Mini Millionaires: How to Set Up Your Children for Financial Independence with Rob Phelan

Mindy:
Welcome to the BiggerPockets Money Podcast, show number 183, where we interview Rob Phelan from the ChooseFI Foundation and talk about financial literacy for kids.

Rob:
… who cares, they’re putting money aside that’s for future them. That’s a great habit. And then once they’re ready to say, “Okay, you know what? Now, I get it. That light bulb has gone off and I’m ready to start investing.” Either they have been doing this as a habit already, so they’re in a much better financial position, or they’re in the habit of putting money aside so it’s not a big switch to go from saving to investing and getting that train going.

Mindy:
Hello, hello, hello. My name is Mindy Jensen. And with me as always is my doesn’t-have-any-kids-to-teach-FI-to-yet, co-host, Scott Trench.

Scott:
That doesn’t mean I can’t learn the theory. I think it’ll be really easy. I look forward to it.

Mindy:
Yeah. Scott thinks that kids are just going to be a piece of cake. Scott and I are here to make financial independence less scary, less just for somebody else, to introduce you to every money story, because we truly believe that financial freedom is attainable for everyone, no matter when or where you’re starting.

Scott:
Whether you want to retire early and travel the world, going to make big time investments in assets like real estate, start your own business, or teach finance to your young kids, we’ll help you reach your financial goals and get money out of the way so that you can launch yourself towards those dreams.

Mindy:
Scott, I am super excited to talk to Rob Phelan today. He is from the ChooseFI Foundation and his, I would say passion is teaching kids about financial literacy and financial independence in general. And you can tell that he’s really passionate about it in the episode today.

Scott:
Yeah, I thought it was a great show. I learned a tremendous amount. I really respect his foundation that he’s building with ChooseFIFoundation.org. I think you’re going to learn a lot. There’s a ton of resources out there that maybe you were unaware of previously around teaching kids, your kids, other kids, around financial literacy.

Mindy:
I was certainly unaware of these resources, so I’m really glad he was able to share them with us today.
Rob Phelan from the ChooseFI Foundation, welcome to the BiggerPockets Money Podcast. I’m super excited to talk to you today.

Rob:
Hey guys, I am so excited to be here. Thank you so much for having me.

Mindy:
Today we’re going to talk about a subject that is near and dear to my heart, which is personal finance and financial literacy for kids. I have two kids, they’re 14 and 10. Oh, no. Wow. Oh, I hope she doesn’t hear this. She’s getting so mad. 14 and 11.

Rob:
Very important.

Mindy:
And my 14-year-old is going to start high school next year, and she is required to take a personal finance course starting with incoming freshmen. It is now a requirement in Colorado. And I’m super excited about that. And I’ve reached out to be instructor, I’m like, “Hey, this is my jam. Let’s talk about it.” Rob, let’s talk about your money journey and your childhood growing up. You clearly know everything about money, right?

Rob:
Oh, of course, yes. And I feel so bad for that teacher who’s going to be like, “Oh crap. There’s this person at home who actually knows what they’re talking about who’s going to be able to tell everything that I do wrong.” So that is a nightmare, I’m guessing.

Scott:
Mindy mentioned a previous recording that she had already reached out to that teacher to volunteer her help in whatever capacity, and I was like, “Oh, poor teacher.”

Mindy:
They have no idea.

Rob:
But just to start off, that is a wonderful thing that there is states that are moving in that direction, and that is what we really want to see, states saying, “This is something that’s really important, let’s make this a requirement.” Especially from ninth grade, that is awesome. What is the requirement, they just have to take a personal finance class sometime during high school or is it every single year there’s something built in? Is it part of another class? Do you know?

Mindy:
0.5 credits in four years? It’s just baby steps starting off. And Tiffany the Budgetnista has a New Jersey law that’s named after her, I don’t have one yet, that requires financial literacy in New Jersey as well, so that’s really exciting. And hopefully, the other 48 states can catch up.

Rob:
So if you’re listening to this podcast and you’ve heard this statement from Mindy that this is spreading from Colorado, we want to call this the Jensen Effect as financial literacy spreads to other states, so we’re going to try and make this thing happen.

Mindy:
I like Rob a lot.

Rob:
It sounds like Colorado is where Maryland currently is, there’s like some minor requirements that is at least mentioned that kids have to get some exposure to personal finance education during their high school career. Unfortunately, it can look like a very different spectrum depending on each school, even each teacher, and how much they’re going to include in it because it’s hard to monitor, have they got a half credit of personal finance education or what the standards of that will look like. But I really hope that it is a start and it’s a start towards a full credit of personal finance education, that would be amazing.
And I think that’s the big goal for most of us working in this space of personal finance education for kids, let’s just get at least one standalone class that’s required to graduate so we can say you’ve got something under your belt that teaches you about money before you go out into the big world. But I totally missed your question. I was supposed to go back and talk about myself and we got totally distracted.

Scott:
Well, tell us about your experience with education and money.

Rob:
So in terms of formal education about money, pretty much nothing. I grew up learning from just watching my parents do what they did with money. To this day, I still don’t know whether it was a good thing or bad thing. It’s just I saw how they handled it, I didn’t really get much conversations about money. I was actually listening to your episode with Erin Lowry recently, and very much like if you asked about my parents money situation anyway, that’s none of your business. It’s not the business of the kids to know what’s going on with the finances of the household, that’s mommy’s and daddy’s job and you don’t need to know about that. So that’s what my financial education looked like growing up. There wasn’t really much transparency about what was going on.
I was encouraged to save, which is at least a great habit that my parents gave me. I became an expert at spending their money and saving all of my own, which is something I’m very proud of and my parents still highlight to this day, like, “You are an expert at spending our money, but not your own.” And they encouraged me to also venture out into a little bit of entrepreneurship as well. If I wanted something, it wasn’t a flat, no, it was, “Okay, but you’re going to have to pay for it yourself. So here are some ways that you can make money, whether it’s different chores or different ideas.” I lived in New York growing up, so I was able to collect bottles and cans, take them to a bottle bank and get my five cents to a quarter for each bottle.
So that was my way, I started making money when I was in my six, seven, eight-year-old phase. And that was at least great lessons. I think looking back now, I can be like, “Yes, that was positive money lessons that I got that helps set me on at least a path of thinking about saving and thinking about making more when I wanted to buy something.”

