← ChooseFI | Financial Independence Podcast
ChooseFI | Financial Independence Podcast
Raising FI‑Minded Kids: What Really Works | 15-Year-Old Rishi Vamdatt | Ep 576
00:58:12
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- [00:00]
A
Hello and welcome to Shoes of I. Today on the show we have Rishi from EZPZ Finance. He's actually 15 years old and he got into personal finance at 6, if you would believe that. And he gives the inception story on the podcast. He started investing at 7 and he created his YouTube channel at 8, and he's put out over a thousand videos now. And while we talk about second generation Fi here as a way that those of us who are a bit older than can teach our kids or maybe nieces or nephews or family friends or whatever, I think Rishi speaks to everyone. He speaks to people who are just getting started with Phi, even though he's 15. I urge you to look past that because he's extraordinarily wise. And what we talk about throughout this episode is really experimentation. And we can experiment teaching our kids, we can experiment teaching folks, family members, et cetera. And frankly, we can experiment teaching ourselves. And I think that mindset is what is going to set you apart and what is going to make this a really successful journey to Fi. I think you're really going to enjoy this episode. And with that, welcome to Choose Fi.
- [01:16]
Before we get started, I keep this podcast entirely ad free for two reasons. First, first, this is a five podcast and I don't want to promote products that I don't want you to buy in the first place. And second, I really like the clean listening experience of a show where you don't have to fast forward ads to keep it ad free. All I ask of you as a listener is the next time you open a travel rewards credit card, go to choosefi.com cards and with that, onto the show.
- [01:44]
Rishi, welcome to ChooseFi. I've been looking forward to this for a while. This should be fun.
- [01:48]
B
Yeah, definitely. Thank you so much for having me, Brad.
- [01:50]
A
Yeah, yeah. Well, thank you for being here. So you are 15 years old. You have a YouTube channel, Easy Peasy Finance, that has Last check, has about 40,000 subscribers, and you've produced content over the last seven years, which is seven plus. You might correct me on that. It's extraordinary. You produce over a thousand videos. And we talk here at Choose a Fy about second generation Fi because, you know, obviously we're. Many of us are a bit older than you, and it's, how do we teach financial independence to the next generation, whoever that next generation is, whether they're teenagers, people getting started in their early 20s with jobs, but how do we. How do we get this to sink in? Because a lot of us didn't get this education when we were growing up, and we want to pass it on. So I think you are the perfect ambassador to. To help teach that next generation. So why don't we start with your money story, because I know it started really, really early. This wasn't like, hey, I just happened upon this at 15. Tell me the inception story.
- [02:54]
B
Yeah. Thank you so much. So my interest in finance and my finance journey started when I was six. My parents were reading a book on personal finance. It was I will teach you to be rich, which is about practical money management. Maybe some of you have also read it, but that's definitely not meant for kids to read to learn concept. It's much more practical application for what adults can do to manage their money in young adults. But even though I was just six at the time, I was still really enamored when I was reading it. And after that, that's what really sparked my interest in personal finance. And actually, based on what I read in that book, when I was seven, my parents had to change the date for one of the flights when we were traveling. And because of that, they were charged a fee to change the date of the flight. But based on something I read in the book, I learned that when you're using a credit card to book the flight, you can actually waive the fee through the credit card. And so I started nagging my parents for a few weeks. Like, during the entire trip, I was telling them, you have to use your credit card. You have to get the money back. And at first, they didn't think that it would actually work, and they just didn't really listen to me. But I kept on nagging them about this, and eventually, once we got back, they decided to try it and called the credit card company, and it actually worked. And they actually did get the feedback from the credit card company, and that was a really big win for me because I was just seven at the time. But that showed me how finance isn't just theories or what you can do. It's actually very practical. And that was a really proud moment for me because I was so young. Just a year ago, I started getting interested in money, and I was already seeing how beneficial it could be into life, and. And I was already seeing how beneficial it could be to have money knowledge. And that's what really helped me continue on my journey. So since then, I got more interested and I learned more. And also when I was seven, I started investing through my dad's brokerage account. And when I started, I was investing in individual stocks because that's kind of the first thing I learned about and I thought that was best. But of course, as I continued to improve my finance knowledge and to learn more, I switched to investing in index funds soon after. But when I was seven, that's when I started investing. And over time, as I saw that my interest in finance was growing, I also realized that there was a real lack of resources for teaching personal finance, especially for kids and beginners. And at that time, especially after saving my parents so much money on the flight cancellation, I was really interested and really invested in in learning more about finance. But I thought that especially other kids and beginners might not be and the resources that were available were mostly geared to adults, so they weren't really interesting. They could use complex language and they weren't really made for beginners to learn. And considering at that time I was interested for over two years, I decided with my parents that I wanted to share my passion for finance. And I thought the best way to do that would be to create a personal finance resource that helped break down the concepts and make it simple and easy for especially kids and beginners to understand. And that's really what informed a lot of my decisions, which was also a challenge when I was starting where I wanted to make sure the videos were especially meant for kids to be able to use and to learn from. So at that time, I had the videos animated and in a question and answer format, which really helped make it more engaging and also made it easier for the kids to to understand what the content was. And I also added lots of visuals and interesting graphics to it to help kids grasp the concepts. And in addition to doing that, I made sure to keep the video short, which was mostly two to three minutes long, because kids have shorter attention spans and that way they're not so bored that they don't learn half the concept. So I really worked on breaking down the concepts in simple language and doing all that to focus on kids and beginners, especially when I was first starting when I was 8 years old. And since then I've continued publishing at least one video every week, no matter what happens, since I feel like consistency is very important both in general and in fi and to me with creating my financial literacy resource. And over time I've definitely learned and grown a lot. And now I also make more practical money management videos which are more about things that young adults and teenagers can do. And since I felt like I've covered most of the important concepts. So now it's things like how teenagers can earn money online or psychological Tricks that your brain is playing on you that stop you from earning money or how Gen Z people can invest things like that that are more practical, money focused. But I still continue with the ideas that I was using earlier with the animated videos by not using complex language, keeping everything concise, using visuals, things like that, to make the videos still engaging and to continue my mission of spreading financial literacy for kids and beginners.
