Smart Not Spoiled: 7 Money Skills Kids Must Master Before Leaving The Nest with Chad Willardson: An EOFire Classic from 2021

0:02Who's ready to rock today, Fire Nation. JLD here and welcome to Entrepreneurs on Fire. are brought to you by the HubSpot Podcast Network, the audio destination for business professionals with great shows like inclusion and marketing. Today, we're pulling a classic episode from the archives and we'll be breaking down Smart Not Spoiled, seven money skills kids must master before leaving the nest. To drop these value bombs, I are brought to Chad Willardson and to EO Fire Studios. Chad is the founder and president of Pacific Capital, a fiduciary wealth management firm in Southern California, and was elected city treasurer managing the $350 million investment portfolio.

0:35He's been featured in the Wall Street Journal, Forbes, Inc., U.S. News, and World Report. And today we talk about how you can be productive in less time and be successful without sacrificing what matters to you, how to not wait until you're rich to become generous, and how financial freedom and stress-free money is available out there and it's up to you and oh so much more. And a big thank you for sponsoring today's episode goes to Chad and our sponsors. The Next Wave, your chief AI officer, hosted by Matt Wolfe and Nathan Lanz, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals.

1:08AI technology is transforming the way we do business, and the media landscape is fragmented. The Next Wave strives to be the leading podcast on AI technology and how you can apply it to growing your business. Listen to The Next Wave wherever you get your podcasts. If you've ever considered launching a show on YouTube, I may have the solution for you after launching a very successful show on YouTube in 2024, MicroStrategy Today. I've learned a lot on what it takes to create a successful show and have launched a one-on-one mentorship program called YouTube 100. If you want to jump on a call and learn more about this program, shoot me an email, john at eofire.com.

1:45This is the year of YouTube. Let's go. Now, Chad, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. Good morning, good morning. I would say something that I believe about becoming successful that people often disagree with is that you don't have to sacrifice your family time, your family relationships, and your personal time to become successful. I see a lot of the hustle and grind culture that says don't sleep, burn yourself out, go 20 hours a day at work just to make it to that sunny financial freedom spot that you're looking for.

2:29And I don't agree with that. I actually think you can be productive in less time and create an incredible lifestyle without giving up and sacrificing all the things that actually matter to you. And this is coming from a guy who manages the$350 million investment portfolio in the Southern California city. So just something to think about, Fire Nation. Wise words. And Chad, I thought I was going to do something a little bit different here today. We've kind of really saved the best for last. And what I mean by that is, you know, we really want to talk about these seven money skills that kids must master before they leave the nest.

3:09and Fire Nation. This is so important. It's unbelievable what a failure our education system is from people graduate high school and then even college with zero of these money skills. But listen, we're leaving that for the end. So don't go anywhere. I want to set the stage first with you, Chad, talking about your story of leaving corporate America, of leaving that grind, of leaving those 20-hour work days behind. So I was working at one of the large investment banks, Merrill Lynch. I was grinding. I had the corner office. I wore a suit to work with a nice tie and it was all buttoned up. And frankly, I had a good situation.

3:49I was in the top 2 % in the country of 17 ,000 financial advisors in the wealth management division. A lot of corporate perks, a lot of recognition and traveling and things like that. And yet, I just felt like this wasn't where I was meant to be. And as we went through the 2008 financial recession and we had the banks getting bought out and merges and just a lot of challenges in the financial services industry, I felt it was time to make a change. And the corporation was more, you know, the Wall Street Bank was more interested in serving their own shareholders and kind of doing what was best for and not necessarily best for the clients.

4:31And so that's when I decided I've got to do something different. And I took the big leap of faith. You know, I was only 32 years old. I had a couple kids by then and a mortgage. And it was like, am I really doing this? Am I really jumping off the diving board right now? Because it's super comfortable and cushy here at the big Wall Street Bank. But greatest, greatest decision in my career that I've ever made hands down, though I think a lot of people questioned it. And even my own parents were concerned and told me maybe I should rethink it because it's a little risky at a young age to do something like this.

5:08And how could I make it on my own when I didn't have any big backing from a big Wall Street bank? But I could not be in a better place. We've grown a ton. And, John, we just celebrated our 10-year anniversary, and I'm managing close to a billion dollars for people that I really, really love and enjoy to work with. So it's an incredible situation for sure. Well, let's talk about that next. Your wealth management firm, Pacific Capital, its focus, its goal is to help people achieve financial freedom. So give us an overview of that process. Our goal really is to help you enjoy life by removing your stress about money.

