The Smattering Episode 78: Investing With Kids with Robert Brokamp

The Smattering Episode 78: Investing With Kids with Robert Brokamp

Note: Transcripts are lightly edited. We may earn commissions from links. Thanks for the scratch.

Jason Hall: Hey everybody. Welcome back to The Smattering. We ask the hard questions about investing with kids and investing for kids, part two. This is the second of this episode. I am Jason Hall joined as usual by Jeff Santoro, the voice of the people. Hey buddy. 

Jeff Santoro: Hey, how are you? 

Jason Hall: I'm good, man. I'm good. So, part two. Here last week, we talked with Robert "Bro" Brokamp of the Motley Fool, who is one of the most knowledgeable people that I know, about all things financial planning, whether it's taxes, investing, savings, all the things, he's incredibly good about. And for those that listened to last week's episode, Investing for Kids. Great show, touched base on a lot of things about whether you're saving for college, other things with your kids about money, the process for kids.

If you haven't listened to that episode, I encourage you to go back and listen to that one first and then come back. We'll wait. 

Jeff, you think we've waited long enough? 

Jeff Santoro: In the world where you can just hit pause, [00:01:00] yes, I think we have. 

So we hope you enjoyed the last episode where we spoke with Bro. And here is the second part where we're going to talk about how to involve your kids in the investing and saving part.

So last week was about what to do, kind of before they're aware of all these things. And now we're going to talk about how to involve them in the process. 

But before we do one more time, thank you everyone who's been leaving us reviews and ratings on the podcast apps. If you can continue to do that, we would really appreciate it.

And don't forget, we also have a newsletter you can sign up for where you'll get transcripts of all the shows and also weekly thoughts from Jason and myself on whatever we feel like talking about. So you might even get some more thoughts on investing with and for kids after, after these episodes.

Jason Hall: Welcome back. Robert Brokamp. Bro, time for investing with kids. Are you ready for this conversation? 

Robert Brokamp: I'm ready. 

Jeff Santoro: So I guess the place to start is maybe the basics of just beginning to talk to kids about money. 

So I have a 14 and a 11 year old. [00:02:00] I'm past the point of having to teach them what money is. But for those listening who have even younger kids, any thoughts or advice on when to start those conversations, how to start those conversations so they have a good, healthy understanding of money?

Robert Brokamp: I mean, I think it's naturally going to happen once they start walking around and they can talk and you, you take them to the grocery store or to the mall with you, and they're going to start asking for things.

And that to me is usually the normal- 

Jason Hall: What is asking? My son went straight from learning how to speak to demanding.

Robert Brokamp: There you go. Exactly. Exactly. So, I mean, that's the opportunity to say, you know, we don't get to have everything because we only have a certain amount of money and we choose other priorities.

And, you know, that will only register a little bit with a 3 or 4 year old, but as they get older, they will just learn that that is the case. I do think it's important, not like, I have a graduate certificate in financial therapy from Kansas State. And some people go too much the other way. Like you don't want to create financial anxiety in your kids [00:03:00] so that they fear, like oh, we must not have any money and we're gonna be homeless at any point. 

You want to make clear like we have money. We're doing fine. But we have chosen to spend our money on other things that are more important. 

Jason Hall: Bro I'm glad you said that. Our son's six, so I'm a little closer to this than Jeff and having to deal with it. 

And we're fortunate. My wife and I, we have pretty high income, plenty of disposable income. And we agreed really early that we would never say, no, we can't get that. Never going to lie to our kids about those sorts of things. 

It's exactly what you're talking about. It's, no, the answer, we're not going to get that. We're choosing other things. And then eventually the kid stopped sulking about it and, gets curious as to why, well, why are we not buying it? If we can, why are we choosing not to? 

And then the conversation starts to get a little bit more fun, actually. You can talk about, you know, saving up to get, instead of getting that cheap $2 thing that you were really [00:04:00] excited about right then, save up your money, you know, and then you can get that $20 thing you're going to have fun with for 10 minutes before you forget about it.

So. You know, it's, I really appreciate that. 

Robert Brokamp: Yeah. And then I think it's important to let them then buy that $20 thing. Because you could go overboard and saying like, well, you just save, save, save. And then a kid doesn't learn that, you know, there's a benefit to saving and there is a reward.

So I think there's that balance there between teaching kids like, you can't have everything. But you should reward yourself eventually.

Jeff Santoro: Yeah, I my, one of my two sons, I won't say which one in case one of them listens to this podcast, is a little bit more of a spender than the other. And he's learning that lesson now of, oh, I impulse bought all these things that I wanted, 'cause he has an allowance and we let him mostly buy what he wants. And then he's learning, oh wait, but I really want this more expensive thing. And now I don't have as much money because I spent it on all these, you know, dumb things along the way.

So, to your point, Jason, I think it's just, it's taking him a little longer to learn that lesson than I was hoping. But I'm, [00:05:00] I'm just trying to let him learn it on his own rather than just tell him.

Robert Brokamp: We try to have a yard sale every year or so. And you know, that means the kids go through their closets, in the basement, in the garage, and they find stuff that they at one point thought they would really love. You know, they asked for it for their birthday, or they saved up and bought it. And they used it two or three times and then it just sat around gathering dust. 

