Teaching Kids the Family Business – Episode 430

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[00:02] Hello, prosperity thinkers. Welcome to another episode. This one is about teaching kids the family business. Now, even if your family does not have a business, the family does have a business of how you operate. So we’re going to be speaking on a couple different pieces. Kim, I’m actually really excited for this one. Well, it’s so cool what you said about the family has a business, regardless of whether it’s a literal business that serves the public or not. And I would add, in addition to how they operate, which is based on values and principles and a lot of the things that we talk about on this podcast, it is also how they handle money. Handling your money is a business. I just had an awesome discussion with our 25-year-old son

[00:52] recently because he has now bought his third real estate investment property with borrowing against his cash value of whole life insurance for his down payments and getting a cash flowing property. And it’s in an LLC and he was asking about keeping records separate. And I reminded him of a discussion that we’d had a while back, but as all things, until you’re really ready, the discussion isn’t going to land of the important of having quick books. So not quick and quick books for not only each of his three investment properties, but also for his personal life. And so this is something that my bookkeeper taught me and Todd eons ago. And that is to run our personal finances on a proper accounting program called quick books instead of quick in. So quick in as an example,

[01:49] and I assume it’s still around. I have to admit, I don’t know. It’s basically just a checkbook register and that’s fine. It’s better than doing nothing similar to a lot of the other programs out there like mint.com or you need a budget or personal capital, or there’s a variety of ones. And I’m sure anything that you would get from your bank, those are just checkbook registers better than doing nothing, but not as efficient and as effective as handling your personal finances under proper accounting rules. In other words, your personal finances have income and expenses just like a business does. Your personal finances have assets and liabilities just like a business does. The first thing is called an income

[02:32] statement. The second is called a balance sheet. These are really valuable things to learn. And there’s nothing better than to have the adult family or it could be the grandparents teach the 10, 12, 14 year old children based on their own abilities and time frame things about said income statements, balance sheets. Then of course, you also want to have a list of your insurances because those don’t really go on either of the first two and to go over some of this material and over some of this material and over some of this material year by year by year, more deeply, more thoroughly as the children rise in their capability. And what an incredibly valuable tool you will be teaching your children

[03:22] by educating them on the family business called your own personal finances. What you’re describing is creating wealth and generational wealth because of the habits that are inside of it. And I think a lot of people don’t realize that. We’re not going to bad mouth anyone per se, but there are lower level systems where people may be using envelopes with cash and that’s how they operate. And then maybe some graduate to using, you need a budget, why NAB? But ultimately treating it like a business, like you’re mentioning, is how wealth is managed and how wealth is added with gratitude and then amplified in the future. For you, Kim, when you’re talking about this of having the proper accounting, are you seeing with the clients that you have more of the affluent clients are already doing

[04:18] this or are they not? It’s interesting that affluent clients do this. And I love what you said about adding the wealth and then adding gratitude to that wealth. And it is really interesting to ask the question, which comes first, the gratitude or the wealth. And I think it’s the gratitude, which is so cool because if you’re listening to this and you’re younger and haven’t built up wealth yet, or you’re older and haven’t built up wealth yet, gratitude is the first part. And then all of these other parts, in other words, the responsibility parts of having your numbers and writing them down or computing them on an Excel spreadsheet or whatever, yellow pad, envelopes, like you said, it really doesn’t

[05:03] matter the system. What matters is that you’re paying attention to it and you are really making sure that on at least a monthly basis, because that’s how our lives tend to operate, you are looking at what comes in and what goes out. And being grateful for the movement of money, that’s one of the principles of prosperity. And also being grateful for the multiplier effect. In other words, when you do something with a dollar, does it do more than just one thing and how awesome it is when it can, like investment real estate, like life insurance, like other things where we are getting two birds with one stone, so to speak. So these are all aspects. And not only the physical act, but the mental aspect that goes along with this work is super valuable. And it is why wealthy families get

[05:59] and stay wealthy. Not everyone has the same strengths. We often on the podcast talk about the Colby and Colby helps us understand how we process information and take action. Some people are paying attention to all the details and others don’t. So in this case, would it make sense for families that are not going to enter in their information, that QuickBooks, should they be hiring bookkeepers? What does that look like to you? Yes, 100%. It’s one of the very first things I did after I learned my own Colby and got indoctrinated with the strategic coach way, which is find a who. So Dan Sullivan’s book, Who Not How, tells us to find who’s that are very, very good at their work. And so I came back to Phoenix, Arizona when I was 24 years old, having just attended my

