Welcome to the Fiscal Firehouse, a podcast dedicated to promoting
financial literacy to firefighters.
I'm your co-host, John Beattie, executive board member of Local 1309, a lieutenant,
and also a certified financial planner.
With me, I have the other co-host of the fiscal firehouse, Louis Barella, executive
Board member of Local 1309 ambulance driver, and want to be financial expert.
Together, John and I hope to bring clarity to the world of personal finance,
specifically relating to firefighters.
Firefighting is a difficult job making sound.
Financial decisions shouldn't be.
Introduction: Welcome back to the Fiscal Firehouse where we break down money.
Investing in financial independence for firefighters.
Today's show is a special one.
We're calling it the Kids episode.
John and Louis dive into why teaching your kids about money early can be.
One of the most powerful financial decisions you'll ever make from 5
29 plans and Roth IRAs to custodial accounts and the new Trump accounts.
We'll walk through practical ways to start investing for your kids'
future goals if you're building wealth at the firehouse and at home.
This episode's for you.
Without further ado, let's kick it over to local 1309 studios and the
recording of the fiscal firehouse
Jon: Welcome back to another episode of The Physical Firehouse.
I'm your co-host, John Beatty.
We're recording here, live in local 1309 studios, and as always sitting
across me, the person that's really bringing it every episode, my
partner in this endeavor, Louis Ella.
Hey Louis.
What's going on buddy?
Louie: Hey, jb.
Good to see you, man.
Jon: It be good to see you man.
Good to see you as well, bud.
unfortunately we're gonna kick off this episode with some somber news.
obviously all those, in the West Metro community know and have been infected by
a pretty significant tragedy in our go.
Organization, we lost a brother and a friend, engineer Kyle Bartlett passed
away exactly one week ago today.
and our hearts are just broken.
Honestly.
We're all healing as a group and as a community.
our thoughts and prayers are with Kyle's family, his wife and his kids.
And, it's just been, it's just been devastating.
So we're not gonna elaborate too much more on that, except, our hearts and
prayers really go out to Kyle's family and everyone else affected by this.
but we did want to take the opportunity, obviously, in previous episodes
we've talked about the importance of, beneficiary updates and making
sure all your information is tidy up.
So if something does happen, and all these things are.
Are tragic and they're unforeseen.
We just wanna make sure that, as people are healing and as they're recovering,
all the things that go around with accounts and all that other information
is already handled, and it's just one less burden that the family has to endure.
You agree with that, Louie?
Yeah.
Louie: I think it's important, not just for, firefighters, but for
everyone to have their beneficiaries updated and to have a will or
a trust if you have children.
and, we've talked about doing an episode on that.
That's not this episode, but maybe we'll do an episode in the future.
and look, we're not trying to avoid the hard conversations.
The truth is, John, you and I had a lot of conversations about
what we wanted to do with this episode and what we wanted to say.
and the truth is we just, we're not in a good space to, to want
to talk about that in detail.
We don't, we're not experts in that field.
So we can only talk about, the financial side of things or that
benefit, because that's what we know.
That's what we're good at.
And We, we do wanna say you should update beneficiaries.
Make sure that those things are taken care of, as well as your wills and
your trust as well, if you have those.
And if you don't, you really need to get those, you really need to
get those taken care of as well.
And then on top of that, it's also important that we
just take care of each other.
Like it's hard and it is, this job can be very difficult at times.
And we are in a unique position where we live with the people that we work
with for a roughly a third of our life.
So it is, incumbent upon us to take care of each other.
In the best ways we can and to notice if something is off or
something is weird about our crews.
and I say that without saying anything negative to
Jon: yeah.
No judgment.
Which is
Louie: is great, and Kyle knew all the things, like he was really good
about, knowing his own mental health.
problems and probably being able to hide those as well.
But for other people out there, for other crews out there, be diligent about the
people that you work with about paying attention to how they're acting, how
they're, what they're going through.
And, I know that's easier said than done.
It's a hard thing to do, but we just encourage you guys
to take care of each other.
Reach out to the brotherhood, the sisterhood for help when you need it,
because we are here for you and we do want to help you in any way we can.
your union reps, whatever department you're at that you're listening to, I
can just almost guarantee you, especially if it's a Colorado professional
firefighter union, they will go outta their way to make sure that they help
you and get the resources that you need.
If you say that someone on your crew is struggling, they'll be
there for you in an instant.
So take care of each other.
Take care of yourselves.
Jon: Yeah, absolutely.
that's well said, Louie.
And, I'm just proud of everyone really, coming together in this time of need and,
just the outpouring of support, not only on a financial basis for Kyle's family,
but just really surrounding them and shrouding them in love and support and,
yeah, it's just a, it's, we've, there are no words and we've tried to have
these conversations and unfortunately this is not the first, tragedy, that
West Metro has had, had to an endure.
I really hope it is our last.
but nonetheless, we love you Kyle, Kyle's family.
We love you guys and everyone's surrounded.
we're there for you.
That's really what we wanna talk about.
and really moving forward, really what this episode is.
And, this was actually on a suggestion from one of our listeners.
it seems like at West Metro, and I'm sure, throughout a lot of the other
departments, man, there's been a lot of babies being had, we're in that turnover
phase of the organization, honestly, where we have a lot of people retiring.
Obviously we have a lot of newer folks coming in and where they
are in their lifecycle, a lot of 'em are getting married.
Some of them are not getting married, but a lot of people are having kids.
Yeah.
so there's a lot to, a lot to unpack when you're talking about kids
and finances and all the things that go in with raising kids.
So Louis and I thought this would be a good opportunity to talk about some of
the challenges that Louis and I are both.
Parents of boys and they're crazy.
but we wanted to talk about just some of the things that we consider when
we were talking about our kids and money and teaching them about money.
And then also what are some of the accounts, that you can use to help,
establish some financial security for your family and your kids moving forward.
So that's really what the episode, moving forward is going to talk about.
I think when we're talking about kids, before we talk about the accounts,
I think it's important to teach them about money, how to use money
responsibly, what is money, and all the things that go around with it.
You agree, Louie?
Louie: Totally.
I think it's weird.
I get a lot of questions about money and kids, but all the conversations or
all the questions that I get are all about how do I save money for my kids?
Or what account should I open for my kids?
Or how do I set money aside and I rarely get asked The really
important question, which is, how do I teach my kids about money?
How do I model for them good behaviors when it comes to finances or to investing?
And that's the real question.
I think your heart's in the right place as a parent, if you wanna
save money for your children.
And I'm not saying you shouldn't.
There are ways to do that we'll talk about, like John said, but
before you do any of that, it, that all counts for nothing.
If you don't do a good job at teaching your kids how to be
responsible with money, the value of money, how to use money.
So that's why we wanted to take this first time to talk about like the education
side of it, the teaching kids about money.
I think we have failed in our society, in our school systems
by not teaching kids about money.
the one thing, regardless of what your child is gonna do in life, whether they're
gonna go be a his history major or they're gonna go to college, or they're gonna
become a firefighter, whatever it is.
The one thing that is common to every child is that they will 100%
have to deal with personal finance.
They will have to manage their own money.
They will have to save, they will have to navigate the pitfalls of debt and
of buying a house and all those things.
And they're not gonna learn any of that from the public school system
or from the private school system.
there's no personal finance component
Jon: They're gonna learn it from TikTok is where they're gonna learn it from.
Louie: Yeah, exactly.
They're gonna learn it from their friends and from TikTok and from other
terrible ways, or Wall Street bets.
and so it is really incumbent upon you as a parent to teach them about
money, to teach them good money habits.
So that's what we wanna focus on first with this episode.
Jon: Yeah, that's, a really good point there, Louie.
And this is something that, I'll be honest, I did not really even think
about even before becoming a parent or even my upbringing in my childhood.
But, as I was doing my coursework, a lot of time was spent around
like the psychology of finances and money and how do you really
develop, your feelings around money and how you think about money.
that's not something that I really unpacked until I went through some
of these, some of these courses.
Then did it internally.
