Money Lessons for Young Minds
by SGL Financial
Our 2 Cents – Episode #213
Money Lessons for Young Minds
Welcome back to Our 2 Cents! In this episode, Steve and Gabriel pick up where they left off last week—diving deeper into how to financially support your children. From key savings benchmarks and little robots to smart advice from a financial guru, they’ve got you covered. You don’t want to miss this. Listen in now using the link below!
- Savings Benchmarks:
- Learn how age and salary-based savings benchmarks can be a valuable tool for tracking your retirement progress.
- Gabriel’s ‘Quick Hits’:
- Where in America can you stretch your retirement dollars the furthest and live your golden years in style?
- As we move closer to an AI-driven future, Walgreens is going private and letting robots take over your prescriptions.
- Money Guru Financial Advice:
- Discover 5 powerful tips to jumpstart your kids’ journey toward lifelong financial success.
Request Your Free Consultation Today
847.499.3330
Podcast Transcript
Announcer: You’re listening to Our 2 Cents with the team from SGL Financial, Building Wealth for Life. Steve Lewit is the President of SGL Financial, and Gabriel Lewit is the CEO. They’re here to discuss all the latest in financial news trends, strategies, and more.
Gabriel Lewit: Welcome everybody, to Our 2 Cents. You’ve got Gabriel and Steve here for another round of fun, entertainment and financial news and updates.
Steve Lewit: Can I start with a complaint?
Gabriel Lewit: No. No, you may not. We’re going to start off with good news here.
Steve Lewit: Are you tired of the traffic from the… I mean, every road I drive on is… Okay, I’m going to leave it be. I’m just saying, I’m frustrated. Folks, just give me an audio hug because I’m frustrated this morning with the traffic.
Gabriel Lewit: There you go. Audio hug given.
Steve Lewit: Thank you.
Gabriel Lewit: Well, you’ve heard the joke, right? That there are two seasons in Illinois or Chicago.
Steve Lewit: Construction and construction.
Gabriel Lewit: No, it is winter and construction.
Steve Lewit: Winter and construction, my God.
Gabriel Lewit: Right? You got the two seasons. So we’re in the middle of, it’s not winter, so we’re in construction season and it is all around us, so.
Steve Lewit: Just needed a hug this morning, is all.
Gabriel Lewit: Yes. So while you’re stuck in traffic listening to this, we hope you’re doing well.
Steve Lewit: Yes, for sure, for sure.
Gabriel Lewit: Well, we’ve got, I think, a great show lined up here of course, for you today. We’re going to continue some of our conversations in a slightly different angle from what we talked about last week, which was this idea of kids living with parents and parents financially supporting their kids.
Steve Lewit: Yes, yes.
Gabriel Lewit: What we’re going to talk about today is some benchmarks around, how much should you have saved at various ages along your savings career journey, okay? Now, what does this have to do with your kids? Well, if you’re a parent or a grandparent and you’ve got kids or grandkids, these are things that maybe you can help set them up for more success. Okay, and so the next time you’re talking with them, we’re going to then expand upon this on what a money guru, the article says here, Money Guru Shares Five Ways to Set up your Kids or Grandkids for Financial Success: And Some Tough Love will be Necessary, or these could even be tough love tips for yourself to set yourself up for financial success.
Steve Lewit: Now, these are older kids, right, Gabriel? Because I didn’t see the article. These are older kids? These aren’t kids like 7, 8, 9, 10 years old? So folks, we were out for dinner last night with friends and we were talking about how to incent young children.
Gabriel Lewit: Business compatriots.
Steve Lewit: Business compatriots, they’re like friends. But we were talking about ideas of how you incent young children to learn about money. I thought that was pretty interesting.
Gabriel Lewit: Yeah, we were talking in particular about nine-year-olds to 14-year-olds, maybe somewhere in that range, how to get them to appreciate the value of money, to be hard workers, not to just inherit money and be lazy.
Steve Lewit: Save, save, understand the meaning of it, having to pay for some things. But these kids that you’re talking about are of an older age.
Gabriel Lewit: Yes. We’re talking Gen Z, Millennials, younger Millennials, but really, again, we’re going to talk about some benchmarks of all ages. Right? So your kid could be 50, and if you’re talking to your 50-year-old kid and they don’t have enough money saved for retirement, this might be helpful for you to understand or relay to them if they’re not listening to our show.
Steve Lewit: Yes.
Gabriel Lewit: All right?
Steve Lewit: Got it.
