Last week we opened up a dialogue to help parents talk to their kids about money. Join Matt and I this week as we dive in a little deeper and explore:

  • Enabling failure (say what?)
  • Chores and Allowances
  • Apps – making life easier or harder?
  • Investing, Saving and Giving

The common thread between this week and last week, and all the topics we covered in both, is conversation. If you don’t talk to your kids about money, they won’t know what to do with it – how to use it effectively and safely – much in the same way we have to talk to them about their bodies. They aren’t teaching financial values in school, that is up to you, and I hope I’ve helped you start the conversation for lifelong financial success.

Learn more about Mike and my services at https://www.mortonfinancialadvice.com and connect at https://www.linkedin.com/in/mwsmorton/

Are you ready to create your ideal lifestyle? Let’s Connect.

Transcript
Matt:

Hey, it's real financial planning broadcasts on WKXL available wherever you get your podcasts, especially if you're subscribed to capital flows, or financial life planning with Mike Morton who was also our guest or recurring guest on this show. Mike, welcome back, we're picking up on a conversation that we started got into and was so great that we wanted to do a part two of it.

Mike:

Yeah, yeah. Happy to be here, Matt, always a pleasure.

Matt:

We started talking about a topic that we just ended up hitting in like lots of different shows, in various ways about teaching your kids how to spend their money, how to invest their money, how to give away their money, how to save their money, and how hard that is. And we talked a little bit about saving and spending and teaching lessons and teaching the lessons that come from mistakes and the mistakes that we ourselves have made. But we still have a lot more to hit on this. Let's pick it up. Right here. I was just saying that we're both I think relating some examples from our lives or from your clients, where we've helped kids to make some decisions, but also let them make some mistakes, and maybe then revisit them and talk about them and see what you can learn from them. What about investing, which is really your stock and trade pun intended? How do you get into that with?

Mike:

Well, before we get into investing? Let's round out a couple other things that it made me think of here. We're talking about spending in the kids and you just brought up, how about learning lessons. Matt, how do you best learn a lesson?

Matt:

I listen to podcasts, learn all my information from informative podcasts. Is there another way?

Mike:

No, that was it. That was the best way of learning anything is like audio form. Not by doing it yourself and actually having first hand experience of tripping and falling over eliciting two way that's what other people are for, why should I hurt myself? Yeah, that's the smart way of learning. But I think the best way is right, when you go through that, that experience yourself, and we all knows with kids, and we know that you should let them fail, right? In that safe environment, it's so hard to do. But in this spending, that's one of the things I will reiterate to the listeners out there, and the parents, let your kids fail with spending some money, give them some money, let them go and buy something that you know, is not going to bring a lot of value in their life. And they really want it and just let go and let them do it. Because they will learn what it is that they enjoy and how they want to spend their money. So in that safe home environment as you're raising those kids, let them spend some stuff, let them have some money, let them go out and fail, quote unquote, failed by something that just wasn't really worth it, and learn that lesson firsthand. And trust me, they're gonna be way better off in their 20s and 30s and beyond.

Matt:

That's true. You don't want a snow plow absolutely every decision for them.

Mike:

Yeah, yeah. And then. So before we get to investing, too, I did want to hit on this. We're talking about spending and the kids having their own money. So let's go ahead and talk about that allowance thing. Right? So yeah, let's get allowances so that the kids have money. So this is a great way of teaching saving and spending, which is what we're talking about in the previous episode, where kids can have their own money, right. And so you might give them an allowance of some sort, so that they have their money. And that teaches them saving habits. You could have them set some aside and say, hey, you want that thing now you're in charge. So now you're transitioning the kids from spending mom and dad's money all the time. So the parents are cutting me off from certain things, and I've got to save my own money. If I want to buy those items.