And I, being the horrible dad that I am, use that opportunity to point out to them that, you know, you actually didn't get a whole lot of enjoyment for this. So, the next time you want to spend some money on something you think you really want, make sure you really want it. Because now we're selling this thing that you paid $30 for, you know, for 50 cents at a yard sale. 

Jason Hall: Bro, I would love... And you know, your kids are older, so maybe we'll have to revisit this in like 15 years or so. But I would love to compare your jar full of eye rolls from your kids to my jar full of eye rolls and see who comes out with more and-

Robert Brokamp: I do have the benefit of my four kids are widely dispersed in age. Youngest is 19. Oldest is 32. 

32 year old just got married and we are now [00:06:00] seeing from her, the like, oh, wow I'm so glad you taught me this. I'm so glad you told me not to get into credit card debt. I'm so glad you told me not to buy a house until I'm absolutely positively ready because she's seen, you know, many of her friends go into credit card debt or overpay for a house that they now can't afford. 

So I'm starting to get some of those, I don't know, what do you call them? Reverse eye rolls? The unrollings? I don't know. Something like that. 

Jason Hall: And, but of course, your youngest is absolutely wanting to throttle your oldest now. Because you have been given permission to turn it up to 11. 

Robert Brokamp: Yes. Yes, absolutely. 

Jeff Santoro: Yeah. The youngest is going, don't encourage him. Don't encourage him. 

Jason Hall: Stop. Stop. Stop. Stop. 

But let's, let's talk a little bit about the basics. So how do you, how do you think about it when, kind of again, thinking about money broadly with all of the different things that you can do, spend it, save it, invest it. How do you think about having those conversations with kids? 

Robert Brokamp: The first place I've always started is, is really before all [00:07:00] that. Which is making it.

I think one thing that we don't talk enough about in the financial planning world, even for adults, is your human capital, right? Your ability to earn money. And the first thing is like, how are you going to earn that money?

And then, okay, you got the money and you have choices, right? 

You could save it. You could spend it. You can invest it. What's going to provide lasting value with that money? And we talk an awful lot about, you know, buying something that goes up in value. Ideally, like a stock, ideally, not always, versus something you buy and immediately loses value. So we, we've talked an awful lot about that.

And my, and my kids, like I said in the previous episode, my kids have had jobs in high school and they just knew that they have to, they're going to be expected to have a job, and that they have to work because that's how you make money. If that is the starting point for everyone's eventual financial success to save and invest, you first have to earn.

And that's pretty important.

Jeff Santoro: I really like that you pointed that out, Bro, because [00:08:00] I, it reminds me of another thing we don't talk a lot about. And we don't need to necessarily go into it here, but there's still so much stigma about talking about how much money people make. 

So, but the one question I did want to ask is if you had any opinions on whether or not you should, or if you, and if you should, at what point actually talk to your kids about how much money you and your spouse make.

Because I know when I grew up, that was verboten. We did not talk about that. I remember my mom was a public employee, and her salary got published in the newspaper once from some article. And she was mortified that I, and not that it was public so much, but that my sister and I knew how much she made.

And to this day, I remember the dollar- 

Jason Hall: Because you knew that meant that she was lying to you when she says you couldn't buy that, right?

Jeff Santoro: Yeah. I was like, so I started asking, why can't I buy this? 

No, but I mean, it was, it, the funny thing is, I remember that dollar amount right now. And this had to be when I was in fifth or sixth grade. And I remember the specific amount because that's how like mind blowing it was to actually find that out.

So [00:09:00] I'm curious if you have thoughts, Bro, about talking to your kids about the amount of money you make as parents.

Robert Brokamp: I have to say that we did not tell our kids how much we made. Although if they specifically asked, I think I would have told them. 

I mean, the bottom line is my wife is a mental health therapist and now a professor. I'm a writer. So we, we make good professional salaries, but they're not exorbitant. You know, I would be making probably four to five times what I'm making if I had stayed in as a financial advisor. 

So, we haven't brought it, we haven't talked about it with them, I think, because when they were younger, it would have been that old, like, well, if you make this, why can't we buy this? But now I think if my kids asked, I probably would tell them. 'Cause I think it's important for them to get, start getting an idea as they entered the workforce, like, what different jobs pay. 

And I will say too, one of the great things about the Motley Fool is we have outstanding benefits. And there's something we have [00:10:00] talked to our kids about from the beginning, because I've been at the Fool now for almost 25 years. The benefits have been extraordinary. So talking to them about that too, so they understand why benefits are important. 

Jason Hall: Well, there's a dollar value there that's so easy to underappreciate and undervalue.

I have a family member who does contracting work, design work, and he's been talking to a few other people to try to reset the market for what he charges. And he's come to realize, how much money, because he's been looking just at the salary of similar people, professionals. And not thinking about all of the burdened cost of the benefits. The matching of the 401k. Insurance. All of those things that can be 20 to 50 percent of the salary amounts That you're leaving on the table.

So I think that's really important just to make it a tangible, real number you have to factor that in too.

Tate asked me, Tate's my son, by the way, Bro. Tate asked me how much [00:11:00] money we had. And I told him that it was none of his business. That he would have to listen to my podcast or follow me on, social media. 

Jeff Santoro: Right. You just sent them a podcast link.

Jason Hall: Yeah, well, I told him he could also check on Elon Musk's social media website, too. It's none of his business. But, no, it is. It's, it's important. That's, it's really important. 

