 think tech Hawaii civil engagement lives here boys and girls and children of all ages we are back with the Prince of investment right here live on think tech Hawaii and I'm your host the Prince of investing Prince that's coming to you guys all the way live from a beautiful state of Denver, Colorado and we've been broadcasted out a beautiful state of Hollywood Hawaii but as always don't forget to hit that like subscribe comment and share button and stay tuned for more as always I don't have a time I definitely you guys and girls will have our time so we're going to jump straight into it so on this video as you can see in the description box I'm going to give you at least five topics of five ways of five tips of how to help or create a budget or teacher kids about budgeting the reason why budgeting is so important first I want to talk about an importance the reason why so important is if you can't maintain a budget you can't invest of course we love to invest of course we love to put money in places and things like that but we first have to maintain and understand a simple budget we all know this as an adult if you're not an adult yet you listen to the show yes as you make your money you're going to have bills you're going to have expenses you will have once needs and desires right but with that with that being said in order for you to invest you will have to have some type of budget for example I make $500 I have a pay for a light water gas insurance whatever and then I'm going to what you call it and then I want to put money to the side so I'm in a great one but to say that first pay yourself first before you pay your bills so for a prime example most who say I don't have the money or I can't say because I got too many bills pay by self first I think that was in the richest man in Babylon as well so first let's go down to my handy-dandy list the first thing is set an example one set the example and do it together that the example with your child for prime example say hey like take it with me my son Wesley hey listen I have a clear jar these are my savings this is mom and dad savings Wesley this is your jar for your savings when we get paid they watch me say and then he puts money to his jar so he says so we're doing it together and he's actually getting a chance to see us with a clear jar a clear jar you can see how much money is building and accumulating over time so when he sees mom and dad doing it and maybe coming to it may turn into some type of competition of hey I want I want my jar to be more I want my jar to be bigger or anything like something like that the second thing is why you're doing that while you guys are working together create the budget together sit down and say hey this is what we're going to do this XYZ I'm going to save $2 you're going to save $1 it doesn't have to be your real savings plan but we're kind of setting up something to where they know the importance of a savings plan right so that's the first thing you can do get a clear jar do it together match each other right number two make them work for their money I know we all think about allowance and things like that but for prime example when they you ask them to go outside and say hey I want you to clean the car if you watch the car this weekend I'll give you five bucks if you outside your daily chores not just giving them money just because they're who they are when they do some a little extra you do a little extra hey sweep off the driveway I give you you know a dollar to a driveway Wesley come down to my office clean my office you know I will ask them hey I want you to clean my office how much you gonna charge me you know you say five cent something like that because we don't understand all the way and I take pre-advantage he would say I do it there five cent like deal we got a deal we shake on it he cleans my office I give him these five cents so he sees where this money is coming from he sees that I have to do something I have to do something in order to get this money so sometimes parents love to give allowance if you want to give an allowance great been an allowance but I want you to also think of the concept of you know working for making a work for now he knows I had to do something in order to get this money because we all know we become an adult the money's not going to be handed to you not it is not for some of us I'm not the majority of us and if it is handed to you contact me because I like to have handed to me too all right so let's jump into number three now when we do this we want to show them the cost of stuff when they want things I want them to see the cost of it for prime example firstly he doesn't really understand how much money is equals to what so number three let him see the cost hey you offered to clean my office for five cents but what you're asking for you were like the ice cream ice cream a couple ice cream cost two dollars you don't have enough money so now he understands the money that I made from sending my dad's office it's not enough to buy ice cream so now he has to ask for more money he understands that hey I have to ask for more money I have to save up to get something or whatever case may be alright so now he knows hey maybe I should ask for two dollars with two dollars I can buy ice cream I mean I asked for three dollars because I can save a dollar and have some ice cream those type of things so I'm teaching him how to negotiate and you know I'm not going to tell him I want to understand that people will take advantage of me so you have to be smart enough to not be taking advantage of and be responsible and be responsible as well so let him see how much it costs don't just say hey well I just buy you this they think money falls out of the sky I wanted to understand hey this how much your work and what labor's off your cost great way to learn about budgeting another thing number four the jars right this is when you place the jars together and what I mean by you place the jars together is a prime example just don't have one jar for safe we all know that's what you can do I had a deep conversation today with some students at Gateway High School thank you for