HIP Exam with ESI Money

Welcome back to the H.I.P. Examination. This is where one parent (me) asks another parent (ESI Money) about his approach to his kids in handling education, investing, and money in general. Parenting can be hard. Money can be hard. Put both together and we are probably approaching something the consistency of Wurtzite boron nitride. (Yeah, I looked that up. It’s the hardest substance known to man, not diamond!)

Today’s HIP Exam features another blogger who has talked the talk and walked the walk when it comes to raising kids to be financially savvy. He’s recently retired but like most high earners he hasn’t stopped working. He just puts his efforts toward passions instead of punching the time clock.

One of the areas in which he really excels is his ability to help you increase your earnings. He’s assembled and wroteĀ some of the best articles I’ve ever seen about the value of increasing your earning potential and making the most of your career.

Also if you’ve ever wanted to get a behind the scenes look at how other millionaires have come to that position in their lives, he currently has fourteen interviews with fellow millionaires on his blog with plenty more in the pipeline.

My hope is that these questions reveal some ideas you never thought of and give all of us some tips for making our financial lives better for ourselves and our kids. Without further ado, here is ESI Money.


HIP Exam

Two Truths and a Lie. Tell us two things that are true and one that isn’t about you. Make them something not too many people would know. We’ll come back to this later.

I’ve run only two marathons but finished seventh in the second one.

My grandmother was mayor of the small town I grew up in.

I had the lead role in two different high school plays.

 

What do you do/did you do for a living? How long have you been doing it/did you do it? What was/is your favorite part?

Right now, I’m retired.

Before that, I was a marketing executive for 28 years. I eventually worked my way up to being president of a $100 million company.

For the most part, I enjoyed my career. I wouldn’t say I “loved” it but I certainly “liked” it. It was challenging, interesting, and fulfilling. It also provided nicely for our family.

How did you learn about personal finance? Did you have any big role models that mentored you financially?

I had no financial role models. My parents didn’t know a lot about money nor did anyone else in my life.

My financial education began when my wife and I volunteered to teach basic finances at our church (we were just married and wanted to serve together). We had to go through some significant training where we learned how to manage money. As you might guess, the teaching covered the basics: spend less than you earn, avoid debt, live on a budget, etc.

Once we learned, we began to coach others, mostly on how to develop and manage a budget. We learned so much what NOT to do from the various financial disasters we saw in our sessions.

I also started reading books like The Millionaire Next Door, The Richest Man in Babylon, etc. which taught me even more. I began to apply these principles and our finances blossomed.

How many children do you have? How old are they?

Two kids. My son is 21 and my daughter is 19.

 

How did you help them manage money while they were young? Did you have an allowance system?

Yes, they had an allowance.

There were certain chores that they did not get paid for — they were simply expected tasks as a result of being part of the family.

But once they did those, they could do other chores and earn money for them.

It didn’t add up to much but we taught them how to manage the money by putting it into save-give-spend buckets.

[Tom: I’m a big proponent of the allowance system not only for teaching the kids to manage money but I think it benefits the parents too. One of the hardest things for us was to be consistent with each child about how we approached buying things for them. One child might have very expensive “hobbies” and another not as much. It was difficult to encourage the one child without making the others feel like we were treating them unfairly. Since we set the ground rules like you that there were expected task that just contribute to the family and they have the opportunity to earn above that with added effort, the kids feel like they all have the same opportunities. ]

 

How do you plan to help them manage money as they get older?

As they got older and began to make more money, we built upon what we had already taught them.

We also set up some financial incentives to help them make the right decisions.

For example, we gave them the chance to earn a car as well as take home a portion of their college savings.

These have met with mixed results. My daughter took both the deals and will leave college with $30K and a new car.

My son is still deciding if he wants to take us up on either offer. His preference is that we simply give him the money with no effort or performance on his end. šŸ™‚

[Tom: It’s always amazing how kids with the same parents can turn out so different. We are going through the same thing. At the end of the day all we can do is teach them and try to help them succeed the best we can, they have to make the ultimate decisions. I love the creativity you described in both those articles.]

 

How do/did you finance their education? Do/Did they go to public school? Private School? Home School? What is the reason for your decision?

They were homeschooled because we felt we could give them a better education than the school system. Of course, this took a lot of time, effort, and expense on our part, but I think we were all the better for it.