And I think, one thing, the way that I think about it, too, is that you have to think about the context of the kid, too. And sometimes you can tell a kid a number, and five, six, seven, eight years old, doesn't make any sense, but it sounds cool. 

And then, of course, you run into, you know, one of their, one of their friend's parents at the bar. It's like, oh, I heard you got this much money. And I was like, oh, great. Right. So you have to be mindful about those sorts of things too.

Robert Brokamp: Yeah. And there's, you know, you have, they have cousins because we have siblings and, you know, if you have family dynamics where, whereby someone does not have a lot of money and they think you do, then that changes things. 

So I think generally it's probably better to keep it, keep it to you. But I know there are people who are, feel differently. Who feel like the kids should see everything. They should see the [00:12:00] budget. They should see the checking account. And I'm not gonna argue with it. I think that's also probably could be very valuable. 

Jason Hall: Yeah, and it's probably, at the end of the day, if you're gonna go one extreme or the other, going to the extreme of transparency is probably far more healthy than the other extreme.

Robert Brokamp: Yep. Totally agree. Totally agree. 

Jeff Santoro: Yeah, I keep thinking that I'll know when the right time is to have that conversation. Like I just, I feel like at some point my kids will be older, maybe when they're in college and getting ready to go into the workforce and it comes up in a conversation. I'll just feel like, yeah, this seems like the okay time to tell them.

I just don't want to have as much of a stigma around it as existed when I was a kid. Like, that's my only goal is to just be a little bit less uptight about it, so. But I just was curious what you guys thought. 

So I guess the next thing logically to talk about then, Bro, is like, so once kids are old enough to understand the concept of money and just all the things we talked about, saving, spending, giving to charity, investing, whatever we decided to do with it.

Any thoughts or tips on how to get kids to understand the actual aspect of investing and maybe even how to get them [00:13:00] interested in it? Because I'm struggling with the latter in my own household. 

Robert Brokamp: Well, I would say, just I'm sure you've already done this. You just make it a regular part of the family conversation right? 

The one thing I have said to my kids from the beginning is when you own a stock, you are a legitimate part owner of the company. So when we go into Starbucks or when we go into Home Depot, you know, I'll say like, oh, well, we're going in cause we partially own this company. Because we own stock in Starbucks and Home Depot. 

And so you start with that. And sometimes I think it's funny, sometimes they roll their eyes, but it starts with this idea that, that's how you build wealth. By being a part owner of a company.

And I will say that my wife and I opened brokerage accounts for our kids before they were interested in stocks. But we did it anyhow, because, partially because we wanted them to at some point when they were interested to look at the account and say, Holy cow, you paid this much for that stock or that index fund. It's now worth this. That's amazing. 

Jason Hall: So which of your kids did you open the account for in October of 2007 and show that, show it to them in March of [00:14:00] 2009? 

Robert Brokamp: So, wow, that's a good question. Did we have accounts then? I don't think we did, but so that's an interesting point, right? 

So that's part of the value. So here's what... My wife and I have cash in the account so they understand cash is important. We have index funds, so large caps, small caps, international, because I'm a big believer in having index funds as a foundation of your portfolio. 

And then we chose some stocks based on their interests. Because I'm an employee of the Motley Fool. I have access to our services. So I would look at one of our services, like Stock Advisor, and see what were on the Best Buys. As they got older, they got to choose, have some input in what they wanted. 

 But we started it before they were even interested, and it's only really now that they're old enough to look at that and like, dang, wow, that's what happens when you leave an investment alone for 5, 7, 10 years. And it kind of creates a little bit more of a of an interest in it.

Jeff Santoro: I opened brokerage accounts for both of my kids and just, and started buying some stocks at the best time. In [00:15:00] 2021. So I'm gonna, it's going to be a long while before I point out the power of compounding to them because right now I think the lesson is on the other side. 

Robert Brokamp: Right. And that's what I think, it's, that's a lesson too. And that's why we have some cash in there as well. And the emphasis on that, this is not something you spend today, tomorrow, not even next year. This is something for when you want to buy your first house or buy your first car. 

And you know, what we often say at the Motley Fool is, you know, if you're right with an investment 60 percent of the time you're doing well. There is unquestionably, especially once you move into the world of individual stocks, you are going to buy some companies that are going to go down and are never going to get back to what you paid for them. 

I was looking the other day at like the, what were the top stocks in 2000, like right at the dot com crash, and if I'm remembering correctly, Cisco and Intuit are still below the prices they were back then.

Jason Hall: GE is another one. 

Robert Brokamp: Oh my gosh, yes. Yeah. And talk about a stock that people would have said back in 99 and 2000. [00:16:00] Like this is a widow's and orphan stock. This is a diversified solid company. Been part of the Dow since the late 1800s. GE is a safe company, but that's not what happened. And that's an important lesson too.

Jason Hall: Yeah, it really, it really is. 

One of the things that you talked about there that I think is so awesome that I think is maybe the most important skill, and to a certain extent, it's a skill that you can develop. And you can help your kids develop there.

Because as, mean, we're stock jockeys. We talk about it on the podcast all the time. You know, I, Jeff and I both, we write and make videos for The Fool about individual stocks and stock picking prowess, right? Everybody wants to be the, have the stock picking prowess.

But it's really delayed gratification. Like learning, like developing that muscle, is the most important thing to being a successful investor in individual stocks, whether it is for mutual funds or index funds, or whether you are picking individual stocks, that's the hard thing. And if you can learn that, and like helping your kids figure that part out.