- [07:53]
A
Nice. Yeah, I love it. I'm actually on your YouTube channel right now and I went to the popular and sorted by popular and yeah, the first six or so videos have about 200,000 views each up to 600,000. And you. Yeah, they're these short little videos since literally the most popular one. What is a bank account? A simple explanation for kids and beginners. It's a minute and 43 seconds. And yeah, I mean that, that's just brilliant. What is a debit card? What is a credit card? These are, these are such important little, little nuggets that you can pass along in a minute or two. And yeah, I like that that that's how you started. But it's interesting to see how you've evolved frankly as you've grown up also. Right. Like this made sense. And of course once the content is out there and, and you're a little bit beyond that, I'm curious how you go about learning. So you just talked about the psychological concepts. You talked about much more in depth personal finance as opposed to just simply what is a bank account, what's a debit card, what's a credit card? I'm curious, what are your sources? So it started with Ramit Sethi at six years old, which is incredible and I do want to come back to that. But where do you go for information? Where do you personally go for personal finance info?
- [09:04]
B
So for personal finance info, since I first got interested, I've read a lot of personal finance related magazines and books. And one of the first books that I read after I will teach you to be rich was Blue Chip Kids, which I also think is, was really important in getting me interested. But since then, till now, I also read personal finance magazines like Kiplinger, Fortune, Forbes, things like that, which helped me keep in touch with what's happening now with money, any new developments and also to learn other concepts or new information that can help me. And one other thing that I'm doing is pursuing certified financial planner certification. I've already completed the coursework and earned a certificate in financial planning through nyu. And one important reason I did that was to broaden the scope of my knowledge so I can create more diverse videos. And, and like you were saying, as I'm growing up, I also want to create different types of videos that can reach a wider audience and cover new topics and a lot of the more advanced concepts or more practical concepts. I feel like through my work towards CFP certification, I've learned a lot about that. In these more advanced topics like retirement planning, tax planning, estate planning, different types of accounts, things like that, I've been able to gain a much broader understanding, especially related to the practical money management. And that's been a real, really significant source of my learning as well, in addition to these other resources.
- [10:29]
A
Yeah, that's wonderful. And that's extraordinary that you're 15 years old and going for your CFP that that is worthy of its own 20 minute segment here. But, but you actually answered a better question than I asked, frankly, which was what were the beginning sources of knowledge? So you said blue chip kids, which is one I've never heard of before. So you started with I Will Teach youh To Be Rich by Ramit Sethi, which is an incredibly popular book. I don't know necessarily that a ton of other 6 to 8 year olds are gonna gravitate towards that, but they might, they might, frankly. Uh, a friend of mine named Rob Phelan, who's a great friend of the show, has a book called M Is for Money, which is another one that I recommend. Do you have other sources? Because yeah, like I said, you answered a better question, which is what sources of info do you think really work for other kids, let's say from when you started six up to teenage years?
- [11:25]
B
I'd say, especially compared to when I started, there's definitely more resources now. So in addition to what I was using, there's more things that have been made and also my resource, easy peasy. Finance definitely is something that parents, schools and kids have been using to learn about the financial concept. But one thing that parents might also overlook is what they can do to help teach their kids about personal finance, starting when they're very young. Because most kids develop a lot of their finance related habits or ideas by the time they're only seven. But most people don't learn about money until they're adults or at least until they're near adults. So it's really important to start the financial literacy journey really early, which is something that I'm working toward. And there's a few things that parents can do that are really useful toward this since unfortunately a lot of schools don't teach personal finance. It's really false to the parents to do this. And one really important thing that my parents also did with me is to give their kid an allowance because that allows the kid to manage money on their own and have some freedom. But it also lets them make mistakes early when the stakes are a lot lower. So for example, if a kid wants to buy some new sneakers, then if there's a concert in town like a week later, they won't be able to go because they'll have spent all the money. And those kinds of lessons about how earning money is a lot harder than spending money and about the importance of saving and delayed gratification, those are really important to learn. And it's a lot more powerful when the kids or teenagers learn them through action than just the concepts alone. So that's really important thing parents can do. And that's also something my parents do with me. They gave me an allowance of my age every week and money. So when I was 6, they gave me $6 per week. And that's also something that really helped me. And one other thing parents can do related to an allowance is to match their kids savings similar to a 401k, where to incentivize kids to build these habits of savings that'll help them in the long run. They can match say dollar per dollar. So for the kids savings to incentivize them to build these really good habits. And one more thing that my parents also did with me that's really helpful is to not just talk about finance separately, but to really involve the kids in day to day activities that relate to money and use those as teachable moments. So for example, when we were checking out at a store, my parents would tell me about how we're using money to when I was really young, about how we're using money to buy the things at the store and how credit cards work, and that we're using credit cards or that when we're taking money out of an atm, it isn't just coming out of nowhere, it's coming out of the bank account and money that you earn, things like that. But depending on age, the topics parents can cover are really different. Like for middle school students, for example, parents can talk about investing or about taxes or things like that. But if the kids are older, like in high school, they can involve the kid in creating a household budget, which is also a really important skill that adults unfortunately sometimes lack. But these kinds of involvements in day to day activities related to money are really important to help the kid gain a strong understanding Starting when they're really young. And one last thing that parents can do is to be a good financial role model. Because like I said about kids learning by the time they're seven, even if parents don't actually teach kids financial literacy skills when they're young, just by observing what the parents do and by observing what people around them do, they'll build a lot of beliefs and habits related to money. So by practicing good money skills as well as the other things like giving an allowance and involving day to day activities, parents can take a really good step in making their kids financially literate and helping them in the future when they'll have to manage their own money.
