Word on the Street: November 2018

In this edition of Word on the Street we share the financial health tool provided in our November virtual classrooms.

November was a full and exciting month for the Station Co-Lab. Our classroom was virtual as we reached thousands of people on Facebook and beyond in our first ever #GivingTuesday Fundraiser. We took the opportunity to raise awareness and funds in support of teaching fundamental life-skills to young adults in San Diego and beyond.

Giving Tuesday is a movement that spawned from the desire to direct resources and energy to non-profits and well-meaning projects in addition to the spending frenzies of Black Friday, Small Business Saturday and Cyber Monday. As Facebook and PayPal teamed up to match up to $7 million to registered non-profits, we thought it great timing giving the trajectory of projects manifesting here at The Station.

We were able to raise more than $2,500 in a single day!

These funds will be put towards our newest projects focused job readiness for students in a south San Diego housing project, programming for charter school students and for our newest offerings to young athletes.

These funds will go directly to purchasing necessary insurance, filming and supplies for classes, marketing and website upgrades.

We are so grateful to our generous donors who made it all happen for us. Your support and encouragement mean the world to us.

As part of this campaign we hosted two Facebook Live events to share the Word on the Street. The first was to give our annual update on where we have been in 2018 and where we are headed in the first part of 2019.

You can watch it here:

Our second event was a fun and educational offering as we shared about the basic money management system that I use with my family and that we are teaching students in our programs. It is a system designed to build true wealth from a young age.  It is truly a paradigm shift to working smarter rather than harder for your money.

You can watch the video in its entirety here:

As a parent or teacher who is wanting to share these simple tools with their child or students, the key takeaways were:

Explore Your Own Beliefs About Money.

Our children will model and take on our beliefs based on what they hear and witness from your actions, which ultimately stems from your beliefs. Take a moment to explore your own money beliefs to determine what subtle messages are driving your choices. Some common, yet not always supportive beliefs are:

• Money is the root of all evil
• Money can’t buy happiness
• You have to work hard to make money
• Money doesn’t grow on trees

What are some others that you might have? Are they constructive or limiting beliefs?

Exploring these beliefs with your children or students can create a wonderful dialogue to explore what support may be needed going forward.

The benefits of an allowance.

There are many ideas and philosophies about giving money to children. We are not here to espouse any one specific belief structure about when, how much or why allowance should be given; but rather to say that learning through doing early and often will create powerful habits that can stick with a person for life.

It is not the amount that matters, but the action of managing money that creates the habits. Starting children off early with productive and empowering tools is our encouragement.

Giving a child manageable amounts of money to use, spend and share as they like creates a greater sense of empowerment and can often minimize power struggles and fighting over wants and needs. Giving a child choice may open them to making poor ones, but the sting of learning the consequences of their actions will go a lot further than any explanation a parent can give.

Keep it simple.

The system we teach is very simple and not actually new. We modified our system from a more comprehensive version taught to us by T. Harv Eckert in The Millionaire Mind Seminars. There is also a wonderful system created by Moonjar.com that we use to help contain the money and track spending.

We encourage choosing an allowance amount that can be divided easily into three jars/containers. This can be an equal split or another division that feels appropriate to the amount of money provided and the needs of the family:

1. SPEND:

Money that can be spent freely on items of their choosing. Setting simple parameters are ok as long as the focus is on their safety and well-being. It’s ok to say the item must be non-violent, age-appropriate and in alignment with any dietary specifications for their health. Although the idea is to give them freedom to choose.

This is a great way to limit how much you have to say NO to your child when out at the store or when they see things that they want. It is a less stressful and more effective way of teaching healthy spending habits to ask, “Do you have the money for it?” or “Is this really what you want to spend your money on? Weren’t you saving up for this other __________ (game, toy, doll, etc.)?”

The beauty is they can only spend what they have. And it creates more dialogue to help them make their own choices, regardless of whether we like their choice or not.

2. SAVE:

Save is the beginning of their INVEST jar when they get older. It’s ok to use SAVE for much larger things they want or would like to ‘invest’ energy into. Maybe a new bicycle when they are younger or maybe a ticket to Disneyland. But it is ideal to have them really save this money for when they are old enough to open a proper investment account.

Developmentally around the age of 12-14 (depending on their maturity), a child has a greater sense of delayed gratification and also a sense of a future self. They are more equipped at this age to understand ‘compounding interest,’ which I will explain below.

3. GIVE:

Giving is the powerful third arm of wealth creation. Using this kind of system creates a natural and more balanced way for children to develop a sense of generosity, philanthropy, and on the flip-side, not over-giving, as many of us do. This is a perfect jar for buying gifts for others, for donating to charity and helping out a friend in need.

Whether you believe in tithing, the law of attraction or none of the above, having a certain amount to give, while knowing you still have some to spend and save, creates a more balanced approach to managing resources.

Compound Interest…The Eighth Wonder of the World.

According to Albert Einstein: “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it. Compound interest is the most powerful force in the universe.”

We all know what interest is on our credit cards when we don’t pay off the balance every month. This is the side of the interest knife that can cut you and make you bleed. But if you use the knife correctly, and invest at an early age, that knife can cut through barriers to create wonderful opportunities and security that our government can no longer offer us.

Here is a stark example of the power of compound interest over time:

Pam starts putting money in an interest-bearing account or investment opportunity at age 20.  If she invested $4000 per year for 45 years at 10%, that would be a total investment of $180,000.   By age 65, she ends up with $2,500,000.

Steve starts putting money in an interest-bearing account or investment opportunity at age 40.  If he invested $4000 per year for 25 years at 10%, that would be a total investment of $100,000.  By age 65, he ends up with $400,000.

Just by setting aside a small percentage of your income every month, as little as 10%, you can set yourself up for retirement, and potentially great wealth, with minimal effort.

Surround yourself with wise people.

The financial world is an ever-changing environment and it’s unrealistic for every person to know everything about investing. If you are not personally a financial advisor or investor, we encourage you to find a trusted person who knows the ins and outs of what is available and right for your family.

The Station has many advisors we trust and can recommend to ensure you are investing wisely for your family. Know that you have support from us when it comes to sharing this information with your young adult. We know that talking about money feels challenging for most people, and it can be extra challenging with a teenager… So lean on us to help support you and your individualized needs in setting your son or daughter on a path towards wealth and independence.

Remember, it’s the practice, not the amount to creates healthy habits for life. Learn more about our upcoming courses here and may you have a healthy and wealthy new year!