The strategy that you talked about that's used with your kids, that is incredible. That is like, kind of blew my mind a little bit [00:17:00] there. It's a small mind. It was a tiny little pop.

But I love that, Bro. I really do.

Jeff Santoro: I agree. I found a little bit of success with my older son just explaining to him. Because what I, I bought some stocks in his brokerage account and I'll continue, I continue to do that every month. I just do exactly what I do with my own investing and pick some stocks I think are good. And that's just me contributing for him. 

But the money that I matched that I took from his account, from his job in his Roth, I just put in an ETF and the way I explained it to him. 'Cause he's, he understands it, but he's not super interested in it.

I said, if you get into the habit of taking at least 10 percent of everything you make and just buying this ETF, you will probably have, there's a very good chance you'll have at least a million dollars by the time you're my age because I felt like an easy to remember number and an easy to remember age, the age of his parents was a good way to help him sort of wrap his head around that.

And then I said, and if you get interested in buying other things later on, like individual stocks, that's cool. But like to your point earlier, Bro, [00:18:00] about having a foundation of index funds, that was kind of my thinking. And that seemed to click with him and he never wanted to talk about it again. But I think I got through to him with that very simple way of thinking about it.

Robert Brokamp: Yeah. And I think that's important because I, I mean, just thinking of my four kids, I would say there's maybe one, maybe two of them who will ever have an interest in individual stocks just based on their personalities now. And that could be, could change. And the other ones, I think they will always in the end just be mostly index investors.

And you know what? That's perfectly fine.

Jason Hall: Yeah. Most people should be. Most of the vast majority of people should be index investors. 

Robert Brokamp: Yep. 

Jeff Santoro: And it could change over time. I mean, I bought my first stock when I was 40. So I was an investor since I got my first job, but I bought my first stock when I was 40. So people change. 

Robert Brokamp: Yep. That's true. That's true. 

Jeff Santoro: So I guess one thing we should talk about are, when it comes to investing and investing with your kids and getting them involved in all those things. 

Are there any pitfalls, anything you've seen that you've had to go through with your kids or you've seen other people struggle with when it comes to investing [00:19:00] with your kids? Anything we should watch out for?

Robert Brokamp: What's related to what we talk about. And I have heard it from other people, I haven't seen it with my own kids. And that is when you invest and put it in stocks and the stocks go down. And they get, they feel like basically they got burned, right? 

Especially if the money came from work they did or an allowance. So where they felt like it was real ownership of their money. And I put some sweat and tears into this money. And you had me buy this $100 stock and it is now trading for $25. Why in the world would I do this? So that's why I think it's important to have the diversification part of it. 

I often cite stats like, you know, when you look at the S&P 500, it's profitable, like 83 percent of three year holding periods, 88 percent of five year holding periods and most 10 year periods. 

So you can feel confident that it'll eventually be profitable, especially if you're reinvesting dividends and buying on the dips and stuff like that. That's why I like investing in index funds, because you can't say that with an individual stock. With an [00:20:00] individual stock it can go down and you really can't say whether it will recover or not. So that's why I think it's important to have the other thing.

I haven't had the position at this point too, where my kids have asked to sell any of their stocks. And I think that they're at an age now where I think I'd be okay with that. But if, you know, they were teenagers, younger teenagers, and they would have wanted to sell the stock, I think that would have been, that would have been a tough call for me and my wife. Because on the one hand, I really do believe that you, the kids should be able to enjoy the money they have, and they shouldn't always being delay, delay, delay.

On the other hand, You also want them to see the power of compounding. So I think probably as parents, probably have a good discussion about that beforehand. Like, what are the rules around, if you're going to let your kids invest in the stock market, what are the rules about when they can sell that stock? And what are valid expenses for that? 

Jeff Santoro: And that's something that you really should consider if you're opening accounts that they'll get control of at the age of [00:21:00] majority in their state. Because if you have a like, I know my UTMA accounts for my kids, they'll get it. Those accounts will be theirs once they turn, I believe it's 21 in New Jersey. I think. Maybe it's 18.

But the point is at some point they're just going to get those. So those are conversations I'm going to have to have before they get turned over so that they're prepared, you know. Because at that point they can do whatever they want with with the money.

Robert Brokamp: And you won't know. Because you will have no, you'll no longer have access to that account. So you won't know what they're doing with that money. 

Now, if they show up with a new car somehow, you'll have a good hint. But yeah, you won't know. So certainly to prepare them for that beforehand is important.

Jason Hall: Yeah, this is, you know, I've been stumbling through and kind of fumbling through some of this with, with my own son. And I've come to a couple of realizations, Bro.

One thing is when it comes to the investing with kids aspect of it, it's kind of like investing with spouses. My guess is that we have a lot of husbands and probably not a few wives that listen to our [00:22:00] podcast, that their spouse is entirely uninterested in this. And they've made overtures. Yeah, that plays well for, for podcasts, Jeff, raising your hand. That they've made overtures, and some have probably even made demands, and there's been arguments over getting more involved.

And it's an unrealistic expectation for a spouse. And I think it's the same for kids too, right? It's like, if they're going to get really into like the, like the hardcore stock picking part of it. Or really be aggressive about knowing what's going on with their funds and picking individual funds and, you know, maybe investing twice as much as another kid would, then it's going to happen, right? 

It's going to come to them. It's not going to be because you forced them to do it. 

