hey everyone welcome to my channel and welcome back to my subscribers this is where we talk about turning your cash into wealth building assets this is bald guy money i am bald guy let's talk money in today's video we're not exactly going to be talking about turning your cash into wealth building assets but rather how we can teach our kids and the kids were kind of responsible for educating about personal finance because it's a very important topic that simply doesn't get covered enough


i have two kids they're age 12 and 9 and i wanted to put this video together for everybody watching out there who has contact with kids and has the ability to pass this knowledge on to them because i think it is really important i and i'm going to show you in a moment some things some exercises some games i do with my kids so please watch to the very end if you are wanting to pump up your kids and the kids around you if you're a teacher for example if you want to pump up their financial iq


um yeah none of this is financial advice we know that let's get started okay so i've been exposed to all kinds of ideas on how to um educate children on personal finance and i found that the biggest mistake most people make is that they focus simply on having fun how can we make this just fun instead of actually giving a little bit of thought into whether or not the activity is actually beneficial so i've given some thought into what i think is important for kids to actually focus on in a fun way of course and


here's the list of things i think that are worth focusing on number one mental math the ability to do quick calculations number two understanding inflation number three understanding cash flow and passive income number four understanding the difference between assets and liabilities and how to calculate return on investment on those assets and liabilities as well as understanding the opportunity cost associated with them so basically what we're talking about is if you buy one thing you are giving up


your ability to buy another thing we're going to cover all this in detail in a moment so let's cover these points in order starting with mental math or for our british viewers mental maths this is so important to have the ability to do quick mental calculations you know whether it's adjusting your monthly budget for an unexpected cost whether it's calculating what taxes you may have to pay on capital gains so the sales of stocks in a profit or whether it's simply finding errors in


a bill you receive it is absolutely crucial to be able to do mental math and i sadly meet too many adults who are unable to do it so i have three things i focus on with with my kids in order to ensure that they are able to quickly make calculations in their mind and here they are number one flash cards you can find these on amazon they're quite cheap and i've purchased for my kids multiple sets of addition subtraction division and multiplication at varying levels of difficulty number two a game called math prodigy it


is a role-playing game kind of like for those of you who've played legend of zelda final fantasy although the point of the game is actually to go through it solving mathematical riddles instead of solving puzzles as you would for example in zelda and number three is a game called times table rock stars it's a timed game where you can compete against friends and family members solving mathematical equations in addition subtraction division and multiplication again uh the last two things here so math prodigy


rpg and the times table rockstars these are things that are available on the internet for free all you have to do is google them and create an account and your children can access them and play them now to get a bit deeper in understanding money it's very crucial that kids understand the concept of inflation and i have a very simple way i cover that with my children and it's actually a pretty fun way so i'm sure many of you out there have a monopoly board at home get it out with your kids


and we play monopoly with inflation now there are many different variations on how we can play this game with inflation but the simplest way that i found doing it and how i play it is that every time somebody passes go three times and you have to kind of keep track of it on a piece of paper what we do is we double the amount of money somebody receives from passing go so for example for the first time it would go from 200 up to 400 but that's not all at the same time as the amount for passing go doubles


so does the cost of everything on the board including the cost of purchasing properties the cost of rent and the amount of money you get from mortgaging properties and the whole idea of this is to make children understand the fact that the dollars they have today will not be as much will not be worth as much as they are today in the future and it's important to convert that cash in line with the mantra the code of baldguy convert your cash into assets in order to hedge yourself against inflation in the case of monopoly and


we'll cover this on the next topic generate some passive income and i think this is a very fun and interesting way of tackling the topic of inflation and again it brings everybody together and i mean i know my kids love to play monopoly so i really highly recommend this one the next topic that i think is absolutely crucial to cover is a topic that was really introduced to me by robert kiyosaki the author of rich dad poor dad i'm sure many of you have read the book and it is the concept of


generating passive income or cash flow now thankfully mr kiyosaki has made this absolutely easy peasy for us to hand off and and teach our kids about with his game called cash flow what's best about cash flow is that you can play it for free online by going to this link right here i will also link it up in the description so you can just click on it easily and it is an absolutely fantastic game that you can play with your family around the table it's it's multiplayer capable you can create a private room on


