Bet You Wish You Learnt These Money Habits When You Were A Child [Chills 58 with Will Rainey]
How old were you when you had your first conversation about money? Society has always emphasized on the importance of education among children. How about financial education for the little ones too? In this episode, we discuss why, when and how we can encourage children to develop positive and healthy money habits with Will Rainey, founder of Blue Tree Savings (https://bit.ly/3se5HyT) which provides useful resources to teach children about money. You’ll be surprised to hear that some of these habits can also be applied in adulthood too!
Research has shown that children actually form many of their adult money behaviours by the age of seven. Thus, it is imperative that we start educating children about money at a young age. Apart from sharing with us fun and engaging strategies to teach what he calls “the three rules of wealth” to children, Will also talks about why it can be difficult for parents and caregivers to teach children about money. This conversation will invite listeners to think deeply about how we learnt about money as a child and how we can equip the future generation with adequate financial literacy and help them build a healthy relationship with money.
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Andrew: How do you talk to children about money? How do you teach kids financial education? This episode might seem like it’s for parents with kids but as you listen on, you’ll realize that some of the points really make sense for the adults as well.
Expand Full Transcript
We’ll talk about why is it important to start teaching financial education from a very young age before seven years old. Why is it important to start early and at that age, how do you talk to kids about money? Do they understand? What are some of the tools that you can use to help make learning money fun for them?
At the same time, with technology and social media, does it make it harder for children to understand money? For example, we live in a cashless society. You use your apps to make payment. You will use credit cards. You don’t even see physical money transferring hands.
Without the physical transfer of money, children don’t have something to visualize, something to see. Does it make it harder for them to understand money? Does it shape their perception of the world with regards to money because of this cashless society, because of technology and because of in-app purchases? How are they going to handle money? Does it influence them in the future? Let’s talk about some of these topics and learn how to teach children about money.
Hello, my name is Andrew and welcome to another Chills with TFC episode. In this series, we talk to interesting people with relevant experience and insights to help us learn from their perspectives.
My guest today is a qualified actuary who was born and raised in the UK. Currently, he’s based in Vietnam, Hoi An to be specific, to spend more time with his wife and two kids.
He has created lots of content to teach children and parents about money and financial education. You can check out some of his work at bluetreesavings.com. Let’s welcome Will Rainey.
So Will, why not introduce yourself? Help us to get to know you better.
Will: Sure. So yeah, I’m Will Rainey. I’m from the UK and my background is that I’m an actuary. For people who don’t know what that is, it’s essentially an accountant who loves statistics. So we look at insurance and pensions etc.
I was doing that for many years in the UK and then in 2014, we moved from the UK to Hong Kong. And so I had a role of head of investment strategy for Willis Towers Watson. I was essentially going around Asia talking to some of the largest investors, so your insurance companies, your pension schemes, your sovereign wealth funds, advising them on where to invest their millions, billions of dollars of assets.
Then in 2019, my wife and I decided we’re going to take a completely different path and we decided that we’re going to leave our full-time jobs and move to where I am now, which is in central Vietnam. The main purpose was to spend more time with our two young kids. As they say, they only grow up once so we wanted to make the most time with that.
And so, we’ve been here for the last two and a half years now. My kids are in the international school. So whilst they’re at school, I wanted to really be doing something and kind of using the skills that I’ve had throughout my career and the conversations I’ve had and so, I’m really focused on wanting my children to have the same opportunity that my wife and I have now.
And so, I started teaching them about money and I thought actually, there’s not that many resources out there for parents to teach their kids about money and it’s so important. So I started a company called Blue Tree Savings and the main purpose is to try and educate as many parents and children about money so the next generation grows up more financially healthy and wealthy than generations before them. So that’s my story.
Andrew: Okay. Why is it important for kids to know about money?
Will: Yeah, it’s really important because there’s quite a bit of research that shows that children actually form many of their adult money behaviours by the age of seven. This was a big research paper done by Cambridge University in England. It blew my mind when I saw that or read about that because I remember when I was seven, I was never really thinking about money or don’t remember any money conversations at seven.