Scott:
Awesome. Can you give us a very high level overview of your journey with money? We usually would go 30, 40 minutes in this, but we’ll try to condense that in just a two-minute overview so we can spend most of the time talking about financial literacy for children.

Rob:
Sure. So I grew up that way, observing, doing different things. I had a couple of mini businesses as I went into my teens. I had a pinata making company, I tutored a little bit on the side, I did a baking company in 10th grade as part of a entrepreneurship project in school. And those were all just mini lessons that came along the way. No formal money education. Went to college, graduated as a phys, ed and math teacher. There was no jobs in Ireland at the time, which is where I did my undergraduate degree, and so I ended up moving back to the US. I went to Boston and worked as a director of marketing and a full-time soccer coach, which I had absolutely no qualifications for except maybe as a soccer player, so I was a natural fit for that job.

Scott:
You went to school in Ireland, that’s good enough.

Rob:
Yeah. That’s exactly what, you haven’t accent, you can coach soccer, and that’s all you need. Did that for a little bit. Went to grad school for STEM education in New York. And at that point, I had met my future wife and decided I was going to move down to Maryland to be with her. And when I moved in with her, I realized that she just knew way more about money than I did. So her upbringing had a bit more formal financial education from her dad. Particularly like how you save, how you invest, which was a big one that I just had no clue about. And we realized in the beginning that there was this imbalance in our relationship that she was making most of the financial decisions and it wasn’t something that she embraced or wanted to do, she wanted more balance in our relationship because she felt like it was a lot of pressure to have to be in charge of all the financial decisions for our household.
And so that was the point where I started just like digging into a little bit myself. I think the first book I read was The Automatic Millionaire by David Bach. And I was like, “Oh, this is doable. It’s approachable. It’s not like this big mystery that I need to solve.” So I just started digging more. Found Dave Ramsey, started listening to more podcasts. And eventually, I got asked, did I want to teach personal finance at my high school? So there is a math class called contemporary math, which is like a hybrid of personal finance and math, and the teacher who had it was vacating the spot.
And I didn’t know enough really to teach at that point, but I said, “Sure, why not?” And I spent that summer just diving into the curriculum, figuring out, “Okay, what do kids need to know about money?” I realized there wasn’t really anything right out there. There’s a lot of financial literacy stuff, which is just really dry and boring, like, “Here’s how you balance a checkbook. Here’s how you write a check. Here’s how to do a mortgage loan amortization schedule.” Who cares? And what I was realizing from these podcasts I was listening to was, it’s not about what you know per se, it’s about your attitudes, beliefs, values, your relationship with money. That’s really what’s going to determine whether you’re going to become wealthy in the future or not.
And because I couldn’t find anything like that out there, I approached ChooseFI as one of the podcasts I listened to the most, and I said, “I’m interested in creating something. Do you want to partner on this?” And that’s when I fell into this whole journey of creating a personal finance curriculum with choose and we were joined by Dani Mendonsa and Mandy Bert, and we created a pre-K-12 personal finance curriculum. End story.

Scott:
That’s awesome. So, are you still pursuing FI for yourself? Is that still a personal goal?

Rob:
Yes. So my wife and I are on our journey to FI. We’ve, I guess, actively been pursuing this for about five years now.

Scott:
It sounds like we should talk to her about your FI journey.

Rob:
At least in the beginning, definitely. Yes.

Scott:
I stole that from Mindy. Mindy had that joke and I just ripped it off. All right. But moving on back to children’s financial literacy, I don’t know the first thing about this. I don’t know anything at all about teaching children and education and those types of things. Where do we even begin that discussion about how to approach this topic with kids aside from the really great start you gave us around framing it as an attitudes, beliefs, mindset about money, rather than an amortization schedule and balancing a checkbook?

Rob:
All right. So let’s go back to, you’ve got kids who are very young, like they’re two, three, four, five, before formal school starts, how do you teach them anything at that age?

Mindy:
You show them.

Rob:
You show them. What else?

Scott:
No idea. [crosstalk 00:11:37]

Mindy:
Lecture them.

Rob:
How do you teach your kids something? They surely know something.

Mindy:
Well, Scott doesn’t have any kids. I showed them, “Here’s how you put this Cheerio in your mouth. Here’s the sippy cup.” You start very small and show them, and then it just builds on. Or they watch you and they imitate you.