Gabriel Lewit: Okay, so let’s jump on into this one here. We’ve got, first and foremost, this is a study done by T. Rowe Price, okay, called a Benchmarking Study, and the idea of a benchmark is to give you a sense of where you stand relative to some form of a data-oriented number. Okay?
Steve Lewit: Yeah, it’s not a judgment. It’s not saying you’re bad or good. It’s saying this is where most people are at this stage, and just compare yourself to that, it’s helpful.
Gabriel Lewit: Yeah. I just had a call last night with a new potential client who said, “Gabe, are we on track?” Right? So this type of question comes up a lot. Benchmarks designed to help allow you to see if you’re potentially on track. Although I will caveat here, that you really should have a specifically customized financial plan that will truly show you if you’re on track or not, because there are so much varieties when it comes to financial planning with budgets, expenses, and all these other things, so.
Steve Lewit: Yeah, everybody’s circumstances, life is different. So, everybody can’t be on the same track. The question that you’re saying, Gabriel, do you know your track and are you on it?
Gabriel Lewit: Now, yeah, what I like about this one is there are some benchmarks that are just based on how much savings you should have at a certain age, but they ignore something very important, which is what your income is, right? So if you spend $50,000 a year versus someone that’s 30 that spends 150,000 a year, do you need to have the same amount of savings saved up? What would you say there? Mr. Lewit?
Steve Lewit: I would say, no.
Gabriel Lewit: Right? Why? Because that makes sense, if you spend a third less than somebody else and you’re comfortable with that lifestyle, maybe all said and done-
Steve Lewit: You need less money.
Gabriel Lewit: You probably need less money saved, right? Because if the goal is saving for retirement, retirement is designed to then pay you to live a certain lifestyle when you’re no longer receiving that paycheck.
Steve Lewit: Yes.
Gabriel Lewit: So, I think this one’s a great study because it talks about percentages or multiples of how much you earn in form of a salary or income, which of course is more relevant. Right? If you earn more, you might need to have more saved, if you earn less, you may need to have less saved. This will scale a little bit more according to that.
Steve Lewit: Yeah, and essentially, you’re saying if you want to protect your lifestyle, then this is how much money you’re going to need to protect your lifestyle when you retire.
Gabriel Lewit: Yeah, roughly, roughly.
Steve Lewit: Roughly.
Gabriel Lewit: Okay. So let’s go through some of the lists here. Right? At 30 years old, if you have a son or a grandson or a daughter or granddaughter, or you are 30 yourself, the savings benchmark here, according to this study, says you should have a 0.5x or a half of your salary saved today. Okay, so if you’re 30 and you’re making $100,000, let’s just say for easy math, it’d be good benchmark wise to have about $50,000 saved today.
Steve Lewit: Yes.
Gabriel Lewit: Okay?
Steve Lewit: Yep.
Gabriel Lewit: Now, at 35, it says one to one and a half times your salary. So if you’re, again, $100,000, salary goes up to 35 to 150,000, you should have roughly around $150,000 saved at that point.
Steve Lewit: Yeah. So what that’s starting to do, folks, is creates a savings goal for your kids at each age. So they know that as their salary goes up, a little bit more of that salary should go into savings rather than, oh, I made some extra money, I can spend it all.
Gabriel Lewit: Yeah. Let’s use an example. I just had a review meeting with one of my younger client households last week. They collectively make $160,000, and I’m going to say for simplicity, they’re roughly 40 years old. Actually, they’re late 30s, so it’d be somewhere between 35 and 40. At 40, the benchmark study here says you should have one and a half to two and a half times your salary saved. So if collectively, the two of them make 160,000, let me get my trusty iPhone calculator here, folks.
Steve Lewit: Well, two times is 320.
Gabriel Lewit: So, I’m going to do the two and a half on the high end. Right? So at 40 years old, 160,000 times two and a half, they should have about 400,000 saved up on the high end. And on the low end they would have about, what was that, 240,000 on the low end.
Steve Lewit: That’s right.
Gabriel Lewit: So, 240 to 400.
Steve Lewit: Good job on the math.
Gabriel Lewit: Good news for this client.
Steve Lewit: Proud of you.
Gabriel Lewit: Thank you. That is precisely where they approximately are.
Steve Lewit: Yeah, yeah.
Gabriel Lewit: Okay. So that’s a good, I think rule of thumb, right? And you can also utilize this if you understand a little bit about inflation. You could take your salary level, project that in the future, and see if your income, of course, will grow over time due to inflation. Will your savings be around that benchmark also in the future? So you can also use this as a future benchmark, as well as a current benchmark based on projected inflation and projected rates of return you might earn on your investments.