But what we’re doing is we’re observing the world around us at that age, which is sucking it all in and it’s that point we’re seeing money being spent by parents or adults and picking up on any conversations. And it’s so important because if at seven, all that children see is that money is for spending, then it’s just going to get hardwired in and then later in life, when they learn about other uses of money, it’s essentially trying to say… you’ve got to try and rewire their brains and that just becomes hard.
So what we want to do is from a young age, teach kids about the different uses of money. Get them to start forming really positive, healthy money habits from a young age and then they’ll stick into adulthood rather than not teaching them at all and hoping they pick up good habits and if they don’t, you have to try and unwind it and that’s… as we know, habits are so hard to change. So it’s really important that we have kids having positive views about money, because if they think positively about money, then they’re more likely to want to manage it and learn about it, but also forming these great habits. So the younger the better.
Andrew: Are you saying that even before seven years old, based on this research, we should really get them started. How young should they start?
Will: Yeah, they should. Even from the youngest age, even before even talking about money, there are some things that parents can do that helps with money. Stuff like patience. If you want to be financially healthy and wealthy, in my view, you have to be patient. We know this from… if you want to invest in the stock market, you can’t expect to have high returns in the next month or something. You have to wait for a long time and lots of people who start investing don’t see returns in the short term. Same thing with spending as well. People can’t wait to save up for the money. They just want it now so they use credit cards and it’s all about patience.
Even for kids, even before talking about money, you can start getting your children to learn to be patient. I used the example of giving my children a chocolate bar. I let them eat most of it but I always try and get them to save just a little bit in the fridge for tomorrow or the day after or whatever. So again, they’re seeing that they have to be patient and if they do, I give them a little reward.
So I’m teaching them, be patient with some of your chocolate and I’ll give you a reward. And then the same thing happens with money. If they can get some money. So with my children, I’ve been giving them pocket money since they were four years old and every time we give them some pocket money, we say you can spend most of it.
Andrew: Pocket money at four years old?
Will: Yeah. Again, just small amounts, it doesn’t matter. Just a little bit and just let them go to work, go to the shops. I’ll buy some sweets because that’s pretty much all I could afford. But I always say “you have to save just a little bit” and it doesn’t matter how small that amount is. It’s not really important. It’s more about they’re getting in the habit of not spending all and so, even from that youngest age, they’re seeing okay…. and then I’ll give them a little reward.
So he’ll put that… whether it’s 10 cents, 20 cents, away and I put a little bit extra into the pot when they do. And so again, it’s just very small amounts, but it’s getting them into the habit and showing them that if they are patient, they get rewarded.
When I’m talking to parents about this, I always say I call it the three rules of wealth, and that’s make sure that you spend less than you earn, that you invest what you save and then you be patient.
To make that fun for children, I use this analogy of money being like seeds. I say to my children “think of money like seeds, you give that seed away and that’s just like spending”, but straight away they’re like “oh, what does it mean when you plant those seeds?” because kids know about seeds and that’s when you say “that’s like saving and investing. See, every time you get 10 seeds, boys, keep one and then the next one, which is to invest, is to plant the seed and that’s when the seed starts to grow”.
Lastly, they know that seeds or trees don’t grow overnight so they know they have to be patient to see these trees grow and it’s just a really easy way for them to visualize money in the future. It gets them to follow these three rules because let’s say the first one is spend less than you earn. So that means save some of your seeds. Second is plant them, which is investing. And third is be patient, which is let your trees grow and it’s just a fun way.
Hence… why my company is called Blue Trees. So my kids will say, when they put in some money away, they’ll say “how many blue trees do I have, Daddy?” Or “Daddy, I want to put some money towards my blue trees” and we show on the computer their savings and we show them in trees rather than money, because it’s more engaging and fun for them and they compare it amongst themselves about who’s got the most trees.
Andrew: Because you’re saying that trees is a really good analogy and a visual image for children to understand. You mentioned the three rules of money. I was going to ask you. How do you teach them such hard topics about money itself and do they relate well to this tree analogy? I don’t know. We’re city kids. Do we relate to the trees and nature?
