Paying Your Kids – Episode 404

This transcript was auto-generated and may contain errors.

[00:00] Hello, partners, we’re going to be talking about paying your kids. So this can go from, I think what start from chores all the way to ways that will help you with your taxes. How about that, Kim? Oh, such a fun discussion because it’s such a fabulous thing to do. And if you’re more in grandkid mode, that’s awesome as well. It is something that we did with our kids, Spencer, you’ve got kids more at home now than I do. I’d love your opinion on it as well. So literally, as early as you can possibly manage, I think getting your children young young, I’m talking three, four or five years old, involved in monetary discussions that are age appropriate, of course, so valuable, and helping them understand how money works.

[00:49] When you add in paying them for things, then there’s so much value in that. So for our family, we made it really clear that there was a list of chores that they did because they were part of the household. And there was a list of chores extra that they could do for money. And as early as we could, we shifted all types of toy and even candy and that kind of thing, buying to them. So awesome. You want to buy that candy? Did you bring your money with you today? Oh, no, I’m sorry. Well, maybe next time. End of discussion. No tantrums in the grocery store aisles, right? Love it. And then beyond that, oh, my gosh, you want that new game or that new whatever bicycle. I mean, you just fill in the blank. The list goes on and on,

[01:41] and it just gets bigger and more expensive, right? So we started paying them for anything that we could. Again, optional chores. And of course, as they got older, the required chores grew as well. I love it. Mimi Klosterman’s our online business manager, and she just had like three or four teenagers leave the house like, you know, they’re off to college now or whatever they’re doing. And she said it was such a bummer because they had to drastically reduce their required chore list because she didn’t have as many kids that owned to do it. So that’s an important thing. And of course, those chores should be expanding, expanding as their capabilities expand, and the option for additional payments should be expanding. There’s a fabulous website. I think I’ve shared

[02:25] it on the podcast before. I think it’s called My First Sale, S-A-L-E, where the kids can now start to think entrepreneurially. And one of the lifetime goals that I have is to prepare entrepreneurial thinkers because not everybody’s going to be a full on entrepreneur where they own their own business, but everybody can be an entrepreneurial thinker. And so helping your kids be an entrepreneurial thinker is such an important skill to give them. And when they get paid for doing things, then they start to see the connection between providing value, getting paid for that value. And when you can make the payments based on value, not based on time and effort, I think that’s a really critical thing. You know,

[03:10] let’s not get paid for an hour of, you know, it depends. You have to do this sometimes, but ideally let’s not get paid for an hour of raking the leaves. Let’s get paid when the leaf raking job is done and done to my satisfaction. And then let’s also teach the kids how to start to negotiate. Maybe they want to do a little bit more. And so they ask for more money. And it’s a negotiating thing that goes on. I mean, that’s an awesome skill to learn as well. And then furthermore, again, as your kids are getting even older and maybe even past 18, when they can start to own their own assets and own contracts and sign legal documents and that kind of thing, we did while all of our kids were in their college age years, payments from our companies for legitimate business things

[04:06] that our business needed that our kids could then take that money. And of course, they got to spend some of it. And they also bought their own life insurance policies with it. So it was a fabulous tax strategy. That’s a completely legitimate business deduction. And then you get monies down into the kids’ tax brackets, which are much less expensive than the adults’ tax brackets. And then they’re using those after-tax dollars to then pay their life insurance premiums with and build up a policy which can then be used as a down payment on a first car or first house or whatever other thing, maybe a business, maybe investment or real estate, maybe more equipment for some of their own projects that they’re doing. Spencer, tell us if you’re comfortable sharing,

[04:54] what’s Zane doing with his drones? And what are some of your other kids doing? Ellie’s got art that she’s getting paid for. I mean, you guys have done a ton in this space. You know, we really have. And it’s so strange how quickly things are evolving. So for my oldest, who’s 14, he purchased and he’s got several drones, but he purchased those with his own money. Now on his last drone, we helped out a little bit, but that was a part of the deal because it was an expensive one and said, okay, he’ll put in this amount and we’ll match a certain amount. But this is how it worked is he’s now focused, he’s doing the work. And I’ll tell you what, he had to shovel a lot of manure to get there. He had to