Steve Lewit: Yeah. It’s like you can establish a landing, like a landing zone. You start here up higher, and then to get to land, you need more money.
Gabriel Lewit: Yeah. So at 50 years old, let’s get a little closer to retirement. Three and a half to five and a half times your salary. All right? So say you are 50 years old, you’re making you and your spouse, $200,000 per year. Okay, crept up a little bit there with some promotions and some other things. What would you need? 50, okay, sorry, I did this wrong. I was typing in 50. At 50, you would need 200,000 salary times three and a half on the low end, so you’d need $700,000 saved up.
Steve Lewit: Yes.
Gabriel Lewit: Okay?
Steve Lewit: On the low end.
Gabriel Lewit: On the low end, yep. Now, let’s say you’re approaching retirement. You’re 60 years old and there’s a 55, but just for an essence of time, I’m going to jump ahead. So at 60 years old, you’re thinking, okay, I want to retire at 65 when I get Medicare. Am I on track? It says, you need 6x to 11x your salary saved today. And let’s say at 60, you’re bringing in-
Steve Lewit: Well, let’s use-
Gabriel Lewit: … household to-
Steve Lewit: 300,000.
Gabriel Lewit: I’ll do 250.
Steve Lewit: All right.
Gabriel Lewit: It’ll be a little more conservative.
Steve Lewit: Well, let’s just take 10 times because that’s in between. So 10 times that would be $2.5 million.
Gabriel Lewit: Well, I was going to use the low end just for not to depress anybody that maybe isn’t there yet. But, yeah-
Steve Lewit: Well, it might depress them also.
Gabriel Lewit: 250,000 times six is 1.5 million. That sounds a lot less than 2.5 million.
Steve Lewit: It sounds less, and yet we know a lot of people of that age do not have $1.5 million.
Gabriel Lewit: That’s true. Okay. So rules of thumb are just rules of thumb, and it all depends on a variety of factors. Do you have pensions coming in? Are you going to get, how much social security? Are you going to get inheritances that you’re expecting? Although you shouldn’t typically plan around getting an inheritance. So there’s a lot more than just a rule of thumb. It’s why I always say I’m not a big fan of them, but people love to ask, what’s a good rule of thumb? And so, there we go. We’ve got a nice thumb here for you.
Steve Lewit: Yeah, I just had a client that gave birth… I’m going to let that go. I just had a client that just had triplets. Guess what? That’s going to rock their glide path a little bit.
Gabriel Lewit: Triplets will be triple the cost of a single child.
Steve Lewit: I have to write that down. That is such insight.
Gabriel Lewit: These are what I call timeless wisdoms.
Steve Lewit: Timeless wisdoms. Get your pen out, folks.
Gabriel Lewit: You have three kids; it costs three times as much as if you have one. Okay?
Steve Lewit: Yeah, yeah, it’s steep.
Gabriel Lewit: All right. Now, this report also gave a couple of rules of how to stay on track here. Make sure you’re taking advantage of the full company match, of course, is a great step. Easy one, free money from your company. If you’re falling behind or feel like you’re way behind here, what do you need to do? Well, you’ve got to up your savings rate. Okay? That’s going to be more important than getting ultra aggressive, for example, your savings is going to be the most important part of this. Let’s see, if you’re finding it tough to save, take a look at your budget, do a budget review. Stop putting money on credit cards. Building up debt is of course the opposite of saving.
And then if you’re really struggling, work with an advisor. Now, the study doesn’t say that, but I’m going to add that into the mix, because I think you might find, as I’ve found many times before, somebody came to me, this was about a year ago and said Gabe, “I don’t think I’m on track to retire.” And we ran their numbers, because she was using some rules of thumb like this, and she had plenty of money, okay, based on her personal situation.
Steve Lewit: Yeah, and the older you get, Gabriel, the harder it is to make up for lost time. I’ll use the plane landing again, is that if a plane lands in smooth weather, it’s real easy. But if you’re landing in the middle of a storm because you’re close to retirement and you’re behind on your savings, it’s like a storm because that’s coming, and it’s hard. You do these… Wait a minute, wait, wait a minute.
Gabriel Lewit: I’m giving him a look, folks.
Steve Lewit: He’s giving me the look.
Gabriel Lewit: I’m not one-to-one tracking on this analogy here.