5:47And what I've found is that most people, no matter what level of income or net worth, they have some kind of anxiety about money. They feel like there's things that opportunities they're missing or they're just not optimizing their financial life. And so I created and trademarked a process called the financial life inspection. And similar to like, let's say you're getting a, you know, your car checked out, a deep diagnostic. What's different about the financial life inspection is that it goes through 100 very specific checkpoints and gives each person a very clear and objective score of green, yellow, or red.

6:29It's really simple. But the clarity that comes with going through that inspection process gives people just a lot more confidence on their path forward? Like, what are the action steps I need to take to get me from where I am today to reaching my ultimate financial goals? And so we look at a lot of things that most financial professionals don't look at because it doesn't really make them money. We're looking at things that we think we can help a client save a lot of money in their life. But, you know, we don't necessarily earn anything from that, but it's it's important. And so we want to go through this thorough diagnosis before we prescribe any medicine, if you will, with a doctor's analogy.

7:13So the financial life inspection process just gives people a lot more confidence, a lot more peace of mind, and a little bit more juice and excitement about their future, especially if they've got a family or if they're running a business and they've got a lot more decisions to make and things to consider. Okay. So a financial life inspection, I mean, Fire Nation, isn't that something that you want going forward to just have comfort? the peace of mind of knowing that your financial life inspection is being looked at by a pro as being, you know, give them the thumbs up or is saying, Hey, there's a lot of things, a lot of gaps here that need to be filled in.

7:52Let's make this happen. Now we're going to spend the rest of the interview talking about your latest book that came out back on September 14th, smart, not spoiled the seven money skills kids must master before leaving the nest. Now before the break, let's go through the first two. Break those down for us. Okay, I'll start by sharing this stat. It's interesting, but two-thirds of American parents today think their children are spoiled. And I lead into that with, you know, from toys, laptops, smartphones, and cars, our kids have just grown increasingly entitled in what they believe we should do for them.

8:29They don't really understand or appreciate the value of a dollar. And schools aren't teaching personal finance. Most parents aren't teaching personal finance. So frankly, I don't think it's necessarily the kid's fault. And my wife and I, we've been married 20 years and we have five kids. So teaching kids to be smart with money is extremely important to me, especially as a financial expert and as a father of five. So this book, Smart Not Spoiled, is really to help empower you as a parent, as a coach, as a mentor, as a grandparent, whatever, to teach the young people in your life and prepare them to be really financially successful adults.

9:09It's a book I wish I had when I was a kid. So the first two chapters, the first one is invest early and often. I share the story of when we were in St. Thomas on vacation, having a breakfast and sitting around at the table, I overheard a son say to his dad and the son was maybe maybe about 10 years old and he said dad I've got a riddle for you and he said okay and he said if if I could give you would a hundred thousand dollars a day for 30 days or a penny today that doubles every day for 30 days which would you rather have frankly I don't think the dad was like totally paying attention anyways but he said of course I'd rather have $100 ,000 a day.

9:58That's easy money. It's over$3 million. And the kid excitedly said, that's wrong, dad. That's not the right answer. You could have had over$5 million if you chose the penny option instead. And at that point, I thought, man, I should make this young kid a job offer. This is a smart, he's going places, right? And the dad said, that's impossible. And he said, no, it's not. Look, I'll show you. And he took his phone calculator, pulled it up and did the math. And And his dad was like, let me see that. Now, of course, doubling your money every day is ridiculous and it's not reasonable. It's not realistic.

10:33But the principle matters. The principle is compound growth, compound interest. So if we can teach our young people to invest early and invest often, they're going to be so much further ahead than if they're just something, you know, they're expected to figure it out in their 40s or 50s and they just start investing later in life. So I encourage you to teach your kids and the young people to get involved in investing at a young age. Make mistakes. Make small mistakes with small amounts of money instead of waiting until they're 50 or 60 and making big mistakes with big amounts of money. I'm going to give a real quick example here.

11:09And when I was young, I want to say at 13, maybe 12 years old, I'll never forget my dad, who was always very open about money, which I give him a ton of credit for, said, here's$1 ,000 into your Fidelity accounts. which of course to a 12 year old is like a million dollars. He said, invest this money. And I went ahead and I remember pouring over, this is back when like all the stock market, like information was printed every day in the newspaper. Like there was some stuff online, but it wasn't like it is today. I mean, so I was like pouring over the newspapers. And I remember that my only strategy at 12 years old was, I'm like, I'm going to find a stock that used to be, had a high of at least a dollar or a little bit more, but was now less than 50 cents.