Another thing that I've realized, and you were talking about, kind of with a kid selling a stock is if the kid's old enough to work and earn an income, you know, and make that choice, you know, that they probably deserve to make a little bit of decisions about what they're doing with that money, right?

If they're choosing to invest it on their own, and they want to sell it and [00:23:00] do something with it, okay, right? I mean, you build a framework around it, around what they're going to be doing. But at some point you're not raising kids. You have kids, but you're raising adults, right?

Robert Brokamp: Yeah, that's a great point.

And boy, there's a whole other conversation in terms of handling money as spouses.

I mean, the studies are pretty clear that when it comes to money, opposites attract. So there's always in most couples, there's a significant difference in attitudes about money and investing and things like that. And it's not dissimilar to having kids who are also not very interested in certain things.

And yeah, there's a lot of dynamics going on there. 

Jeff Santoro: So to wrap up this conversation, like we did last episode, Bro, any resources that you can think of that we can stick in the show notes for people to go back and check out? 

Robert Brokamp: Yeah. So there are a few books that I like. 

So, first is from Ron Lieber, who is the personal finance journalist for the New York Times. His book, The Opposite of Spoiled, I thought was really [00:24:00] good. Talks an awful lot about allowances. 

And you know, there's a big debate in the parenting world about whether allowances should be tied to chores, or kids should just be expected to do chores because they're part of a family. But then you give them money because they need to learn how to be responsible. So that's an important decision that parents have to make. And I would say my wife and I started out one way and moved to the other. Another great book is Make Your Kid A Money Genius (Even If You're Not) by Beth Kobliner. That's a little older, but really solid advice.

So those are for parents to read. But then there's a series of children's books by Sheila Bair. And some of you may know Sheila Bair from her time as head of the FDIC during the Great Recession. And by all accounts, she did a great job managing that crisis. Well, she's written a series of children's books really for like kids ages, you know, six to 10 about like money concepts. How to spend money loans and things like that. (Go here for all eight books in the “Money Tales” series)

And so if you're looking for a good storybook to read to your younger children, to start a conversation [00:25:00] about money, her books are a good place to start. 

Jason Hall: That's, that's great. Thanks for that, Bro. 

Any, any other last words of wisdom you'd like to share before we wrap up this episode? 

Robert Brokamp: Well, my kids are further along than your kids and certainly as my wife and I look back, there are things we would have preferred to do differently. We wish we had done differently.

But I would just say, don't let the perfect be the enemy of the good. Just start doing something. There's something that you do related to money and your kids, that 10, 20 years from now, you'll be like, eh, I probably should have done something differently.

But as long as you're doing something and getting them to understand that you got to earn money, you got to save it, and you're better off gotta be investing it for the longterm, you're probably going to be very happy with what the result will be.

Jason Hall: Bro. Again, thank you so much for coming on.

Robert Brokamp: It's really been fun. I love it. Thanks, guys. 

Jason Hall: That's good. We'll have to have you back on for sure. 

Robert Brokamp: That would be great. 

Jeff Santoro: Yeah, this has been great. Thanks, Bro. 

Jason Hall: Yo, Jeff. Investing with kids is hard. 

Jeff Santoro: Of the two conversations we had with Bro, the investing with [00:26:00] kids conversation that was on this episode, I agree. That's, that's trickier than doing it for your kids. 

Jason Hall: Yeah. Like everything with your kids though. It's just easier to do it for them. 

Jeff Santoro: I think it's especially hard because, for you and I, and probably a lot of people who are listening to this, we love this stuff. Like this is, I mean, this is not our full time jobs. Like you and I do this podcast because we love it and it's fun and we love talking about it. No one in my family feels that way.

So trying to get them to sort of come along and get excited about things like investing is like pulling teeth. And I don't, I think you're probably in a similar boat, maybe not as much, but I think that's the hardest part. 

Jason Hall: Probably more. Probably more. Because you have to remember, you're in education in your full time life. People in, a lot of people in your life are also in education you have Interesting things in common to talk about professionally. Nobody in my family does what I do for a living. 

Jeff Santoro: Yeah, I don't know. I, this is not the conversation we need to have right now, but I think I could put, I think my family [00:27:00] cares less about investing than yours does. Pretty sure we could, I would win that contest. 

But anyway, we hope everyone enjoyed the second part of our conversation with Bro. This episode was focused on involving your kids in the investing and saving and personal finance stuff. 

So I guess let's start this conversation like we started the second half of last week's show. What stuck out to you from what Bro had to had to share with us? 

Jason Hall: So it was really the laying the groundwork. I mean, this is, of that conversation with Bro, that is the thing that will stick with me. 

Like I will have forgotten my wife's name and I will be wearing Depends, but I will remember that thing. Like I will tell random people, "start saving before your kids are born. Who are you?" 

Like, no, it's, seriously, it's, it was, I just, because it... 

Two things. Number one, the compounding power of time, how important that is that those dollars 10 years ago are so much more powerful than your dollars today, in terms of creating that wealth to pay for things like college, to start [00:28:00] funding retirement with the kids Roth, if you're fortunate enough to start a UTMA or UGMA, to get them, to help them hit the ground running when they enter the real world. I mean, that's, that's powerful. 

But the other part, and this is the thing that really stood out to me the most is that it demonstrates in reality, like how all this stuff is supposed to work. Versus you get your kid to, hey, let's pick some stocks. And they pick some stocks. And then there's a bear market and they're 30 percent down in six months. And your kid's like, that's stupid. I never want to do that.