Steve Lewit: Okay, why don’t you do one of your football? Wait, no, it’s either football or restaurant analogies for me on this topic.
Gabriel Lewit: What was the question that you had?
Steve Lewit: It’s just as you get older, it gets stormier. It’s like retirement is right in front of you and you don’t have enough money. It’s a rocky road.
Gabriel Lewit: So, you’re saying retirement’s a storm? It doesn’t have to be a storm.
Steve Lewit: Well, if you don’t have money, it’s a storm.
Gabriel Lewit: That’s true, yeah.
Steve Lewit: Yeah. So if a plane is landing in the storm, it’s pretty rough. Hard to land it.
Gabriel Lewit: It is.
Steve Lewit: Yeah, it gets harder as you get older. That was a great analogy. I love that.
Gabriel Lewit: Good.
Steve Lewit: Nobody else in this room loved it, but I loved it.
Gabriel Lewit: Well, if you got questions on that, of course, let us know, we’re moving along.
Steve Lewit: I think we’re moving on.
Gabriel Lewit: Our number here, (847) 499-3330.
Steve Lewit: You got to be more poetic in the way you approach life.
Gabriel Lewit: You are a very good writer, you got me beat on that front, 1,000%. But I do think I have better analogies, perhaps.
Steve Lewit: I will admit, you do have the greatest analogies. You’re great, and you think of them all the time.
Gabriel Lewit: Yeah, they just sort of pop into my head.
Steve Lewit: They pop out of you. Yeah, yeah.
Gabriel Lewit: So yeah, go to Sglfinancial.com, click contact us, set up a time, and you can chat with us here anytime about your retirement plan, of course.
And before we talk about the article from the Money Guru, I guess they didn’t quote us for that article, but that’s their loss.
Steve Lewit: Well, yeah.
Gabriel Lewit: Okay. I want to do a little segue here. We like to keep you entertained as well as informed. Okay now, Steve, pop quiz. Don’t look at the article, okay? Which city in the United States was named the most affordable retirement spot in the US with a high livability score too? Yes, you must guess this right.
Steve Lewit: Yeah, that’s in Iowa and it’s Grand Rapids, Iowa.
Gabriel Lewit: Grand Rapids, it was an impossible task, but I give you an A for effort.
Steve Lewit: Yeah, you think of it, Midwest.
Gabriel Lewit: All right, I’ll give you one more try.
Steve Lewit: Los Angeles, California?
Gabriel Lewit: No, a real try. Come on, real try.
Steve Lewit: A real try? And this is the most, say it, most afford-
Gabriel Lewit: This city was named the most affordable retirement spot in the US with a high livability score of two.
Steve Lewit: No, it can’t be Atlanta. Is it a big city that I would know?
Gabriel Lewit: It’s medium.
Steve Lewit: Medium? Minneapolis or Dent? Minneapolis?
Gabriel Lewit: Eh.
Steve Lewit: All right, I-
Gabriel Lewit: Akron, Ohio.
Steve Lewit: How would I know Akron, Ohio?
Gabriel Lewit: I said it was an impossible task. Yes, Akron, Ohio is the number one most affordable place to retire in the country, according to GOBankingRates, the article I’m looking at here. Okay? It says a retiree would need just under 1,700 a month to live in the city where almost 16% of the population is age 65 and over. Now, Albuquerque, New Mexico, and Spokane, Washington, Spokane, Spokane?
Steve Lewit: Spokane.
Gabriel Lewit: Yeah, round out the top three cheapest retirement cities. So look, what does this mean? If you’re wanting to make your dollar stretch, you could move from a high cost of living area. I actually just read a study the other day, just a little tidbit. That New York City has over 423,000 millionaires, and this is creating a problem because if you’re not a millionaire, you’re not going to be able to live there, right?
Steve Lewit: Well, that’s been true for a long time. You either have to be very rich… Because I grew up in New York, you have to be very rich or very poor. If you’re in between, you got a big problem.
Gabriel Lewit: Yeah, right. So obviously money in New York City wouldn’t stretch you very far, right? But if you’re one of those millionaires and you go to Akron, Ohio, maybe you could even retire today if that was on your list of things to do. Okay? Now of course, it’s got a large community of seniors, that may or may not be a good thing for you, depending on what you like or don’t like. And it offers a good mix of urban amenities, like hospitals, recreation centers, restaurants, museums and parks, but without feeling hectic. And it’s only eight miles away from Ohio’s only National Park, Cuyahoga Valley. Okay?
Steve Lewit: Yeah.