And dude, it's man, it's like going through therapy when you
start to think about like, why do I feel this way about money?
Why do I feel like certain ways around debt?
Like some people, it's a much more visceral
Louie: Oh yeah.
Jon: response and other people are like, what's the big deal man?
I use it all the time and it's not a big deal.
But other people are like, man, I will never take out a loan ever.
I will live under a, bridge so I don't have to take out a loan.
And it's like, why does someone get to that point?
And it almost always goes back to their upbringing and seminal events
that happened in their life that really burned or etched a certain.
Visceral emotion around
Louie: Sure, yeah.
Jon: can and cannot do for you.
Yeah.
And that was one of those things that I didn't really consider, but
as I have kids and raise kids, that's something I've been very attuned to
is how I talk about money, openly.
Yeah.
With, my wife and the kids around us so they can hear mom and dad talk about this.
I think it's very healthy because for so long in our society, and
even today, money is still one of those things that's very taboo.
Like some people are very secretive about it and a lot of it has to do with debt.
And being in debt and talking about the challenges of getting outta debt.
but really I think it starts with just having open conversations now.
And Louis and I will talk about how it's age specific.
Yeah.
Because dude, you talk to a kid that's three years old, right?
You've got some kids that are around that age and you start
talking to them about compound interest and they're gonna be like.
Sure Dad, what's, I wanna watch the, Sesame Street or whatever.
Bluey or some of these other, it is just gonna be way over their head, right?
So Louis and I will talk to you guys, today about some of the strategies
based on where your kids are at and maybe some more age appropriate
education, for where they are.
But the one thing that I did want to talk about really quickly, and this is more not
for your kids, but more for the listeners.
And one of the things that was a really strong takeaway for me when I was going
through school was, and I've talked about it here, on the episodes before,
but just a quick little brief, overview of something called money scripts.
And money scripts are an unconscious belief about money
that we learned in childhood.
These beliefs often drive financial behavior, sometimes in ways that
don't align with logic, all right?
Or being what, the finance community we'd call rational.
And this is something that really hit me strong.
Alright, so there's two, two guys that really drafted this and came
up with this, Ted and Brad Klon, their psychologist by trade.
and then one of 'em actually became a CFP, so he's got more of
the financial backing behind it.
But as they did all their studies, it basically came down into four.
I don't know, different quadrants.
If you want to think about how you view money and the behaviors
that are associated with this.
And as I was going through each one of these, I've definitely seen
it in all of our firefighters.
Oh yeah, they all have, some level of this, some more than others.
But once you understand what you're more susceptible to or just how your
brain is wired, you can then really start to think about how you want to
potentially change some of this behavior.
'cause a lot of it is not healthy, it's not healthy behaviors.
so I just wanted to bring those to light.
and then I'll also reference a book for you guys that want to do
a little bit more research on this.
if you find that it's, beneficial to you.
So the once is money avoidance.
So that's the concept that money is bad.
Rich people are greedy.
These people typically have scripts that associate fear,
shame, and anxiety about money.
they just avoid money at all costs.
Yeah.
I'll be honest, I'll throw my dad under the bus.
Dude, my dad is 100% money avoidance.
I love you, dad, but he just, it's outta sight, outta mind.
Doesn't want to talk about it, doesn't really wanna, engage with it.
And unfortunately, it's left him in a position now in his life,
where he's having some challenges with some of his finances.
'cause all the money has run out now and now he's being forced to
engage in those conversations.
Yeah.
And this is something common, I've seen this around our folks as
Louie: Oh yeah.
Jon: outta sight out of mind.
Like as long as that money just keeps coming in, we'll be fine,
like paycheck to paycheck kind of behavior, but they don't really wanna.
They don't wanna engage with money, they just want to have it be an afterthought.
And, man, it leads to sabotage a lot of times.
Louie: there's a lot of negative opinions.
People that hold this script have a lot of yeah, rich people are greedy,
money is bad, the system is broken.
which, could be true depending on the circumstances, but if, but let's be real,
you need money to survive in this world.
And that's just part of the process.
It's part of the world that we grew up in.
And when I say world, I literally mean the entire world, no matter where you're at.
So to say something like that, which, money is bad, or to have that
kind of script, and to associate having money with, I don't know,
being bad or being evil or something like that, it's not healthy.
It's not healthy for your own personal finance.
Jon: Yeah, that's, yep, that's very true, Louie.
so the second one is, something that, they termed money worship.
And this is more the concept that, the more money I have, it
will help me solve my problems.
so what with this is a lot of overspending.
I mean, we see this with some of our firefighters where they're working a
ton of overtime, and they really tie their happiness, to their net worth.
This typically where I've seen this play out a lot is, people that maybe
came from humble beginnings, right?
and now they have the opportunity to make money or they have had
some success in either business or promotions and stuff like that.
And then they continue to just strive to achieve more and more.
but really they tie a lot of their happiness to their net worth.
Yeah.
Once again, from a healthy perspective, probably not the
most healthiest of behaviors.
as Louis mentioned, there is a certain amount of money that you need to have
in order to feel safe and secure, and we want everyone to have that.
But a lot of the studies show that, the incremental, a level of happiness
that you derive from each dollar goes down after a certain threshold.
Yeah.
money status.
Is another one.
so once again, this has to do with more my self worth equals my net worth.
so they're constantly comparing themselves, to
their friends and coworkers.
they tend to have, a tendency to wanna overspend as well.
and they really prioritize image over stability.
when I was thinking about, firefighters specifically in status.
Tied to money.
What do you think would be a status symbol with the fd?
Louie: Oh, please.
Dude, that Ford 1309, dude,
Jon: 100%.
And as I was going through this, this book that these guys wrote was really,
more for the general public and just some of the behaviors that they've seen.
But when I went more into our industry, one of the status symbols for sure,
and something that you're always feel feeling pressure to compare yourself
to, has to do with a new truck or what version of a truck, how much
lift you have on that truck, what
Louie: size?
You got a raptor, you got the trimmer package.
Like what do you got on that fancy truck?
Oh my gosh.
Jon: So we as an industry have been culpable in promoting some of these
not so healthy financial behaviors.
Louie: 100%.
100%.
Jon: And then the last one is money vigilance.
And this is one you can never be too careful with money.
So typically these folks have traits of frugality.
they typically tend to have strong savings habits.
they tend to be more private about their finances.
They have anxiety about scarcity in the future of running out of money.
And at the end of the day, they have a really difficult time spending money.
'cause their whole habits, they're hardwired to save.
So the minute you go from a saver to a spender.
They don't get happiness out of it, it actually gives them more anxiety.
this is the one that I probably resonate with the most.
and I, once again, I tried to think about where I came up with this,
and not to get too personal, but when I was growing up, I lived in
Wisconsin and my dad was a professor.
And, I was very comfortable.
We were very comfortable as a family.
I grew up there for about 14 years, had, a strong community and strong friends.
Long story short is, my dad's contract, didn't get renewed to be a professor.
So he grew up in Colorado and always wanted to move us out here.
so I moved out in middle school the last year of middle school.
And it was a challenge, man.
It was a challenge moving to a new place, in eighth grade, and all
those things that went around that.
So I think that as I did all of my kind of.
Interior work as they would call it.
Like I think this is where I really developed this concept of money vigilance.
'cause we went from having a pretty comfortable lifestyle, right?
To, we were never poor by any means, but we definitely had a big
reset in what our lifestyle was.
We went from a really nice house to, we went to a rental house and not so great
of a community and like all those things.
And I'm 14 years old.
At the time I didn't know any better.
But as I got older I'm like, where do I really.
Why do I feel so, I don't even say guilty, but why do I feel so
concerned about running out of
Louie: anxious about money?
Yeah.
Jon: And I really think it goes back to that, that one big pivotal movement in
my life and my family's life, where I'm like, oh, I kind of wanna understand now.
and as a father and as a husband, I don't wanna put our family in that situation.
So I'm extra careful
Louie: Oh dude.
Jon: stuff, probably to a not healthy
Louie: honestly.
