Recently, we were able to sit down and speak with Dan Sheeks to discuss a topic that many of our podcast listeners and blog readers are interested in teaching financial freedom to teenagers. A lot of parents want to help their kids reach financial freedom in life.
Dan Sheeks is the author of First to a Million: A Teenager’s Guide to Achieving Early Financial Independence.
While we help clients with retirement planning and are certified financial planners, we don’t have the expertise to really help teenagers make pertinent financial decisions. Dan, on the other hand, does.
Quick Background on Dan Sheeks
Dan aims to pass information to young people to help them learn about money and make the right financial decisions. Dan has taught in high school for 20 years. He focuses on business classes, such as personal finance, marketing, and others.
Sadly, he has found that very few states have a requirement to teach kids about financial literacy.
Dan started a blog and created an online community for young people who are motivated to make sound financial decisions, investing and more.
Dan decided to write his book First to a Million as a natural offshoot of the online community. In the book, he teaches teens how to reach early financial independence.
Understanding the FIRE Movement
FIRE is a movement that stands for:
FIRE is a community that is based on making different financial choices early in life that allow you to become financially free before the age of 65. Many of these people create the financial freedom that will enable them to choose where they spend their time.
If teenagers start with the right financial outlook and foundation at a young age, they have the opportunity of reaching true financial freedom early in life.
How to Motivate a Teenager to Look at Their Financial Future
Teenagers, like adults, must make their own decisions in life. However, there are things that you can do to pique the interest of a teen. Unfortunately, you can’t make a teen want to look at their financial future.
With that said, if you teach the teen about the following concepts, they may take an interest:
- Compound interest
- Financial figures
Dan recommends that parents take a proactive approach to make financial literacy fun. For example, if you want to get your child interested in finances, you can:
- Show them your 401(k)
- Ask them to plan your next vacation
- Request the teen create your food budget
If you take small steps to educate your teen and teach them the basics of finances, such as budgeting, it can make a world of difference in their lives.
Helping a Young Person with a Credit Score
As someone with a teenager, credit has always been interesting to me. I helped my son’s credit by having a joint credit card, but that doesn’t seem to matter in the world of business. My son started his own business, tried to get a credit card, and he was denied, even with a 740-credit score.
He didn’t have a credit history.
When asking Dan about his thoughts on parents helping their children build credit, he said:
- Add teenagers to your existing card as an authorized user. Additionally, call the card issuer to ensure that they will report the history to the child’s credit report.
- Teenagers should ask their parents to add them to a credit card.
Since a teen is still living at home, parents can use this strategy to really analyze their child’s spending habits. You can set consequences for charging too much and even require your teen to pay all or a portion of the charge.
If the teen is an authorized user, they’ll begin building credit at a very young age, which is crucial for everything, from getting a personal loan to a mortgage or auto loan.
Teenagers should also:
- Apply for their first credit card at 18
- Apply for their second card at 19
- Apply for their third card at 19 and a half
Use these cards monthly and pay them off every month. Obviously, the teen needs to learn what responsible credit card use means. Three credit cards can help a teen build credit rapidly, but they cannot go out and max out these cards.
For example, a smart strategy for credit card use is to use one card for food, one for gas and one for something else. Then, each month, pay the card off so that you’re not accruing interest, but you are building your credit.
What Teens Will Learn in First to a Million: A Teenager’s Guide to Achieving Early Financial Independence
In Dan’s book and workbook, teenagers will learn:
- How to build their credit score
- Responsible credit card use
- Good debt and bad debt
- Real assets vs false assets
- Opening their first brokerage account before 18 and after
- Investment options, such as index funds
- Tracking expenses
- High savings rates
However, the real purpose of the book is to teach a mindset. The book is truly meant to show that living the American Dream doesn’t mean following the same path everyone else has in life.
You don’t need to go to college, have 2.5 kids, a house with a picket fence and plan to retire at 65.
Instead, Dan introduces options to teens to show them that they don’t need to work until 65. Of course, everyone has their own goal and picture of their ideal life. However, the book shows teens the options they have available to them.
As a teacher, Dan explains tough topics in a way that makes it easy for everyone to understand. Also, everyone who owns the book has access to the community Dan created online.
Anyone who joins the community can support each other, tell their stories, ask questions, and really help each other by surrounding themselves with others interested in the same concepts.
Through the community, young, like-minded people can interact with each other and really learn more about reaching their financial goals together.
First to a Million: A Teenager’s Guide to Achieving Early Financial Independence is available on BiggerPockets. Additionally, anyone who signs up for the paid version of Dan’s community can enter the code “secureyourretirement” to receive a discount.