a password and have your family members meet there and play the game and why is it such a good game well the reason i like it so much is it differs a lot from monopoly in that the point of the game is not to bankrupt your opponent but simply make investments to generate enough passive income to cover your living expenses and escape what mr kiyosaki likes to refer to as the rat race i really like the positive vibe of this game because not only does it teach kids to invest in property generate passive


income and really teaches them how to understand an income statement and kind of the basics of a balance sheet but it also teaches them that really not everything in life is adversarial multiple people can can succeed at the same time and i think that's something that again is not instilled enough in kids today because again like i said with monopoly it's very adversarial you're trying to bankrupt your opponent but in reality we know that you know if we help and support the people around us


again in line kind of with the bald guy philosophy that you know multiple people can succeed together so that brings us to the final topic which is teaching our children the difference between assets and liabilities and i left this one for last because it's really the most crucial but the most complex now i also lumped in return on investment calculations and opportunity cost in here and i'll explain why more in a moment but let's start with covering the foundation of what is an asset and what is a liability the


activity i do with my kids is simple i call it assets and liabilities it's it's quite a simple name and what i do is i just name off different things and they verbally categorize them as either being an asset or a liability now other variations of this are they can you know write it down on paper and compete against each other in like a a test format or what i do is i just sometimes print off a long list of different things and give it to them i say okay mark here which ones are the assets and which ones are the


liabilities you know this is a kind of a test and they like doing that because they like to prove that they understand this kind of adult topic so before i go any further i just want to clarify how i define assets and liabilities as there are many different takes on this there are people who work in corporations who understand it very much in the accounting way but i don't think that that particular methodology applies to personal finance and here's why an asset is something for the person for


the individual that generates money for them or appreciates in value whereas a liability is something that costs money or depreciates in value it's really that simple and here is actually a really short list i put together one that i practice with my kids regularly so they understand the concept and difference between what is an asset and what is a liability here it is in the assets column we are talking about things like gold and silver coins bitcoin stocks and bonds rental properties art and collectibles


numbers five and six might be a little bit new to you but the fact of the matter is that many wealthy people are putting their money into art and collectibles even when you're talking about collectibles whether they're baseball cards comic books watches rare ancient coins or something like that this is really a thriving business and absolutely counts in the asset column when it comes to liabilities we're talking about cars we're talking about the house you live in bills you have to pay vacations you go


on number five consumer electronics and number six entertainment and why are all those things liabilities because they take money out of your pocket and i know some of you are probably looking at the computer screen right now and yelling but my house i own my house i've paid it off it is an asset it is not a liability the only thing is please remember this the house you live in is a liability because you pay for insurance you pay for repairs you pay property taxes most likely all of those things


are actively taking money out of your pocket and they are not putting money in your pocket now the value of your house might be increasing however until you sell it and realize any profits it is still a liability and remember even if you sell your house and make a profit you still have to buy another property and live somewhere and that's a very important concept that i always explain to my children so they understand the difference between an asset and a liability so if you want to take this a step further you can


introduce your children also to the concepts of return on investment and opportunity cost and luckily for us it's never been easier to introduce those concepts to kids thanks to digital applications so i recognize that most kids these days have telephones they have ipads i know my kids do but it doesn't mean that your kids do or maybe you don't want them to and that's okay you can do all of this from your own personal device and just update them daily or weekly or whenever suits you


and the specific app that i'm referring to is etoro which is a big mobile investment application i'm sure some of you have heard about it and i'm not sponsored by them i don't receive anything from them but for the sake of transparency i do buy and sell stocks on etoro personally so what's really cool about this app is that you can actually trade virtually which means you can trade money without actually having to put up any real money uh and of course the first step is you have to download the app but it's as


easy as this here take a look number one when you open the app you click on those three lines in the top left corner and it will open up all of your different possibilities of what you can do and you'll see a little green box and it says real what you do is you just touch on that box and you can change it in step three from real portfolio at the bottom to virtual portfolio once you've clicked on virtual portfolio the screen on the far right and step four will open up and you'll see that you have a hundred


thousand virtual dollars for investing and once you've invested your virtual money now the application will calculate both return on investment and p l or profit and loss automatically and this is really where the lesson for the kids start for these very four important reasons here they are number one focus on the percentage of return not only the profit and loss it might be nice to invest a thousand dollars and make ten dollars in profit profit is always good but it is important that children understand that