Yeah.
I mean that's, Katie
Jon: helps me spend money
Louie: in That's great circumstances.
Jon: but just from my own personal anecdote, and I'm sure every listener can
think back, if you really think about it, why you are the way you feel about money,
it can almost always be tied to some type of, emotional response you had as a kid.
Yeah.
Both good and bad.
Yeah.
Louie: I grew up in a single parent family, so very similar.
My mom, I mean, we made poverty line of income for most of our childhood,
and it was hard, like it was hard for her, but stressful for her.
We always worried and she.
She would let us know that she was struggling financially.
And that was growing up with a little bit of that insecurity really has
probably made me have some of this money vigilant script, traits where,
you know, I wanna be frugal, I wanna save, I'm not sure if I have enough,
even though I know the numbers and I know the math behind it, Yeah.
You're still like, I don't know, are we really saving enough?
Shouldn't we save more?
Shouldn't we do more?
and I think it's easy for us, especially being, financially minded
people to be like, Hey, that's good that you wanna save more.
that's good.
But at some point it could be unhealthy.
And when you're sacrificing your future, or I'm sorry, your present
happiness, and your family's happiness because you have these unsubstantiated
fears of the future, that's a problem.
that's, that is a problem.
And you should address that.
Jon: Yep.
No, I think that's well said, Louis.
So each one of those is not supposed to be, it's not supposed to be good or bad.
It's supposed to just be an awareness of this is how you're
pre-wired to view money in finances.
And I think some of 'em are more healthy than others, but more
than anything, it's an awareness.
So if you do find yourself, and you will find yourself pretty
much in one of those four buckets.
It's just to be aware.
and then there is certain things that you can do if you're wanting to or
willing to change some of your behavior.
So just a shout out to, Brad Klontz and Ted Klontz for really
doing the hard work on that.
if you are interested in learning more.
recommendation for the book is called Mind Over Money, overcoming
the Mind Money Disorders That Threaten Our Financial Health.
so I will start, linking some of the stuff, into the show notes,
into the description so you guys can just find it so you don't have
to remember any of this stuff.
So just strongly recommend it if this at all has piqued your interest.
If you've ever wondered why you feel the way about money and finances, I think
this is a good, foray, a good first step into learning a little bit more
about yourself and how you view money.
But let's talk specifically about money with our kids.
Louie: Cool.
So when it comes to teaching your kids about money, I think the first thing
that you need to do is be a good example.
you can talk to them all you want about it, but if you are someone who sets what
I'll call bad examples to your children, they are going to pick that up and that
is what will stick with them, regardless of what you tell them to do with money.
So if you are an impulse buyer and you're buying the snacks and the toys
at the checkout lines or whatever, when you go to Walmart or Target,
they're gonna learn that and they're gonna grow up to be impulse buyers too.
Same thing if you, if If you set good examples, like you talk openly about
money and why it's important that you save money or that you set money
aside, or that you give some money to those in need, they are going to
develop those habits from an early age.
So whatever you do, whatever example you set, regardless of what you say to your
children is what they're gonna learn.
I think that's the number one thing you have to, if you don't take away
anything else from this episode when it comes to kids and money, it's
that the example you set will be the.
Way that they think about money and the way they handle money when they get older.
Jon: Yeah, no, that's good.
Louie: and then I'll say this too.
I think it's okay to start early.
There is a lot of, we treat children in a way where it's like, Hey, I don't
want them to have to worry about money.
Especially if you maybe struggled with money or if your parents
struggled with money, you're kinda like, I wanna shield them from that.
And I totally get that.
That comes from a good place.
But it's important to start early when it comes to teaching kids about money.
You don't need to wait until they're in high school to teach them about financial
possibility or financial responsibility.
And if you do, they're probably not gonna learn it.
It's hard to raise a 16 year.
To develop good habits to, with a 17-year-old when it comes to saving
their money or using their money responsibly, it really needs to
start at a younger age than that.
there's an idea that you should train them.
starting when they first get their first dollar, whatever that looks like.
If that's a 4-year-old or a 5-year-old doing a chore around
the house, that is where you should start teaching them about money.
And you should use those money moments when they get money to teach them
about money, if that makes sense.
Jon: Oh yeah, no, that makes a ton of
Louie: I'm gonna give you example of how that kind of
looks in the Barilla household.
obviously I've thought about this a lot with three kids.
I have a 5-year-old, a 3-year-old, and a.
18 month old.
So I've been thinking a lot about how to handle this.
And one thing that I've done, which is actually really fun, the boys
like it is I bought them, these little, it's like a three tier or
a three sectioned out piggy bank.
There's one section for spend, one section for save, and one section for give.
it's a really great bank and maybe I'll link that to, it's a,
actually a Dave Ramsey product.
It's a,
Jon: oh really?
Louie: the Children's Saver Bank or something like that.
but anyway, we, the way we set it up with our kids is when they get
money, we make them split it up and we say that they can spend some on a,
whatever it is, a toy that they want.
If they wanna put that money in the bank for that's totally fine, but then they
have to save some for something that is.
unknowable right now, we just are saving for the future.
So if they get $3, we make 'em just split it evenly between save, spend and give.
And then, when they go to school, they have this, this fund that they
can give to help people in Haiti who are struggling financially.
When we go to church, we have a benevolence fund that they can give
to that go to people who are hurting and in need, and so we make them
do that on a regular basis as well.
But that kind of teaches them from a very early age.
I do this both with my 5-year-old and my three-year-old, that when you get
money in, you are assigning it a job.
Some of that is fun for you because it's spending, but some of it is not
fun for you necessarily because we're deferring it for a future purpose.
If I can develop that habit in those, in my boys from an early age, I'm hoping that
it will stick with them as they get older and eventually have jobs and eventually
have to make the decision on their own to save and to spend their money.
Jon: That's funny.
Louie: do anything similar?
Jon: That's funny that you use the the piggy bank method.
'cause we also have, and I don't know if it's a, the Dave Ramsey
product or not, and I feel like ours has four tiers or four little
slots for the plastic piggy bank.
I think it might be invest.
save.
So two separate accounts, and then one is to spend, and then one is for
philanthropy or give, but very similar
Louie: concept.
Yeah.
Jon: Yeah.
so we've been doing that probably since the kids have been, I
wanna say around four-ish.
they've been able to and same thing, we like to just split in similar increments.
so then they don't really have to do a lot of math involved.
It's just yeah, if you got four bucks, it's a dollar in each one.
Louie: Perfect.
That's what we do
Jon: move forward with that.
But I want them to have some context behind each of these things.
I don't want them to just be investing as some abstract thing.
So a lot of the stuff that we'll do for investing or saving is, we.
One of our things that we do as a family that really drives a lot
of happiness for us is we travel.
We go on vacations.
that's our jam.
So a lot of times they'll use their savings accounts or their investing
accounts to purchase something in the future when we go on a
Louie: vacation.
Okay.
Jon: So it's something that, and once again, 'cause we do want it to not just
be this abstract thing that Oh, yep.
Invest.
And then in 15 years you can enjoy it.
no, invest now and then.
Yeah.
And then in six months when we take a trip, now you can take that money out and
now you've got it to do with whatever.
So I think just having something that's tangible like that and just having
a little, and they actually like it.
They enjoy it.
They have some fun with that.
So that's the other thing, if kids, it's just like firefighters, if they're
not having fun or engaged with it, it's gonna go right over their head.
But I don't think, I mean, I think there is an age, appropriate time, and I think
probably that later toddlerhood is when it probably starts to make the most sense.
'cause before that it's all about mind.
And they're not gonna have zero, they're not gonna have a lot
of context or concepts around
Louie: that.
Super important to keep it age appropriate, right?
Like you don't, you're just trying to teach them some basic fundamental habits.
you don't need to teach 'em about index fund investing or, mutual funds when
they're in, when they're toddlers.
that's not the goal at that point.
There'll be times for that, and we'll talk about that in a little
bit, but you're just trying to, like you said, make it fun and engaging.
keep them.