- [15:17]
A
Yeah, yeah. There's so many important things you just said and it's interesting because I have a 17 year old daughter and a now 14 year old daughter and it's been intriguing to see how our financial education has really changed and evolved over the years. And I think you hit on this perfectly is as your kids get older, there are different lessons and there's a different ability for them to get more involved. I love that concept of the household budget, frankly, because I mean my girls, in fairness, I don't know how they could possibly know this, but they have no idea what things cost or even honestly the categories like that there is a water bill and my girls might know this, but many, many kids might not like that there's a water bill that you have to pay a bill for the trash disposal to come every Thursday or whatever it is in your, in your town or your, your location. Like I think just any type of financial awareness that we can pass along as like day to day lessons with it just being as a natural part of life. I think you nailed this. And I've seen this is what I've tried to do so much with my own girls is yeah, just really make it okay to talk about finance, make it okay to talk about money. Right. And I'm curious. So you said, and we did something very similar in terms of giving a dollar figure of allowance for that equated to the age. So when they're 8 years old, they'd get $8. But now we put kind of stipulations on it in the sense that the three buckets, right. The savings, spending and charity. It sounds like your parents did not do that and left that up to you, which frankly I like a lot better because then they can help incentivize behavior by giving you the option to do what you wanted to do. So talk me through how they did that and how you treated, let's say when you were 12 years old and you got $12 every week, how did you think about that?
- [17:18]
B
$12, definitely. The type of allowance and the structure that works best, it depends on the parents and the kids and what they think is best as well as. Like, if parents see how their kids are managing their allowance, they might decide to change it. But for me, what my parents did was they gave me the money, but they didn't like, tell me exactly how to use it. But since I was learning about money and finance, I was really interested in investing, especially because I could see the magical power of compounding and how, as you know, of course, the earlier you start investing, the exponentially more money you'll have by the time you use the money in retirement. So naturally, even when I started investing when I was seven, I wanted to invest all of my allowance starting then, which of course most kids wouldn't want to do that. But for me, that's something that I wanted to do naturally because I was already aware of the importance of investing. And so that's how I've been using my allowance. It's all been going to investing. And another thing, a lot of things happened when I was seven. One more thing was that I decided to stop having birthday parties. Because I saw, like once my parents told me how expensive they were, I thought I wasn't really getting as much enjoyment out of them as they were paying for the parties. So I told them to, instead of paying for parties, to just stop those and use half of the money to buy gifts for me, that I would really enjoy a lot more than just one day of celebration and to actually invest the other half of the money into my investment account for my retirement. And so that way I was getting enjoyment on my birthday. It wasn't like I was just saving everything and just being sad. No, I was still having fun, but I was also being able to invest for my future. And those kinds of decisions, since they didn't tell me exactly how to use the money, it was a lot more organic. And when I made those decisions, I'm sure it helped me a lot more because it was something that I actually decided to do. It's not like they were telling me to do it. And whether it's like that where the kid wants to save more or the kid wants to spend more, the lessons still work. Like I was saying earlier about the kid spending all their money and then not having anything when they want to buy something urgently, those kinds of lessons too, even if it's not Related to spending. Those can be really powerful. Especially since nowadays there's a lot of consumerism and because of all the advertising, people are often tempted to spend a lot more than they should or a lot more than they can afford to. So being able to have strong skills for knowing the difference between needs and wants and being able to make a budget, like you said, that's a really crucial skill. That's important for people that are starting to manage their own money. Those kinds of skills can be built up when the kid's pretty young, through their teenage years, so then when they actually have to manage their own money, they'll be a lot more prepared financially through an allowance.
- [20:11]
A
Yeah, this is really great. And as you're talking about that, not having the parties, I could not help but think about how many billions of dollars are spent on weddings, which is another, I mean, you think about that is literally a five hour party and many people are spending between 20 and $100,000 on a five hour party. I mean, goodness, to think about how much better served you'd be setting up your financial life if you took a portion of that. Sure. Go on a big trip, go on a fancy honeymoon and then take the rest and just save it. I mean, goodness, that. It's obviously outside the scope of what you're talking about, but the point holds.
- [20:49]
B
That's actually something that I was thinking about like when I was first getting interested in money, like when I was around like 6 to 8. That's an idea that I had. And I also told my parents at the time that I didn't want to have a fancy wedding. I'd instead use that on a honeymoon, like you said, to travel and enjoy and then put the rest toward either buying a house or investing. And like you said, that's not something that a lot of people consider. And my parents were also really surprised. But that's something I was thinking similar to birthday parties, but like you said, on a much larger scale. Because that amount of money, especially for a young adult who has a lot of time to let the money grow, that can be really beneficial if they use the money. But of course most people wouldn't want to do that. So it's really about balancing what you want and what makes you happy versus where you're able to cut back and where you're able to save and invest more.