If you actually have a few years of results to show them and you're like, yeah, put a few hundred bucks in here when you were two and now it's a thousand dollars and you're 11 or whatever, it's just, that's powerful. And that's going to stick with me. 

Jeff Santoro: Yeah, I agree with all that.

I think the thing that resonates with me with the idea of just starting is, and this is something that I know this is going to sound really stupid, but I'm going to say it anyway . When I was a new [00:29:00] teacher and I had my first job and my colleagues were telling me I should set up a 403B- 

Jason Hall: That's the 401K for teachers.

Jeff Santoro: That's the 401k for teachers. And I did it. 

And I understood that I was investing money for my future. It never, I never like really ever thought about the fact that like, those are stocks. Like, because I wasn't picking a stock. I wasn't like buying Apple. They was all index funds, mutual funds, whatever.

And the other thing that was never really made clear to me was that investing in some way is not really like this thing you could do if you want. It's a thing you basically have to do if you expect to have money after you wanna stop working.

So I think with my kids, in terms of like just starting, and hoping that they get interested in it later on, the one thing I have told them is just very simply, at some point you're going to wanna stop working. And it could be because you want to. It could be 'cause you have to, 'cause you're, you get too old or you get sick. And you hopefully [00:30:00] wanna live after that point, and do things. You'll need money to do that. 

So the reason we invest is, and that I think even when they were young, they kind of understood that. Because they understand the concept of like, mom and dad go to work, so they make money, so we can have a house and a car and go on vacation and have food and all that stuff.

 So I think that was like, and that was something that was never really explained to me as a kid. It wasn't like... Not that my parents, they told me about money and like taught me stuff, but it was never really explicitly clear to me that like, this is something you have to, have to do. Or else you'll have to work until you die.

So that was something that I thought about a lot during the conversation with Bro. 

Jason Hall: Yeah. Your kids are a little bit older. You've got one that's a couple of years away from college and one that's not quite high school age, I guess. And then my son's early elementary school. So, you know, we've gone through some, you've kind of gone through some different periods than I have, and I'm trying to get there with my kid.

And one takeaway for me was like, you just, you really can't force this stuff [00:31:00] on them. You can't. 

And getting back to the conversation we've had before is, I'm guessing a rounding error from everybody listening to this podcast. Except for, there's one couple, that you're sitting there together and you're both listening at the same time and you just looked at each other and you smiled. I know you did. 

Everybody else is listening to this podcast because your spouse doesn't give a shit about it. They're not, and you're really passionate about it and you're interested in it. And it's going to be the same way with your kids.

Either they're going to love it and they're going to really be into it, or they're going to be on the other end of the spectrum. There might be something that's a little in the middle. 

But I think the bigger thing is, as much as we love stocks and we want to get our kids investing and understanding investing, it's giving them the personal finance skills that I think is the most important part. And go ahead. 

Jeff Santoro: No. And that's what we spend, I would, probably even more of the conversation today was about that. It was about how do you, how do you get your son not to want to buy all of the crap at the mall, right? Which is [00:32:00] something anyone with kids has struggled with. 

And how do you, you know, how do you get them to understand that, why don't we buy all the things I want to buy? Or why don't we just do whatever we want to do with our money, you know? 

I told the story after, after we logged off that my son, my younger son gave my older son a birthday card. 

Jason Hall: Yeah, we got to hang out with Bro in the green room. It was pretty cool. 

Jeff Santoro: Yeah. Our green room. 

My younger son gives my older son a card with a $20 bill in it after he had already bought him a gift. And when I asked him why he did that. He looked at me and said, it's fine. I have a bunch more in my drawer, 'cause that's where he keeps the money he gets for his birthday and stuff. 

And it was just such a perfect encapsulation of like him still not quite understanding the concept of money. So yeah, I think the personal finance piece is really the foundation for all of it, whether they get interested in investing or not. Like that's something that they absolutely have to have. 

Jason Hall: Yeah, you remember he highlighted something, and this was, again, another one of those kind of light bulb moments for me too. 

He said that really like the financial advisory world fails at this. That's my words, not his. [00:33:00] But talking about, with your kids, about earning power, how important that is, not just saving and investing. 

But if you really want to maximize like your autonomy, and if you measure autonomy by creating enough wealth, then you have control of your life and your time, which I think is the most valuable thing on the entire planet. Putting yourself in a position to maximize your earnings, how valuable that is. And that's a great conversation. 

That's a conversation, obviously, I'm not going to have with my six year old. But can be very- but there's a balance there too, right? How many kids do you know that, like, all they hear from their parents is, you need to be an engineer, you need to go to med school, you need to go to law school, right?

And there's, there's a balance there, right? 

Jeff Santoro: Yeah, I could go on a whole tangent on this topic, working in the world of education. But no, it's true. I mean, I, as someone who grew up comfortably middle class, no one in my family made a ton of money. I don't have any investment bankers in my family.

I grew up sort of, and this wasn't anything that was like put on me, it was [00:34:00] just sort of my goal, my view, especially as someone who like chose to go into education. I never really cared or thought about a high salary. I just, cause it kind of wasn't in the picture, choosing what I chose.