Get them excited about the plans for their money.
You talked about the vacation thing.
You're like, Hey, what are you guys gonna get when you're, when you've
saved up enough money before our trip?
what do you want?
I think having that kind of goal really is exciting for them and
it makes them want to do chores or something around the house, which
is super cool too for parents.
got a question for you.
This is a controversial topic.
I've talked to a lot of parents.
What is your opinion on an allowance that kids get every week versus
commissions making people, making kids complete a job before they get paid?
Do you guys fall on the scale?
You're a little ahead of me when it comes to your children's
Jon: no, and this is one that Katie and I have, had, I wouldn't say
some disagreements, but we've had a lot of thoughts around there.
so I was always brought up in a household that had an allowance.
Okay.
So that's how I was.
Brought up and honestly, I don't remember what my weekly allowance was.
And I'm sure that changed as I got older.
But that was how I always was brought up around money.
Katie thinks, that's not the way to do it.
Her her thought is, and I actually agree with her.
And there's certain things around the house that you just do
'cause you're part of the family.
Yeah.
that's just your own personal responsibility.
So
Louie: one gets paid for it.
Jon: one gets paid for
Louie: it.
Or you get paid in room and board.
Jon: Exactly.
Yes.
We feed you and we clothe you and we send you to school and all those other things.
So that's part of just the household stuff.
Now we also do feel.
Sometimes our kids go above and beyond what we would probably just say is a
general requirement of just being a good upstanding person in the family.
so when it is at that point, then we will give them something, as a reward
for kind of going above and beyond saying Hey, this really helped us out.
You did something unasked, unprovoked, and you guys just
saw a need and you filled it.
And we wanna acknowledge that and reward you for really going above
and beyond almost like a bonus, if you will, or like a promotion, man,
you just didn't do your normal stuff.
You went above and beyond.
So that's really where we've tried to land.
And honestly our kids, they do get enough money through, grandparents
and other stuff where there always seems like they get a little bit of
an income stream in for something for different holidays or birthdays.
So we've tried to make it more of an expectation, like this is just
you being a part of the family and what you should do and not getting
paid or compensated for that.
What's your
Louie: dislike?
I
would say we're right there, but I think Katie, obviously,
Jon: Katie was the one that was the one that's no, we're
not just giving them $5 a week.
Like they have to understand this is part of just what's required to be part of the
Louie: I think that's smart and I've read a lot about it and I've fallen
on the side of commission based work.
Yeah.
So there's a set level that you have to do, you have to clean your room
and you have to help take out the trash and you have to do these things
that we just have to do to manage the household that you don't get paid for.
No one gets paid for those.
and you have to help out.
But on top of that, there's gonna be opportunities for
you to earn extra income.
And maybe that's, a good example is we're getting ready to host a
family event and we need help like dusting and vacuuming and cleaning
baseboards or something like that.
And if you want to grab a towel and you want to help with that, we will give you
one golden coin for doing this thing.
And that's an opportunity for them to actually earn money and associate the idea
that you have to work, to earn income.
And I think that is cool, whereas an allowance is Hey, I exist and at the end
of the week I get $10, or whatever it is.
This is more no, no one's gonna give me money.
I have to go out and actually work and do something above and beyond what I
normally do in order to earn something.
and I think that teaches them some really good, values of money early
on, I need to be a hard worker.
I need to work for my money if I want to buy that toy, or whatever it is.
So that's where we fall in.
and I think that should be the baseline for most families.
Of course, if you do it, if you do it otherwise, and you're teaching your kids
through an allowance and you have them do so many task lists, like I've heard
people say yes, you get an allowance, but it doesn't show up unless you.
Check off these 10 boxes at the end of every week.
I get that too.
And I think that there's good lessons to be learned that way too.
So no judgment if you're doing it that way.
I do think you have to have a plan though for how you give kids money, showing them
efficiency, showing them that there's work that needs to be done for that.
and then on on that topic of making it hands-on engage, and the last thing I'll
say is there are games you can play or things you can do to teach kids about
money from starting from a young age.
One of the one cool thing that we do is we, we we have this pizza making kit,
like this play pretend pizza making kit.
And the boys have, they like to make pizza.
They'll put the different toppings on, they, cook it basically, or bake it.
but then we talk about like money.
I order a pizza, I call them up, I order a pizza.
They have to determine like how many toppings we put on and how much
money that's gonna be and how we're gonna split it between the brothers.
So it's just a way, it's just a simple way to talk to them about you're
doing this service you're making.
Pizza and then you're delivering it and I have to pay you for that service.
It's just a way to, to get them to think about the economy, basically.
So we we, these actions happen.
Yeah.
we you just use it as an opportunity to throw in the economic side
of finances, from a young age.
And I think that they are starting to get it and they're starting to realize, oh
yeah, like I need to be paid for this.
And if we're gonna put on extra toppings or something, there's a little bit
more money that needs to go into it.
I don't know.
I
Jon: And I think that's super healthy too, because a, especially
at their age, it's helping them with their math skills for one.
So it's teaching 'em about, math on top of finance.
But the one thing that I've noticed, and this, I see this in my kids a
lot, and I think it's gonna only continue to, become more evident.
The whole paper currency is just going out the way.
So people, and probably in that circumstance you probably still
play with play money, right?
So they can actually like, physically exchange it and what that looks like
and add it up and everything else.
I think there's a huge benefit to that.
'cause right now I think, and Katie and I are no different.
We spend probably almost 99% of our stuff is on a plastic.
on a credit card.
Yeah.
Sometimes via phone or actually the physical card.
But the kids have zero idea.
They just see a plastic card come out, us sign something,
Louie: and we get whatever we want.
We get
Jon: whatever we want,
Louie: by tapping this little plastic card.
Jon: So I think actually, and this is going back to the day, Dave Ramsey,
like envelope method, but actually okay, I've, this is my wallet.
I've got a finite amount of resources, money in here, and
then once I buy something.
It's gone.
It's no longer there.
I think that, especially at a very young age, I think is very helpful
Louie: That's a great point.
It has to be physical.
It
Jon: start understanding the concepts around money and having a finite amount.
It.
So I think that's a, I think that's a great thing that you do with
your kids to just demonstrate.
And once again, so they're having fun with this.
It's engaging.
We're not sitting down and going through a sheet and being like, here you go.
I mean, it has
Louie: be interactive, right?
I'm not showing 'em the spreadsheet.
I love spreadsheets, but I'm not like, let's talk about this spreadsheet, son.
Yeah, no, definitely not.
So that's the idea of, let's expand on that a little bit.
I, different kids depending on their age, are able to handle
concepts about money different.
Yep.
So at the preschool age, we're just trying to teach them that money exists.
Talk to them about what it means to have to go to, why does Papa
have to go to work for two days?
Why?
It's not just because he likes hanging out and having to sleepover with
his fun friends at the firehouse.
I have to go be away from you guys for two days so that I can
get money to pay our bills and to pay for food and stuff like that.
So I just try to.
Keep it very simple.
We play pizzeria or play, store.
Yeah.
you're just trying to give them an idea of what it means to, to
make money and how we spend money.
Yeah.
I think that's the important thing about the preschool age.
Jon: This one, honestly, this one has been hard for us.
so it's inverse our relationship.
So Katie and I, because now I work in days, right?
So I'm home every
Louie: Oh sure.
Yeah.
Jon: And my wife travels a lot.
so the kids, are starting to, wonder why mom has to be gone all the time
or why she's gone all the time.
And, we have a lot of conversations around moms making up some sacrifices
for our family to better us and our future, but her job is to go and travel
and make money and what does that do?
And that helps, support where we live and the fun things that we
get to do and saving for college and all these other things.
We're very open about.
Why that is, but it doesn't make it any easier.
And I know I'm preaching to the choir here, and it's, like I said, it's inverse.
the firefighters are the ones that are having to explain, why they go
away for two days, while mom and dad have to hang out, and take care of us.
But it's that concept of well, we're doing this, so we can support the family.
This is how we make our money.