a one percent return is not as good as for example a ten percent return and identifying those opportunities where you're going to get the highest percentage of return is really the most important thing in investing number two opportunity cost by investing in one thing you are actually giving up your ability or opportunity to invest in another thing if i invest all of my money in gold i am giving up my ability to invest some of that money in bitcoin which might yield a higher percentage return over


time number three diversification is good but too much diversification is not a good thing remember alexander the great one said when you attack everywhere you attack nowhere and this is a very good lesson for children to learn that investing in for example individual companies in different sectors is a great way of diversifying but once you hold more than 10 15 or maybe even 20 different things that you're invested in it becomes very difficult to track and it becomes very difficult to really


maximize your profits as it's impossible really to make good swing trades and decisions on where you need to take resources out of and allocate more resources too number four is the importance of being flexible and securing profits and this is kind of what i was alluding to in point three in the sense that something that i always teach my kids is if you're invested in a stock and it's run up for example 50 60 i'll give you an example recently tesla has run up really high it is always a good thing to


take a little bit of profit from those things that run up quickly and invest them in something else you believe in but has not run up or maybe has declined a little bit as what i like to call a swing trade and that's a very good lesson and kids are very responsive to that i know it might sound complicated to some people out there some people might not give their kids enough credit for being able to understand this concept but believe me my kids are 12 and 9 they're totally average kids and they very much


understand these concepts okay now that we've covered those four topics let's quickly summarize what it is we want the kids to really learn and understand number one really emphasize mental math skills as i said before this is the basic this is the foundation the ultimate foundation of being able to manage your personal finances and being successful in doing so number two explain the importance of owning assets to protect against inflation if you remember the monopoly example i gave you kids will understand


the concept of using the money they have now to invest in assets which will appreciate with in value over time as the value of the money they're holding decreases number three explain the concept of cash flow and passive income and this is when we covered in the game cash flow which is available online for free invented by robert kiyosaki and this will help children understand the idea and concept of investing money in real estate investing money in things that generate money and put that in


their pocket in the pursuit of being able to generate enough money where you can actually cover all of your costs and be your own boss or what i like to say financially free the fourth one is investing comes with a certain level of risk in the example that we're going to do with our kids with the etoro app they'll see once they invest a hundred thousand dollars sometimes it goes up sometimes it goes down that is a very important lesson in understanding because absolutely no investment comes without


risk you no matter how safe it is whether it's real estate gold bitcoin whatever you think is the safest investment you're in right now be aware that it comes with some level of risk number five get them thinking in terms of percentages it is very important that kids think about things in terms of percentage and not just an absolute value by understanding that they'll be under they will be able later on to understand important concepts of compound interest and also being able to identify what the


best opportunities for investing specifically in places like the equities markets might be and the final point is that for every investment they make they give up the opportunity of making another investment and that's called opportunity cost and especially in again in that etoro example that i gave if they're invested in multiple equities a great lesson to kind of cover with them is oh you invested in stock a which is up five percent and you've invested in stock b which is up 20 percent


if you had invested more into stock b you would have had a higher profit because of the 20 would have generated you more money and again this is a very important concept that children should understand and and building on that and it's not on the list actually but it just came to my mind the concept of especially if you want to teach your kids a little bit about trading stocks and equities doing swing trades if something goes up really quickly how to take profit out of that and put it into things that you believe


in but might not be as high as you think they should be before i finish i just want to say you know when i was a kid we i really didn't talk much about money with anybody it was in fact it was discouraged and i never really understood why because i always had this dream that i wanted to be rich i wanted to be financially independent and nobody really was there to support me or let me know you know this is the way that you can achieve those things and it wasn't really until i found that book


rich dad poor dad by robert kiyosaki that i was really able to truly understand what i need to do in my life to achieve the goals that i had we live in a world today where many adults in developed countries cannot afford a two thousand dollar emergency me personally i can't imagine that but it just it shows how important educating our children today on the topic of personal finance really is and that's all i have for this topic so as always i wish you all happiness i wish you all success i do hope to see you in the next


video and with that i say goodbye