Money Lessons From Parents Saving Millions For Their Children ｜ Life Lessons ｜ Business Insider

Underside? This is fine. Sinking down. Make sure I don't have my big belly sticking out. My reason for saving and investing so much is so that my children can have opportunities that I didn't have. Kids are expensive. Yeah, kids are really expensive. Starting your children off right leads to generational wealth. If the amount of money you're saving each month, each year doesn't hurt, you're not saving enough. We didn't have a car. I rode a bike everywhere. We didn't go out to eat. For two years we didn't go on vacation. We're actually saving something like 70-80% of income. I said no for two years so I can say yes for the rest of my life. It's simple, not necessarily easy. Make sure you have reasons, clear reasons, for why you are saving and investing so much. Once you have a reason, there's nothing you can't do. And I want my children to do better than me. That is the goal. I grew up in a trailer home, right, about the poorest housing that you can find in the United States. You can picture growing up in Minnesota, the middle of winter, and your parents are struggling to pay the heating bill. My earliest memories are deprivation. I grew up in Taiwan and my parents had to send us to an orphanage. They couldn't afford to feed us to get us a place to live. My parents grew up, you know, not having a lot of money. My mother had eight other siblings living in Statesville, North Carolina. We had everything that we needed, you know, but our middle class as an African American family is different than the American middle class. My parents were always very frugal and they didn't give me any money. So I decided, maybe I'll go to McDonald's and I'll try to get a job at McDonald's for $4.25 an hour while also being able to eat as much free apple pie as possible. Within the African American community, a lot of them grew up not trusting banks because a lot of times they couldn't put their money in banks. So they carry a lot of cash and you'll find a lot of older African Americans carrying cash all the time now. I am afraid of spending money. And then I met him. He has the same mindset. Yeah. So we were like, oh, we are like perfect match. We don't want to spend money. I remember being embarrassed, sadly, when I saw my classmates. And I look back upon that with a little bit of shame because why would it be embarrassing to be a 14, 15 year old boy trying to make your own money and be more free? I was the first person to go to college and graduate. So I'm a first generation college student. I went to South Carolina State University on a full ride tennis scholarship. If I didn't get that tennis scholarship, I would have had to take out a lot of loans. I chose to attend the College of William and Mary because at the time the tuition was only $2,800 a year. Other private schools were about $20,000 a year. I remember when I was in college, like, like many times I don't have enough money for food. Like sometimes I'll just have a hard boiled egg for lunch. Just call it enough. Yes, it was pretty tough. A lot of my college experience was I have to get good grades because I have these massive student loans. And if I'm unable to pay them, then it's back to poverty. I became largely a workaholic. I ended up doing 55 interviews total to finally land my job at Goldman Sachs. The base salary was $40,000 and $40,000 living in Manhattan, even back then, didn't go very far. The job when I, when I was laid off in 2008 was pharmaceutical sales. I put so many hours in, I've worked so many years and just like that, it's done. It just felt like the world started crashing. I was laid off and it really sunk in that I need to be prepared for that point in time where I'll be able to take care of myself whether the work's there or not. Very quickly when I started working, I realized I couldn't last at this job. I was getting in at 5.30 a.m., leaving after 7 p.m. And so I decided, okay, in order for me to escape this job one day, I needed a certain amount of money to cover my lifestyle and expenses. I didn't even realize that we were $50,000 in debt. And then I looked at, oh, your student loan is $25,000. This car that we just bought a year ago is $25,000. And so I started to think about what, what do we need to be doing? Reality started setting in and I was like, what, what are we going to do? Really important is to make sure you have reasons, clear reasons for why you are saving and investing so much. Once you have a reason, there's nothing you can't do. I wrote out something called a dream sheet and it was our short-term, intermediate and long-term dreams. Because I said to myself, we're not going to be able to do this if we don't have anything in front of us to look forward to. My child was two years old at the time when I wrote this. I said to myself, my first child was born to debt and my second child would not be. I put together like a 50-page business plan about how I could go from having a net worth of roughly zero at that point to having enough where savings and investments would, would cover my, my normal cost of living. He presented me his 40 pages of research and said, you know what? There's a thing called, called a financial independent. We can like work together on this, this project. I said, okay, it's convincing. Maybe we can try. So I did pretty simple back of the envelope calculations in Excel spreadsheet on how much I needed to be happy and comfortable and maybe to raise a family. And I felt $3 million would be it. I needed to save at least, at least 50% of my income. Within six months of finishing the business plan, I had sold my house, sold my car. Like I rented a room in somebody else's home and I replaced my car with a bicycle. I needed all of my money to go towards paying off $50,000 of debt. I was selling TVs, selling a microwave I found in the closet. I wanted to be free. That, that's the way my mindset was each and every day. We didn't go out to eat for two years. We didn't go on vacation for two years. Nobody got a gift, not Valentine's Day, not anniversary, not Christmas, nobody. That's why the $50,000 of debt got paid off in two years. Over like the 12, 13 years or so, we were going from a point where those last few years we were actually saving something like 70, 80% of, of income. And so I started with about 20% saving rate and then I slowly ramped it up. I was saving 70 to 80%. If the amount of money you're saving each month, each year doesn't hurt, you're not saving enough. We, uh, write down every single expenses, even just $1. When we spend them, we will just write it down to calculate it. Because we both grew up in poverty, so we are used to have no money. So we, we are, we are okay to accept that kind of lifestyle. Once the debt was gone, the investing kicked back up. I was still in corporate America, so I was investing into my 401k. I had a Roth IRA. What I try to do is have a diversified portfolio of about 30% in public equities, 30 to 40% in real estate and private real estate. About 20% in alternatives and the rest in low risk or risk-free assets like treasury bonds and cash. Our overall investments are, are fairly simple. Everything we own is just in index funds. There's, there's zero management. I don't have to pay