So I think that's important though, is just having those conversations.
Louie: Yep.
Yep.
At the preschool age, that's important.
And then in elementary school, that's when we can teach them the importance of
saving money and of delayed gratification.
That's a really hard thing.
And let's be real, you firefighters listening to this.
We know you guys can struggle with delayed gratification too.
Jon: Dude, just even we were talking about the FLSA cycle and working overtime,
but not getting paid until sometimes six, six weeks in arrears, you're just
like, oh my God, this is ridiculous.
I need that money now, right now.
Yep.
Louie: Yeah.
but that's, at the elementary age that's when they're ready to learn about that.
if I save money, I can get whatever it is, this bigger toy or this better
toy or whatever it is, versus spending it all on candy as soon as I get it.
elementary kids are ready to learn about that.
and I think it's also important during that time is to let
them make those mistakes.
let them run outta money.
Let them spend their money on something stupid, while maybe their brothers saved
it up for a few months and then brought that, bought that really cool toy.
man, there's no better time to make mistakes with money than when you're in
elementary school when the stakes are
Jon: Stakes are low.
And this is one, I don't know if your kids have done something similar, but
at least in our neighborhood, there's a lot of lemonade stands that pop up
and like small little things where they have the opportunity to once
again, potentially earn some money.
Make some money, and they interact with people that are buying whatever, like
I said, whether it's lemonade or snow cones or cookies, whatever that is.
So I think it's a great opportunity for them.
it just, it goes another level more than the preschool where now
they're actually interacting with people outside of their family.
Yeah.
Like with, neighbors or friends and stuff like that.
And having conversations about what trade looks like and a business looks like.
and once again, we don't go much beyond that.
We don't even get into the tax conversation yet.
But it's just an opportunity for them to start to express, how they're gonna make
money potentially and what it feels like.
'cause a lot of times it feels good for them to do something
and then get paid for it.
And now they got this money to go buy something that they want.
Louie: Yep, yep.
Jon: great opportunity at that age to do a lemonade stand or something like that.
Louie: We got a lot of 'em in our neighborhoods.
Yeah.
So I, and we try to buy, we try to shop and buy because it's let's
talk about these kids are being industrious and they're, trying to do
something cool and provide a service.
let's support it.
and then I think, same thing around elementary age, you can teach 'em
to give, I think it's important to instill the values of giving.
that's important to our family is to give to those in need to those
who are less fortunate than we are.
And so that has.
we've even really started at the preschool age, but definitely by elementary.
The idea of giving to those in need and why that's important.
we're very blessed and we have done well financially.
And so there are those that don't, that have not been, as lucky as we have.
And it's okay and it's good to, to give to those causes.
So by elementary school, if that's a value for your family, you should be really
imparting that to kids by having them, give money to charity and to good social
Jon: Yeah.
No, I think that's, I think that's super important.
so obviously as we go up the kind of the hierarchy or the age spectrum,
now we're talking about that preteen.
So we're talking, end of elementary school, beginning of middle school,
definitely the awkward years and a whole host of different things.
but this is one now where kids really can start to value and consider
the importance of working more.
A lot of 'em will do, things on, in the summer, on the side
jobs, like all sorts of different
Louie: things.
Yeah.
Shoveling snow, mowing lawns, maybe.
Jon: And money for them now at this point because they're hanging
out with their friends and wanting to go do things outside of, just
hanging out with the family becomes way more important for them.
Yeah, They're asking for money now.
Yeah, because before you're just going out as a family.
You go into the movie and it's okay, mom and dad are picking up everything, but
now they're like, Hey, it's Friday night.
And I'm going out with Jimmy and we're gonna go catch a movie.
So I need 25 bucks pops.
So now you're like, okay, now you have to have conversations more
around like the value of money and what can you do to help support some
of the things that you want to do.
So there's way more buy-in now at this age, to really start to have
those conversations around budgeting.
Yeah.
Right now you can start to talk about, okay, you've got a finite amount of money.
This is how much money you're making this week, or Right.
Or whatever.
And you want to go do these things.
you can start to orchestrate what budgeting looks like and help
them, and support them with that.
Louie: I, I think this is a great time to pull out the spreadsheet for kids
and I, I don't think elementary school you need to do it, but at some point
you need to be like, well, let's sit down and create a plan, whether that's
a spreadsheet or whether that's a notebook, but having a way where you
can plan out your future expenses.
They get that the pre-teen age, they're ready and they know that they
have some big things coming up that they want, or they have a video game
system that they wanna buy, and it's gonna take quite a bit of saving and
a lot of commission work that they need to do before they can get it.
Now you can wave that carrot in front of them and have them work towards it.
Great age to do that thing.
And also related to that is that's the time where we can
teach 'em about opportunity costs.
The pre-teen ages.
Now they're, they can conceptually understand opportunity costs and
just for those that need a little reminder of what opportunity cost is.
Opportunity cost is what you give up when you choose between two options.
Whether it's just keeping it simple for kids, again.
buying candy now versus buying a $60 video game in four or six
months or something like that.
Do I want that now?
Do I want that instant gratification or do I want to put that off and
give that up so that I can buy this bigger item in the future?
Kind of teaching them that at a young age and how to think through that.
the pre-teen age.
Perfect time for that.
Jon: I think that's, a good, age appropriate, interaction to have.
and then last but not least, obviously now we're talking about teenagers and a
lot of the challenges that go with teens.
and really now getting into the real, they're becoming young adults, soon
to be young adults, and now they're really having to grasp more with like
reality in the real world and really what money, how money works and how
it serves a purpose in their life.
So this is really where hopefully now, they do have some type of, way that
they're making money on their own.
And this is really hard too in our culture, right?
And a lot of.
firefighters and our friends, their kids are heavily involved in sports.
Oh, big time.
Sports.
sports.
And I'm not to try to dismiss that 'cause I think sports are valuable
for a lot of different reasons, but sometimes I think it is at the detriment
of kids being able to be kids and have a summer job or be able to make money.
and all they know is just sports and they're going across the country,
traveling to all sorts of stuff.
And that's their job,
Louie: all year.
these families are doing it all year.
It's wild.
Jon: and that's challenging, but I think now is the time to have
those conversations with your kids on money talking about, budgeting.
And then you're starting to have more adult conversations
about investing, right?
Really now you can really start to talk about, okay, that's great.
You worked at, the pool, or you cut a bunch of, or you mowed a bunch
of, lawns, and now you've made four grand or $5,000 over the summer.
That's great.
let's talk about what are we gonna do with that four or $5,000.
Hopefully we haven't just spent it all, like hopefully we've saved some of that
money and now let's talk about ways that we can make that money grow and that money
will then make other money and really have those concepts around investing compound
interest and how to invest wisely.
by the time your kids get to, 13, 14, 15, they should really
start to be able to understand some of that stuff conceptually.
Louie: Yeah.
I mean that, this is high school age.
they need to know about investing in comp compound interest.
They also need to know about credit and debt.
Yeah.
And the dangers of that.
how it could be a tool maybe, but how it could also really burn you.
so that's your time to really just be very open and honest with 'em about everything,
about your finances and about how you save and how you think about money.
'cause they're gonna ask, like they will find opportunities to ask you
about your financial situation.
And I think a lot of parents, like for decades, I think for
generations past, they'd be like, wow, they don't need to know.
I don't need to tell 'em about my money.
Yeah.
I just don't think that's the best option.
I think just being really open and frank with them about money.
even money problems to a certain extent.
I'm not saying you should burden them with your financial problems, but you
should talk to them about things that you've had to think through or sacrifices
you've had to make in order to save for your future or to save for their future.
it's a great opportunity to do that as a teenager.
Jon: Yeah.
I've seen, I've seen this play out the most and maybe you have too,
Louie, just talking with a lot of, our firefighters is where this concept
really comes to a head is college.
Yeah.
And when we start talking about where we're going to college and how much
college is gonna cost, this is really where you have to be completely
transparent as a parent, And say Hey, I was able to save this amount of money,
or maybe I wasn't right, but this is basically what our family can contribute
and now we want to go to this school and this is how much money this costs.