Gabriel Lewit: I’ve heard good things about the valley there. And it also has some of the most affordable real estate in the country, with the median home value only being $132,233.
Steve Lewit: Why do I have a feeling this is a place I will never go to?
Gabriel Lewit: I don’t know. But there you have it, folks.
Steve Lewit: Akron, Ohio. Okay.
Gabriel Lewit: There you have it.
Steve Lewit: All right.
Gabriel Lewit: Okay. Now another little interlude for us today is a little story about a company called Walgreens. Have you heard of Walgreens?
Steve Lewit: Well, I’ll tell you all my stories of people who work for Walgreens that would not sell their Walgreens stock. You know why? Because it was Walgreens and they are the best and will always be the best.
Gabriel Lewit: Well, they have been struggling, of late.
Steve Lewit: You think?
Gabriel Lewit: Okay, and a couple things here. Walgreens is a good example of the risks of individual stocks, of course, and individual companies and why diversification is still a benefit. But here’s what’s interesting, this is a little bit of a story about AI and the impacts of AI on the world, and I’ve got some other tidbits here in addition to Walgreens. But yeah, Walgreens is going to double down on prescription-filling robots and AI to cut costs and free up pharmacists amid their turnaround. Okay, so Walgreens is trying to turn itself around, it’s going to go private. Okay, it’s going get off the stock exchange there. And if you have been to a Walgreens of recent, and I have a Walgreens near me where some prescriptions go to occasionally, and yes, it is tough there. You go there, you wait in line, it’s slow. If there’s a line in the drive-through, I will never go through it.
Steve Lewit: Yes, you can wait 15 minutes on that line.
Gabriel Lewit: 30 minutes, I don’t know. I don’t know what’s going on there, right? So what’s the goal here? The goal is that the robots are going to take over, all right? And they’re going to try to reduce the pharmacists actually filling the prescriptions using micro-fulfillment centers. Okay, so think of these, what is a micro-fulfillment center? What’s it going to do?
Steve Lewit: It must be some kind of an automated… So right now you go into Walgreens and I feel so badly for the pharmacists because they’re just running. The moment they walk in there, they are running, running, running, because there seems to be always somebody online and there’s always somebody on the phone, or there’s always somebody on the auto-pickup and everything has to go through the pharmacist. So if you’ve got an assistant there, they got to go to the pharmacist, say, “I’m giving this out,” or looks like that, or whatever it is, unless it’s in a bag that they can’t find.
Gabriel Lewit: Well, yeah, recent study, 2023, there was nationwide walkouts. There’s been mounting discontent amongst pharmacy staff, right?
Steve Lewit: And among-
Gabriel Lewit: Chronic under-staffing, burnout, and it’s a big problem. Then of course, customer service suffers. When you go there, you’re just dealing with angry people waiting in line all day long, and it’s just bad all the way around. Right? So, robots to the rescue here.
Steve Lewit: Yeah, I love it. It’s a great idea.
Gabriel Lewit: Yeah, and I think this is going to give you a sense of where the future is headed here. All right? But how’s it going to work? You’re going to have at every facility a highly automated system that uses robotics, conveyor belts and barcode scanners, amongst other things, to automatically fill prescriptions. And the operations are going to be supported by a team of pharmacists, pharmacy techs, and other professionals. And so instead of staff members filling prescriptions by hand at stores, pill bottles will move through an automated and carefully choreographed assembly line.
Steve Lewit: I like it.
Gabriel Lewit: Interesting, right?
Steve Lewit: I like it. I didn’t know they were going private, though. So they’re going to de-list themselves.
Gabriel Lewit: Yeah, yeah. So basically the Walgreens here, the company’s preparing to go private in a roughly $10 billion deal with Sycamore Partners, expected to close by the end of the year, which will end its rocky run as a public company.
Steve Lewit: So, Gabriel, I don’t know if you know, I don’t know this. When a company de-lists from the stock, what happens to all the people that own the stock?
Gabriel Lewit: Well, they-
Steve Lewit: Do they get a-
Gabriel Lewit: They don’t lose their money. Right? They’re being bought out by a private company.
Steve Lewit: But must get a payout per share of some kind?
Gabriel Lewit: Yeah, there’s a dollar amount per share that’s agreed upon for the stock, and then the transaction closes and you get your money and find somebody new to invest in.
Steve Lewit: So, part of that $10 billion goes… Well, of course, the stockholders would split that somehow. Got it, okay, yep.