Gateway High School for bringing me in and when we spoke about was if you continue to say right now what is the national high on a savings account it's roughly around about 1.25 according to bankrate.com the last time I checked maybe a little higher maybe a little lower but I'm pretty sure this in that ballpark I know my account is not getting 0.25 on a savings account right so you have to understand well that's that's not the whole picture you just can't say you must do something else with your money first no matter if you're an adult you have some former bills whether it's a phone bill a card note mortgage rent anything you have some former bills so first we when he's earned his money they must understand I was first paid my bills right to when I first pay your bills for first day for yourself or pay your bills either way some people say hey you know I want to get my savings off the top some people say hey pay your bills I want my son to know hey you must pay your bills because if you don't pay your bills it goes on to your credit and if you don't pay you know if your credit is messed up not a fix you get a job or it affects you for business loans get in the house car anything else like that right so bad juju so first you must understand as an adult you must pay bills second you must save some money third you must invest you have to learn to invest because like I was the point I was getting at savings account getting about point two zero or something like that but you got you have to look at them same notion that with the savings account being so low you have to also understand inflation inflation you don't see inflation so people don't think about it right and I told you know you got to think about purchasing power if I was right now here in 2018 to dig a hole in my backyard put a thousand dollars in my backyard let it sit there for 20 years 20 years later how much money would be there a thousand dollars right then let's say 20 years from now and 20 was that 2038 and 2038 I go up to the store go to buy stuff do you think I'm going to be able to buy more or less probably less right the reason why I'm going to be able to buy less it's because of inflation the value of money continues to fall the price of business services continue to go up but the price of services continues to go up up up you know I go over I can't buy the things I used to buy if you take $200 today and you take $200 20 years ago both of went into a grocery store both of money still spend you're going to be to buy less and less and less and you're buying less and less and less due to inflation now what is inflation percentage how fast is inflation move right now they try to maintain the federal reserve they want to maintain the federal inflation between two to three percent something like that last year 2017 I think it was about 2% so when you're looking at inflation moving at that type of rate what people are trying to do they're trying to keep inflation to be modernized people don't think about it because nobody knocks on your door and say hey hey let me have 2% this year because of inflation you can't really see it you know you just go to a store and things cost a little bit more and a little bit more and a little bit more you don't understand why so that's the thing you must understand is with inflation now you must beat it you must match it so you can't just save your money you just can't pay your bills and save and then you're going to get ahead because the current interest rates decided we're in now is not favorable for a saver you're saving 2% but then you're saving and getting 20 25 cent but then also families inflation is coming in take $2 every year you have a negative point 75 right so you can't win that way you must put your money somewhere invested somehow to where you can at least match or beat inflation you know you have you know maybe could be cryptocurrency maybe it could be you know maybe to be cryptocurrency to stop market real estate running out of house and all types of things you can do now the next thing you want to do number five the matching system right you pay out a dollar give the kid a dollar your son your daughter nephew whatever case and do you give my dollars they say hey if you don't spend that dollars you bring me a dollar back next year whatever you got in your savings by the end of the year I'm going to match it by the end of the year if you have $50 and your savings account I'm going to match that $50 it's time to get them in the notion of you guys working together and also getting them prepared for it they go into the employee world and they work somewhere well we have the government matching a lot of us have matching systems but a lot of us don't know how to take advantage of the matching systems we don't know how to take advantage of the matching systems because we don't understand we don't even know what it is we don't know the power of it we don't understand oh every dollar I put in they're going to match but then they're going to invest some people don't know and they don't take advantage of it so by you matching them end of the year whatever you have in that jar I'm going to double it you got a hundred dollars in there I'm going to put a hundred dollars second you're giving them a reward you're giving something to them for them looking forward to it right and you're here and I know some people may say well you just giving them money but what I'm trying to do is mimic what interest is teaching what interest is hey look I'm going to give you 50% or whatever you was able to say whatever you say by the end of year what's in this jar jar will count it if you have a hundred dollars I'm going to give you fifty dollars you have a hundred dollars I want to give you a hundred dollars whatever thing you're doing you want to reward them and say hey this is what is interest calls now you're getting into the next lesson which is very important which is now you're able to teach them the value of compounded interest for example let's say one year they save a hundred dollars you count it out you say the hundred dollars say this is what I'm going to do I'm going to match you with the