Matt:

What do you make of the tie between chores? And allowance? This is an age old question. We may have even talked a little bit about a related version of this before but so tricky, because on the one hand, you want to start to teach kids that work brings reward, and you don't just get things and on the other hand, there's a view that chores are things that you do because it's like the table stakes for being part of your family and your household. I don't get paid to wash the dishes why should you? How about this? You get to live in this house. I sound like Mr. Brady, you lazy bum? Where do you come down on that?

Mike:

So my daughter brings this up we were talking about last time we have a rental home we just started renting out recently and it's bringing in some money renting it out and she's like, oh, that much money some of that's my money. Because I'm part of this family. That house is part mine so I get some money.

Matt:

Is this your youngest?

Mike:

Oh, yeah, of course. Good. Yes, ma'am.

Matt:

Of course, from what I know about your kids? Of course she said this, because wow, that's so clever. Okay, wait a second. Are you sure you want full participation in all of the rights and responsibilities proportionally, that go with being in this family? Because we can give you the full boat if you want.

Mike:

I don't know, man, do your kids ever bring that up like with their rooms? My room is mine. And why should I clean my room if it's my room? And I don't know.

Matt:

I haven't gotten that. I haven't gotten that. I think the reality is that we, I think we so evidently we over snowplow for our kids is what I'm grasping for here. We do way too much. And I think our kids know it clever enough. You were saying before kids are you gotta trust your kids, your kids are smarter than you give them credit for. I think they have picked up that they're not getting a raw deal. They're just not. Therefore they're like, I bet they get together their rooms late at night. They're like, don't say anything, this is going swimmingly? No, I don't get that. But it is a genuine thing the trap that we’ve fallen into a little bit is we've tried to do both at once we've and we've gone back and forth at different times, we've tried to teach the you are part of this family, therefore you do certain things and that has no tie to allowance whatsoever. With the hey, do some chores. And we're going to talk about apps. We're going to talk about tools you can use in a little bit, but we've tried using one of those. And the whole idea of this is to explicitly tie you do work, you get money. So is there Do you have a general guideline on that?

Mike:

No. Okay, I do not have a general guideline, nothing. But let me give you some thoughts anyway, man. All right. So yeah, I'm with you, man. I actually think it's a bit of both, because that's the truth. So first, this goes back to what we started the last episode around, which is setting a good example. And don't be afraid to talk about it. Because it is tricky. Yes, we have to run a household and no one pays me for doing the dishes and keeping a relatively clean house, I have to just do that. So yes, I expect you children to be part of that household and do those things as well and be part of the family. And yet also, I have a job that makes money. And I want to teach you that lesson about that you can do work and make money. So in our household, we do a bit of both, we have chores that the kids have to do, and they do get an allowance. It's not explicitly tied alright, so it's not, hey, did you do all your chores, and you only get your allowance, I'm going to check them off. Oh, you did 80% of them. So I'm only giving you 80% of money. It's not like that. It just there are two things, okay. So I expect you to do your chores as part of the household and I want to give you some money to have your own money, so that you can learn about saving and spending. In addition to that, Matt, we also have chores that you can decide you want to do and get paid for. So I'm going to maybe outsource raking leaves or mowing my lawn or whatever it is, hey, kids, if you would like to do that, I'll pay you instead. And so there becomes another choice, oh, I can decide as the child I can decide to do work, like you and I have a choice, sometimes, I could decide to do work, and get paid for that work or not. And so trying to teach, just set an example, be open and try to teach the lessons that are real world lessons. It's a little bit messy out there, right. And so we tried to teach a little bit of all those things.