But I also never thought of the fact. So I kind of always looked at like getting rich or being wealthy as sort of this thing that like, I don't care about. But I never really thought about it through the lens of, oh, maybe that allows me to volunteer, you know, only work part time, or retire early and then volunteer and give my time and efforts to something that's really valuable, you know.

So like, It goes back to the whole conversation we've had previously about not retiring from something but retiring to something. And the whole idea of wealth can be the thing that allows you to have control of your time. Or maybe even wealth is the thing that allows you to just give a lot of money to charity if that's something that you care about. 

Jason Hall: Or to waiters and waitresses in the Bahamas. 

Jeff Santoro: Yeah, exactly. Yeah. Or to send money to your favorite podcast hosts, you know, whatever. 

Jason Hall: That's, [00:35:00] that's a good one. I like that one. That's a good one. We'll post our Venmo on the, uh, no, I'm kidding. 

Jeff Santoro: But that was an interesting point he made, like the, that you have to talk to your kids about earning. And I think, depending on how you were brought up, that can feel icky, the first time you think about it. And so I think that was a good thing for him to have said. 

Jason Hall: Yeah. One of the other things we talked about that I thought was powerful is that we asked him if he ever really talked about like his, like how much he and his spouse earned with the kids. And he said, never really, and it never really came up. But if they asked it, probably would have. 

And, I just, I've been thinking a little bit about that. And I do think that obviously your kid needs to be at like a certain age level and level of maturity to really internalize what it means. But being open about your family's finances. I think like, that underpinning the whole, the whole conversation, I think is really, really valuable.

Because you teach much better lessons because the reality for most people, Jeff is money's [00:36:00] emotions. And if you are in a situation where you're fortunate enough that you have a lot of disposable income, I think it's a terrible idea-- and this is again, my situation-- I'll never tell my kid we can't get that because in most cases it's not true.

We just, we won't. But here's why we won't. Let's talk about why we won't, right? 

Jeff Santoro: Yeah. 

Jason Hall: Remove the emotion from this idea of money being just this thing that you feel like you need, right?

Jeff Santoro: Yeah, I've I completely agree with that. I mean, that's something that, something like my opinion on has changed over the time that I've been a parent. 

Like anytime I hear or read anything that's about parenting and money and investing and money and kids and stuff, like I'm interested in it, obviously, because I have kids, so I'll read it and listen to it. And I've heard it several places where, you know, saying we can't afford that, if it's really not true, is not a good thing to say to your kids. It's better to say, I choose not to afford that, or whatever it is. 

And I can just say from experience, talking only about conversations I've had with my kids, [00:37:00] I've said things like, this is where, this is the closest I've gotten to like telling them how much money I make or anything like that is, I'll say something like, I absolutely can buy that thing. I could buy 10 of those things, , here's why I'm not going to.

I was talking to my son 'cause he really likes to, he's very into like different types of cars. And he's really into like different types of airplanes, like modes of travel. That's his thing. And we were talking about Teslas once cause he thinks Teslas are cool looking.

And I was saying how the model S is a very expensive car. And he said, how much? And I said, it's over a hundred thousand dollars. And he was like, well, can you buy one? 

And I said, honestly, because you can borrow money to buy a car, yes, I could, like I could borrow money and buy that car. And I was like, but you have to understand that you could get two cheaper cars, really nice, cheaper cars for the price of that one car.

 I had this whole conversation about, you know, like, yes, maybe I could buy that expensive Tesla. But that might mean that we don't get to go on a vacation this year. Or [00:38:00] that might mean that you get less Christmas presents, you know, like I gave all these very-

Jason Hall: Hope you like ramen, boy.. 

Jeff Santoro: Yeah. And I, not in like a threatening, mean way. But just to get him to understand, like, yeah, it's a decision, you know?

And I was like, we could live in a nicer house, but that's, we've a decision was made to live in this house 'cause it was affordable for us, and we could have money for other things, you know. Even saving for our future.

You know, you can take this in any direction. It would have been disingenuous to say, oh, I could never afford a Tesla Model S. Because again, with, I want to be clear to the audience, I don't have $130,000 in cash to buy a new car. But, you know, you could take out a car loan and pay $2,000 a month if you wanted to, like- 

Jason Hall: Right. 

Jeff Santoro: But that would be stupid. 

Jason Hall: No, I think that the underlying point there is that the lesson you're teaching your kid is, there's a lot of people that stretch their capacity for things, right? Because they can and they want to. And having some impulse control and planting those seeds for [00:39:00] delayed gratification I think it really matters at a young age.

I think it's far more important than helping your kid understand that they could actually be an owner of the company that makes the iPhone. Yeah, that's cool too, but at the end of the day, if you teach your kid the skills to retain more of their income, right? Actually have more disposable income. If they learn those skills, then they don't have to be a perfect investor to end up with a large sum of wealth down the road. That they can make the world a better place with, that they can retire early, that they could give to charities, whatever they want to do, right?

Have time autonomy, like all those things that we talked about. I think it's just far more, more valuable. 

Jeff Santoro: Yeah. 

Jason Hall: So we, we started, go ahead, go ahead, Jeff. 

Jeff Santoro: Now, the only thing I was going to say was the other thing that I've talked to my kids about is I don't try to, I try not to stigmatize spending money on anything.

aardvark: Yeah.

Jeff Santoro: Like I do when I'm talking about myself, like I'll make snarky comments about how I would never buy X or Y. But like, I do try to get across that like, let's go back to like the Tesla [00:40:00] example again.

