Finance: The Next Generation (Creating A Financial Mini-Me). ⋆ XRAYVSN (2024)

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When I was growing up I really had no exposure to any financial advice.

Sure as a son of a physician I knew my family had money but that was the extent of it.

Navigating through adolescence without really wanting for much, as I typically got everything I wanted, I never witnessed firsthand the need for savings.

Sadly my father died when I was 14, before any financial knowledge he possessed could be passed on to me.

Therefore my financial naivete carried on with me through my early adulthood where I proceeded to make every financial mistake in the book.

My trial by fire method of learning finance via the school of hard knocks has allowed me to finally amass a decent amount of financial knowledge, enough to supply almost 3 years worth of blogging material.

Creating a Financial Mini-Me.

As a father to a 15 year old daughter, I did not want my daughter to follow in my footsteps and make the same foolish financial mistakes I made decades ago.

I would consider myself a failure if I could not pass along some of this financial knowledge to her now so that she can be better prepared financially when she finally leaves the nest.

This is a lot easier said than done as the eyes of a teenager typically glaze over the moment you start speaking about passive income, compound interest, equities, and bonds.

I therefore had to strategically pick my moments to drop some financial knowledge.

It started casually when she was in 6th grade, during the morning ride when I dropped her off at the school.

I strategically picked this location as my daughter was essentially trapped in a confined space for about 20 minutes with not too much to distract her.

The financial facade.

One of the first tidbits of knowledge I tried to pass along to her was that appearances were not often what they seem.

I mentioned that some of the individuals who have the flashiest cars and mega mansions are often some of the poorest people out there.

She seemed perplexed at first but I went on to explain how the facade of wealth that most people see is a house of cards supported by immense individual debt.

This discussion was directly taken off the pages of the classic book, Millionaire Next Door.

The perpetual money printing machine.

The next financial topic I wanted to pass along to my daughter was one that I learned fairly late in the game, that of passive income.

I really wanted to drive home the importance of passive income to her because this was the concept that truly changed my own financial trajectory.

I gave examples of my real estate syndication portfolio, how much I initially invested in each property, and how much cashflow I was getting from said investments.

I stressed the fact that this money was being made 24/7 and was instrumental for me to be able to cut back the amount of time I work currently and also allow me to retire early when I chose to.

Once you have money working for you, rather than the other way around, you truly can achieve financial freedom.

The 8th Wonder Of the World.

Albert Einstein famously said that, “Compound interest is the 8th wonder of the world. He who understands it earns it; He who doesn’t, pays it.”

Given our incredibly low interest rate environment, I knew that my daughter would not be impressed with the yields she would be getting if she put her money in a traditional bank.

I therefore had to devise a way to magnify the effects of compound interest in a condensed time period so that she could witness how powerful compound interest could truly be.

So with the traditional banking system failing me, I did what I had to do and created my own bank and gave my daughter a 12% interest rate (don’t worry I outlined steps on how you can create a similar bank for your children with the ability to choose any interest rate you want).

Apparently I achieved the desired outcome as evidenced by the following interaction I had with my daughter:

I truly was beaming when she sent that last line and knew that she grasped the importance of savings.

Of course there have been some hiccups in the journey, with one particular situation coming to mind:

I was in the office and paying my vehicle registration fees online.

The registration card offered a direct website and I filled out all the information and went to pay.

It then informed me there would be a 3% transaction fee for using the service.

I quickly exited the website and just went to my online bank and sent the fee as I have done in the past via BillPay (which is free).

My daughter said, “You are worth how much and you did that just to save a couple of dollars?!?!?”

I told her the reason I was wealthy was because I just don’t throw away money if I don’t have to.

The Future.

My daughter will be turning 16 this October and soon these morning school drop off rides will stop as she will be driving on her own (she already is driving with a learner’s permit).

I do feel that she already has a solid foundation of financial basics that places her decades ahead of me.

I would like to think she will always have a good financial resource in me if anything does arise that she cannot handle on her own as a young adult.

She has witnessed firsthand how I run the finances of the household as I have always been transparent about my income, expenses, and net worth with her.

Who knows, maybe a couple of decades from now I can look forward to reading some blog posts by Xrayvsn Jr.

Note:

If you are in search of financial help, please consider enlisting the service of any of the sponsors of this blog who I feel are part of the “good guys and gals of finance.”

Even a steadfast DIY’er can sometimes gain benefit from the occasional professional input.

-Xrayvsn