Matt:

I like that a lot, in a way mirrors the basic proposition that you were joking about with work in the real world, as well. Most of the time, you don't go to your boss and say, hey, I showed up today and I did three hours of work so could you pay me for that I'm gonna go home now. It's most of the time for most people, it's I have a job, I get paid an annual salary, I get paid while I'm employed. And and there are pluses and minuses to that. But we do try and take we're trying to get to an approach that's similar to what you just laid out, which is, here are your responsibilities in terms of chores. And it's like the TV or screens these days principle which is if you do your responsibilities, and you do your homework, then you're allowed to do X. If you do your chores, then you get your allowance. And I think as a general proposition that kind of works. It's not piecework. It's not like a and maybe this is a good segue I was going to go to let's talk about investing in charitable giving. But maybe we should I'm just gonna save this for later. But maybe we should just go right to this app question because that's the setup that they try and nudge you toward with some of these apps. The one I've been experimenting with recently is called Green Light. I know you've messed around with it and used it a little bit as well. And I have some thoughts about it. But first of all, just what do you think about apps? Do you think that's a good way to try and manage it and teach all these lessons about saving, investing, etc…

Mike:

I think different things, different approaches work for different people. So if you like apps and you want to use an app to help you, you like to have that and do that and click the buttons. And the kids want to do that kind of thing like Green Light, it has an app on their device as well, where they can track things then yeah, go for it. But you don't have to, you can just use pen and paper, you can use cash, I'm a fan of cash for actually touching money and and teaching those lessons as well. So whether you want to use an app or not, it definitely adds overhead. Any system that you want to put in place, my wife and I are good at implementing systems, but terrible at keeping up with them.

Matt:

That’s the thing, that's the thing is that I think you'd have to commit to one of these things. And I've gotten caught, I imagine that a lot of people feel the same way. Or maybe not maybe this is just know that you're particularly bad at this. But I suspect a lot of people are like this where, especially with apps systems are great. But they do take not only an initial upfront cost of your time, but you have to commit to them, you have to go all the way and say we're going to do this, we're going to stick with it. And we're going to see if it gets traction as a habit. We've actually tried lots of different systems over the years. And sometimes they'll get traction for a few weeks. And then usually, it's the parents who run out of steam. We're the ones who get distracted, we get busy and focused on other things, which is amazing, because kids that's like their whole, that's their jam. They're like, wait a second, that's what we're supposed to do. You guys are losing focus here. And that's what's happened to me with the Green Light app, honestly, is, it was a lot of upfront work to get it set up. I'd say I did about 80% of it. And then I got stuck, I got busy this was like a month ago. And I never went through with the rest of it. And now I'm stuck in this in between place where we have it set up. But I'm not really using it all the way. And I would guess that you would tell me if I was your client, which I'm not, by the way, full disclosure, I don't have any financial interest in these conversations. And neither does Mike, I think you would say to me, Matt, what I would do is set aside one hour now to go the rest of the way on setup. And then put in your time budget that you're going to spend 30 minutes each month to make sure that you're keeping up with this and that it's all running smoothly. It'll be worth it. And it will save you time overall in the end. I'm guessing that's what you'd say to me.

Mike:

So yeah, partly, I think that's true, but figuring out how you want to use it. So I'll tell you how I use Green Light and what it's good for, I think it's great for kids in the 5-12 range, I think it's great. What I love about it is that it auto gives them they have their own little bank account. And I can set up automatic payments weekly, or monthly or whatever to go from my account into their account. So now they're getting their own money. It's on time, which was always behind on and they can see it so they can they know how much money that they have. And they in there get a little older, my kids are 10-14, they have a debit card, and they can take that to the store and use the debit card. So it's really good for those things. Now I don't do it, you can also have chores in there and check off the button did they do the chores and they can log in the app and check it off. That gets man, now you're 30 minutes a week to just review the app and look in there and have them check it and you check and all that stuff. So I don't find that particularly useful. What I like about it is I can automate their weekly allowance. And then they can see their bank balances, you can also set up the charitable giving, the saving and the spending within the app. So they're starting to learn all those concepts and how to earn money from that end. So that's what I think is good about Green Light. But I like the first part of what you said, go ahead and get it set up. So it's doing what you want it to do. But then I don't like the second part, spending 15 or 30 minutes a week, I would try to get rid of…

