Okay, I am your family shrink, I'm not your financial adviser but I've got some
ideas about how to teach kids about money.
Money makes the world go round,
right? Well I don't know if it's money that makes the world go round but that's
that's a common saying and it's something that we have to deal with in
our world. How do we teach our kids about money?
I think we're getting ahead of ourselves. We need to talk first about value so
let's consider something for example, how about this candy bar? Alright, what is
it worth? What is its value? And maybe those are separate questions but think
about that for a moment. What's it worth? Now when I ask people in a presentation
or a training that I'm doing or here at my office, I get answers that vary a
little bit but they're usually close to about a dollar. I have a dollars worth of
quarters here. Okay, so let's see how this transaction might work. The candy bar
is the item that will be involved in the transaction. Any transaction has at least
two parties. So let's on this side, we'll put the seller, okay. This is the person
who's holding the candy bar and wants to transfer it to someone else so on this
side is the buyer. The buyer is going to receive the candy bar from the seller
now what gets traded for the candy bar? The money. So technically, the money is
starting in this hand, the candy bar is starting in this hand. Seller, buyer.
They're both holding something so think about if you were the buyer, okay. You're
feeling the munchies, you go into the convenience store, you see the candy bar
over there sitting on the shelf, you get a dollar in your hand
or your pocket. What do you do? Duh, you trade, right? So you say, "Hey. I will give
you this money for that candy bar." So these two things get to trade hands. See
how that works? Now nothing was created or destroyed, everything already existed
before this transaction but something just traded hands. Now I want you to
think about this. In terms of value, what is this worth? Now it begs a question but
I need to illuminate the obvious to you. To whom? What is it worth to whom? So you
in this example are the buyer, you're the one that ends up with the candy bar,
right? What did you have to start with? You had a dollar? What is this candy bar
worth to you? You paid a dollar for it. Okay, most common answer is it's worth a
dollar. That is the most common incorrect answer. It's not worth a dollar. How do we
know that? It's evidenced by your own behavior. You have a dollar,
there was a Snickers on the other side, you compared them. Which one did you want
more? The candy bar. So obviously, this candy bar is worth more to you than this
dollar. Makes sense? As evidenced by your own behavior, you traded and there was no
force involved okay. That's an important assumption. What was this candy bar worth
to the seller? Notice the seller have the same choice to make, there's candy bar,
there's a dollar, it's the same candy bar on the same dollar. Which one did the
seller want more? The dollar. So obviously, the Snickers was worth less
than a dollar to the seller because he wanted to trade as well so by his own
behavior, it's worth less. A dollar is the only incorrect answer
here. It's not worth a dollar to anybody. You think it's worth more, he thinks it's
worth less. It'd be kind of like going to the grocery store. We do this all the
time. Pretend that you go down to the grocery store, you pull a box of cereal
off of the shelf, you see the price says, five bucks. You're like, five bucks? This
isn't worth five bucks. You take it upfront, you slam it down on the counter,
this is not worth five bucks. The clerk looks at it, I agree, it's not worth five
bucks. You give him five bucks, he gives you the cereal, everybody's happy, it's
not worth five bucks to anybody, it's worth more to you, less to him. You see
where we're going? This really hit home for me when one of my financial advisors
and mentors shared with me an example of this very transaction. He was giving a
seminar and he asked the audience, does anybody have a candy bar that I can I
can buy basically to demonstrate this this particular transaction, what we're
talking about here today on this video, and this lady came up she had one, okay,
yeah, I got one. He said, "Can I buy that from you?" You know how much he paid for
this? Just guess. Yeah, a buck, right? That's the most common guess. No, more. Five bucks?
No. Ten bucks? No. Keep going. 20? No. 50? No. $100. Okay, so he's holding the
hundred bucks, she's holding the candy bar, they trade. Who won? Now you might be
thinking, wow, she got a hundred bucks for that candy bar. Yes, she did. What was this
candy bar worth to my friend who bought it? As evidenced by his own behavior, he
chose this over that. It's worth more than a hundred bucks to him. Can you wrap
your head around that for a minute? How much is the same candy bar worth? Same
transaction to the lady who sold it to him. Obviously less, probably a lot less
than a hundred bucks. Who won? They both won.
If you can wrap your head around that for just a minute. They both won. He
told me after the seminar. He said, "Paul. I was prepared to pay far more than that. I
got a really good deal." What? He could have walked down to the hotel gift shop
and purchased the same candy bar for probably a buck and a half. It was worth
far more to him. Why? Well he knew something that the rest of the room
didn't know and quite frankly, he probably made a million dollars off of
that but that's not what we're here to talk about today. Understand that the
money is not the value, the money is the receipt for the value. Now why is this
important as we teach our kids? It's easy for them to get the misguided notion
that it's the money that's valuable, this is the valuable stuff but quite frankly,
it's not. Look at this one for example, what could you use this for? Well
not much actually except in trade. We've agreed that this represents value, it's
not value, I don't know unless you run out of toilet paper, there's not a
lot that you could use this for except in trade.
So we trade this for something of value but think about the money as a
receipt for value and then this makes a whole lot more sense. Why is this
important? Because the only moral reason that anyone would ever give you this is
because you provided for them something of value, either a product or a service,
something that they value more than their money and then the trade is a win
on both sides. The money is simply the receipt, you're not even going to keep the
money, are you? No, you're going to go trade it for
something that you value and you're eager to trade it for something that you
value more than the money. I think that is probably the most important thing
that we can teach our kids about money. It's not the money that's valuable. Do
you want money? Well not really. You want what the money
can get for you so to get clear about money being a receipt for value then if
you need more money or want more money, the answer is always the same.
Create more value for more people. As you create the value, the money flows in as a
receipt. What a service that would be to our kids if we can actually teach them
where the real value is. It's in the creation of value for other people. The
money comes in as a receipt. So this is one of the best ideas that I've heard in
recent times about teaching kids about money. What have you heard?
Would you please share some of your ideas down below? Let's share these ideas
together.