Ep 169: How Early Could Your Teen Retire?

Dan Sheeks, author of First to a Million, gives us a run-down of
what early financial independence could look like for your teen
and how they can get started on their journey. It’s not about
making enough money to laze around all day—it’s about having more
options.


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Full show notes
Do you ever wish you learned smart financial planning earlier in
life? Maybe if you’d just had some more information, you could
have that sports car you’ve always fantasized about...or maybe
you would’ve just avoided making some rough mistakes! In order to
set our teens on a better path, it might be wise to get them
started on a financial education while they’re still under our
roofs–so that when they step into adult life, they’ll pay bills
and crunch numbers like a boss.



The only problem is….kids don’t want to talk about money. They’d
love to talk to you about the things they want to buy. But when
it comes to investing, saving or planning, you might as well be
talking to a wall. How can we get kids excited to learn more
about their personal finances? 



Dan Sheeks is here to answer that question and many more! He’s a
high school business teacher and author of the new book, First to
a Million: a Teenagers Guide to Early Financial Independence.
Dan’s been teaching business to teens for nearly two decades,
making him pretty qualified to give financial advice to you and
your kids. He knows just how to make finance palatable to teens,
and all the juicy secrets for making money while you’re young!



In our interview, we’re talking about what we can say to teens to
get them interested in financial planning. Plus, Dan is
explaining the difference between real and false assets,
outlining different kinds of debt, revealing how teens can get a
“next level” job, and much, much more. This episode is bursting
with great financial advice for both teens and parents!



Getting Teens To Care About Their Finances



Although kids may seem bored by discussions of dollars and cents,
they probably aren’t tired of telling you their dreams. And it’s
pretty likely that their dreams include travelling, making art or
accomplishing things outside a 9-5 job. Even if teens do aspire
to be lawyers or doctors, it might be because they’ve been
conditioned to think this way their entire life, says Dan. He
encourages parents to sit down with kids and ask them what they’d
like to do with their lives, especially if money wasn’t a factor.



When prompted with questions like these, Dan finds that many of
his students express frustration with what’s expected of them.
They don’t want to be on a preset path for forty or fifty years;
they want the freedom to explore, try new things and pursue their
passions. Although it may seem impossible for them to have all
this and still have a stable income, Dan believes the contrary.
With Dan’s advice, teens might just be able to have it all.



Dan’s methods for saving money can help kids follow the path they
dream of–making finance seem much more fascinating to them! If
you can frame smart money-planning in a way that helps teens
realize they can have their cake and eat it too, they’re much
more likely to lend an ear when it’s time to chat about equity,
savings accounts, index funds and tax breaks. 



But how is this possible? How can we make our money work in our
favor? Well, Dan is giving us some expert advice this week to
help both you and your teen make smart decisions and unlock the
life you deserve.



Assets, Debt, and Jobs (Oh My!)


You may know a thing or two about assets, but did you know there
are two different kinds? Dan explains in the episode the
difference between false assets and real assets. No, false assets
are not a scam...although they may cause you to lose money over
time! False assets are assets that depreciate in value, meaning
that by the time you sell them, they might not be worth as much
as you bought them for. A car is a good example. Dan tells us in
the interview about the incredible value of real assets over fake
ones.



When it comes to losing money, Dan believes that not all debt is
bad. Although debt like student loans and credit card debt are
definitely not good, there are also ways a person can accumulate
debt that will actually benefit them in the end! Dan recommends
that teens look into the possibility of debt if it comes with
purchasing a piece of property. Although they may find themselves
paying off the purchase over time, they can also rent it out and
not only make payments, but turn a profit! In this case, Dan
believes it’s wise for teens to consider taking on some debt.



For teens getting a head start thinking about money, jobs are
definitely on the table...but Dan thinks teens shouldn’t just go
for any old job. In the episode, he explains the concept of a
“next level job”, or a job kids can get now to help set them up
for success later. This depends on what kids hope to do with
their future, but it could be anything from  a secretary in
an office to an unpaid internship. As long as it’s getting kids
prepared for their future, it’s better than a simple part time
employment that doesn’t round out their life, says Dan.



All this talk of assets and debt makes it seem like the only
thing there is to do is spend…but what about saving? In our
interview, Dan drops some expert tips for teens to save money the
right way.



Secrets to Successful Saving


Dan doesn’t believe in budgeting. Well, ok, he’s not against
it...but in the interview, he explains that it’s wiser to track
expenses then create a fixed limit for doling out funds. When we
create spending limits, we too often tend to start thinking of
them as spending goals...and then we find ourselves going out to
dinner one last time before the end of the month just to fulfill
our $100 restaurant budget! Instead, he suggests we look at how
much we naturally spend and see where we can cut down.



In order to make the most of saving accounts, Dan recommends
teens open up three different ones. That’s right, three accounts!
One for emergencies, in case they fall out of a tree or crash
their car. Another for future investments like a house can be
helpful. And finally, Dan recommends having a third savings
account for fun stuff! It’s not wrong to want to vacation in
Costa Rica for a week or two, says Dan, and we should be able to
save accordingly. He suggests teens create an automatic income
transfer system, so that their money goes into those accounts on
it’s own.



But what about investing? Should teens be risking their money in
the stock market with the possibility of multiplying their cash?
Maybe not, says Dan. Although the stock market can be lucrative,
Dan suggests most people, including teens, simply stick some
money in an index fund and leave it to collect compound interest,
instead of throwing money around into different companies. Unless
you’ve got the next Warren Buffet under your roof, Dan recommends
teens play it safe when it comes to stocks.



In the Episode…


If you’re looking for some seriously sound financial advice for
your family, this is the episode for you! On top of the topics
discussed above, we talk about:


Why early financial independence is so valuable

What “house hacking” is and why you should know about it

How to talk to kids about the cost of college

Why w...