Will: So I don’t know about all schools, but I know my kids are learning a lot about the environment and the rainforests etc. I like making sure that they grow up trying to be good global citizens and not use a lot of plastic and stuff like that.
They’re learning all this at school and it’s really nice because I say to my kids “we’re planting all these blue trees. When you’re 18, are you just going to go and chop down all of your trees and go and spend it?” And they’re like… because they’ve got this really strong affiliation or sentiment about these trees, they’re like “no, we don’t have the thought of cutting down a tree.” Almost pains them, which is like a complete win from my side. So yeah, I completely get the tree analogy and I use it.
So in my book, which is Grandpa’s Fortune Fables, we use lots of stories which have these tree analogies, but it’s not just for the three rules. It’s about debt, we can use it about tax and just how you should invest as well. So the tree analogy just works. It just makes it fun whereas money is quite abstract and it can be quite arbitrary in terms of the numbers for young kids. So using the tree analogy is just simple and they get it. They see trees and I say it puts money into the future. So yeah, I recommend all parents start a conversation about money using that analogy.
Andrew: Apart from using trees, how to make it fun for them? You mentioned earlier on that you use the chocolate which is, I think, similar to the marshmallow test. You mentioned it’s training their patience. It’s also training whether they have delayed gratification. Apart from all these, how do you make it fun for them?
Will: I like stories and so whenever I set out to teach my kids about money, I didn’t want to just be like, I’m going to sit down and do a lecture. I’ve tried to think of stories they might’ve heard and then just put a little spin on it to make it about money or I just… when I was putting them to bed, try to come up with new stories which had a key money message.
And hence, I’ve been doing that now. First, it was like two years so coming up with these different stories, all focusing on a different money topic so I find stories really good. And it doesn’t have to be fictional. It can be real ones as well and then just put into it a twist.
I like the story of a guy called Sam Brannan and he became one of the wealthiest or richest people during the American gold rush. It’s in like 1845 to I can’t remember when. And so everyone was flooding because they found gold and everyone wants to get rich quickly.
Sam was there and he didn’t go looking for any gold at all. He didn’t find any gold but he told everyone “come, there’s loads of gold to be found.” And then, he sold everyone a shovel and he made so much money from selling the shovels that he became essentially the wealthiest person there.
It was just a really fun, real life story that my kids catch onto and it’s one of the stories that I’ve adapted in my book. It’s all these real life ones that kids can… One of my favorite personal finance books is a book called The Richest Man in Babylon. I recommend everyone reads it if they haven’t. It just goes through about how to build wealth and it’s written for adults but it’s all done in story form and it’s by far one of the most easiest to read, powerful financial books there is.
I wanted to replicate doing some of that for children because adults like stories and kids like stories even more. Whenever you can, you see a little story or a real life story, just tell your kids. They’ll love it and they’ll learn something from it.
Andrew: What do you think is the biggest obstacle in teaching children about money? From your line of work, you work with the parents as well, right? You have to teach the parents on how to teach their kids. What’s the biggest obstacle in all of this?
Will: One of it is about belief and it’s about as parents… lots and lots of parents have never been taught or adults have never been taught about money themselves and a lot of adults are actually in financial stress. They’ve either got debts or they’re worried about general payments and so you have these parents who are struggling and don’t have the knowledge and they’re saying “how am I supposed to teach my kids about money? Why would I want to talk to my children about money when I’m finding it stressful? I don’t want to put stress on my child.”
That’s one of the biggest blocks. Overcoming that is a hard one but when I’ve talked to parents and said “actually, if you break it down into the simplest of actions that you can help your children do and that is to help your child save a little bit of money every time they get some.”
Therefore, it’s so simple. Every parent can do it, no matter how much money they have, what family background they have or how good their kids are with numbers. All children can do that. And if that’s the… if they can just do that, it doesn’t matter if they don’t go on to learn all of the different jargon that comes with money or start doing all the different types of investments. Just that one act of saving every time that they get some money is going to put them ahead of around 70% of people because so many people are in debt.