- [21:41]
A
Yes. I love that we're on the same wavelength with that. That's really cool. And yeah, I think again, we're trying to set people up for how do they, how do they Teach their kids or there are going to be many, many teenagers who are listening to this episode. So let's be clear, it's not entirely passing on from one generation to the next, but I think what you and I, to a lesser degree are trying to get across here is it's about lessons. It's about how do you pass along lessons that give people and give children, give them options, right? And give them the ability to make choices. Because everything at the end of the day, it's decision making and trade offs, right? So like, how can you build more of that in. I'm thinking about your party, right? And okay, you said, I'm going to take a hundred dollars. Well, in my mind, okay, a $200 party, I'm just making that up, right? Okay, $100 my parents take and buy gifts and then 100 we're going to invest. But it would be interesting if your parents said, hey, what about for every extra dollar you put from spending to saving will then match a dollar for dollar, right? Like, okay, that might change your answer. And I like what you said. And no, I know you were joking about the I was going to be sad on my birthday. But because you're such an investor, I'm certain you wouldn't have been sad. But nevertheless, that's one of the cool things. The three of you together could have set this up in any way, which is really neat. And, and I think that's what we're trying to get across to people listening, right? Is like you can incentivize behavior, you can try to get your kids to save or frankly sometimes spending money. We both know this spending money is a really important part of financial life, right? Like, there's nobody's advocating save a hundred percent of your income. That is not a good life. It just simply isn't. So. Okay. As you well know, this podcast is about taking action and I always want to get these little tips because people really thrive in them going back to the allowance. Did your parents give you actual tangible cash? And then second to that is if they did or maybe this was on, on a spreadsheet. I'm not sure exactly how, how they gave you the money, but then how did you invest it? Like, and how hands on, did your parents let you, let you be? Did you have the logins to the brokerage account? Did you have to ask your mom or dad to log in? How did you track this? Like, this kind of stuff is really the difference between, oh, it sounds good, I'll let my kid invest too. This is how it's actually done, definitely.
- [24:04]
B
The specifics are really important if you want to put it into action. So like for me personally, when I was first getting an allowance, they did give it to me in cash. But soon after I decided I wanted to invest everything. So at that point it really didn't make sense to give me the money and then invest it. So I invested through my dad's brokerage account and I kept track of everything in a spreadsheet that he made and he kept updating based on what I wanted to do. So for example, when I first started, I wanted to invest in individual stocks. So I looked at a list of companies that he thought were good based on his research from earlier, and then I talked to him and said that I wanted to invest in these. So anytime that my allowance comes grew to enough to buy one stock, then he would invest in the one that I wanted to invest in. But then it's not like I had the brokerage account login or anything like that. But every month I would talk to my dad about what I wanted to do and then he would implement that. But then soon after, I learned that index funds are a much better way to invest, especially for people like me or other young people where you have a lot of time on your side. So soon after, I just invested in AN S&P 500 based index fund. And at that point it was really hands off because that's also the goal of dollar cost averaging, right? Not having to think about investing and being able to just consistently invest over time and grow your money. So for a long time now, I haven't actually been doing much related to my investments. It's just happening automatically, which is how it should be and how I also tell my viewers to set up their investments because that way you're growing money for the long term automatically and you don't have to think about it or get scared when the market drops or anything like that.
- [25:49]
A
How do you explain to the people that you educate about index funds? How do you explain what an index fund is and why that is, in your opinion, a more optimal investing strategy for your investing lifetime, which frankly is another 80 plus years, right? As opposed to individual stocks, how do you get that point across?
- [26:10]
B
Definitely individual stocks are something that most beginners would probably gravitate towards, like I did, because they're a lot more exciting and you can actually understand what they are really quickly because they're like companies that you see all the time, like household names. But the thing is, it's index funds. It's basically A basket of all the. If it's a broad based index fund, it's a basket of all the biggest companies. For example, The S&P 500 is the 500 biggest US companies and it's meant to represent a certain market. So when I explain it, I say that instead of trying to choose one or two winning stocks, which even the pros more often than not fail to do, and end up losing money, instead of trying to choose a few winning stocks out of the entire market, why not just invest in the whole market? Because that way you're over the long term, you're guaranteed to earn money at around 10 or 11% per year, per year. And instead of having to constantly worry about what to invest in, when to buy or sell, day trading, things like that, you're just invested and you're guaranteed to make money. So that's one thing where it saves a lot of time and energy doing thinking about where to invest and also worrying about if you made the right investment, when to buy and sell, things like that. And also if you have to make a portfolio from scratch using individual stocks, you need to think a lot harder about what sectors to invest in, different market caps to invest in, also different regions, things like that. But if you're investing in a total market index fund or even AN S&P 500 based index fund, then you don't have to worry about diversification at all. At least when you're young and you still have a long time until your retirement, you can just invest everything or close to everything into index fund and not have to worry about that at all. And just know that your money is going to be working for you and continuing to grow. And another thing that's especially important now is that a lot of people think you need a lot of money to start investing. But it couldn't be further from the truth, because it's not timing the market, it's time in the market that matters most. So the earlier you start, you'll have a lot more money than if you start later. So one example I also use in some of my videos is that if you start investing at 20, just $150 a month, by the time you retire at around 65, you'll have $2 million. But if you start investing later, even at just 40, you'll have only around a tenth of that money because you waited until you have more money to start investing, or you waited until you learned more. These kinds of things that people think they need, but of course they don't actually need to be Experts. But the most important thing is to just start early. And one thing that's great with index funds is that you, especially now, you don't need a lot of money to start, especially with fractional shares and zero commission brokerages. Even if you just have 10 or $20 a month, you can start investing and you can get the ball rolling. And then once you're able to afford more, of course you should increase your investing. But that way you can start really early and with a smaller amount and you can begin your investing journey, which can be the hardest step, especially for beginners. But it's also the most important if you want to start growing your money and building a nest egg for retirement or some other goal.