Gabriel Lewit: So, it’s just kind of interesting, there’s a-
Steve Lewit: I feel really badly about Walgreens because I do have many clients that really loved Walgreens, believed in Walgreens, just like I have many clients today that love their Apple stock. Apple will never go down, it will be here forever, just like UPS and McDonald’s will always be here forever. We have clients that just own these stocks.
Gabriel Lewit: Some people really feel that way, and look-
Steve Lewit: And they’re believers, but when you have half of your savings in one stock like a lot of Walgreens people did, it’s just terrible that they would lose that money.
Gabriel Lewit: Yeah, yeah. It’s a risk, right? Not to use an overly negative example, but the Titanic. Oh, this ship could never sink, right?
Steve Lewit: Well, yeah.
Gabriel Lewit: It’s like, that’s such a big ship with so many redundancy measures, blah, blah, blah. But people feel that way about individual stocks. Right? How could this company ever go out of business?
Steve Lewit: We should make a list of all the great companies that are no longer here.
Gabriel Lewit: Yeah, I think we did that in the past, but it’d be a fun one to update and see.
Steve Lewit: Let’s resurrect that.
Gabriel Lewit: Yeah, so we could definitely do that. Now, I also read a recent article too, it was a story of a laid off programmer. Okay, that used to make $150,000 per year and this AI push has resulted in many, many programmers in specific being laid off with one CEO of a tech company saying within one year they believe AI will be able to write nearly all code. Right?
Steve Lewit: Amazing, yes.
Gabriel Lewit: With very minimal oversight from a much smaller team of architects or coding type architects that again, monitor the AI writing it, to the point where tens of thousands of otherwise high paying tech jobs will not have a job anymore. And he said in this article it said he had been on 800 interviews or something, or 800, I forget what it was, and there’s no jobs.
Steve Lewit: Trying to find a job.
Gabriel Lewit: So now he’s DoorDash-ing and-
Steve Lewit: Until that gets-
Gabriel Lewit: Uber-ing.
Steve Lewit: Until that gets automated.
Gabriel Lewit: Well, they’re trying to automate that too, right?
Steve Lewit: Exactly, exactly.
Gabriel Lewit: Uber-ing DoorDash-ing. Yeah, why do you need a… you know?
Steve Lewit: Let me get a little robot to roam to your door.
Gabriel Lewit: I took my son to Austin a couple months ago, and I don’t know if it’s just an Austin thing, but we were walking down the street and on the other side of the sidewalk there’s this little, have you ever seen the movie WALL-E?
Steve Lewit: Yeah, like a little robot.
Gabriel Lewit: This little WALL-E robot.
Steve Lewit: Yeah.
Gabriel Lewit: Coming down the thing, and he was stuck because he couldn’t get across the intersection, and people were just taking pictures of him and stuff, but someone didn’t get their prescription. So what it does is, a store or whatever or their DoorDash thing places the order in the robot and the robot moseys itself down the sidewalks crosses the intersections, right? It does all this on its own.
Steve Lewit: How did he get stuck?
Gabriel Lewit: It was like a rocky part of a side.
Steve Lewit: Oh, he couldn’t get through.
Gabriel Lewit: He couldn’t get off. He got stuck, right? So they’re the cutest little robots, but that’s the future. I mean, it’s interesting and scary a little bit, right? For people that are in jobs that are subject or at risk of AI. And I think one of the, I forget who it was, it was either a politician or somebody recently came out and said, “Well, we want people to work in factories, but it’s not going to be the factories of old, you’re going to be in a factory overseeing the robots that are doing all the factory work.” It’s like the new age factory work would be just repairing and monitoring robots.
Steve Lewit: Well, look at the auto plant, auto makers today. I was watching a short video on how cars are made, and half of it’s a robot, robotic.
Gabriel Lewit: Yeah, yeah. Producer Gabby found a picture of these little WALL-E robots that are delivering stuff. They’re so cute. You just go online and Google.
Steve Lewit: They’re like little-
Gabriel Lewit: They’re like little Mars rovers.
Steve Lewit: Like little Mars, yeah, that’s perfect.
Gabriel Lewit: Can I see real quick?
Steve Lewit: Yeah.
Gabriel Lewit: Hold on one second.
Steve Lewit: Yeah, they even have different color tires.
Gabriel Lewit: Yeah, so Google food delivery robots and they got these little WALL-E eyes and little wheels and little flags like it’s a back of a kid’s bike. They’re adorable. I mean, how could you not like that? But other than if you lost your job to one, then you would not like one.