So that’s the first one about having that belief that “oh, I can’t do it” but trust me, if you teach your children to do that, you’re so far ahead and you’re well on your way to having your children grow up financially healthy and wealthy.
The next big barrier is this kind of knowledge gap. As I said, most parents and adults were never taught about money. They get a bit scared of different topics. So a) there’s knowledge about debts that people don’t fully appreciate…. the dangers of debts. You’ll hear lots of stories about people who think they can afford to use debt because they only look at the monthly repayments. They don’t look at the total costs.
But then there’s the other one which is investing. Investing in the stock market is the most sustainable way to grow your wealth over the long term. And yet, so many people don’t invest because they think it’s either complex or they think that you have to have loads of money to invest or they just think it’s too scary. “Oh, I’ve heard lots of stories of people investing. They’ve lost lots of money.”
And so, there’s this big barrier to say “why would I even teach my kids this? It’s too complicated for me” whereas actually, when you break it down and this goes back to my years of experience working in the industry, investing can be very simple. In fact, there’s a huge advantage to try and keep it as simple as possible. Lots of people try and make it complex because there’s money to be made with complexity, but actually keeping it simple in investing. I’ve been teaching my daughters and they’re like seven and nine for the last couple of years all about investing in a very simple way and I’ve shared that in my blogs and in my book to show that.
Andrew: Do you still use the tree analogy or how does investing come into play in teaching children?
Will: Yeah, so there’s two parts. One is about the tree, but the main bit is to… so I actually told my daughters when we’re in Hong Kong and we’re sitting in McDonald’s and since they were born, we’ve been putting money into a global investment fund which invests in thousands of companies in a very low cost way… invest in all the big companies and one of those companies was McDonald’s.
So we’re sitting in McDonalds and we said to them “did you know that you own a piece of this McDonald’s? Because we invest your money and that’s what your blue trees are.” They got really excited really quickly. They’re like “we own this tray, we own this seat, we own the bins” and I was like “yep, you own it all. You own a small bit of it. And also, all those people in the queue queuing up to buy their burgers and their Happy Meals, some of the money that they’re giving to McDonald’s is your money because you own a piece of McDonald’s. Not just this restaurant, but all of them around the world and McDonald’s takes the money that we’ve given them, that we’ve invested and they use that to create new burgers or open new restaurants. The more burgers and the more restaurants they have, the more money they can make and the more money they make, the more money that you make.”
And so straight away, they got this concept of investing means that I own something. So we went around the shopping mall after that and we went and we saw the Apple store and we saw the people buying their iPhones and iPads and you could say “you own some of that as well. So all those people in that shop who are spending their money, they’re getting a little bit poorer and you’re getting a little bit richer because you own a piece of that.”
They got, again, just really excited, especially when you start using the names that they know and love. We were in Hong Kong, so you have Disneyland, so you own Disney and Netflix and Google, Alphabet… straight away, they got that as a real life concept and then the tree analogy just comes in beautifully because you can say investing means that you’re planting that seed and it grows into a tree.
But then clearly one of the big areas is that people worry about risk. They’re like “oh, I put some money into the stock market, it can go down.” And so why the tree analogy just works, because you say “you got these trees, you’re growing them. Expect them to go really big over the long term but it takes time. And also during that period, there could be storms. A huge storm could come along and blow the top off your tree.”
That’s like a stock market crash and straight away they can see. “What would you do when there’s a storm? Do you go off and chop all the trees down?” No, you don’t. You just let your tree grow back and it will always grow back bigger and stronger. They’re very robust. And that’s exactly what happens with the stock market.
And at the time shortly after that, we had the pandemic hit. So we actually showed them the stock market chart and saw the big dropoff of the stock market. We were like “look, we’re just going through a storm. All your trees are now smaller than they once were but we’re not going to touch them. We’re just going to let them grow back.” And luckily, they’ve grown back quite bigger and stronger than they were before.