- [29:26]
A
I totally agree. And yeah, the power of compounding is just absolutely enormous. And this truly is the golden age of investing. It has never been easier or cheaper to invest, Right. We don't advocate any particular platform, but we usually mention Fidelity, Vanguard, and Schwab as three very reputable places that are very easy to start investing. And yeah, I mean, in this day and age, with expense ratios being minuscule on these S&P 500 or total stock market funds, usually 3 or 4 or 5 one hundredths of a percent, and there being no, no commissions or trading fees, you really can get started with those small sums that you talked about, which is awesome, right, Rishi? And I guess my question to you, and it's funny because I asked my daughters if they had any questions for you, and Molly wrote basically saying, what are the best tips to balance between saving money and spending money? Which I would add on to that, which is how do you convince people that they want to save in the first place? I think a lot of people, a lot of children, a lot of adults, frankly, spend all their money because that's what they, it's fun to spend, right? Like, they, that's what they want to do, but yet they're obviously, if you spend all of your money, you can never reach financial independence. You can never retire. Just by definition if you have a zero percent savings rate, right? Or you have to like, get lucky or somehow hope that Social Security can cover everything, right? But that's not, that's not a winning strategy. So I guess to my daughter's question, like, how do you balance saving and spending? And how do you, how do you talk to people about the importance of, of saving when it's so easy to spend?
- [31:06]
B
Definitely, especially nowadays, a lot of people focus on spending, which is natural. Like you said, it's fun to spend. People like Buying things and consumerism is really common, but I think it's really about finding the right balance between spending and saving. And one interesting story that my dad told me a few years ago, which really relates to this is between a hedge fund manager and an author, where the hedge fund manager says that in just a day he earned more than the authors made in his entire career. But the author said that he has something that the hedge fund manager will never have, which is enough. And I think that's really important when thinking about saving and spending, because wealth is not necessarily about having more, but as needing less and being content with what you can have. So, like you said, people shouldn't think about it as just saving a hundred percent of their income. And then sometime in the future being able to have financial independence. Like, you can enjoy life right now, but also start working toward saving for the future and building a better future for yourself where you'll be able to enjoy a lot more because of the decisions you make today. And this also is sort of similar to what I was doing when I was younger. Like when I was around five. My parents tell me stories of how once I learned about Black Friday and how things often go on deep discounts, I wanted to not buy anything when it wasn't Black Friday. And of course that's not practical. But I still try to buy everything on sale wherever possible, and different things like that. And I also use the same backpack for many years. I've had this current one since the start of high school, and I'll keep it till I graduate because of course, backpacks don't break after a year. You can keep using it. So things like that, wherever you find opportunities to save money in your life, is where you need to find the right balance. Because it's not about just saving everything or spending everything. You need to really find a middle ground. So, for example, I don't really care about brands or fashion or sneakers, things like that, but I do care about experiences. So instead of spending money on those things, for example, when I'm traveling with my family, I spend on experiences in the place I visit. Or I also look for sales on things that make me happy, like video games or fishing gear. Because to me, a $50 T shirt is the same as a $10 when I don't really get any enjoyment out of that. But if I save that money and instead I buy a video game for $50, that would be a lot better because that would give me many hours of entertainment. But if I bought both, then that would not be an Ideal situation. Because like you were saying, if people spend all their money, then they'll never achieve financial independence. So it's really about finding what makes you happy and what brings you value now and being able to balance that with where you're okay, cutting back so that you can have more enjoyment and have more wealth in the future. Because through this intentional spending, you're really able to enjoy life in the moment and while also really building toward financial independence in the future without having to sacrifice all of your quality of life now.
- [34:16]
A
Yeah. Oh, Rishi, you. The audience can't see this, but you can. I have a big smile on my face the entire time you're talking. And the reason why, aside from the fact that what you're saying is profound, is that you and I are so similar, it's unbelievable. So I. I kid you not. I have my high school backpack that I literally. I go to the gym basically seven days a week now, and I bring my heist, my gensport backpack from the time I was literally your age, 15. I've had this for 30 years, and it still holds up. It's a great bag. The zipper is starting to break, so I think I might have to finally get a new one, but that's the nice thing. And we have a phraser on here that was coined many, many years ago by a good friend of mine. He's a doctor named. His first name is Bo, and he's been on the show a number of times. And we. We call it being a valueist. Okay? So it's not being cheap. It's not being frugal or being a miser or all the negative connotations. It's buying what you value, and that is in the eye of the beholder. And it sounds like you see that in terms of. It's not about trying to spend as little money as you possibly can on things. Like you said, it's about utility and finding the sweet spot for you. Like that $50T shirt, in your case, your example, the $10 T shirt is going to be just as warm as the $50 one, right? Like, it might even last just as long. I have plenty of T shirts that I am similar in that I try to optimize for shirts that I like, and I'll find a type of shirt that I like, and they just buy five or 10 of them and just. That's my wardrobe for them for the next year or two. And it cuts down on decision making. Like, that's how my value is brain works. And it just, it's Interesting how. I think that's a really good way of going through life. And again, it's not trying to buy cheap things that are going to break. I mean, there are many things that I buy that are much more expensive than the lower level version. But if I plan on using it for years, I'm getting value and utility out of that. And again, it's case by case, of course, but I think everybody should really think about that. Like, what are you looking to get out of this purchase and how can you optimize it for however that works for you. So you. Yeah, I really, I really, really like how you said that.
- [36:26]
B
Thanks.
- [36:27]
A
So I am curious how. And we can jump around so much, but how and where do you invest now? So both. And you don't, you don't have to say specifically what brokerage, but you obviously earn. I imagine you earn some YouTube revenue and maybe other types of revenue. Are you putting that still into a taxable brokerage account? Are you putting it into a Roth ira? How, how do you personally think about the different buckets where you can invest?