attention to anything. I was a little sad we didn't invest in Bitcoin 10 years ago. We missed our chance. My reason for saving and investing so much is so that my children can have opportunities that I didn't have, that my parents didn't have. Once I had children, oh my gosh, I really rethought about how much risk I should take. Because, okay, I can't be that cavalier with my investments anymore because if I lost it all, then my family would be suffering. To, to have a child is really, I need to be ready to spend, you know, a couple hundred thousand dollars over the next 18 years, plus college, and just coming to terms with, with that in advance. My son is 17. He'll be graduating in 2027. You know, just all the accomplishments and stuff over here. My daughter plays tennis and she's 13. I want my children to do better than me. That is the goal. My daughter is 5. My son is 8. And I really, really try to make them focus on work and earning what they deserve and earning what they want. Our kids, one is 10, one is 5. We have a mommy and daddy bank. So we will track all the, the allowance that people give him on his birthday or Christmas. I'll put them, put them in that book. And then we will give him some interest. And then he can spend half of his interest on the thing he really wants. But we also told him if he doesn't spend them and keep putting into the bank, into the bank, he will have more. It's kind of giving him an idea of investment. Both of my children have Roth IRAs themselves. They don't really know that, but they have them. And I put money into them as well. And then, of course, they have their own savings account that they are able to feed into as well. They have small Roth IRAs and they have small 529s. And everything else will just be when we die. Don't tell them that. They definitely are going to find out now. But here's the tricky thing. If you have all this money at 25 years old, you might not try as hard. You might not work as hard. You might not appreciate the things you have. You might not want to make something of yourself. I do think that they, you know, may feel like, oh, money is just everywhere. And I think that with me as well as their father, we have to put them back in their place. But I think what ends up helping is that a lot of times for things that they want, they pay for it. Mommy, can you buy this for me? I said, sure, what's your money? He said, oh, no, it's okay. So in terms of talking about money with my children, our children, it's that, look, money doesn't grow on trees. You have to earn everything. You cannot develop an entitled mentality where, hey, life is so easy. Life is so good because life is hard. Kids mostly learn, like, their parents' values and things by observation versus, like, direct lesson. What I've done is try to get my children involved in the act of maintaining rental properties, for example. So I bring them along. I get them to do a lot of the landscaping. When they see their parents getting down and dirty and doing the work, hopefully that builds that work ethic and that appreciation of money in the future. For me, I think I will have my kid prepared, like, well-prepared for their own independent financial path. So they don't need to depend on us. What are we doing as parents, you know, financially or morally or anything like that, if we're not teaching them to be better? And then they should teach their children, if they decide to have them, to be better than them. Some of the life lessons that I took from my mom about money is just knowing what you're doing with it and, you know, not just using it whenever you feel like it, because it's not unlimited. I would rather live the way where people give me stuff, buy me stuff. And that's the difference between the two of them. This is Julian. He is ten years old. He's a fifth grader now. And over here, this one. Come here, baby. This one is Jayden. He's five years old. I just feel like I don't want to do this. No filter at all. I love it. When I got, like, 15, when I could actually start, like, working and stuff, I brought my game system down there. And my dad and my mom was just like, they was waiting too long to pay for the game. And I was like, I'm just going to pay for it myself. And that money left the bank. That was definitely a hit. It was definitely a week or two where I didn't spend any money. We have starting money. And at the end of every month, we get 5% of the money that we have and add it to it. And, like, all the money that we get, we can use half of it to spend. And the other half, you just can't do anything with it. I would want to have my own business, because my mom has her own business. Like, I would want to have my own business, like, where I sell stuff and actually be successful in it. Love to help people, like, with tennis and stuff like that. And I just want money in 20 years. I hope I would be a millionaire. I'm trying to work towards it. I would just be glad having a great financial situation where I could provide for my family. And hopefully, I was thinking about this the other day, retiring my parents. In 20 years, I see them where they see themselves. And so I would definitely just support them in whatever they will be wanting to do. I was able to achieve financial freedom at the age of 34 and become a stay-at-home dad and author. I am retired. I have a full-time job taking care of two kids and a husband. The fear that drove me a lot in my 20s is completely gone. My day feels like it really begins when school gets out, because I'm a coach on our son's baseball team. So we have baseball practice and soccer practice going on. We do a lot of moving kids around to and from sports before dinner and then getting ready for bed. I describe myself as a mompreneur. I pretty much tailor my business around being a mom. And that's how I've built it over the last 15 years. I've been traveling all around the world sharing my story of how I paid off the 50 grand of debt in two years. In five years, I plan on being a millionaire. Money is essential for living a comfortable life. But once you have enough, please think about the other more important things in life. Money means to me, it's just a tool. It's nothing else other than that. It's to make sure the lights stay on. It makes sure that we have a roof over our head, that we eat, because that's just the way the world is. Like most tools, they're good for one thing. You're not going to use a hammer to fix a window, right? But if you apply it towards the right things, it can be very, very useful. I think everybody can have financial freedom and time freedom at different levels. You don't actually have to be a millionaire. You don't have $100,000 in the bank. You have $40,000 in the bank. If you're able, as a parent, to be able to go to any event that they have freely, without worrying about getting fired or worrying about your money being taken, that is financial freedom. That is millionaire status. I really don't know how we could fit jobs into our schedule. Yeah, I used to work from a.m. to a.p.m., even longer. Now I cannot imagine that life. I'll buy a mansion, a Lamborghini, a helicopter, a private jet. And I'll give the rest of it to my mom. I don't think there will be any rest. You'll end up having lots of credit card debt. I want all those things too.