That kind of example… the virus and the pandemic helped us talk a little bit about why that happens. We said using the McDonald’s example, because everyone got told to stay at home, less people were going to go and buy those burgers. Therefore, McDonald’s is making less money, but as the pandemic gets a little bit controlled and people can go out and buy burgers or McDonald’s starts to deliver, McDonald’s are going to start making more money and they’re going to grow again and that’s kind of what happened and so they got this kind of real world example plus this visualization together is such an easy way for them to understand. Oh, okay. That’s what’s happening in investment.
I know kids aren’t taught this stuff and yeah, it doesn’t have to be complex. If a seven and nine year old can really grasp that… and it doesn’t have to go down to the details. I haven’t used acronyms and all the capital gains tax and dividends and stuff like that. You don’t need to really go into all those nuances, just the basics and it gives them such an advantage.
Andrew: They can’t be looking at candlestick charts and red means bad, green means good, but you did show her the chart right off when the pandemic hits and it’s all going down and that’s when there’s a thunderstorm.
Will: Yeah. So it’s very funny. They look at the shots and we don’t do it very often. That’s again, one of my big issues is you should not look at it very often at all. We had a funny conversation. I was on my phone and my youngest daughter came up and… the stock market chart and it was red. So it just gone down and I was like “oh, that’s good. Because it means that we can plant more seeds and more trees and it’s cheaper” and she’s like “Dad, but it’s red and you seem happy, but when it was green the other day, you were really happy as well because that meant we’ve made money. So are you happy if it’s red or green?”
I’m like “yes!” and I was like as soon as you have that mentality, that if the stock market goes down, brilliant, you can just put some more in. After the storm, the ground is ripe for investing more and it has gone up great. Your money’s going up and if you have this positive mindset and have this long-term view, it gets rid of all those fears that a lot of people have that the stock market’s gone down and it’s the end of the world and it’s in my mind, you need to have the opposite mindset and see it as opportunity.
Andrew: Earlier on, you mentioned that one of the biggest challenges or barriers or obstacles is the parents’ knowledge gap or they might be facing financial stress in their own life and I think that’s a good point because while children pick up financial habits from their parents, it really starts from the parents themselves. You shared a lot about how we can teach children financial education, but it’s your internal barriers as parents that’s the biggest. Let’s dig a little deeper into that. How do you overcome your own biases, assumptions… all the false assumptions you have about money such that you can impart financial knowledge to your children?
Will: Yeah. It’s a really tricky question because everyone’s gonna have a slightly different view, but what has been really good as people have to say, I want my… even if you’re feeling financial stress, all parents will say “I don’t want that for my children and I want to do something about it.” The great thing about what I’ve been doing is that people are using their children as a catalyst to change that mindset, to change their motivation for learning about money and we all need that. I think we need that catalyst because… and the same for everything.
I know people who’ve known that they’ve been unhealthy for a long time, but yet haven’t done anything about it and then there’s been… either they’ve had a health scare or they start thinking about their children. That causes them to change.
And so for parents who are financially uncertain or have a knowledge gap or are a bit worried, use your children as this catalyst to not just change their lives, but to change yours because money is not a one-off lesson. You don’t sit down, give your children one lesson and suddenly they’re going to be the next Warren Buffett. It’s all about habits and continual reinforcement.
What they need is good role models and so therefore parents saying “today is going to be the day I’m going to teach my kids about money” and I hope this podcast is that catalyst, that motivation. Then use that, not just for your kids, but for yourself and say “I’m going to be a good role model. I might have not been good at spending before, I might have overspent, but I want to show my kids that I can start saving a little bit every time I get some money. So I’m going to start saving with my children. I’m going to start investing with my kids. I’m going to start learning about investing so I can invest their money so it grows and I’m going to start investing some of mine as well.”
I remember when we had a talk before, I shared a story of a friend who said “what are you doing for your children in terms of investing?” I told them what I was doing and I said to them “if you want to do the same thing, here is how you do it” and I went through a couple of steps and it was very quick. They’d set up an investment account for their kids but as they were already doing that for their kids, they’d set up an investment account for themselves and they started putting a little bit of money in there and they continued to do that and then they saw it wasn’t hard and they saw the money growing and they started to put a little bit more and more. And now, they just saved a good part of their salaries every year and it was all because they were doing it for their kids and they just jumped on.