Steve Lewit: And then you would not.
Gabriel Lewit: People are probably going to graffiti them and all sorts of poor things there. So any who’s, all right, so I wanted to circle back to our topic at hand here.
Steve Lewit: We should get a little robot here to deliver coffee to our clients. Wouldn’t that be cool?
Gabriel Lewit: They’re probably like $10,000 or something like that.
Steve Lewit: No, you can probably get a little robot. That would be great, that would be so much fun. Come on, Kate.
Gabriel Lewit: What’s funny is they tried this in restaurants. There’s ones that come around to serve your food. I don’t like them there, it’s too impersonal, but I like this one about delivering food just down the sidewalks with their little flags, and then you got a little code and you can pop it open, there’s your food. Right?
Steve Lewit: Just wait until there are 100 of them coming down the sidewalk with their little flags.
Gabriel Lewit: Well, they’ll probably be like combo wheels and drones so they could just pop up their helicopters and zoom up, and it is going to be a crazy future, folks. Get ready for it.
Steve Lewit: Get ready.
Gabriel Lewit: Okay, so how do we set your kids up for success in this crazy future? Right? Money Guru here, now, who is the Money Guru? It’s some guy named Mark Berg. I don’t know who he is, but he was in this article. Okay? It shares five ways to set your kids up for financial success, and some tough love will be necessary.
So let’s say you got kids or grandkids, and we talked last time about some parents, we’re starting to draw the line on having kids live in the house. Why? Because they got to get out there and learn these things. Right? You can’t be a 40-year-old… I mean, you could be, getting out of your house for the first time trying to figure out how to budget and save. Okay, so how are we going to teach our kids good money habits? They don’t teach enough of these in school, they don’t teach enough of these in college. If you didn’t grow up with good money habits, you’re perhaps not teaching your kids good money habits. So we’re kind of on a mission here to help change some of this, I think. Okay?
Steve Lewit: For sure.
Gabriel Lewit: And I’ve got a passion for that, for working with younger kids and helping them learn some of these basics.
Steve Lewit: Yeah, you do. You’re really great at that. Yep, yep.
Gabriel Lewit: Okay, so start with the basics is step number one, right? “Teach about personal finance when they’re as young as six or seven,” says Berg. Explain how money works. Give them an allowance and pocket change for doing chores and odd jobs. Encourage them to save for a special purchase and learning the ideas of savings and delayed gratification.
Steve Lewit: And giving money and getting it back and getting change and all of that.
Gabriel Lewit: Yeah, it also teaches them about opportunity costs, right? If you buy, like my son the other day just took $50 of his birthday money and bought a police officer set. It’s got little vests and it’s got little plastic handcuffs and it’s got little batons and walkie-talkies, and-
Steve Lewit: I just hope it doesn’t have a real gun.
Gabriel Lewit: No, there’s no guns in the set. Okay? We’re not going there yet.
Steve Lewit: Thankfully.
Gabriel Lewit: Okay, and he was very excited about this. I was like, “Are you sure this is how you want to spend your money?” Right? “I know you were talking about X and Y and Z.” And he’s like, “Yes, this is how I want to spend my money.”
Steve Lewit: And knowing Nathan, your son, he’s probably very thoughtful about it.
Gabriel Lewit: He is, he is. Yeah. So yeah, and understanding if the kids have an allowance, this is what we were talking about last night. You can go to the store and be like, “Oh, you want this candy? You got to use your money,” right? You want this, whatever it is that I wouldn’t buy for you? Use your own money
Steve Lewit: Because kids, I’ll talk about my kids, folks, because they got everything they wanted. They’re totally spoiled.
Gabriel Lewit: Not me, by the way.
Steve Lewit: Not me.
Gabriel Lewit: Your newer kids. You didn’t spoil me.
Steve Lewit: But it was a bad, when I look back at it, I said I could have done a much better job on giving the same kind of gifts and things, but with a little more responsibility to what they were supposed to learn. I just gave the stuff and because I like giving kids stuff, my kids stuff, I like giving a lot of people stuff. But it’s actually irresponsible just to give things away without teaching somebody how to value.
Gabriel Lewit: I’m glad you’re learning these things.
Steve Lewit: Yes, I am.
Gabriel Lewit: Better late than never.
Steve Lewit: Better late than never.