Rob:
Yes. So a lot of observation and you take the time to show them, you point out and you voice, “This is what I’m doing, this is why I’m doing it.” You take them through your decision-making process. But even more so, a lot of our kids learn through play. They imagine different scenarios. They they have a great sense of wanting to reenact what they’re seeing and process what they’re seeing in their everyday life. And if you take the time to sit down and play it out with them, you’ve got a lot of those early lessons through that. Books are another wonderful example where kids just like to read with you, and that’s how we teach them to read and recognize words and that sort of thing.
There’s lots of different strategies that we use with kids just to teach them random things, and the same thing happens with money. So if you’re taking them out to the store, explain to them like, “Oh, if you want this, we have to pay for it. Where does that money come from? Well, mommy and daddy, or whoever, has to go to work, and when they’re at work, that’s when they make the money that allows us to get these different things.” And you just scale up the concept as time progresses. If they have questions, that’s the best time to just sit down with them and be like, “Okay, let’s talk through what this particular question was about, whether it was, why do you have to go to work? Why can’t I have this particular item or toy.” Where you said no to something, why did you say no?
Talking about like, “Okay, there’s certain things we can and can’t have, there’s needs, there’s wants.” And just having conversations, I think with your kids is a wonderful way to do, and especially if they do show any curiosity in the area that you’re willing to sit down with them and explore those topics with them. And then as they get older, the lessons that you have can change. Involving them in the financial decision-making process of the household is a really empowering thing for a child. If you can give them any feeling of ownership over what’s happening, they’re going to show an interest and they’re going to be much more compliant with like say, you’re trying to get out of debt, you’re trying to get rid of some credit card stuff, you’re paying down student loans, you are trying to build wealth.
If you’re involving your child in that decision-making process, maybe not sharing a huge amount of stress or overwhelm that you’re feeling, we don’t necessarily want to burden our children with that. But certainly saying like, “Okay, this month we are going to try and save $1,000 and these are the different ways we’re going to try and do it. What else do you think we could do to try and reach that goal?” And let them come up with some ideas like, “Oh, we could maybe spend less on cereal this month,” or something like that. Or like, there’s something that I can cut out. They have something that they can contribute to the situation. I think kids age see that and know that-

Scott:
What age is this appropriate for?

Rob:
So we start our curriculum at pre-K, is when we start having formal conversations and lessons about money, so through books, through different play activities. But this goes all the way up to high school, to college. I mean, we can have these lessons at any point in our adulthood, I feel anyway.

Scott:
I imagine, lacking any expertise, but I imagine there’s a continuum where pre-K is one level for a second or similarly in that same bucket, but a little bit more advanced and that kind of stuff. How do you bucket the curriculum? Where are some of the milestones in terms of the real differences in education you can start giving your kids as they age?

Rob:
The nice thing is, if you are in a situation where you can commit to these lessons from a pre-K-12, like you said, it just builds up on itself rather than the scenario Mindy was putting out, where maybe the first experience anyone has a personal finance education is in like high school, where you have to try and go from beginning to end in one space. So thinking about literacy as well, there’s levels where you learn to read. You start with smaller words, you start with bigger words, you go into sentences, and we progress that as we go. Same kind of idea with money.
In the beginning, we’re talking about things like, you just have to pay for something, you have to have patience, delay gratification, but without using that word. So you want something, well, let’s talk about how we could save for it. And then as the students get older, we start bringing in more strategies of, “Look, here’s how you save, here’s different types of accounts you can save in. Let’s talk about now investing and getting your mind to grow instead.” So I would say like early elementary school, it’s very, just basic broad concepts. You might not even be using money terms very much, it’s more so story and play, but then as they go into elementary school, we start talking to things like meal planning. So thinking ahead, having a plan for what you’re going to do with your time, with your money, with your food.
And by the time they’re getting to middle school, that’s when we’re really starting to introduce some of the more complex, in quotation mark, topics, so talking about like retirement, what are taxes? And then when you’re hitting high school, we’re saying, what does a kid need to know before they leave school that would allow them to be successful as an adult? And building all the way up to, here’s how you get started investing. That’s the key one is, can you get kids to have bank accounts? Can you get them to start building habits for saving and investing? And then making better buying decisions when things come around like student loans or new cars or houses, that sort of thing.

Scott:
I start my kid on this at four years old, and we start talking about money. How rich should they be by the time they graduate high school?

Rob:
I don’t know if I can put a number on that, but man, if you started… At what age you said, four or five?

Scott:
Four, yeah. Four or five.

Rob:
So I heard this wonderful concept, like bank of dad where you’re encouraging your kid to save and you’re just matching everything they save, and at some point, then you start investing and you just keep showing them how it grows. They could have like 25, $30,000 by the time they’re graduating high school. And if they just kept adding like 100 bucks a month to that, they would be in their millions probably by, what, mid-30s? Just get started.

Mindy:
I’m hoping that my kids can start a pet sitting business as the country opens up in the next few months, fingers crossed. I want them to start a pet sitting business, a legitimate pet sitting business. They will pay taxes. I mean, pay taxes. What is it, like $12,000 that you have to make before you can pay taxes? But I want them to max out their Roth IRA. And that is a really boring thing to do. And my kids have been lectured about money since birth. Every once in a while, they’re like, “Mom, I don’t care. Mom, I don’t want to hear it.” And I’m like, “No, no, no, you have to.” I started talking to them about the concept of a Roth IRA, and Daphne’s, she’s the 11 year old, she’s like, “Ugh, mom, this is so boring. I’m not even listening.” Wow. Thanks for being so honest. But she’s right.

Rob:
That is a hard one. Yeah.

Mindy:
That’s a hard one. Look at the amount of runway she has, Scott, if she starts contributing to her Roth IRA, when she’s 11, look at how much wealth she can accumulate before she even graduates high school if she maxes that out over a year. And how much fun is it for an 11-year-old to spend time working and earning income and then putting it all in the Roth IRA, 0% fun. She will revolt. So, the bank of mom and dad will match her when she puts money into the Roth IRA.

Rob:
And even like saying that they’re putting all of it in there, that’s probably where some of the problems starts. Like if they’re going to earn money, maybe keeping a portion of it for spending, they can use that for whatever they want. I like the families who say, “When our kids make money, either it’s gifts or chores or their own business that they have,” a spend, save, invest and give allocation to what they do with their money. So 50% of it goes into investing, 10% goes to saving, they give away 10% to whatever cause they feel is important to them at the time. And then what am I left with, 20%? They can do whatever they want with.
And I think that is a bit more attractive because like, “Okay, there’s a reason why I’m earning the money. There’s something personal that I’m gaining out of this.” Because yeah, we’re just trying to build habits at that point. They’re not getting the concept of retirement, that’s just so far away in the future, that’s like four or five lifetimes away for them at that time. So it’s a hard one. You’re trying to build that habit. And if you can just say, “Okay, we’re going to build these good habits of saving and investing at that age.” If you do that from a young age, by the time they graduate high school, they’re at Coast FI. They could just stop investing at that point, probably let it ride until they hit 65 and they’ve got their millions. They’re good to go. And then anything they do afterwards is just bringing that day closer and closer.