Before that… because other people said “how have you… got my friend to start saving? He was always terrible with money.” It was all about not making it about them because they are spending because they’re adults and they’ve got holidays to spend for, the houses and the cars and all these other things that we as adults have as short term responsibilities and where our money goes. It’s really hard for adults to see into the future and think about the future. It’s too hard work. We’ve got too much going on today but we’re very good at thinking about our kids’ futures.
As soon as I made talking about money about his kid’s future, he started doing the right actions and as a result, he benefited because he just said “now I’m doing the admin, I might as well double up and do my own admin as well” and it’s been kind of life-changing for them and it was all using the kids as a catalyst.
So yeah, all parents who are listening, who are a bit worried, just start thinking what you can do for your kids and then do it for yourself at the same time and you’ll see great results.
Andrew: Yeah, because you mentioned patience and a lot of values and things that… for financial education, and sometimes it’s the parents who need to learn. Reaching out to the children, it’s like a Trojan horse for teaching the parents actually.
Will: Exactly. That’s what I love about the sort of feedback that I get and about the books I’ve written. Parents are sitting down, reading it with their kids and the feedback has been great. We’ve had some great conversations, but also I’ve learned a lot of different things… mostly like the investing pieces and about debts and a bit about gambling and scams as well.
Parents are saying “oh, why is this not taught in schools? Why was I not taught this as a child? I wish I’d have known this.” And yeah, no, it’s definitely been that kind of… and that’s what I wanted. I wanted parents to feel more… A way of teaching them in a non-condescending, patronizing way, because I think that’s another fear that a lot of parents have. They don’t want to go on courses or ask questions when those experts are around, because they’re a bit worried that it’s… “oh, I might sound stupid because whilst I haven’t been trained and everyone else seems to know what they’re doing because they have nice cars etc.”
But most of those people have no idea as well. They are just using credit cards so it’s just trying to use a way of saying “here’s an easy way of doing it and you don’t have to worry about feeling silly because it’s a story and ultimately, it’s there to help children as well.” Don’t feel frightened by this at all.
Andrew: Okay. Talk about credit cards. You don’t even see the physical money being transferred, right? Money has taken on different forms nowadays. Talking about technology, there are reports in Singapore about… the most recent one I read was a teenager who spent five figures on some game with in-app purchases and she was using her dad’s account and she was buying stuff. It snowballed to five figures but there are cases of children who’s done that as well as somehow the lack of parental controls on that app caused them to start overspending. They might not even know that they’re spending real money.
You got a child playing your games on your app, on their fathers’ phones. So how do you teach money, especially in this day and age where there’s technology, there’s social media? Is it harder?
Will: It’s incredibly hard because essentially money’s becoming invisible and for us growing up, we’ve had money and we played with money. We see money and transacted using money whereas a lot of children today might not have had that opportunity. So money is this kind of concept. It doesn’t feel tangible.
And as you just said then, when they’re playing some games on their apps or phones or wherever it is, in the game they might have paid to go into a shop or something like that. But it’s all in that game, so it’s just pressing a button, but then they see that their parents got similar kinds of apps and it’s got the same kind of button and they’re just pressing it and it’s very hard to tell the difference. That’s just the same. And I’ve heard of stories of children spending thousands and they just say “oh, I thought it was just game money. I thought it was like Monopoly money.” They didn’t think it was real.
What happens now is that we as parents, we have to… all parents, guardians have to be more proactive than ever to teach children about money. We have to teach them what it is, that a transaction… when they press this button or when Mummy and Daddy put their phones and it goes beep at the shops or their credit cards or their watches, a transaction is happening.
Without parents or anyone teaching them that, they’re not going to know. We’ve grown up and we’ve gone through the process of seeing what’s happening, whereas children aren’t. And so it’s all just beeps and cards and no, it’s not visible.