And I'm telling you right now, this is the thing that really brings it
home for kids and parents, both where they realize, some of the Challenges
of maybe not saving up for college and just having those conversations.
Yeah.
so this is one that, once again, I think there's a lot of different
resources out there when you're talking about college and affordability, and
we'll talk about that in the accounts section here in just a second.
But this is really where it comes to a head and where there's a lot of sometimes
pretty difficult conversations mm-hmm.
About man, that's great that you got into this school and all these other things,
but we're looking at all these costs and
Louie: And here's what debt can happen if you decide to go outta state or whatever.
totally.
Yeah.
And I think finally, I'll just say this about the high school years is
that's, this is your, probably your last chance to drive home the importance
of being a saver, being someone who just is gonna commit to saving some
of their money or, and setting aside money for rainy days and for the future.
If you can't do it now in as a high schooler, if you can't teach that
to them, they might never learn the importance of that, or they
might not learn for many years.
And it'll cost them a lot of money and a lot of heartache, if they're not a saver.
So being a saver is really important.
Teach it to them by the teenage years.
just do it.
Like you gotta save, you gotta save some money.
yeah.
Jon: Good.
So that, I think that's really wraps up the conversation around at least talking
about money and some of the education that goes around money with your kids.
obviously from the time they're little kids like toddlers in preschool all
the way up until they're young adults in high school and going off into the
workforce at some point or college or whatever that avenue looks like for 'em.
So now that we've got that behind us, let's talk about some of
the avenues in which you can use different accounts to help support
your kids or set them up financially.
Okay.
So there are different options with that.
So we'll talk about this one first and foremost.
Louie: Can I just give a quick disclaimer here?
Yeah.
I, so before we talk about how you can save for your kids, which I know comes
out of a great place, like parents want to help their kids and that's awesome.
But I just wanna say that any kind of saving for kids should only be done after
you have saved adequately for yourself.
So your goal as a parent should to not be a burden to your children someday.
So I don't think that you should be sacrificing your own retirement savings.
And your own emergency fund savings in order to fund your children's whatever
college or just a down payment for their house or anything like that.
Focus on your own retirement and your savings account before you consider
opening an account for your child.
And it's okay if you don't have a lot of money to save for them.
After that, you, number one goal is to save for yourself first.
And I know that sounds selfish, I know that sounds, but it's not.
What you're really doing is you're not being selfish.
You're making sure that you're in a position that your kids won't have to
take care of you when they become adults.
So only consider these things that we're talking about after you have adequately
funded your own retirement accounts.
Jon: Yeah.
the famous saying with that is, you can always borrow for, your kids' future,
whether that's college or other things, but you can't borrow your retirement.
Exactly right.
You can't, there's no loan you can take out there when you're ready to
retire and there's no money out there.
So you do have to, it's they always, Talk about the example
when you're on the airplane, right?
You gotta put your oxygen mask on yourself first before your kids.
And in the circumstances, finances is true.
You have to get your financial house in order first in order to help
them and their financial house.
So I think that's super important.
Good clarification on that, Louis.
So this is assuming that you're taking care of yourself financially
in your retirement and your future, before you're helping out your kids.
So one of the very popular avenues when it comes to accounts and,
saving for your kids or saving for goals for your kids is college.
Mm-hmm.
We just talked about the cost of college and there will be a whole
episode of college and how to navigate college here in the future.
This is something that I get asked a lot about, and it's constantly
changing, but one of the good accounts out there is something, and most
of you have probably heard about this, it's called a 5 29 account.
Once again, 5 29 is for the, section in the Internal Revenue Code.
Anything.
Any type of account of financially 4 0 1 5 29 4 57.
It all is just the precursor to the internal revenue code.
So that's where this is cited.
but really what this is this is an avenue for you as a parent,
to help saving for your, for your kids on a, taxed advantage basis.
So what this looks like, and once again, we're in the state of Colorado, right?
That's where Louis and I are based.
So that's what we're the most familiar with.
So if you're listening outside of the state of Colorado, each state has their
own little provisions and their own, accounts in order to fund this in order
to get a, state income tax deduction.
Alright?
So this is not a federal.
Tax deduction.
So you're not gonna save money by putting into these accounts on a
federal tax basis, but there is the opportunity that you can save
some money on an income tax basis.
So basically what happens is your money comes from a post tax account.
So you can't do any of this stuff pre-tax.
So you'll get money, you'll get your paycheck, or you'll
get a windfall or whatever.
So you have this money and then you can allocate how you want to do it.
but then you can set it up, through different, accounts.
So in Colorado, if you want the state income tax deduction,
you would go to college invest.
That's our state sponsored plan, right?
Like I said, almost every state has their own state sponsored plan.
So if you're really trying to take advantage, and get the
income tax deduction from your state, use a state sponsored plan.
So once again, for Colorado, that's college Invest.
If you just, Google that Chad, TPT at whatever college invest, it'll get
you to the landing page from there.
So your money goes in, like I said, it goes in after taxed,
but depending, there's different avenues in how it can be invested.
That money will then grow tax deferred, so you're not gonna pay
any taxes on that on a yearly basis.
And then assuming it gets used for educational purposes, and once
again, the IRS lines out exactly what you can and cannot use it for.
It will grow tax free and then when you pay a tuition bill or something
else associated with education, it then comes out tax free.
So it's very similar to, kind of retirement accounts.
As long as they're qualified to some degree.
So the key point with this though, is you have to use after tax money so
it can, it doesn't come out pre-tax.
You can get potentially an income tax deduction.
from your state.
From your state.
Yep.
And then it'll grow tax free as long as you invest it.
and then when it is taken out, it will then, not be taxable as long
as it is for educational purposes.
Louie: And the educational requirements, what they consider qua
a qualified expense is pretty broad.
Like it doesn't have to be your traditional four year college.
It could be, EMT school or a paramedic.
It could be vocational, it could be, an apprenticeship program.
It could be flight school.
if you wanna send a kid to flight school, they're, it's very generous in terms
of what they consider to be continuing education or post-secondary education.
So it's not like they need to go to a traditional four year college in order
to be eligible to spend that money.
Jon: And it can also be used for K through 12 education as well.
the last, limits were 10,000 a year, I think in this year, 2026.
They're actually gonna double that
Louie: it's 20,000.
Yep.
Thousand
Jon: per year.
But really, I mean, you guys can imagine the magic with these plans are, is
getting it funded early and often.
Really getting that opportunity for it to compound.
if you're only doing it the last couple of years, something is better than nothing.
But really where these things thrive is if you can set money up earlier on in your
kids' life and hopefully let that thing grow for 18 years, that's a huge benefit.
Yeah.
Huge benefit to get as much money in there early on.
If you really think this is something you wanna save for, you're gonna have a
much better return on that investment.
Louie: And so we'll say this before we go on.
I'll just say that I think the 5 29 is the best account for kids.
And you have to determine like the value you spend on, the value you place on
education for your children, and if you think they're gonna go to college or not,
because tying up all that money into, educational purposes that they might not
use might not be the best because you have to pay a hefty penalty if you use it for
something other than educational expenses.
So you gotta really think about where your kids are and if you're gonna really
place a lot of value on education.
I know we do in our family, and I have a lot of conflicting feelings about college
and about the cost of college, but we're.
Place an emphasis to our children on continuing their education
after high school, whether that's a traditional college or a vocational
training or something else.
We do want them to continue to get skills and knowledge and
education after high school.
And then what I think makes it a no brainer, at least to saving a certain
amount in a 5 29 account is there was a new tax, law that, went into effect
a couple years ago that allows you to roll over up to $35,000 total from
your 5 29 account into a Roth IRA.
So even if they don't.
Spend all the money that they have in a 5 29 account.
you can roll that into a Roth IRA account.
They can roll it into a Roth IRA account for them.
So you're basically, you could be pre-funding their
retirement account in a Roth.