11:52Cause in my opinion, again, this is just me not knowing, but I was like, if a stock has been over a dollar and now it's below 50 cents, it could obviously go back up to over a dollar and that could be awesome. And then I'm going to double my money. So I did that. I found that stock, long story short, that exact thing happens. And it was, ended up, you know, being the best and worst thing that could happen. Cause then of course I thought I had the best and most unbreakable strategy in the world. So when I did that. Yeah, you were Warren Buffett at that point. Yeah, yeah, totally. when I did that a second time, it fell flat on his face.

12:23And I went, took my$2 ,000 that I had made because I doubled my money. And then I brought that quickly down to like six or 700 bucks. And I was like, wow. So that strategy doesn't work, but it got me thinking at a young age of investing. And it got me thinking that there were strategies that worked and strategies that didn't work. And it made me understand the market because I got interested in it because it was real money involved. And Fire Nation, we've still got a bunch of other of these skillsets we're going be talking about when we get back from thanking our sponsors. Ever feel like your job description just keeps getting bigger?

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14:46Find a co-host at airbnb.com slash host. So Chad, we're back. We've got some more skills that kids must master before leaving the nest. Talk about number two. Number two is borrow wisely. I think it's a shame that kids graduate high school and they're just thrust into the adult world with credit card solicitations the moment they turn 18 student loan solicitations they're expected to somehow know how to borrow money how much it should cost what the process is where they should go and frankly most of them don't and so that's why we've got a nation that's incredibly deep in debt most most families can't can't get their hands on 500 of emergency cash in 2019 the credit card debt held by families in america crossed one trillion dollars for the first time so i think it's very important to teach kids about debt now some people have extreme views on it and say i don't believe in debt you know if i can't pay cash for it i'm not gonna i'm not gonna buy it and others are using debt for investment and wealth building and that's fine so i think you can have, in my opinion, you should have a balance of that approach and at least teach kids what is good debt, what is bad debt, what's the difference between borrowing on a credit card and taking out a mortgage for a home.

16:08So that's the second principle is really teaching your kids to borrow wisely and be smart about taking out loans. Borrow wisely. And for me, again, to kind of chime in here with a quick story, I didn't really understand at 17 years old that taking$200 ,000 out in debt was a bad idea. Because guess what? I was going to college and I was like, well, I'm going to make like what? Like 70 or 80 or$100 ,000 a year. So that means I can pay off that debt in a few years. No, when you're making$70 ,000 a year, Fire Nation, let me tell you, your disposable income is less than a thousand bucks a month, probably more like 500 bucks a month.

16:46So how long is it going to take you at$500 a month to pay off$200 ,000 that, by the way, has interest going on it. So luckily, my dad slapped me in the face, figuratively, not literally, and encouraged me strongly to get an ROTC scholarship, which I did. So I graduated with zero debt and actually$30 ,000 in the bank because he gave me the money that he had saved from my college education as a reward for giving eight years of my life to the army. So blah, blah, blah, blah. Anyways, those were the first two. Let's choose two more, Chad, to talk about that you think Fire Nation needs to hear as we close down here.

17:24Absolutely. So Fire Nation, you got to think about chapter five, which is learn to earn. This is one of my favorite chapters because I'm talking about teaching entrepreneurial concepts to young people. I think this is critically important. My wife and I, though we have five kids, have never paid an allowance. Wow. I don't I just don't believe that kids breathing and existing and making it just automatically brings them a paycheck. What do you believe alternatively to an allowance? We have a menu of opportunities and we have some blank spaces in that menu. So they look at the spreadsheet each day and they decide how much do I want to earn today?

18:03How much do I want to work today? And when they do things like go to a birthday party or go to go out with friends, they pay their own way. And so it's really up to them to create value in the home or outside the home and earn money. So our kids will actually initiate projects and say, hey, I give a couple examples in the book, but like I'd love to earn some money. My friends are going to Disneyland because we live in California. And so they're like, let's – I want to mop and sweep the garage, wash the cars and do a couple other things and, you know, organize the attic. And here's how much I think that would be worth.

18:39and they get to negotiate with us as parents. And they get to do a job and accomplish it, earn their own money and then pay their own way. And I just feel like that's a much better approach to teaching them to be value creators and initiators rather than a worker bee that's just waiting around to get their paycheck every Saturday because they made it through another week. I think that's a fascinating aspect to that. Like I was with you the whole time and I didn't expect you to say the end part, which is negotiate what they think the project was worth. I was kind of thinking that you were going to have that on your side, but I love putting that on their side.

19:15So they started thinking about, hey, what is my value? What is the rate of return that I think is worthwhile for this task? That's fascinating. So what's the big last one you want to share with us? Lastly, I want to share Give Generously, chapter 7. Winston Churchill said we make a living by what we get. We make a life by what we give. And I believe that in this time of great abundance and prosperity, that when we're teaching kids about money and handling money, let's teach them to be unselfish, not just with words, but with examples. In fact, when we were in Puerto Rico with our family a few months back, the second morning there, though it's a three-hour time difference, we got up at 8 a.m.