[06:54] first coach conference and dug around and found a bookkeeper. And I’ve been grateful for Carrie ever since. And so I do absolutely recommend that people delegate and you can actually do the opposite of delegating by finding a who, because you don’t have to actually delegate. You just let the who do their good work. And you might have a discussion about roles and outcomes so that everybody’s clear on the outcome that you’re looking for. And this is not the kind of thing that happens overnight, especially when you’re giving somebody your personal finances to handle. Yet it can happen. It is super valuable. And it lets me do what I’m good at. And you might think, gosh, that’s kind of funny. She

[07:38] handles personal finances, but she doesn’t do her own checkbook. Well, it’s because my ability to handle personal finances is at a bigger picture level. And I am not skilled at the detail work of handling the necessary forms and steps and processes and pieces and parts of bookkeeping. Plus it takes a lot of time. We have a couple of different entities, a bunch of different life insurance policies, other assets that we need to deal with. I would rather spend my time serving our clients than fussing on the computer with automated banking pieces and parts. So yeah, we all know you can automate a lot of it. Nevertheless, there’s still some time in there. I wouldn’t even want to guess the amount of time

[08:21] per week Carrie spends on all of our entities and our money personally and all the moving pieces and parts and payroll and all of that stuff. So we were just talking about personal finances. That can be delegated too, especially if it’s at a level and you as an individual listener are not detail oriented. And even if you are detail oriented, then it becomes more a question of not capability, but capacity and how you want to spend your time and who could possibly help you spend your time more effectively. You know, as this episode, we rolled out the teaching kids about the family business. This is the basics that happens in a, you know, personal business. If you happen to have a corporation, but this is also with the family business itself, understanding what’s happening,

[09:15] having someone, a who that can categorize and they can determine where things are. And again, as Kim, as you mentioned, it helps everyone be on the same page. Now, let’s grab a couple other things as we wrap out the episode. What are other pieces with the family business that we should be teaching the kids? And I know I’m using the word should. Well, assuming that there is an actual business, then all kinds of things are interesting and can be taught. Every business has marketing, every business has sales, every business has supply, every business has, you know, other aspects that are common. And it’s always interesting to see where your children are as it relates to their interest in this, in the family business. And this is true of the personal finance space as well.

[10:09] One of your kids might be super interested. One might not be. And so that’s okay. There’s still good learning that can occur. And I’m of the belief that when kids get out of college, even if there is a family business, they should really go experience life and work outside of that family business. And yet there’s so much good learning that business creates. It’s just such a natural part. And capitalism is such a law. And learning about it and how it works and how to think about it is so valuable that any aspect of that can be beneficial. And it can start super young, you know, take your daughter to work day or whatever it is to be able to impart to them some of the lessons that you’ve learned, some

[10:51] of the things that you do, just more clarity about how to make decisions and more clarity about how does mom or dad spend their day during the day. All of that is such good stuff. You know, I’ve noticed the families that create these black boxes that don’t show their kids what the family business is and how it operates and what’s happening are the ones that don’t appreciate it because all they get is the end result, which is the money. And so they’re disconnected and they really don’t have gratitude towards it. And then there are other families where it can go to the other extreme, where at a young age, they’re almost forced to work in the business and then they can have a disdain for it. And so being able to find that prosperity, that balance to it and having everyone on the

[11:46] same page and with the accounting and other pieces, that really creates the opportunity, as you mentioned, that if they want to step away from the family business at the beginning of a career or maybe they want to go all in, but they can choose. Yes. Well, it’s an important thing to be intentional about. And so at whatever level the children are, and I use the word children lightly because it could be adults at this point and whatever their interest is, start there. That’s an awesome place. And if you feel like, oh, I missed an opportunity. No, you didn’t. You’ve got 20, 30, 40, 50, 60, 70, 80 years to go. And today is your opportunity. One thing that I’ll say as we round out the episode, Kim, you mentioned your son, him starting out his career and purchasing real

[12:38] estate and moving forward and keeping himself organized. And there are family businesses where it may be multi-generational. One thing that you mentioned is the life insurance policies, which can be a vehicle that is so valuable. And so for you as a listener, if that’s not a tool that you have in the toolbox right now, reach out to Kim at helloatprosperitythinkers.com. And if you do have additional questions on how to help them bring the kids into the family business, Kim can answer those for you and just send an email that’s dedicated to the podcast, helloatprosperitythinkers.com. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit us at partnersforprosperity.com. If you liked this episode,

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