[05:40] rake a lot of leaves and mow a lot of lawns. Now he’s taken that skill set and he’s created a course. And now he’s also editing photos and videos to sell them as stock footage. So he’s got another revenue stream that comes through. So that’s a 14 year old. So if he can do it, anyone can, right? Absolutely. And Ellie is doing her art. She does it in several different ways. She creates different art pieces and she’s sold them. Her aunt is an artist and they do art shows. So she gets to bring it and sell it at the other art shows, which is neat. Now, the one that is most exciting to me is my middle son, Michael, because he’s into gaming and he’s into technology. There is something happening right

[06:27] now that is an explosion in technology. And it’s called NFT, which stands for non fungible tokens. Have you heard of this? Yes, keep going. So now he’s finding ways that he can build personas, avatars, and other types of online pieces that can generate revenue for him. And I learned about some last night, there’s an online real estate. Last week I learned about this. So I purchased some. I’ve already had a return on my investment and he’s doing the same thing. And so he has gold investing. He’ll go into my precious metal accounts and he’ll see what’s going on. And so that’s the one where I see the upside and I think, wow, I wish I had this when I was 12 years old. It’s so amazing what can be done on

[07:18] a computer these days that the kids in the past just didn’t have the capacity and the reach for. And when all of the blockchain came out and all of the token capability came out, I just read and read and read and read on it. And I am not as current on it as you are, but certainly well aware of what’s happening in the token space. And it’s very, very exciting. And it’s just amazing what kids can pull off these days. I want to share the Udacity website that we’ve shared on the podcast before U D A C I T Y.com fabulous little nano degrees, little micro degrees, literally what they’re called nano degrees on that website that a child could get and adults to whereby you would have a specialized skill and then be able to go out in the marketplace and huge companies that need that

[08:12] very specialized skill will hire you for piecemeal work that is five hours a week up to sometimes obviously full-time jobs as well that you could pop in, do something that you love and that you’re good at and that you’ve been trained to do, get paid for it, and then pop right back out. So there’s just no reason in today’s world for us to be limited in our thinking as to what’s possible. And again, if you own a business paying children, if you don’t own a business helping them figure out their own sources of income, connecting that to learning, connecting that to that entrepreneurial thought process that we talked about, connecting it to just good economic lessons that can be taught so naturally is a worthwhile parenting skill. It’s a worthwhile

[09:06] time to spend things on. Gosh, so much time gets wasted in the evenings with families just in front of the screen on intake mode. In other words, turn on the movie and sit there as bumps on the log. Nothing wrong with that. The way my family does it is that’s totally cool Friday, Saturday and Sunday night. But if it’s quote a school night, which is Monday, Tuesday, Wednesday and Thursday, let’s be in sit up and out go mode. In other words, let’s be having our brains on and be putting things into the computer, putting things into the screen rather than just taking things from the screen. I love that. And I’ll echo for us, we don’t pay for normal chores. It’s just something I don’t believe in. I want kids

[09:57] to learn that they need to earn it. And I want them to know the value of money. And yes, money isn’t one of those things where it should be underappreciated or overappreciated, meaning that they feel it’s impossible or terribly hard to make money. But I also don’t want them to feel entitled. I think entitlement is a sickness that we need to cut off as soon as possible. Here is raising the next generations. Your statements are so powerful, Kim, thank you love to share and something that I’ve worked on that entitlement space with for as long as I can remember, is to not use the word deserve you deserve that as an example. But instead to use the word you earned that and earning isn’t always monetary,

[10:47] it can be time and effort and mental thought processes, etc. But it’s just a small shift. But as we know, can make such a big impact on how children operate out in the marketplace. As we’re wrapping up here, I overheard a story recently of dad took his daughter to Starbucks for a treat. And she got her little drink and it didn’t have enough foam on it. And she threw a fit. And he said, hmm, must be time for a visit to a third world country. I loved it. I love that. That’s so good. Well, listeners, thank you for tuning in to the podcast. Depending on the podcast player that you’re on, you could be listening to us on Spotify, or you could be listening to us on one of your favorite devices. Let us know what you think. You can send us a review on your favorite podcast player,

[11:39] or you can simply send us an email and let us know how we’re doing. Or we can answer your questions at hello at partners for prosperity.com. Thank you for listening to the prosperity podcast to take control of your money and have it work for you. Visit us at partners for prosperity.com. If you liked this episode, make sure you subscribe and leave a review.