I a, which as John and I think are the best accounts for almost anyone as a Roth
IRA, they, you can actually get up to $35,000 in that, of that 5 29 into a Roth
IRAI think that makes it a no-brainer.
I think this is the best account to save for.
We'll talk about some other options, but you should really consider if you
have children you wanna save for them.
I think a 5 29 is great.
Jon: Yep.
and that just speaks to the importance of getting this
started sooner rather than later.
'cause there are certain, requirements to do that.
5 29 to Roth, IRA rollover, like Louis said, at a minimum
it's gotta be open for 15 years.
The account does.
and then it is limited to how much you can contribute to a Roth IRA each year,
for this year I think it's $7,500.
So it's not like you can just roll it over as soon as they turn 18, you
can put 35 grand into their Roth IRA.
It's gotta be phased in over, at this point it's gonna take
you about five years to do that.
But it's a great starting point.
It's gonna give your kids a huge leg up.
Yeah.
So at a minimum, I think if you are thinking about setting up your, accounts
for your kids, a 5 29 makes a ton of sense and getting to at least that 30
5K amount is gonna be super beneficial.
Yeah.
and I just wanted to give a quick shout out to, once again, I know most
of our listeners are in the state of Colorado, We went back through
the website at College Invest.
so just know right now you can get a 5 29 account set up.
the state will actually front load it.
So without you even investing anything, just by opening up account,
they will give you $121 to seed that account, to start that account.
and then for the next three years, they will match dollar for dollar.
Five up to $500.
So if you contribute at least $500 in the first year to your kids' account,
the the college invest will match that.
So they will give you $500 and that plays out for the next three
years or for the first three years.
So once again, Louie and I are huge for, huge fans of, free money.
This is literally free money.
I mean, if you just open the account, they'll give you $121.
That is as free as it gets.
And then once again, if you put in dollar for dollar.
Up to $500, they'll match that.
That once again, is free money.
Yeah, you have to put up the 500 bucks, but you're gonna get $500 in return.
So as we talk about strategies to help support your kids and think
about their financial future, this, to me is a no-brainer.
at a minimum, if you can get $500 in there for each one of your kids
for the first three years, they're gonna, they're gonna match that.
and it's gonna, and it's gonna give them a starting point.
So I think that's super important to just bring up how that plays out and works out.
All right.
so
Louie: lot of people are talking about this next account.
This is so good.
Such a great account.
Beautiful.
It's beautiful.
Beautiful.
Jon: Yes.
these are the Trump accounts.
and it actually, that's an acronym, and I should probably look at
what the acronym stands for.
and they tailored it just for that.
But this is something, that did get passed in the, one big beautiful bill act.
All right, so this is gonna go retroactive, so it
actually goes back to 2025.
So in order for your kids to qualify for this, at least to be able to get a
contribution from the government, they have to have been born January 1st, 2025.
and this will extend in the future until December 31st, 2028.
so basically in the government contribution will be $1,000.
So if you open up one of these accounts, similar to like we
talked about, the 5 29 account, the government will seed the first $1,000.
Alright?
They will fund that into that account.
And that funding is not gonna take place until July 1st of this year.
So even if you do open up an account, and I know a lot of the custodians
and everything else are just getting brought up to speed on this.
but that won't take place at least until this July.
But if you do open up a Trump account, the government will
give you $1,000 to seed that.
Louie: Yeah.
And that's, once again, free money.
Jon: Free money.
I get
Louie: it.
You can contribute to this account.
You can create an account for a child if they're not born within between 2025
and 2028, however, you're not gonna get that a thousand dollars match.
I don't know.
I, you can contribute up to $5,000 per year in that account if you want.
It's on an after tax basis.
but the money does grow tax deferred, and as long as it's spent on an
eligible expense or a qualified expense like education or starting
a business or purchasing a home, then it is spent tax free as well.
It's an okay account.
I mean, I don't have anything pro John, do you have any problems or anything
that super excites you besides the a thousand dollars free government funding?
Jon: Yeah, so what this is meant to do is it's supposed to make everyone.
Have some skin in the game when it comes to the stock market
and starting to get some assets.
That was really the thought process behind this.
'cause there's still almost 50% of our population in this
country that doesn't own a stock.
So that's really what the purpose of this was, is if kids did not have an
avenue, or people didn't have an avenue, is it was supposed to create more of a
level playing field and try to reduce income inequality in our country.
That was really the thought process behind it.
most of the people that I talk to are my own.
professional thoughts are, this is, I think it makes sense to get the match at a
minimum once again, or get the a thousand dollars not even talking about the match.
Just open up the account.
If you're eligible for that contribution, that's a no brainer.
That's gonna be a thousand dollars.
And if you'd never even touch that thing, by the time 1820 years comes
around, that's gonna be, just at normal rates, that's probably gonna be three
grand that your kids are gonna have that you didn't have to do anything for.
All you had to do was fill out some paperwork.
So at a minimum, I think it makes sense.
If you have a kid born between January 1st, 2025 through December 31st, 2028,
it makes sense to open that account and have that government seed that no brainer.
Other than that, though, I'll be honest, I think, there are better ways
to save for your kids, either college or if you want them to have a down
payment for a house or if you want them to, be able to start a business.
I think there are better strategies and better accounts, rather
than those, that's just my own.
My own 2
Louie: I agree.
Totally agree.
Jon: All right, so one of the other things that you may have heard of or
you may, some of our listeners may have had one of these accounts set
up for them when they were kids are what are called custodial accounts.
All right?
So there's two different types.
There's an ugma.
And an UTMA account.
So UGMA that stands for Uniform Gifts to Minors Act.
Alright, so these things have been around for a long time.
These things were like, started in like the 1950s and basically what that was
is that was a way that parents could set up a, an account for their kids,
hence the custodial nature of it.
And they could invest in things such as like stocks and bonds
and financial assets like that.
that thing was pretty much superseded.
The UGMA accounts were superseded by what is called the UTMA accounts, UT MA, that
stands for Uniform Transfers of Minor Act and that was put in the eighties.
And that's basically all that I've seen.
Now, I have not seen an UGMA account, honestly, I only see Upma accounts.
and really the only difference with these are, once again, they're custodial
accounts, but on top of being able to put financial assets in there, you can
also put real assets in there, pretty much like real estate business interests.
Stuff like that.
so what's important to note about this is you are the one, if you are a parent
and you set one of these up for your kids, you are the one that gets to manage
and have a say on how it is invested.
But your kid.
Owns the account.
Mm-hmm.
All right.
So that's something you have to consider when you open up one of
these things is, if you have a, if you have an issue with your kids or you
want to disinherit them and transfer this, it is by the IRS's standards.
It's an irrevocable gift.
So once you put this into place, your kid now owns that.
Account, you cannot change the beneficiary like you can with a 5 29 account.
So that is one of the things to really consider when you're setting up one of
these things, is, it doesn't allow a lot of flexibility once the accounts are open.
It allows flexibility in how the account is managed as you being, the person
that can see how that account's managed.
But the ownership never changes, and it's gonna be your child
that is going to be the owner of that, the legal owner of that.
So something to, consider strongly with that.
there are no contribution limits to one of these accounts, so it's very
similar if you want to think about it.
So Louie and I, last episode talked about a taxable account.
That's what this is.
It's an taxable account for your child.
You're managing how the money is allocated in the investments,
but they are the beneficiaries.
They are the owners of that account.
There is also something called the age of majority, and this is also
the caveat to this account is the age of majority in Colorado is 21.
So even though you as, the set upper of the account, you get to say how
the account is being managed once your child reaches 21, at least in the
state of Colorado, they have complete and full utter access to that account.
Louie: And you don't get a say
Jon: you don't get a
Louie: you don't get to do anything with it after that point.
Jon: Correct.
they now by law have full access to that.
So if you have set up quite a bit of money for it or grandparents have set up quite a
bit of money for that and now Junior has, call it a hundred grand, that's something
to really consider is most 21 year olds able to withstand the peer pressures.
and the temptations that having a fully funded account now of call it a hundred
grand, are gonna be so something to seriously consider when it comes to that.