We were fortunate to live in an area where homeschooling was popular and hence we had a broad selection of supplemental classes and extracurricular activities for the kids to choose from.

[Home schooling has come a long way since I was a kid. I went through the public school system but my brothers were home schooled. Our city has a great homeschooling community and the curriculums available today are top notch. I like taking some off peak vacations with the kids from time to time too.]

Do they plan to go to college? If so, how did you plan to pay for college? Is the child responsible? Are you fully responsible? Is it a bit of both? How did you decide this?

See the link above for the college incentive system we set up.

My daughter is going to college (she enters as a junior having taken many college courses while in high school) and will graduate in two years. She should leave with a diploma, no debt, and roughly $30,000 in cash.

My son is in a ministry training program which we are helping him pay for. He will leave with no debt as well.

What is the most important financial lesson you could teach your children?

There are many others less fortunate than you are. Help them out however you can. Sometimes that means giving, sometimes volunteering your time. Consider yourself blessed and work to bless others.

 

Okay, fess up. What was the lie? Tell us about the truths.

Wait, what? Wouldn’t you prefer I left you hanging????

Ok, if I must.

The first one is a lie. I hate running. I have completed several centuries (100-mile bike rides) and even led a marathon (I was on a bike leading the runners on the course) but never actually ran a marathon.

My grandmother was mayor of our small, Iowa town for twenty years. It was kind of awkward when I was in high school but other than that I thought it was cool.

I tried out for the school play as a sophomore and got the lead. When I refused to kiss my co-star as part of the play (it was not in the script but the director wanted to add it — I said “no” because the girl already had a crush on me and I didn’t want to encourage her), he passed me up for a role the next year. Or at least that’s what I tell myself. Maybe it was because I was bad. But my senior year we got a new director who cast me as the lead again. I think somewhere around 50 people watched that play. Not bad for about a million hours of rehearsal!

[I used to hate running too but for some reason, I stuck with it. I guess it was because I signed up for a half marathon and didn’t want to crash and burn because I didn’t train. Something kinda magical happened after training for about six months. I started to like running. The simplicity of strapping on some shoes and just putting one foot in front of the other is therapeutic and it’s my number one way to listen to podcasts.

I might be sorry in twenty years though if I’m getting kneeĀ replacements.]

 

What is the number one money/finance/investing tip you have for high income parents?

Save and invest as much as you can as early as you can.

This tip plus time will make you wealthy.

[So true! It’s hard to see that it will make a difference when we are saving relatively smaller amounts when we are young. I wish someone had pounded that truth into my head when I was younger.Ā  I’m doing my best to make sure my own kids understand this.]

 


If you need help tracking all your accounts, there is a great application that is completely free. It’s called Personal Capital. With Personal Capital you can track all your checking, saving, mortgage, investment and retirement account all in one place. I used Personal Capital and find it to be the best way to keep all my financial accounts straight. Try it our free today.


 

Thank you ESI Money for being part of the HIP Exam. Here’s a little insight into someone who has walked the walk and talked the talk when it comes to earning, saving, investing and instilling those values in his children. He’s also the author of a free ebook titled Three Steps to Financial Independence.

What questions do you have for ESI Money? Sound off below.

Tom
Tom is a doctor, husband and father of five with a passion for parenting and finance. When he isn't skateboarding, riding BMX, or jumping on the trampoline with his kids, he is reading and writing about personal finance. He helps high income parents educate and mentor their kids to become financially, emotionally, and intellectually self sufficient.

4 Responses to “HIP Exam with ESI Money

  • Nice post. How to handle money with kids is interesting. My cousin did a method similar to ESI for his kids. His daughter is getting some good cash in the deal. His son, not so much. Maybe boys really are less responsible.

  • Nice post – love the series, always great to see what smarter people than myself are going through. My kids are much younger but I can already see the difference in the way my son & daughter handle their allowances. Let’s just say my son lives ‘paycheck to paycheck’ and is trying to ‘borrow’ against the ‘Save’ bucket. *Sigh*. I have my work cut out for me…

  • Great insights! I love hearing how others manage finances with kids considering we have two under 3 right now. Such interesting stories! Our time is coming…

  • I want my wife to home school so we can travel more. She works partitime as a Physician Assistatn. I could even help if I retire early. Her reply: Imagine what a NO face looks like without saying the work no. End of discussion…..

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