hundred dollars boom now they have two hundred dollars let's say by the end of next year they was able to say fifty dollars now they have two hundred and fifty dollars now you're going to say hey look last year you had a hundred dollars worth of interest that I'm going to pay you interest on top of again and now they're watching their money grow you know yes we didn't throw money into an account and buy a stock but they don't see it but when they send their money physically grow we're teaching them and we're showing them hey look boom boom boom your money is particularly growing right your money is particularly growing your money is getting growing mom and dad is helping you out you collected interest so it's hey the more money you put in this jar the more money mom and dad put in this jar so when they get older they understand the more money I put into my bank account or the more money I invest the more money that grows aka dividends aka interest aka compounding interest you want to let them see and understand and know the power of compounding interest right and that's the way to do it so let's go let's do a recap the first one set an example and do it together set an example do it with them just don't say hey this is your piggy bank whatever it gets great they have a piggy bank but make it a clear jar so they can see their money growing to mom and dad has one too this is mom and dad saving they see mom and dad saving in their big clear jar that's you know your son daughter niece and nephew whatever the case can be they're doing as well so you set in an example and you're telling them hey five dollars a week or whatever the case can be this is what we put into our jar they're doing it you're doing it together they're building the habit because they say I always saw my mom and dad do it I always did it things like that that's step one number two an allowance flash work some people pay their parents some people pay their kids an allowance so I'm paying them by work once they do that baseline chores let them understand hey she's not going to pay you just for existing you have to do something for your money pay the one in the house so as you pay them hey as you clean the office as you clean our room as you do whatever the case will be I'm going to pay as that person is being paid or as they are being paid you turn around as they're being paid you they can able they can be able to save right they know I had to do something in order to earn this money I just didn't just wake up and boom you just dropped the money my piggy right I had to clean the office in order to get this money right so panning allowance three kind of piggyback all once using the clear jars and having stepped jars not just one big savings jar but let them know in life there's more tool than just saving one you got to pay your bills because you have to pay to live jar number two this is your savings jar number three this is your investing jar because we just went over you just can't save your way to invest you have to set back you have to pay your you have to invest your money some type of way so that's three ways that's number three number four let me know how much stuff costs right now I'm trying to teach Wesley the value of money he doesn't really understand you know how much money whatever cost I say what you want to keep clean my room you want to clean it for five cents he cleans it he doesn't really understand but let him see hey you clean my room for five cents but this ice cream costs two dollars you don't have enough money you have to save up for or you have to make more money you have to maybe clean more things you have to do more things in order to get this let him see the cost of money let him go to renegotiate his contract his verbal contract to see can he negotiate for more money and it lets him see wow five 10 is not that valuable because I can't even get ice cream with it you must understand it now he understand how much things cost and what he had to do to get the money number five match them match them with what they're doing hey maybe it'd be a 10 percent match 50 percent match 20 percent match maybe you match them monthly but you want them to understand the concept of interest when I put money in this jar I get interest for a prime example you may have a matching plan in a 401k uh your bank give you interest on a savings account a cd or a bond or stock page dividends you want to let them know by saving you earn more money you can match them at the end of the year hey in your piggy bank we count all the money you've got 50 dollars boom here's another 50 dollars now you have 100 dollars and when you're teaching them when you're matching them every year like that you're showing them the power of compounded interest in the example we use they say 50 dollars you add in 50 dollars they now have 100 make sure let's say in that same pile they have 110 dollars now they're being matched on 110 because 50 dollars of that is already interest so now they're making money off of the interest to the powerful thing called compounded interest aka my money is making money right so those are the five things the five things set an example uh paying with an allowance of work the three different jars four uh how much stuff costs five match them match them doing it all together and those are five good tips on teaching the kids managing budget now we know how to manage the money now they have a possibility and the opportunity to be able to invest because if you can't manage the money most people don't have the money to invest because they don't they don't know how to manage that for a month so those are five ways to teach your kids how to do it five teaching my hand that's five ways to how to do it but as always i'm going to go ahead and close out the show i want to thank you guys but tune in as always my name is prince dykes every every week biweekly or check me out on the investor show on youtube facebook instagram twitter i heart radio all those type of things follow the investor show once again until the next video podcast cartoon or whatever you see me do crazy around the globe please be safe i'm out and thank you