Yeah.
I know what a lot of people are thinking though.
Some of our savvy firefighters are thinking about.
Dude, this is great.
This is great because I'll just shield this, as a way of paying less taxes.
Right.
I'll just, I'll just fund a lot of this, I'll fund a lot
of this, account with money.
and then it's gonna be taxed at my kids' rate.
Which is super low 'cause they're not making any money.
And here I am at a higher tax bracket.
Not so fast.
Oh, not so fast.
there's something called the kitty tax rules.
Alright?
And we won't go too in depth into this, but IRS is smart.
They're gonna get their money so
Louie: Sam gets his,
Jon: Yep.
So you can't use this to basically shelter, income or pay your lower
income tax rate, at your kids' rate.
So just know that if that's your strategy, and that's why you'd wanna fund this,
there's better avenues out there.
This is not gonna be a massive tax saving
Louie: You'll still pay
Jon: You're gonna still pay taxes.
So I'm not gonna get any into any more of the kitty tax rules with that.
you can look 'em up.
It's pretty self-explanatory, but just know that, your kids will get a very
small tax break at the very beginning, but typically it's not worth setting these
up if that's your number one strategy.
Yeah.
So it's something to know about and like I said, I'm not against them.
I think there's a time and a place for 'em.
but also know that it should not be considered a use as far as a tax shelter
or reducing your taxable liability 'cause you're still gonna end up paying taxes.
Yeah.
Louie: I'll just go real quick onto the next account.
because I, there's this really cool account that's like a UGMA or utma, and I
think it's only offered through fidelity.
I don't know why.
None of the other brokerages do this, but they have something called a Fidelity
Youth account, or it used to be called a Fidelity Teen brokerage account.
But really what it is it's a way for kids between 13 and 17 years
old to have a brokerage account and to actually invest their own money.
So you as the parent are still, On that account, and it's still under your
direction, so to speak, but they can open this account with a dollar minimum.
There's no fees associated with it.
They'll even give you a debit card or give your child a debit card.
and it just gives them a way to open the app, invest money, learn about,
compound growth by saving and investing.
I think it's a cool account if you wanna do something more for them than a regular
checking account or savings account.
Once they become eight, once they turn 18, that youth account
will transition to a brokerage, like a regular taxable brokerage.
But now they have a brokerage account with a reputable, investment firm, and
they can continue to keep adding to that or watching it grow or whatever.
So if you didn't want to go through the whole Ugma, UTMA thing, but you
just wanted to help your kid invest or save for money, like maybe they're,
we talked about they're a teenager and they have a lawn mowing business,
they can put money into this account.
Under your direction and under your kind of oversight and just save money for that.
It's a kinda a simple way to get them investing or learning about
investing at a relatively young age when the stakes are pretty low.
So that
Jon: that's great.
That
Louie: could be something cool to consider.
I'll probably do that when my boys are at that age.
I'll create these accounts for them, I think
I think Yeah,
Jon: it sets the seeds early for that and then, then it just transfers over
when they become an adult to just a regular taxable brokerage account,
which once again, sets up good habits.
It's so much of this is just setting up good habits.
so they don't have to create those, when they get older.
Yeah.
And last but not least is Louie and I's personal favorite.
And that's the Roth IRA.
So once again, this requires earned income.
So your kids have to have, income coming in.
So it could be from babysitting, it can be from all sorts of stuff, but
they have to show that they have earned income in order to fund that.
and this is one that, I mean, honestly, when my kids get to this
age, I'm gonna do some type of match.
So if they're willing to, let's say they make five grand, over
the summer and they're willing to put in 1500 bucks, guess what?
I'm gonna put in 1500 bucks for them.
'cause you can go up to their earned income.
you can do, you create your own employee employer match in
that circumstance like that.
But, contribution limits are the same
Louie: And just to be clear, you gotta be careful.
You can't just say oh, well they haven't earned income because I gave
them money for watching their little
siblings, or they mowed my lawn.
Yeah.
It has to be reportable.
It has to be an income.
think of money from like a W2 job.
if you got money because you work at McDonald's or something
like that, then it's eligible.
It doesn't have to be the money that they earned from them or
from that job that goes into that.
it doesn't have to be the same $5,000 that they got from their summer job.
They just have to have that money.
And if they made $3,000, then you, if you wanted to, you can contribute
$3,000 on their behalf into a Roth.
IRA.
They just have to have earned income.
Honestly, though, it's the best way to do it.
if you really wanted to save for their future, boy, that would be
a great option if they have earned income and you wanna do a match.
John, I love that idea.
I think that's awesome.
Is, Hey, I want to talk to you about, a father match for your summer job.
any money that you put in, I'll give you a hundred percent match.
I think that's a great way to motivate them to save for their
Jon: Well, and hopefully that's what it's gonna be like when they
get to the real world, right?
And they end up doing a job and they have an opportunity to work for someone.
If they do in a corporation, they understand this is how it works.
Like you putting a certain money and they're gonna put in a certain money.
So it's, once again, so much of what we try to do around here is
just creating or thinking about good behaviors, good habits, and
establishing those habits from an early age I think will be super beneficial.
Yeah.
the last little point I wanted to make, and this is not like a specific account,
but this is just something that I would be remiss as we talk about kids and accounts
and behaviors and everything else.
Most employers will have the ability to, contribute to a flexible spending account.
You guys can go back to some of our previous episodes
where we've talked about this.
I know here at West Metro, we do have a flexible spending account.
and this is specifically for dependent care, right?
So once again, the good Lord has heard our wishes and they
have increased this amount.
Lou and I gotten on a little tirade a couple episodes ago, how
they hadn't, adjusted this for inflation in like almost 40 years.
But long story short is, if you and your spouse both work, so you, once
again, you have to, the purpose behind this was to help out working parents.
you can contribute pre-tax.
So once again, you're not gonna get taxed on this money up to $7,500 per year.
So most of the time you do this, it's during the open enrollment season.
but there are certain qualified events that happen in life, where you
could do this throughout the year.
So once again, reach out to your HR divisions and professionals if this is
something that you're interested in doing.
But this is another no-brainer.
Yeah.
If you are working and your spouse is working, you should.
And you're paying for daycare, You should do this because it is
going to save you on your taxes.
it's a no-brainer.
Yeah.
100%.
And
Louie: this doesn't, this is not money for them.
This is not money that you're setting aside for their use in the future.
But at having children, this will help you tremendously.
You'll get a tax break on the money that goes in there.
dependent care FSA is great as a parent when you are paying for childcare.
Jon: it's just helping to support what's already a very expensive endeavor.
It's just gonna help, subsidize a little bit of that.
I would be remiss if I didn't talk about that.
I think so many people miss the boat on that one.
And, for most of our folks, if they max that thing out, they're looking at, I
don't know what, probably about a $2,500 saving in taxes just by doing that.
great.
a no brainer.
All right, so that was a long episode guys.
Thanks for staying with us.
Super important.
Lou and I love talking about our families and our kids.
we've put a lot of time and effort into both of 'em, right into trying
to, set them up on a good course.
and I know you guys are no different, but this is one that really, the actions
and the behaviors and the conversations that you display, even at an early age,
it really is gonna make a difference.
'cause if they're not learning it from you, they're gonna be
learning it someplace else.
So this is where you're gonna have a little bit more, a little bit
more say and what that looks like.
Louie: you gotta be diligent and.
It's intentional about talking to your kids about money, for sure.
Jon: Yep.
all right.
we love you guys out there.
take care of yourselves, take care of your families, take care of
your crews out there, and, we'll be chatting with you real soon.
Louie: Stay safe and keep saving.
The Fiscal Firehouse Podcast is a podcast curated specifically
for local 1309 members.
This podcast is for informational and educational purposes only,
and should not be construed as professional financial advice.
Should you need professional advice, consult a licensed
financial advisor or tax advisor.
The opinions of John Beatty, Louis Barilla and their castmates are
solely their own, and don't reflect that of West Metro Fire Rescue.