- [36:55]
B
Yeah, it's a great point that you're bringing up. When I started, I wasn't earning anything from Easy Peasy Finance. And even now it's only very little from ad revenue. But because one of the most important things in investing, especially for retirement, is being mindful of tax advantages and how to best use them, I do invest a little earnings that I get from Easy Peasy Finance through a Roth ira because that way, especially since my money has so long to grow and I'm not earning so much that I'll have to pay a high tax rate now compared to in retirement, definitely. That way I can make the most of what I'm getting by investing it for the long term through compounding like with a traditional account, but also save a lot on taxes. And this is in addition to what I've been doing through my dad's brokerage account, which is taxable contributions of my allowance. But I am investing the little earnings that I get now in the Roth ira.
- [37:48]
A
Okay, I like that. And yeah, I also like how, yeah, of course, just because you have a YouTube channel, even a successful one, it doesn't mean you're rolling in money by any stretch. But the nice thing is, yeah, net of expenses, whatever expenses you have, I assume you have production expenses and such. All that profit can just go in a Roth and grow forever. And you will never, because of the, by definition, the Roth account, you're never going to have to pay tax on that So I mean, goodness, the compounding of working from 15 years old to even 59 and a half, not less, 60, 70, 80, 90 when you may or may not need it. So yeah, I mean that's, that's really, really cool. Okay, so right, you said low cost index funds and that's what you advise. How do you personally think about college? I think this is a big sticking point for a lot of people who, and you can never know where the world is going. So and just like in investing, right, we don't try to prognosticate in terms of is the market going up, is it going down? Nobody knows, right? Like nobody knows if AI is going to change the entire landscape of jobs. Like I think it's kind of foolhardy to try to even do that. But nevertheless, the world is constantly changing, that we know for sure, right? Like that's not a stretch to say the world is changing. I think for many, many decades, certainly people my age and older, college was the path. And I'm curious both how you think about college and many people your generation think about college. Is it still just the de facto like we are going to college after high school? Are people starting to think about other options?
- [39:23]
B
I guess it really depends on the person. Like a lot of things in finance, it depends on what someone wants to do as their career. But of course a lot of it is the cost of college, which is a really big not problem. But it's a really important thing to plan for both for parents and the students because college is getting a lot more expensive way faster than other things because education inflation is really high. So the cost of college is definitely going up. But then on the other hand, there's also definitely value to a college education. Of course it depends on the field you're going into, but, but college graduates can expect to earn significantly more over their life. But there's also other options like going to a trade school or things like that. So I think it really is on a case by case basis. You can't say there are definitely trends for how people are thinking about college. And I guess definitely fewer people are considering college, like you said, the de facto option. They're more considering alternative paths. But I think college is still really important. Important and especially paying for college is something that parents and kids must think about, like whether they're going to a private college or an in state school for cost where they'll be able to get more scholarships or financial aid or looking for third party scholarships, things like that. So there's definitely, there are now, more factors to consider when thinking about both how to pay for college and whether to go to college. But I still think for most people it's an important option that they'll consider.
- [40:54]
A
Okay, yeah, that sounds. That sounds about right. And that that ties to. So I have a high school senior. My older daughter is a high school senior. So she is in the thick of. She just got her applications in. So yeah, we are really in the thick of it now. And it is interesting because there are a lot of potential optimizations and we've talked about them here for years. I actually, I'm going to ask you in a second if you have any thoughts on paying for college, because you actually told me before we hit record that you're in 11th grade. So you're 15, but you're in 11th grade. So the college decisions are right around the corner for you. So based on your financial knowledge and wherewithal, I suspect you've already been thinking about this. But there are lots of things you can do. Like you said, there are many private scholarships. We've highlighted a bunch of them over the years, just some wacky ones. Even way back when there was a college caddy scholarship, a golf caddy scholarship that somebody talked about in the Big ten, which is interesting. Recent guest Sunny Burns talked about scholarship that the Department of Defense offers. I think it's called the smart scholarship for people going into engineering and tech, which is remarkable. They pay for your college and they give you a $25,000 stipend per year. So there are lots of these one off things. But one of the most reliable ways that I've seen is going to community college. It's in many states. Well, you get an associate's degree in two years if you're diligent and you get rid of a lot of the initial requirements that many four year universities ask for, and you've paid a tiny, tiny fraction of the total cost of that private school or even public school. And I know here in the state of Virginia people are probably tired of me saying this, but I suspect this exists in many states. Rishi is here we have a guaranteed admissions program. So if you go to a community college here in Virginia and you get a 3.4 GPA, which is very doable for many people, and you take certain classes and et cetera, you follow all the stipulations of the contract. You are guaranteed admissions to any state university in the state of Virginia, which include two of the best colleges in America, the University of Virginia and the College of William Mary. Not to Mention Virginia Tech and James Madison and a whole bunch of other amazing schools. So I mean, that's a really cool way. Like that's essentially saving half on college. And I can't even convince my own daughter to do this. So it's easy to say and harder to do. But I'm curious, how do you think about your upcoming college decision and paying for it?
- [43:27]
B
Definitely paying for college is really important and can be a challenge and. But it's important, like you said, to consider all the different options. What you mentioned is also something that I've shared in some past videos about how you can go to a much less expensive school for the first two years of college and then if it benefits you in your chosen career, you can go to a more expensive school later on. But like you said, a lot of the things that sound good in theory or on paper are not things that people want to do. So it's important to consider other options since a lot of these things don't work as well in practice. There are also other things like you said, related to scholarships or going to less expensive schools that are still good for all four years, things like that. And personally, for my paying for college, what I was saying earlier about involving their kids in day to day activities, that's something that my parents did related to paying for college. Now that I'm a lot closer to needing to use the money in my 529. We've been discussing how to rebalance it because for a while it's been all in stocks, but now it's time to include more fixed income and make it more conservative. That's just another example where involving kids can be really useful. And that's also helping me see how important it is to save for college as well as how much college costs compared to what I've saved, what I'll need to take out as a student loan or pay for what's on going scholarships, things like that.