Mindy:
And they don’t have to be stuck in a job they hate or a career that they decide they just don’t love anymore. It gives them so much freedom when they don’t have to be tied to it. I’ve worked some really crappy jobs. I have one boss who shall remain nameless, I’m not the president of her fan club. And I was there because I had to be. And giving your kids the freedom, setting these habits in place so that they can have this freedom Coast FI. I would like you to clarify because there’s all these different types of FI that are running around out there, so I just want to make sure we’re on the same page. But that seems like a really great, powerful gift that you can give a kid.

Rob:
Yeah. I think everyone is coining their own terms. So there’ll be a Jensen FI out there soon, I’m sure. But Coast FI essentially where you have invested enough money and the idea of financial dependence is in loose terms, you have 25 times your annual expenses in investment so that if it’s earning 8% interest, you could live off for and your money would never disappear. So you’re at that financial independence point that you can live off your investment for the rest of your days.
Coast FI would be, I’ve got $100,000 in my accounts, and if I’m okay with retiring at 65, I know right now, if I don’t touch those accounts anymore, I stopped contributing, by the time I get to 65, I will have my 1.2 million that I need to retire, so that’s our FI number in our family. So we are at that borderline on Coast FI because I’m 31 now, so if we just let it ride for another 34 years, we would have enough to retire off of by 65. So everything we add now is just bringing our potential retirement date closer, even though I’m the guy that doesn’t have any plans to retire early.

Scott:
Let’s try it a specific situation because it sounds like 11 is too many lifetimes away from money to… There’s things you can do as a parent is that set up your child downstream, the things that Mindy mentioned, but maybe like a junior or a senior in high school, it’s starting to become more real and imminent. There’s probably some work experience at the very least over the summer that most of those folks are getting in some capacity, and the real world is not too far away, or at least college is not too far away. How do I reach or motivate a person in that situation effectively with content like this?

Rob:
That’s the brilliant question for educators all the time, is like, “How do I motivate my students to want to take action?” And we have some problems with adults in the same boat. You have all this wonderful information, you’re looking at them like, “Why aren’t you doing this?” And it’s really a case of some kids will, some kids won’t, some kids are ready to receive that message, some kids are not, and we’re trying to give them as much great information as we can and trying to get them to take as many actions as possible to put themselves on that path or at least give themselves opportunities in the future.
Mindy’s talking about 11-year-olds, they’re not going to care about retirement, but if we can just train them into that habit of putting a percentage of their money aside, whether it’s going into a Roth account, a brokerage, a savings account, who cares, they’re putting money aside that’s for future them. That’s a great habit. And then once they’re ready to say, “Okay, you know what, now I get it. That light bulb has gone off, and I’m ready to start investing.” Either they have been doing this as a habit already, so they’re in a much better financial position, or they’re in the habit of putting money aside so it’s not a big switch to go from saving to investing and getting that train going.
For my junior, seniors, I teach seniors this class every year, so fall and spring, I teach this personal finance class, and my goal is always that by the end, they have a checking account, a savings account, and they have at least set up a Roth IRA. So even if they don’t put anything into it, I want the mechanics to be there so that when they do decide to get started, that it’s there for them to do it. So we’re taking away as many barriers to entry as possible, and I’m trying to make sure they know exactly how to get started when they do find that motivation. But yeah, a lot of times it’s incentives for just getting started.
If there’s something that they really want to do, in my case, I can offer incentives in terms of, I have a local bank sponsor this project we do in the curriculum called The Passport to Financial Independence. And it’s 40 actions that if a high schooler took these 40 actions and put them in place, they will be on a supercharged path to financial dependence. So it’s opening a checking account, opening a savings account, opening a brokerage account, a Roth IRA, contributing to some of those, having conversations with retired folks about what are some of your do’s and don’ts for managing your money in the future. There’s a whole bunch of these different tasks that they can do. And I got a local bank to sponsor it.
And if they reach five, they get a prize. If they reach 10, they get a different prize, 15, 20, all the way up to 40. And then if the entire class reaches 200 of these financial behavioral changes, they sponsor a pizza party for the class. Totally unrelated to being a responsible saver for retirement. But if that’s what it takes to get them to start making those financial habits and putting those things in place, I consider that a huge win.

Mindy:
Could I get a copy of this 40-step list?

Rob:
Absolutely.

Mindy:
Could we share that with our listeners?

Rob:
Yes. That is in the ChooseFI curriculum, which is absolutely free for anybody to use, by the way. Parents, if you want to do this with your kids, it’s for you. Teachers, if you want to do this with your students, it’s for you. Homeschool cohorts, you can use this. Yeah, it’s at ChooseFIFoundation.org, and just go into the pre-K-12 stuff and start exploring. One of the first things you will find is our Passport to Financial Independence.

Mindy:
I’m going to send this to my daughter’s teacher. And sorry if this is too much.

Rob:
She’s already getting stuff?

Scott:
What percentage of your seniors would you say buy in to this concept of FI?