Gabriel Lewit: Right, yeah. All right. Number two, build good money habits. We’re going to go through these a little quicker here because we’re getting close to our time for the show, but what does this mean? Right? Whether they’re in high school with their first job or out of college with their first job, help them learn about their paycheck. Right? Go through their pay stub with them. Understand you’re paying for health insurance, you’re paying taxes here, you’re paying into social security. Take some of this money, take 10%, pretend it doesn’t exist, throw it into an investment account. Start this at their very first paycheck right at 21 years old and get those good money habits flowing.
Number three, no coddling. Okay?
Steve Lewit: That’s a hard one. That’s a hard one for me.
Gabriel Lewit: Berg says, “Parents should aim to turn their grown children,” or if you’re a grandparent work with your kids to help with your grandkids because the kid’s parents may not want the grandparents help, but work through that, of course. “Turn them into self-reliant adults without delay,” Berg said. “They need to be independent of their parents’ lifestyle and creature comforts and need to work through these hard decisions from an early age, understanding the trade-offs of spending versus saving.” He says, “Stop paying for things like cell plans, car insurance as soon as possible.” He said he recalled a client whose kids moved back home after college and they only offered them six months of rent-free living before charging $400 a month for the next six months, double that for the next six months, and so on. Parents can even give all the rent payments back as a lump some later on when the child moves out. It’s just about teaching the habit that, hey, you have to budget for rent, you have to budget for this.
Steve Lewit: I’m such a softy.
Gabriel Lewit: You are a softy.
Steve Lewit: I’m a softy.
Gabriel Lewit: Right, oh gosh. I’m not a softy, I’m making Nate pay for everything.
Steve Lewit: No, you’re not. You’re a softy.
Gabriel Lewit: No, he just said to me the other day, “Dad, when am I getting a new computer?” I said, “Well, you’re going to have to chip in.” I’m not going to make him save up $1,000. Right? But I said you’re going to-
Steve Lewit: Chipping in, I always did that, chip in.
Gabriel Lewit: Yeah, you got to chip in, buddy. Okay, so number four here. All right, let’s go here. Number four will round out our show here. We’ve got, do no harm, right? The goal here, it’s not to go be so un-coddling that you put your kid out in the poor house and they can’t achieve anything in life and start taking on debt, right? Don’t create a circumstance where your help creates a hurt is the rule, right? It is not like, oh, tough love. Go get yourself in debt and figure it out. Right? That’s not the-
Steve Lewit: It’s not harsh.
Gabriel Lewit: Yeah, it’s meant to give some loving guidelines, understanding the benefits that comes from this. And last but not least, pass wealth down early and carefully. Right? You can, again, instead of just dumping large lump sums after you die, you could start matching money that your kids earn. Basically, tying what you give your kids into the fact that they’re learning the good money habits and implementing these good money habits.
Steve Lewit: Into their own success, it reinforces their success. You still have the problem, which we talked about last time, is the adult child that just doesn’t want to get out of the house. And that’s where, and I think I said this the last time, that is probably the toughest decision you’d ever have to make about a child, is literally throwing them out of the house and saying, “Go figure it out, man, but you can’t stay here.”
Gabriel Lewit: Yeah, I mean that’s an extreme, maybe last resort, but yeah, as we just talked about, maybe that’s doing some harm and if that really was going to do some harm, maybe that’s not the right approach. But there’s smaller baby steps before you get there that could be important.
Steve Lewit: Absolutely, absolutely.
Gabriel Lewit: All right, friends, that’s our show for you today. Next week we’re going to move on. I’ll give you some previews, we’re going to talk a little bit about some tax tips. Now that it’s after tax season, we’re going to dive a little bit into forward-looking tax planning, so-
Steve Lewit: And really important.
Gabriel Lewit: Really, really important, a big focus for us here, should be a big focus for you in your planning and your finances. So, of course if you’ve got questions, call us. (847) 499-3330. Go to sglfinancial.com, click contact us, and we’re here for any and all financial planning needs. Also, one of the other things you can do is introduce your children to your financial advisor, SGL Financial. We do help with the kids as small as 21 years old saving on their first Roth IRA. We like building those money habits early. It is an area of interest for us to assist you with. Let us know how we can help.
Steve Lewit: Yeah, I just talked with a 24-year-old daughter of one of our clients living overseas and she’s earning a nice living, and we had a great conversation. So yes, definitely do that.
Gabriel Lewit: Yeah. All right, folks. Have a wonderful rest of your day. We’ll talk to you next show.
Steve Lewit: Stay well, everybody.
Gabriel Lewit: Bye-bye.
Steve Lewit: Bye-bye.
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