20:02Puerto Rico time. So that's a little bit earlier in California. And we went and did a beach cleanup with some kind of an oceanography service group that we found online in Puerto Rico. And we spent about three or four hours doing a beach cleanup and then talking about the environment and the challenges that Puerto Rico faces with the local people there. And that's something we do every trip. When we go on trips, we always schedule a service day. And we teach the kids that there's a lot more than just spending money on ourselves. And so one of our clients, they always have an annual family charity meeting.

20:41And they talk with community charities in the area. they have presentations to their kids and their family and the kids get to choose what charitable group they're going to donate their time and their money to throughout the year so each year they do that as a as a practice in their family i just think it's extremely important that we teach abundance mindsets and hopefully fire nation agrees with that that if you're creating abundance and you're an entrepreneur and you're looking to grow that you're also going to share and bring people along with you i think this is such an important message for so many reasons but one of the biggest reasons is so many people, and I had this unfortunate mindset for a while, always say to themselves, you know what?

21:20I'll give when I'm rich. Like I'll give when I'm super wealthy. And so that's bad for a couple of reasons. Number one, those goalposts are always moving. Like when you make a million dollars, you don't necessarily feel a rich fire nation. You're like, when I get to 10 million, I'll be rich. And then you could tell me, you're like, well, honestly, 50 million is really a rich, rich. And then it's just the goalposts keep moving. And then number two, what's happening with that money that could have been used for good during that time? It's sitting in a bank account, losing worth and value because of inflation, especially today when inflation is rampant right now.

21:55So you're just going to be like screwed with all these gold coins in a bank, just sitting there rotting away and degrading. That's what your money's cash is doing in the bank. Dusty money, just sitting there getting dusty, losing value. Dusty money, losing value. when guess what? You could have been deploying that money in an incredibly useful and utility way to be changing people's lives. And so let's just get aggressive about it. I'm not saying go impoverish yourself by giving to others. I'm saying, what's comfortable to you? 2%, 5%, 10 %? What is that number that you're going to start giving now?

22:31And you're going to feel great about that. So Chad, let's end with a bang, brother. Let Fire Nation know where they can go to pick up their copy of Smart Not Spoiled. Give us one final takeaway that you really want to make sure our listeners get from all the things we talked about here today. And then we'll say goodbye. The two books both are on Amazon, Stress-Free Money and Smart Not Spoiled. I'm really excited about these two topics because I feel like the financial freedom mindsets really applies to your listeners, the entrepreneurs, the families. and Smart Not Spoiled is teaching the next generation about money and how to really think about success.

23:10And so my parting thought would be financial freedom and stress-free money is really available to anyone out there. It's up to you. It's not going to happen on accident. I love sharing the tools, insights, and resources as much as I can. So if you can follow me on LinkedIn or connect on pacificcapital.com, I'm happy to see how we can help you achieve those successes that you're looking for in your life. Fire Nation, you're the average of the five people you spend the most time with. You've been hanging out with C-dubs and JLD today, so keep up the heat. Head over to eofire.com, type Chad in the search bar.

23:46The show notes page will pop up with everything we've been talking about here today. Best show notes in the biz, links to everything. And of course, pacificcapital.com is your call to action to learn more about Chad. Follow him on LinkedIn, other places, interact with him. He's here for you. and thank you, Chad, for sharing your truth, knowledge, value with Fire Nation today. For that, we salute you and we'll catch you on the flip side. My pleasure. Hey, Fire Nation, today's value bomb content was brought to you by Chad and Fire Nation. If you've ever, and I mean ever, thought about creating a podcast of your own, the podcast journal is for you.

24:22It is a gorgeous faux leather journal that will guide you step-by-step in both the creation and the launch of your podcast in 50 days. That's five zero. Visit thepodcastjournal.com, thepodcastjournal.com, and I'll catch you there or I'll catch you on the flip side. The Next Wave, your chief AI officer hosted by Matt Wolf and Nathan Lanz is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. AI technology is transforming the way we do business and the media landscape is fragmented. The Next Wave strives to be the leading podcast on AI technology and how you can apply it to growing your business.

25:00Listen to The Next Wave wherever you get your podcasts. If you've ever considered launching a show on YouTube, I may have the solution for you after launching a very successful show on YouTube in 2024, MicroStrategy Today. I've learned a lot on what it takes to create a successful show and have launched a one-on-one mentorship program called YouTube 100. If you wanna jump on a call and learn more about this program, shoot me an email, john at eofire.com. This is the year of YouTube. Let's go. Thank you.