Rob:
If I have an average class of 30, I probably get five or six who will really start… like their eyes spark up when they see the compound interest calculators, this idea of not having to work for the rest of our lives is really exciting, mostly because they’ve been working already for a couple of years and are like, “You know what, work sucks. I don’t like this.” So they get that a little bit already. There’s another bunch then who at the end when we do our surveys, they’ll be like, “Oh, this was really interesting. I learned a lot.” I can tell from the measures that we take that they haven’t put a lot of the steps in place yet, but they also would tell me like, “I’ve got very short term savings goals such as paying for college, so I’m not ready to start investing yet.”
I’m like, “Okay, cool. You recognize that there is at least a big expense coming your way and you’re saving for that. That’s fine.” And I always encourage them to come back to me afterwards if they have questions or they’re ready to get started at later points, or they have access to the materials, that sort of thing. And then there’s always going to be probably less than half who it seems like they’re not listening to anything, but then I’ve had students come back to me a couple of years later and be like, “Oh yeah, I started a Roth IRA and I knew about that from class.” I was like, “Oh, I literally thought you were sleeping the entire time. So that’s wonderful.” It was osmosis. It was going in.

Scott:
I think that the stakes are so high there because if you can get somebody to buy-in during class and immediately go out and optimize their college experience, and then their first couple of years in the workforce for this, that’s how you get $500,000 in net worth by the time you’re 22, 23, 24, potentially if you throw out a house hack or you set up the Roth, and you save, and you work through college and that kind of stuff. And it’s just a completely unfair head start in life compared to everybody else, you could just have total power over everything you’re going to do with your career and those types of things.
And so I just think the work you’re doing is great and the stakes couldn’t be higher in some ways around it because it’s just human potential that’s going to be realized by some of those students. Have you gone on to see any outcomes like that in your time?

Rob:
I’m still at that stage where I’ve been teaching this for four years now, so five years ago I started our own journey and in four years I started teaching it. So the kids who graduated that first year are just starting to come out of college now, but I’ve had students reach out to me, one student in particular is down in Florida and he reached out to me like a year later and was like, “Oh, by the way, I’m running my own business down on college campus. I’m drop-shipping all of the stuff from,” I think it was from China. He’s just importing it, marking it up and selling it on again, and he’s like, “I wear my like cowboy hat around the place because that’s my brands so everyone knows me when they see me.”
And he’s just thinking about things differently and I’m pretty sure he’s just cash-flowing his way through college with his side business. And this kid is going to be killing it by the time he comes out. I’ve had some students, they’ll come to me and they’ll be like, “Oh, my grandfather does real estate investing and I’m really interested in that.” So when I get to that section, they’re interested, and they may have no interest whatsoever in the stocks, the budgeting, the saving, but real estate investing for some reason, it’s something they’re really interested in. So giving them the tools to say, “Okay, well, if you want to start investing at 19 years old, here are the things you’re going to have to put in place to be able to do that.”
“We’re going to have to talk about getting that credit score started and moving up as fast as possible. Here’s what house hacking looks like.” We have mortgage loan officers come in and they’ll talk to him like, “Okay, you’re at this age, this is what you’re going to need to do to get a loan from us at that age to buy a house.” Or, “Here’s how you would cashflow it.” Or, “Here’s how you would hack your way to owning property.” And I think kids light up with that stuff, I’m like, “I don’t have any interest in real estate investing right now, but they do.” And it’s so important to foster that interest. Yeah, I know. I’m sorry, I’m on BiggerPockets.

Mindy:
That’s okay.

Scott:
I don’t know anything about this, I’ve gone in and taught a few personal finance classes at the local high school here in Denver, and the first few years, first, the kids were asleep and I was very nervous and ineffective. In the last couple of years, it seems like there’s a little bit more engagement with that, but they seem to engage with the idea of the house hack and the duplex investment and those types of things. Have you taught that concept about using real estate at all or is that beyond the scope of your program?

Rob:
No, absolutely. I have different guests come in and do Zoom classes basically with the students or if they’re local and they can come in, they do that. And yes, some will talk about real estate investing like just buying rental properties and using that as a wealth generating tool or an investment tool. But we’ve had some people come in as well and talk about house hacking and particularly for college, if you could buy a property in a college town, you move in there, you bring in five or six of your buddies, they cover the entire mortgage plus sums of your cashflow positive on it. You’ve finished five years and at that point, you can either sell it on and buy something else in the new place you’re going to live, or just keep it there and let it keep cash flowing for you.
They light up about that stuff because they’re like, “Oh, I need to live somewhere, why not have other people pay me to live there instead of me paying rent or something for myself?” So yeah, it’s a very easy concept I think to grasp onto. And it’s just making sure that they are putting the things in place that would allow them to buy a property like that at a young age, because that’s the hardest part, is that if they go into it with no credit score, no down payment, nothing like that, it just becomes a harder move to make at that young age.

Scott:
And no landlord to yell at you if you’re hosting a responsible social event with your friends as well. It’s another advantage for the college house hack.

Rob:
Yeah. You unfortunately take on that position of being the responsible landlord. If it’s your house hack and you’re inviting your buddies in there, you have to think about, “Okay, do I trust these people to not have socially responsible parties at my house and trash it?” And some of them will look at it that way, and I find that’s always a fun conversation too when we talk about having roommates and the idea of picking your buddies versus like actually evaluating potential roommates for like, are they going to be productive members of the household? Are they going to be an absolute pain in the butt for getting rent from, or contributing to the chores of the house? Are they going to be party animals who are going to be wrecking the place?
And it’s like picking teams or doing group projects in school, it’s like your buddies don’t always make the best team members and it goes the exact same way when you talk about living with someone.

Scott:
You had mentioned earlier that you felt that the students who had worked and understood how work is work, especially your first couple of jobs in high school with that, they’re the ones who seem to engage the most in your classes. Am I remembering that correctly?

Rob:
Yeah. Either they work for someone else or they start their own business, but yeah, the ones who have worked and they have income and they recognize their minimum wage income doesn’t necessarily go as far as they think, even $15,000 a year sounds like a lot, but it’s not really that much in the grand scheme of things, they’re the ones who are like, “Okay, yeah, I’m seeing this scenario play out. It’s not like… ” A lot of times their parents are giving them more financial responsibility either intentionally or by circumstance, so I have some students who are working almost full-time hours because they’re supporting their family at the same time. So they see very firsthand like, “Okay, this is what paycheck to paycheck feels like. I don’t like it, let’s change that.