We have to go back to… what lessons did we learn from using cash? Okay, we learnt that once you give some money over and spend it, you don’t get that money back. We learn that there’s a transaction because I hand over the money and they hand me something back whereas at the moment, if you just beep something, it doesn’t feel like a transaction. You’re just waving your card and someone gives you something. It doesn’t feel like an exchange, whereas with cash it did and cash feels real. It feels like you’ve got paper and you give that away and it’s tangible.
So we need to be so much more proactive in filling in those gaps that were there, which were filled before by cash. We have to do it as parents. That means when we go to the shops, we can’t just not talk to our kids about money. If you’re buying that, that means money is going from my bank account to the shop’s account. The transaction is happening. I’m not just waving my card and suddenly we get given all this free stuff. So that’s one way. And so whenever… at this point in time, when people still do have cash, if you have children, I strongly recommend that you use cash or give your children cash just to help get those lessons.
The technology is fantastic. It makes our lives convenient but it takes away learning lessons. And also, technology means that we spend more and that’s one of… we’re already in a consumer world and instant gratification with deliveries being expected the same day or the next day and technology has facilitated…
Andrew: What should the conversation be like? Because with investing, you can use McDonald’s as an analogy and with saving money, you can use a tree as a visualization technique, but with credit cards, it’s just digits on a screen. I can’t be showing them the digits on a piece on my screens, on my phone and this is money transferring from me to the merchants. How does the conversation go?
Will: I really recommend that this is one of the topics where you try and use real money. You actually sit down with them. It doesn’t have to be in a shop. It can be at home and get some real money out and say “this is what happens when we go to the shops” and you can… it’s just like a kind of role play. Being the shopkeeper, you say that “you give me this money and I’ll give you something else.”
It just shows them that this is what’s happening. This is a transaction and here’s the money and I’ve got lots of these bank notes, but I don’t carry them around. I carry them on this card. When I go to the shops and I beep my card, some of that money goes from my card and you can show them with the notes and pass it over to them in exchange rather than trying to use an analogy or stories.
I find for that one, it’s best to be as real world as possible so they can actually see this is a bank note. This is what we used to have. Mummy and Daddy used to have lots of them in their purse or wallet in smaller dominations and we used to hand them over. For convenience, now we don’t use these cards. So yeah, this one’s not a gimmick, not an analogy or a story. This is a real life one. That will be my recommendation for how can you teach kids what’s going on? Tell them exactly what’s going on.
Andrew: Okay, a physical exercise that you do with them. When we talk about technology, we talk about credit cards. There’s also social media and I know it goes back to the values, the very first point that you make about patience, but with instant gratification and FOMO (Fear of Missing Out) and everything they see on social media, your friends are having all of this good stuff and you might want to get some of them as well.
As your children go older, how do you get them to go back to the values that you have been teaching them all this while? How do you reinforce it?
Will: Yeah, nice… really good question because one of the biggest challenges is this kind of social sort of peer pressure for children, especially teenager children. When we were growing up, we always compare ourselves to our friends but majority of cases, your friends and your friendship group are in the same sort of social, economical kind of place as your family and so, whilst you might compare yourself, it wasn’t a huge amount of difference whereas children today aren’t just comparing themselves to their friends. They’re comparing themselves to essentially the whole world on social media and that just increases that pressure to want to keep up with the Joneses.
And so we have that again, just do a little bit more than what we had to do in the past. The way in which I talk to my daughters about this is two things. One is about the values. What do we spend our money on and why? [indiscernible] Like going on the holidays, we… again, we’ve taken time off full-time work to spend time with our family and that’s all we want to save our money.
While we haven’t got the biggest house compared to everyone at that school and that’s fine. We are happy because we’ve got our money and we’re using our money to make sure that we can go on valleys. If we bought a bigger house, we’d go on less holidays and Mummy and Daddy would have to go back to corporate work and not see our kids as much and so, we are choosing to make that decision.
I think having those kinds of conversations about why your family spends money on the things that it does and why it doesn’t can really help kids understand okay, it’s not just everyone can have everything because that’s not the case and sometimes, you don’t want to spend.
But the other one and this is a really big one is to help kids understand what they see from other people isn’t what it really is. This is one of the big stories that I’ve written about a number of times, essentially rich versus wealthy.