Matt:

Well I was thinking more like a month, but I don't know I wonder a little bit about I think I'm gonna think I'm gonna do this, you know, we could do, you can call me on this, call me on this in a couple of episodes, I'm going to commit that within the next two weeks. I'm going to spend that hour. And I'm going to finish the whole setup and try and figure out a sustainable way to use this because I do agree with you. And maybe this will segue us into the investing and charitable giving part of the conversation. But I do actually like that feature. But I tend to think that it's only valuable if you are going through it with your kids and looking at it together on a regular basis so that they are seeing, here's the money I'm getting. Did you have some mechanism for saying all right here are the chores that are expected of you, did you do them this week, let's review. And they can also see here's the investing you're doing here's how much you've given to charity so there has to be some, maybe that's the part where what you said about this kind of is individual is what works for you. Maybe that's where that comes in.

Mike:

I think what you've highlighted is you have to have the conversations. That's the important part. As we said, up front, it's like, he's not gonna magically fix things, the app is not going to magically fixed up, use technology to ease your life and make things easier for you. But conversations are the important part. Now, they can highlight that right in the app, it's got the saving and the spending, the charitable giving, and the investing. So that's cool. It's highlighting it so it prompts those conversations, but you have to have the conversations with your kids. One last thing on the chores before we move on, I will give this tip, I've got three kids, and I can't keep up with any system. And we implemented that you get chores once a year is where we assign sorry, you have to do chores every week. Sorry, let me be clear.

Matt:

Sign me up for the Morton household!

Mike:

Chores, once a year, it's awesome. You are assigned your chores for the entire year. Okay, because kids don't like having the same chores all the time. And you have three kids, and they argue over who's got what. So the system is once a year, we all sit down. And they choose in order one chore at a time. They pick off the list I have 20 or 30 different chores on the table. And they pick them out one at a time. So of course the arguments who gets to go first. But anyway, that aside, you pick them out. And those are your chores for the entire year.

Matt:

Oh, it's the draft of chores. I love it. It reminds me of the Chappelle. You couldn't do the Chappelle Rachel race draft skit anymore. But it was damn funny. 16 years ago, all right, let's hit the charitable giving and the investing topics. So investing first, regardless of whether using an app, how do you approach that with your clients in terms of their kids? I'm sure some of this depends on their ages. But let's let's just stipulate we understand. We're not talking about two year olds. And if you're getting into it when they're 18 it's probably too late.

Mike:

Yeah, that's exactly right. And that's teenage years. And when you start talking about it, you can bring it up earlier the interest, right. So interest payments, hey, anything, and you could do this, you could be the bank for your kids, when they're five or eight or ten. The more if you save money, I will give you a 10% interest. And you can make it outrageous. So they really see it oh my gosh, I didn't do anything. And you just gave me money. That's how it works. Yeah, it's how interest in like compounding works. So you're starting to like teach that idea that when you're, you're a good saver, your money can make money. And then as they get a little bit older, of course, investing I think is a great idea because you want them to get these lessons, just like every other lesson we've talked about. But the markets go up and down. So talk about some companies how you like baseball, let's talk about some baseball manufacturing companies where you'd like cars, let's look at Tesla or GM or Ford, let's buy a share. What does that mean? So you get to talk about it now you're an investor in Ford, and you get to watch it. And this just brings up a whole bunch of cool conversations. But they also get to see it go up and down. Hey, I just spent 200. And that's only worth 150. What's going on? All right, yeah, more lessons to learn. Learn them all at home. When it's $100 $1,000. Before it's tens of thousands and they're trying to do all kinds of stuff out in their 20s for the first time, it's really good to bring that in whatever app you use, however you want to do it. There's a variety of ways of going about that.

Mike:

Are you ready to create your ideal lifestyle? Let's discover what's most important to you and design a plan to have more of that in your life. Go to meet Mike morton.com. All one word, meet Mike morton.com.