- [44:55]
A
Yeah, And I think this goes back to really the theme of the entire conversation, which is include your kids in the decision making. Right. And like there are trade offs to every decision. This is life, this is personal finance. It's trade offs. So okay, let's say your parents did save diligently in a 529, which is wonderful and it puts you in a very, very comfortable, privileged, I don't love that word, but privileged place. But there are still lessons to be had from that which are, all right, well what if I went to a private school which cost $80,000 a year and we have Even again, if we're in this amazing position where we have $100,000 and a 529, all right, well, that's going to go pretty darn quick. That's going to last about a year and change. But what if you went to a state school? Well, Maybe that's only 30 or $40,000 a year. That makes a big difference. What if you went to a school that you could get a merit scholarship to that might not have as big of a, or fancy of a reputation? All right, well, that's a whole thing altogether. Right now you have some money left over. Maybe some people have siblings that, that money could go towards the siblings. Maybe your parents in that case would say, okay, well, if you go to the school where you get this full scholarship, we'll give you this money we have in the 529 and put it in your brokerage account or a portion of it or something like that. Like, again, we're not trying to be prescriptive here. I think this is the most important thing to get across. There's no prescription, okay? There's no prescription. When you teach lessons to your kids, you can play around with this and you can play around with it together. And the more that you include your kids in the conversation, I think the better. And the more that you give them decisions and age appropriate decisions, the better off all of you will be and the more well suited they will be when it comes time for them to make decisions on their own. Because frankly, that's coming quickly. All right, so, Rishi, I think we talked about college sufficiently. I want to go back to the larger concept of financial independence. So how do you think about fi? Is FI even on your radar screen or is it just like the 4% rule and all these things? Like, is, has this crossed your plate or are you just really focused on, hey, I'm just, I'm, I'm working on the inputs. I'm saving as much as I can. I'm investing for the long term and I'm just doing that week after week. Or, or do you think about the larger picture?
- [47:21]
B
I'm definitely considering the larger picture as well. But right now, at my age, there's a lot of unknowns about what my situation will be, like, exactly what my career will be, how much I'll need in my retirement, like per month, how the situation of the economy and the world in general will be, things like that. So like you said, right now I'm mostly focusing on the inputs of investing my allowance and also the little earnings that I get from Easy Peasy Finance. And also familiarizing myself with different concepts related to FI and money management, which I'm also sharing through my videos and website. But definitely right now it's more focused on the inputs and once I get more clarity about how my life will be as an adult, then I'll start to specifically work toward five goals that are for me and tailored to my situation. Okay.
- [48:12]
A
Yeah. And that makes perfect sense. And of course, yeah, there's no way you could have any sense of what your life costs, not less, come up with a phi number, obviously. But it is just interesting that you're even just aware of the concept of phi and that there is some number, there's some endpoint. And that goes back to that quote you said about enough. Right. I think, I think that was Joseph Heller, the author of Catch 22. I remember it was Kurt Vonnegut and Joseph Heller, at least. Whether it's an apocryphal story or not, I think it was a real story. But, and that is the thing. There is a point where you have enough. And I think this is one of the real fundamental underpinnings of FI is that most people don't have a sense that there's some endpoint that it's based on what does their life cost? And then in essence, okay, My life costs $60,000 a year. I multiply by 25 and that's my PHI number. I spend $200,000 a year. I multiply BY 25. That's my finer rate. It doesn't. We're agnostic as to how much you spend. Your life costs, what your life costs. But the nice thing is there is some number as opposed to. I think a lot of people get scared when, when it sounds so uncertain to them. Right. The, the word I always use is nebulous. Like, it just sounds nebulous like, am I ever going to retire? Is this possible? You have a lot of, a lot of people fear mongering in the, the personal finance world of everything's going to be so expensive, you can never do this. And I just think, I think that's a real shame because I think it, it turns people off and it makes them not even want to get started. And I think what you and I are trying to do is, is to get people, embolden them to take action. And I think that is, it's just really critical that, that you don't just sit and A, be scared or B, just take in information. Right? Like, I think that's what you're trying to do is you're giving these bite sized nuggets of information to get people to get off the couch and take action. Even in that small way, even investing $10. And I'm curious, you teach a lot of kids your age about money. Is there a first step? And the answer might simply be no. But is there something that you tell people, just do this, just take action for me while you're thinking about that, I'll tell you what I do, which is for adults who maybe don't really know what their finances look like, it's just get it down on paper. Now this isn't the same for a 12 year old or 15 year old because your personal finance world is not that complicated. But for adults it's just be honest with yourself, just write everything down and then you can move forward from there. How do you think about educating and informing kids your age in terms of what's the first thing you can do to make your financial life better?