I want my kids and all kids to really appreciate this because in the real world, what we see on social media is what I call rich. It’s people who have got nice clothes and they go on… they talk about holidays and they’re always in the sunshine and hotels etc and we’re always “oh, I want that life. That’s amazing. It looks fantastic.”
But we don’t know what goes on behind that. We don’t know if they got any savings or using debt for doing that. What we need to do is rather than just say “that’s just rubbish”, don’t do that… is to try and give them an alternative and this is where I’ve been doing a lot of work and hence the book Grandpa’s Fortune Fables. What Grandpa’s all about is about being wealthy and this is about looking after your money.
So we essentially… is saying you might not have the most flamboyant lifestyle and clothes etc, if you have savings and investments and you’re growing this kind of financial forest like I mentioned, then you have this security and you can then take time off work because you know that you’ve got your forest and it’s producing seeds while you sleep so you get money whilst you sleep. If things go wrong, you can always rely on that forest.
Those… the people who have the financial security are the ones who are going to be financially healthy and wealthy but you don’t see them around. They’re not showing off their wealth so you don’t know they’re wealthy. That’s what… with the other personal finance book The Millionaire Next Door. It’s all about you just don’t know who’s got the money and most of the people who have lots of money and looking after it, you probably don’t know, you don’t see them on social media. We need to give children an insight to this kind of wealthy and that’s what I have in my book.
I’ve got these two characters. I got Richie Raccoon, who finds gold and he’s very rich and has nice clothes. Then you’ve got Grandpa who’s just sitting in his forest having a nice time, relax time. But what goes a bit wrong for Richie Raccoon and he loses all he has, but Grandpa’s there to look after him and teach him the ways.
Once children see both characters, then they can say “which ones would you rather be like”, and most of them would choose to be wealthy than rich, but without putting the two there, they’re only ever going to see rich and want to be rich. That’s why it’s so important that we say, actually, there’s these other people you don’t see around and these are the ones who are secure and happy and have opportunities, have freedom. Hopefully, they’ll start to aspire to do that and once you have that, you then don’t compare yourselves to other people.
Because for example, I now see people with nice things, but I’d go “do they have any savings?” They might not and we know a lot of people are financing a lot of the… sort of more radical spending or using debt. And so you go “that’s fine. They can have that, but I don’t want debt. I want savings” and then once you think about that, you stop comparing yourself to those people.
Andrew: Yeah, those are good tips for the kids and actually good tips for the adults as well.
Will: Thank you.
Andrew: Thank you. Thank you, Will.
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What’s your biggest failure, financial or otherwise and what did you learn from it?
My biggest financial failure was probably buying my first car and not really enjoying it. I wish I had saved a little bit longer because it was a lot of money. I just wanted a car. I wish I had just saved for a little bit longer and had more patience. Bought the car, so I didn’t really appreciate it. As soon as I bought the first car, I was like “I really don’t want this car” and I knew I was going to have to go and buy another car and that was just going to be a waste of money. So that was definitely my biggest failure. I wish I would have been more patient.
What’s the biggest challenge in your life right now and how are you tackling it?
Will: My biggest challenge at the moment is that I’ve really… so I’m in this perfect place at the moment, being in Vietnam and loving it but for my kids, for my kids’ education, we have to go probably to somewhere else to live to get the schooling that we want for them. And so, my challenge is to see how… whereabouts in the world I want to live that’s going to make us happy but give the kids great schooling as well.
Andrew: So it’s about the children, giving the best to our children.
Andrew: If you could be remembered for one thing, what would it be?
Will: Making a difference to the financial future of the next generation.
Andrew: Alright, thank you Will.
Will: Thank you.
Andrew: Thank you. Okay. Thank you. All right, it’s time to enjoy your weekend with your family.
Will: Thank you so much.
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Despite the name ‘Islamic finance’, it’s not just for Muslims! What is the Islamic view on money and what are some values of Islamic finance that we can learn and apply in our own personal finance?
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What shaped the way YOU feel about money? Don’t have an answer? Don’t worry!
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