Scott:
Rich Dad Poor Dad, there’s a parable in there where they talk about how the rich dad basically had the kids working this terrible job for pennies an hour or whatever with that. That was how they learned the lesson of like, “Oh, yep. I would rather be good with money than bad with money.” As part of your program, do you ever think about how to expose kids healthfully to that reality early on to get them motivated for it? Or is that cruel and unusual? I don’t know what’s appropriate with this kind of stuff, but it seems like that’s a powerful lesson to have that job that’s bad and not get the economic reward that you’re hoping for.

Rob:
Well, the school frowns on me using the students as unpaid labor for different things, so I can’t do that, but there are some wonderful simulations out there.

Scott:
The foundations can do, right?

Mindy:
Well, I think it’s super powerful just for the kids that have been working there. When you’re in high school, you probably don’t have an awesome paying job. Yeah, there’s always that one kid who’s got… When I was in high school, one of the kids that went to high school with was a bouncer at a bar, and I don’t know how he was able to do that legally. And maybe he wasn’t, but he was a big dude and he was making a lot of money. So of course, this lesson would fall on deaf ears, he’s 17, he’s working at a bar, I bet he was drinking. I’m not going to name him by name, Chris, but I bet he was drinking underage. And why would he not want to do that, he’s got the whole world?
But when your first job is working at Dairy Queen and you’re like, “Wow, I paid how much to FICA? Who is FICA? Why did they take half of my paycheck?” Because I’m making 335 an hour and I thought I was going to have a big paycheck, and now I have like $25. And that was really hard. I would have been much more receptive to this information than probably Chris would have because I was working the hard job. And it’s not that hard at the Dairy Queen, but it’s still like, you’re on your feet and you’re working. And now I could just sit in a chair and type and talk about real estate, and I love my job and it’s not so difficult anymore.
So I think the kids that have the experience are really going to be more receptive to it, especially if they’ve got the crappy experience.

Rob:
I don’t know if that was a good example because they got ice cream and you’re just sitting in the chair in front of a computer. I don’t know if that was a good one.

Mindy:
You were at 7:00 to 9:00 shifts at Dairy Queen.

Scott:
I got one. My first job was at Pier 1 Imports.

Mindy:
Really?

Rob:
That’s fancy, man.

Scott:
I went around and I applied, it was 2008 or 2007, right in the middle of the recession. And so I had to go to 20 places, just driving around the shopping center, applying for every single job in high school, just had my first car. And I get the job and I unpack the boxes from the truck, I stock the shelves, I load the couch onto the car at eight o’clock at night on Saturday, I unwrap this enormous frog ornament that goes into someone’s garden that’s three feet tall and was made of stone that’s ridiculously heavy. We sold six of them in the summer that I worked there somehow. I made like, I think, I don’t know, $8 an hour or whatever, very close to minimum wage.
And I had no interest whatsoever in making use of the employee discounts at the time it was awarded.

Rob:
Thanks goodness.

Scott:
And I just remember, like, nothing wrong with it, they didn’t treat me poorly, there was something wrong. The break room was super depressing at the place. And I was like, “This is not the kind of job that I want to do.” And I think that was powerful. I was not motivated about financial dependence of course, for 10 more years following that, or five more years following that. But I was motivated to get better and better jobs each time after that. So I don’t know, that’s why I think that maybe there’s a benefit to guiding your kid towards a pretty lousy work experience one summer and maybe that’s a good kick in the pants to get going on the fire journey, I don’t know. So maybe there’ll be some angry comments on this episode from you saying that, but possibly.

Rob:
Or defensive Dairy Queen coming back at you too.

Mindy:
It was a hard, not hard job, it was a fast paced. During the summer at Dairy Queen, there’s a line, and I worked the 7:00 to 9:00 shift, which is the busy, busy shift, two hours. That sucked because then my whole night is ruined because I was, I think, I was 15 at the time. So my whole night is ruined, I can’t do anything because I got to go to work, and then after work, it’s curfew, so I have to be home. But for two hours, so I got six bucks.

Rob:
Yeah. That is tough. I’ll tell you, that one is tough.

Mindy:
But I was a 14-year-old.

Rob:
Going back to your question of how you recreate this, in the curriculum, we use simulations, there are some wonderful simulations out there that basically force kids to take on a job and budget and do all these different things. And actually, I wrote an article the other week about just different types of video games that are out there that ask kids to budget and cashflow manage and all those sorts of things. There are examples of this out there, but you can recreate a lot of these digitally. And some of my favorites, they pretty much make students, like poor college students, they are literally trying to stretch to the end of the month every last penny, it’s always a hard month. And most times they come out of it and be like, “That sucks, I don’t want to do that.”
And if they say that, I’m like, “Job done, we did it. You at least get it.” Living paycheck to paycheck, not making enough income is a problem. And that’s that first step to getting students to adopt some of these mindsets and mentalities and listen to the lessons because they recognize there’s a problem out there with how people are doing money right now. And then the fun part is there’s two ways to attack the problem, you either decrease your expenses or you increase your income. And for me, the one that lights me up is increasing income. I don’t really have any interest in cutting my expenses to the bone.
I keep them within reason, but you always want income to be greater than expenses. So you got to attack the equation from one or both sides, and increasing income is always a fun one to talk about. So bringing entrepreneurship into a personal finance curriculum is something that we do in the ChooseFI Foundation, and it’s just a really fun unit to teach.

