How to Teach Kids About Money With Real Estate
How did we teach our kids about managing money and running a small business? The word we tend to use is osmosis.
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After my wife and I agreed to become real estate investors, I started reading real estate investing books. My favorite books are The Book on Rental Property Investing By Brandon Turner and Millionaire Real Estate Investor By Gary Keller.
I also read The E-Myth By Michael E. Gerber which gave me insight on how to run a successful business. Furthermore, I would listen to real estate podcasts during my drives.
Anytime we have a chance to do anything involving real estate we openly discussed it in front of our kids. Kids are like sponges and they absorb everything around them.
We use real estate investing to teach them about managing money.
The Osmosis
Whenever I search for potential investment opportunities online and they’re in the room with me, I explain “What” I’m looking for and “Why”.
Can you imagine explaining to a six year old how to rehab and refinance a property? I did. Whenever I drop off and pick up the kids from school, they’re also listening to real estate investing podcast with me.
From time to time, I bring them with me to a property we’re rehabbing. They are able to see the contractors working and transformation of the property.
I try and explain each major phase of the project; From working with a bank to accepting new tenants.
Here are a few picture of my kids at one of our properties during the rehab process:
The Family Business & Managing Money
We refer to our investing as “the business” to our kids. They are taught that after we have “fixed up” a house, people “pay us to borrow” the house. We also teach that we “set aside money” for other expenses.
Furthermore, we explain that the money we receive from the tenants is used to pay the bank for allowing us to borrow their money.
Aside from telling them how to manage money, we are actually SHOWING them how we manage our money and invest it. OSMOSIS!
They have learned that you just shouldn’t buy anything. Instead, they know that in real estate they need to look for a good deal. Check out the post on how to calculate cash-on-cash return and get a FREE Cash-on-Cash Return Worksheet to determine a good deal.
Jacqueline and I ultimately tell them that this is our business. And, that one day, mommy and daddy will pass it down to them. Every time I remind them off that responsibility they get so excited!
Final Words
It may sound obvious to involve your children when it comes to investing. However, you would be surprised on how many people have parents that are investors but have never involved them.
I even have an uncle who was house hacking.
House hacking is when a person occupies a property with the intention of renting out at least a portion of the property)
Not once did he take the opportunity to share what he was trying to achieve with his kids and me.
Involve your kids in different phases of your investing. Break it down for them so they can get a general understanding of what you’re doing.
Kids are intelligent.
We, as parents, need to take advantage of this teaching opportunity. You will be providing the youth with real world experiences that will help them be mindful of their finances.
This post contains affiliate link(s) which may provide us a commission if you were to make a purchase through our links. However, there is no additional cost to you. For more info, refer to our Disclosures.