- [50:51]
B
I think the first thing that's really important is to know the difference between needs and wants and how to spend consciously and mindfully. Since especially for teenagers there's a lot of things they can spend on, but like adults as well, they don't have unlimited money to spend spend with. So I'd say for people my age the most important thing like we were discussing earlier is to find out what you really value and what brings you the most utility, but also know where you're willing to not spend money and instead use that money to save for the future or also to give to charity. Knowing needs and wants and also what makes you happy is a great foundation and upon that you can build with your future knowledge like getting financial literacy skills, learning how to make a household budget for when you're older and have to actually manage your money, starting to invest either with allowance or things like that, or from your first paycheck. But for people my age, I'd say the foundation is knowing needs versus wants and how to spend mindfully. And one thing related to that is some teenagers think that credit cards are free money, which might sound crazy to people who are more like aware about things like like that. But to young people who don't have the financial literacy education, unfortunately those kinds of mistakes can lead to significant consequences. So just becoming more familiar with finance related concepts and practical money management and especially to start with needs versus wants can be really helpful both now when the person's a teenager and especially when they're an adult and have to manage money and when mistakes that they make when they're having a job and getting a paycheck can lead to far worse consequences than if they make the mistakes now with an allowance.
- [52:35]
A
Yes, I love that. I absolutely love that. Richie, the last thing I wanted to ask you is another question that just came in from my. My daughters are texting me. So they wanted to ask what kind of jobs, if they wanted to earn some money. Do you talk about the earnings side as well? So I think the saving side, the investing side that we've covered. But what about jobs for teenagers? Somebody wants to get involved, they want to earn some money, they want to start investing. What do you say about that?
- [53:02]
B
Definitely when I started, it was more on the concept, but now I've actually made a video about that, and it's one of my most popular recent videos about how teenagers can make money online or using only their smartphone. And I think that's really important because for teenagers to be able to learn the best lessons, they also need to have money to use, especially if they don't get an allowance or even if they do and they want to add to that, getting a job is really great to get practical experience and to get money to start to learn money management skills with. And in that for teenagers, a lot of the best jobs are online. Things like designing thumbnails or updating websites or making websites load faster or creating TikTok or things like that that don't require a lot of, like, physical labor are things that teenagers are already familiar with because they're really tech savvy. Usually those kinds of jobs are really the best because they're things that teenagers would want to do. And after getting money from that, they can start to learn personal finance lessons and of course, also spend some of it to really get the benefits of hard work.
- [54:09]
A
Yeah, I love that. It's funny that you mentioned thumbnails, because I'm vaguely thinking about putting video back on our podcast. And I spoke with a friend of mine yesterday and we're talking about YouTube and he was saying about the thumbnails, and I just, like, recoiled in horror at the thought of having to do all these silly faces and other things. And I don't think I could ever, at this point in my life do that. But nevertheless, like, I could get my kids to create thumbnails for me. I know they do that. My daughter has a roller coaster channel. She's a roller coaster enthusiast, and I think she calls it the coaster authority for anybody who's. Who's interested. And yeah, I mean, she. She's Just getting started. So there's not a lot of content there by any means. But she has these skills and I'm blown away by the editing skills that, that she has. And it's just innate because kids, your generation grew up on these things. And people like me, who, you know, I'm certainly pretty darn tech savvy, but I just, I did not grow up on this. So they're just skills that have eluded me. So I love that. And yeah, I just wanted to close out really parroting back something you just said, which I think is really summarizes our conversation perfectly, which is the kids, they're getting money to learn money management skills. That is the key here. Okay. So both internally, but if you want to make this, if you're listening to this and you have someone, a niece or nephew or a friend or a child, the key is not, the key is not making them wealthy at 8 years old or 12 or 15. The key is teaching them money management skills and teaching them the concept of trade offs and making decisions. And like you said repeatedly, you can make mistakes, small mistakes now and they don't, they don't matter nearly as much as making a big mistake when you're 25 or 35 or 55. And I think you've explained that just so beautifully. And I'm honestly, Rishi, I'm just really impressed by you, I think. Yeah, I'm just, I'm blown away and I would love. So we've mentioned repeatedly. So it's Easy peasy. So Easy Peasy Finance is your channel. So you have a website of the same name, ezpzfinance.com, easy peasy finance on YouTube. There are just I think a thousand plus videos. These are amazing places to start. Rishi, is there any last advice you want to give or just simply how somebody could get in touch with you? Or is it really those two ways are the best?
- [56:31]
B
Yeah, those are the best. My YouTube channel is easy Peasy Finance. And if you want to get access to quizzes, infographics, free courses and other resources, then go to my website, easy peasy finance.com and as a final thought, I'd say it really depends on who's watching this. If you're a parent, then as you've seen in the conversation so so far, definitely don't underestimate the role you play in making your kid gain financial literacy skills. You have the biggest role of anyone. So really involving them in the day to day topics related to money and bringing them into the conversation as well as giving them an allowance and teaching using resources. Those things are really important to make your kid financially savvy for their future. And if you're a teenager or a young adult watching this, it's really important to start learning money management skills now. If you're young and start investing from the first paycheck, especially since you have time on your side like I do. And by using the right strategies, don't get tempted by day trading or bitcoin or hot stocks. I know a lot of young people do, unfortunately fall for things like that, but investing for the long term, using index funds is the best strategy. And one thing that I also like to say say in my videos is that the best time to start investing was yesterday, but the second best time is today. So don't wait until you have a lot of money or you think you need a lot of experience or knowledge to start. Just start investing now with whatever money you have and your future self will think.
- [58:03]
A
Rishi, that is brilliant advice. I love it. Thank you so much for reaching out to me. Thank you so much for coming on the podcast.
- [58:10]
B
Thanks so much for having me.
- [58:11]
A
Yeah, it's really important what you're doing, so thank you again. All right, everyone, thanks for being here. Thanks for being part of the choose of I community. As always, get involved, take action. Pass this on to somebody. That's the point. You're not just sitting here passively taking in information. You're getting up and you're taking action. You're making your life better and the lives of the people in your world better. That's the key. That's what we're doing here. Thanks for being part of the community. And until next time, thanks for listening to Choose Fi.