Matt:

One of the things I do, not that I'm advocating for Greenlight, specifically, there are lots of apps, there are lots of tools out there. It's just the one that I happen to have tried. One thing I do like about their setup is this idea that your kid gets to see that you're giving them a total, let's say you're giving them $5 A week $3 goes to them $1 goes to charity, one, you set these percentages yourself $1 goes to investment. And then they can see right through the app, here's how it flows through, here's what's happening to it and connects to something that you've preached on the show many times, which is automating these things. So that first of all, it makes it easier in your life. You're not constantly facing decisions, you're not constantly facing the stress of saving versus spending. And they get into that habit, they have that expectation as well. So I do like that. And I do like the idea of beginning to see we've talked before in the episode about five to nines, giving your kid as at the appropriate age, just a little bit of visibility into this. It's here's what we're doing to save for you. And here's what's happening to it. And here's how it'll work over time. And there's a lot to learn about interest and math and stress and the rising cost of colleges. And anyway quickly before we run out of time, charitable giving, what do you advise around that?

Mike:

The same things household, whatever values you have within your house, just again, set the example and discuss it openly with your kids. If that's something that's a value for you, then go ahead and start bringing it up with your children and say, here's what we do as a family. And like you said, Matt, here's what we do as a family. So you got the green light app, or you have just jars that you're putting some dollar bills into. And you have one that says charitable given and you put $4 in one and $1 in the charitable giving. And so then what we do is maybe once a year, usually towards the end of the year, it's natural, like we're thinking about that, we bring it up with the kids and say, Hey, charitable giving time, what's in your jar, pull out the money, talk about different charities they might be interested in. So again, set the example and have open conversations with your kids, they're going to learn and you want them to teach them your family values as they're growing up in your household.

Matt:

I'll just share the approach we use, which is a kissing cousin of that one, which is actually that's such a gross term that I think it belongs to an earlier time in America that probably should be done away with it's closely related, which is we do a mix of ongoing set it and forget it, not really forget it, but set it as an ongoing measure giving. And so we have a recurring donation that go in our cases to Doctors Without Borders. And we also I like to make donations about once a month and what I'll do is like to just this morning, literally this morning, as we recorded this, I was saying about that time, I'm going to make a donation and I asked the kids, what are some places. And because we've gone through this conversation before they came up with some nice ideas for Mercy Ships was one and UNICEF was another. And part of the knowledge from that comes from another exercise that we tried last year that I really liked, which is we got to our end of year charitable giving. And we decided my wife and I, here's an amount that we're gonna get. But this year, we gave it as an assignment to the kids. We said, Here are eight potential charities that we might give. And we set an amount we said, this is our big annual giving, we're going to we're going to give away $500. And we could give it to one place, we could give it to a whole bunch of places. And so we gave our kids a list of eight potential charities. And we said, here are the websites go online, then come back and report to us on what they do and how you want to allocate that money. And you make the decision and it's in your hands. I just I happen to really like that. Not that other people need to do it. Quick lightning round comment on that because we got to get out.

Mike:

Yeah, well, I'm curious what Aaron's input versus Ruth's input on that exercise.

Matt:

Our our six year old had, I would say, the minority share of the decision and the the ultimate disbursement of the funds alright. Mike Morton. Morton financial advice. We got to get out on that. Thanks so much for that.

Mike:

Thanks for joining us on financial planning for entrepreneurs. If you liked what you heard, please subscribe to and rate the podcast on Apple, iTunes, Google Play Spotify, or wherever you get your podcasts. You can connect with me at LinkedIn for Morton financial advice.com. I'd love to get your feedback. If you have a comment or question, please email me at financial planning . Until next time, thanks for tuning in. This recording is for informational purposes only and should not be considered for investment advice or opinions expressed as our of the date of recording. Such opinions are subject to change. We do not guarantee the accuracy or completeness of the data presented here.

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