If the thing you think most about in life is to one day own a Tesla model S. And you want to do that and you can figure out a way to make it happen and still like get by in life, and you're cool with like eating ramen noodles for the next three years because you want that car. That's a decision you're going to make as an adult, you know.

But because I know people who like spend money on things that I think are wasteful, but I watch how thrifty they are in other aspects of their life, right? Like maybe they drive a 25 year old beater of a car, but they have a beach house, you know. Like they've made that decision, you know, it's- 

Jason Hall: Life's about trade offs, right? And I think that's important. And, you know, one of the things that I said, so Bro talked about exactly that same thing with kids. It's like, you know, kids, they need to spend their money too. They need to enjoy the pleasure of the money that they've earned, whether it's the allowance or the part time job after school or whatever it may be, right? We do the same thing. We go on vacations, you know, you have a secret Tesla that you're trying to make it sound like you don't have, but you really do.

You don't, I think you're a Honda guy, so-

Jeff Santoro: I [00:41:00] have three secret Teslas. 

Jason Hall: Oh wow. That's, that's awesome. So you have a model, a model nine. 

Jeff Santoro: Yeah. I'm trying to get all four of the models and then I'll- 

Jason Hall: Nice, nice, so.

And I really like that point that Bro made because, you know, I feel like I've said before, you know, I'm not raising a child. I'm raising an adult. He's a child now, but the idea is to help prepare him for adulthood. And once a kid's old enough to work and earn money, then they need to be empowered to make some decisions about what happens with that money. And that also means they need to be empowered to screw up sometimes. 

Jeff Santoro: Yeah.

When I, when we moved to the give our kids an allowance. So I mentioned this, I think I said it off the air. But like, I'm doing with my kids what my mom did with me, which was I give them an allowance. It's not tied to chores. They just, the chores are expected. That's what we tell them. Like you contribute to the house, just like me and your mother do, and they each get an allowance and they can largely [00:42:00] do what they want with it, you know.

So like a good example, this whole summer, you know, there's a pool club in town and we go there and there's a snack shack and, you know, I watched my younger one. Bag of chips, Gatorade, ice cream, smoothie, Gatorade, bag of chips, smoothie, ice cream, all summer long. And I, okay.

And then all of a sudden the summer ends and he's like, oh, I want to get this thing. Okay, well, how much is in your account? And he looks at it and he's sad. You know, and I'm like, hey, you made those choices. And this is the time to make those, you know, he's messing around with dozens of dollars. 

Jason Hall: Yeah. When the stakes are much lower. Yeah, no, that's, that's awesome. 

So my son's young, he's six. But we've opened one of those apps for kids spending. And he's definitely on the young side for it, but he has a small allowance. And I think what's going to happen with us is, it's going to probably evolve over time to something closer to what you guys are doing. 

But at this point, just to kind of hammer the message home, he gets his little allowance and it automatically every week [00:43:00] goes on to his account. And the expectation is there, like there's certain things that he's responsible for doing. He empties his lunchbox when he gets home, he puts his shoes away, puts his coat away, right? He walks the dog a couple of times, like little stuff like that. But that's the thing. 

And then over time as he gets older, and like his ability to like actually make decisions about making sure he's got enough money left over to buy shoes for school is there, then, we'll probably transition over to what you're doing.

 But I think the key thing is that, kids I found with my son, because his mom's really, really, really smart unlike me, they tend to understand things maybe a little better, a little sooner than maybe we give them credit for.

Jeff Santoro: It's been really fascinating to watch. My two kids are very different with money too, but it's been fun to watch my younger one sort of navigate this. 'Cause he, he's interested in this one thing and he sets up a little savings goal in his app for that. Three months later, I see him move all the money to this other goal because he has a different thing he wants to buy.

 I try to advise him. I try to tell him what I think is the right thing, but ultimately I let him make that [00:44:00] decision. And I can say this because I don't think he's going to listen. I kind of want him to run out of money. I want him to literally get to zero and then want something.

I can be like, well, next Saturday you get a little more allowance. You know, like I just want him to, and he's getting it, he's getting better. He's better now than he was a year ago, and he's figuring it out. 

But, and it's just very funny 'cause my older son is the opposite. He's a saver. He just, he's got a Ziploc bag of Amazon gift cards he's been collecting for, he just never buys. He doesn't buy anything. You know, he's just the opposite. 

It's so funny to watch how the two of them are different. 

Jason Hall: Yeah. But the key and one thing you're doing, and this is going to be hard for me, Jeff. So seeing your example is going to be really helpful, is to not have control, right? To let the kid have autonomy. To make good decisions and to make bad decisions, because that's, what's going to pay off. Once they're, once they're adults.

Did we, do we do it? 

Jeff Santoro: We did it. 

Jason Hall: We said words about things. You know who else said words about things, Jeff? 

Jeff Santoro: The man, [00:45:00] Robert Brokamp said words about things. 

Jason Hall: Bro laid it down. He did. What a great guest. Hope everybody enjoyed having Bro on the past couple of episodes with us. As always, Jeff and I love to give our answers to these hard questions, have amazing guests like Robert Brokamp on to give their answers.

But it's up to you to figure out how to invest with your weirdo kids. We can't help you do that. But you can do it. I absolutely believe in every one of you. All right, Jeff, we'll see you next time. 

Jeff Santoro: See you next time. 

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