was like okay, so like it seems good to invest. That was kind of the extent of what he took away from it. I said, look, I'm not saying that this is the coolest thing ever. What I'm saying and I want to make sure you get this, so I'm going to show it to you on this graph here. And I'll show a graph that says, basically, here's what you put in and it looks super slim like this. Here's what it became and it looks. Looks like this. And then all of the shaded in between I go work. You didn't have to do, aka xbox time. Now that xbox time might become girl time in the future, might become guy time, it might become um, what else do I'll say? I'll say that might become going out to eat time, that might become pizza time, whatever.

Speaker 1:

I'm trying to relate in some way to show him you see, all of this shaded, this is all these companies working for you. And I'll go let's look outside for a second. What do you see? And I'll have them pick a company and I'll hope that I get lucky. And they go Amazon. I go, that company works for you right now because you own part of that company. Pick another one. They'll go yep, you own that one too. Every time they sell a car, you make money. That's what it means to be an investor. You get to own everything around you, but not everything.

Speaker 1:

Some things are private, so as much as possible, obviously, I'll go deeper than that, but the way I spark interest is I have to relate to them, whatever they care about, or else it's just another financial guy talking numbers and graphs and I try as much as possible to make it fun. But, as they said here, this couple here they said it makes a challenge for us to spend even more, as we continue to feel she is still learning from our habits, meaning this abundant spending, everything else, with some people like, if they're like six or seven, I've talked to kids all like, but here's a dollar and they'll say, ah, I did it wrong. Here's 60 cents and they're like what I go? Yeah, that's taxes, like that's how taxes work, and so, like, I'll do tax examples, but I find those aren't nearly as fun. So I'm not going to tell that story now, but I'll still do it.

Speaker 1:

This is the story of okay, how do you get someone interested? Well, compound interest, that's the only like aesthetically pleasing thing that you can show someone visually where it's like whoa, that's cool, because if you were to talk about Roth conversions and 401ks and Roth IRAs or for children, you could play the game of Monopoly and show them the importance of things. But, like you've got a little bit of time with them while their brain is of any interest, taking any of your information, any lecture, you'll lose them Anytime. I'm boring if I were to say, let me start with this Roth IRA compound interest, I lost them. I need to go deep of them, deep of what they care about, and then I need to slowly start to go. And so the way that conversation ended with this person is he's like okay, so like what's the most I can put into the Roth? And that's when I knew I got it. And if they didn't ask that question, I would have been like okay, you know, I did my best, not every kid. But he said what's the most? I was like this year you can put 7,000. I said what's the most you've ever made? He goes, well, I've only ever made 3,000. I go, you could put 3,000 in 7,000. I said I think he said 300, sorry, I think that was the Xbox. Once he got all of his money, he bought the Xbox. But I was trying to explain like hey, there's a max to it, there's a game to this. There's only so much you can put in. And so he's like so if I made 10, I can only put seven in. I go that's right, and I go think about it Like this time starts now. You can start putting seven in now. And so I'm interested in this for the first time and maybe it just takes that one.

Speaker 1:

The reason I got interested in finances is I was at my car broke down. I went to a gas station to try to fix the car. They looked at me like this up and down clearly went. Here's a someone from Malibu who looks like I can. I'm not going to say they're going to take advantage of me, because that sounds wrong, but what he was doing was clearly going yeah, it looks like you have enough money to pay for whatever number I throw out here. Car cost a thousand bucks to fix it.

Speaker 1:

I'm like okay, I don't know different. He goes nope, 2000. I go what you got? 2,500. I go what are you? What's happening here?

Speaker 1:

And it was just here's someone that's trying to take advantage of me to the nth degree. And not only did I, I hated it. I was like there's, no, I don't want like me, I'm annoying this. But I was thinking what if someone did this to my brother or my mom or whatever. So I'm like I'm entering finances so that my family does not get taken advantage of and now I'm trying to go okay, how do I pass that along in different ways of education and all the different things I'm doing?

Speaker 1:

So not my traditional episode. Once again, the past few weeks have not been my traditional episodes, but I'm picking comments and interesting things from the collective to hopefully talk about that resonate. So if you like this style, please go, let me know in the YouTube comments or let me know by just going into the collective, that free community, and talking about what's important to you and, financially, what are your biases and what do you care most about and what do you worry about, and just being transparent in there so we can have an awesome conversation. That's it for this episode. I will see you guys next week.

Speaker 1:

Thank you all, as always, for listening to the Early Retirement Podcast. I love getting to host these shows and make different content for you guys every single week. I've not missed a single week in years and that is because I love getting to do this. Now, please be smart about this before you actually execute any strategy that you see me talk about or hear me talk about. Should I say Please talk to your financial advisor, your tax preparer, your estate attorney? Please be smart about this. None of this should be construed as financial advice. This is for fun, educational, informational purposes only. Once again, just quick disclaimer here. Guys, please be smart about this. Appreciate you listening, as always, and you can, of course, submit a question on my website, earlyretirementpodcastcom. If you, of course, want me to address a specific case study or topic. I will not promise I can get to it, but I respond to every single person and if I find it will be helpful for a lot of people, I will absolutely make an episode on it, at the very least give you some insight. That's it, thanks, guys.