Scott:
I’m one of the parents that does not have a child in your class specifically, where can I go to learn about… I’m not a parent yet, I’m just pretending I am for the purposes of this question. But where could I go to get access to learning about how to teach my child about this or help other children in the community, if that’s something I want to do, can you tell us a little bit about the work you’re doing on that front?

Rob:
Yeah. With ChooseFI Foundation, this curriculum is freely accessible to anybody who wants to use it. You go to ChooseFIFoundation.org, and then if you want the curriculum part particularly, you can get to /prek12. And what you’ll see there is a pre-K curriculum, a kindergarten, a first, second, a third, a third through fifth, a six through eight and a nine through 12. So it’s banded based on the grade level of the students. And you go in there, you will find it divided up by units and topics, so you can talk about budgeting, you can talk about taxes, you can talk about investing, insurance, whatever you want, you will find it in there.
And if you are a parent who just wants to bring this home, find a topic that you think your kid might be interested in talking about, explore maybe what lesson for that might look like. And you don’t necessarily have to teach it like you would in a classroom, you say, “Okay, what’s the idea going on in here? What activities is this based off of? Is there a project involved? And then let’s just do that with the kids at home and see, do they grab onto that idea or is it a bust? Maybe we just try this another day.” Some of my favorite ones to do are our meal planning project. So you basically, as a high school student, we have this for each age range and it gets simplified as you go further down.
But at the high school level, I ask my students to budget for an entire week’s worth of food. So let’s plan out three meals a day for seven days, what are the meals? What ingredients do you need? How much do you think it would cost to buy those at a grocery store? So just a quick estimate of what you think it would cost. Then we go to online shopping apps like Instacart and we’d find out how much it actually would cost. They realize their week shop was like $250 because they wanted steak every night of the week or they wanted all these expensive things. And then we’re like, “Okay, well, based on the income you have right now, or what you think you’re going to have, we wants to budget 10 to 15% for food, how do we get our food cost to come down into that to fit that budget?”
And so they have to start problem solving through things like increasing the quantities of different meals so they can eat the same meal multiple times a week, or what foods are cheaper than others? How do I go generic versus brand name? And it’s a wonderful thought exercise for them in terms of like, how do I navigate buying food and thinking about it from a cost perspective as well. And that can be done over the dinner table, it can be done in a classroom, it can be done anywhere. So looking for things like that, I think are a wonderful thing to bring home to your students or to your kids at home.

Scott:
So we go to ChooseFIFoundation.org, and I will be able to go there and find the lesson plans and materials to prompt like that particular exercise and more?

Rob:
Absolutely.

Scott:
Awesome. Is that all free?

Rob:
All free. The foundation exists to spread personal finance education to as many people as possible for free, and we’re trying to reach everyone as opposed to just the upper white middle-class society. We want something that is applicable, relevant and accessible to everyone. So if you have schools in your district and you’re like, this is something they might be interested in, they don’t have huge budgets, they’re looking for something free, send them that link and say like, “Hey, here’s something you might want to check out.” You can include this in an English lesson, a math lesson, a social studies lesson, it doesn’t have to be a personal finance class.
You can do book studies on different financial topics, like I do a book study on Richest Man in Babylon in my class. And that’s just one of my favorite things to do with my students. At the end, they’re always like, “Wow, this book is really old, but man, it’s relevant even though they’re talking in this weird Shakespearian language, it still makes sense. I get it.” There’s lots of different ways you can use it. And I would just suggest check it out and look for something that the title stands out to you, you’re like, “Okay, this could be interesting for me or for my own kids.”
You could go into a high school and lead a mini class based on one of these things, go to your local library and put on a class for adults using the high school curriculum. It’s pretty much the same level as what an adult needs to know. There’s lots of potential for it. And if you’re like, “I don’t want to…

Scott:
And you have materials all the way from pre-K to grade 12, is that right?

Rob:
Yes.

Scott:
Awesome. So if I’m a parent, I can just go in there, look at the materials sorted by those age brackets and then get some ideas, pick the one I like, send it to my kid or I can just go through a curriculum line by line in the order you present. Is that right?

Rob:
Absolutely. And if you’re like, “I want a hands-off approach. I don’t have the time to do this, or my kid just doesn’t listen to me,” which we do get a lot from parents, “They want to learn from somebody that’s just not me.” We’re starting to create now some like self-paced asynchronous stuff for students to do, starting with third through fifth grade. So if you have a third through fifth grader at home, you’re like, “I want to put them through a personal finance class that they can just like sit in front of a computer and take themselves,” we are starting to create that now. So you can go find that as well on the ChooseFI Foundation page.
And that is a paid product, so that is not a free one, but all the materials are available for free as well, it’s just if you want somebody actually teaching it to your kid, we can make that happen too.

Scott:
Are you a nonprofit?

Rob:
We are a nonprofit. Absolutely. So if you do want to donate or support what we’re doing, we will absolutely accept those donations and give you that tax deduction.

Scott:
All right. And if I buy the materials, it goes to a nonprofit.

Rob:
All stays within the foundation, we have to fund what we are doing.

Scott:
Great. Awesome. Thank you for sharing all of that, it sounds like a great resource. So go check that out at ChooseFIFoundation.org. And you can find a lot of those materials and more of the stuff we talked about and maybe get some ideas for teaching your kids or kids in the community about buy right there. So thank you, Rob.

Rob:
Thank you.

Scott:
All right, Rob. In addition to the ChooseFI Foundation, where can people find more about you?

Rob:
ChooseFIFoundation.org is a great place to find me, and then my own business is called The Simple StartUp where I teach 10 to 18-year-olds how to start their very own businesses. You can find me there at www.thesimplestartup.com.

Scott:
All right. You’re going to need a business if you’re 10 to 18 years old and you want to begin funding a Roth, or if you’re a parent, then you want your kid to begin funding a Roth, they’re going to need some income. So that’s a good way to couple it with Mindy’s approach. Mindy, your kids make money, they don’t want to put it in a Roth, so you match the dollars, they get to spend those and those go into the Roth, and then their income can go to the Roth.

Rob:
Yeah. So if you’ve got your kids at home wanting to do the dog sitting business, and you’re like, “I don’t know how to help them get it started,” The Simple StartUp is a great way for them to do that. It’s a 10-week program, all virtual, where I walk them through the steps of getting that business started. And the key thing is they do it for free and they do it fast. So it’s not like, “Let’s write a 10-page business plan and take six months to get this thing started,” they’re going to start their business as fast as possible and grow it based on what their customers want.

Scott:
And this is not a nonprofit, this is your personal business, right?

Rob:
Yes. This is a for-profit business.

Mindy:
And do you touch on taxes for the kids? Because I do want to teach them about paying taxes because that’s a big cold slap in the face when you get your first real job.

Rob:
In terms of The Simple StartUp, I give them the general, like you should put about 30% of it aside in a savings account to account for taxes, and then you work with your parents at tax time to figure out what that looks like for you. Because if they’re claiming as dependence, then it’s a different situation versus if you’re independent. So we have nothing more than just that because we’re not certified to give official tax information, but definitely thinking about it.

Mindy:
Yeah. I love that you get them thinking about that. I see these people who are like, “I made so much money on this.” You’re like, “Ooh, save some of that because the taxman will come after you.”

Rob:
Please don’t spend it.

Mindy:
Yeah.

Rob:
And for kids, they probably will get to keep the majority of it unless they’re making an exceptional amount of money, but at the same time, you still want them doing a tax return and going through that process of how to do it.

Mindy:
Yeah. And if you’re paying taxes, that means you’re making a lot of money. That’s actually a really good thing, is to be able to pay taxes.

Scott:
And you have the Bank of Dad, you can also have the tax of dad, right?

Rob:
Yeah.

Scott:
That sounds fun.

Rob:
It’s like if you’re doing chores, it’s like, “Oh, you made a dollar off doing this, but then dad takes tax backs, so it’s really 70 cents.”

Scott:
There you go. Now they’ll roll with the meal planning exercise after you introduce that, now they can begin paying portions of their own meals. This is so valuable for parents.

Rob:
I hope so, and I hope like as parents you’re looking at this like, “Okay, it doesn’t have to be this big, scary thing. I don’t have to be a financial expert to talk to my kids about this stuff.” Share what you’re doing. Look for some games, activities, stories, play stuff that you can do that revolves around money and just experience it with your kids, learn alongside them. And the foundation curriculum is there for you if you need a little bit more guidance and support.

Mindy:
Yeah. This sounds like a really great program, sister program with the Doug Nordman and Carol Pittner book, Secrets of a Money Savvy Family.

Rob:
Yes. They had wonderful book, great advice for raising kids. And in talking to Doug, I think, it fits perfectly with what they feel about how you raise your kids. You have those conversations, you do that Bank of Dad or mom idea, you give them responsibility for small amounts of money and increase the amount of decision-making power they have with their money as time goes on.

Mindy:
Yeah. I love it. Rob, thank you so much for taking time out of your busy day of being a teacher and running an entrepreneurial startup and running the ChooseFI Foundation Education Program to talk to us about this, because I do think this is really, really, really important for all kids to know. I am going to go blast Mr. Benson. He’s going to be like, “Curse you, Rob. I had my whole thing planned out, but this one’s better.”

Rob:
No worries. Send them an email and I’ll take all those questions and abuse as well.

Mindy:
Awesome.

Rob:
Thank you guys so much for having me. I really appreciate the chance to talk to you and your audience.

Mindy:
Yeah. Thank you so much, Rob. We’ll talk to you soon.

Rob:
Bye.

Mindy:
That was Rob Phelan. Scott, what’d you think of the episode today?

Scott:
Really enjoyed it, learned a lot, a topic that I don’t really know much about, but was fascinated by, and love his passion, energy, commitment, dedication, organization, with respect to attacking the problem of financial literacy for kids.

Mindy:
I’m super excited to go check it out. Like I said before, my daughter’s taking a class this fall, and I am really, really excited to share it with her teacher. I hope he is as equally excited to get it from me.

Scott:
Yeah. My understanding is that teachers are really enthusiastic for advice from parents on how to teach their classes. So I look forward to seeing how that turns out, Mindy.

Mindy:
It’s hard for me to be like, “Oh, this is my whole life, I’m super excited about this. I don’t want to overwhelm you, but oh, I’ve got so many resources, please tap me.” So I have to temper my excitement, but I’m definitely going to share this with my daughter’s teacher. Scott, we didn’t do the traditional Famous Four with our guests today, but we do have a joke courtesy of our producer, Eric’s children, Cora and Patrick. Cora and Patrick say, “Where does frosty keep his money, frosty the snowman? In the snow bank.

Scott:
Ah, that’s excellent. You guys have smart kids, Eric. Special thanks to our whole podcast team, including Eric, Dave, Kevin.

Mindy:
Jamile.

Scott:
Jamile. We show up, Mindy and I, and we record and magic happens and you guys get a fully finished, fully edited podcast recording. You don’t hear all of our gaffes, the occasional naughty word when we screw up, those types of things, they do a fantastic job and we’re really appreciative of them. So thank you guys. Big shout out to our podcast team, everybody. And thanks for all you do.

Mindy:
Yes. They definitely are the ones who are bringing you the fabulousness every week. We would like to say thank you for joining us today. We always love talking to you. If your children have a joke that would be on Scott’s mental level, please feel free to email it to us, [email protected], or [email protected]. Scott, we get out of here?

Scott:
Let’s do it.

Mindy:
From episode 183 of the BiggerPockets Money Podcast, he is Scott Trench and I am Mindy Jensen, saying if we don’t see you around, we’ll see you square.