Let It Ride

My son has a side-gig shoveling snow.

Side-gig money is his to spend in any way he wants (and he wants a jumbo Baby Yoda).

His surplus money goes into a bag. “Money in the bag” is real to him.

Other forms, less so.

My son’s outlook is very common and, if not addressed, will cost him a lot of wealth (directly) and time (indirectly).

Last Tuesday, he had a cunning plan to help me “get rich” – the scheme was a simple one. Sell everything I own and realize all the gains.

I left the fact that I don’t truly own anything for another lesson.

Instead, I started by pointing out that there are a lot of rich folks in town who don’t have time to ski with their kids.

Time, son. I want you to remember time.

I want you to remember time.

His scheme gave me the opportunity to teach him three things about money:

1/. We’re not going to sell the rental property…

Income, from rent, is a useful type of money – I used the example that the property he wanted to sell covers the cost of his food.

Cash flow buys strawberries.

Cash flow buys food

2/. Selling costs money

When you sell you need to pay taxes on the gain.

Taxation was taught to him from a young age. Whenever I eat something off his plate, “I’m taxing you.”

If you don’t sell then you can pay taxes later. Pay later is better.

He was on-board so far.

  • Cash flow is food
  • Pay later is better

3/. What are we going to do with the money if we sell?

When you sell, you need to figure out what to do with the money.

The rental property is a great asset and I have no ideas for something better.

I lost him here. I think he wanted to see a _really_ big bag of money.

Opportunity cost and alternative use of funds… fairly advanced for a kid, or anyone for that matter.

How might you get this bag of money to work for you?

  • Cash Flow
  • Deferred Taxes
  • Opportunity Cost
  • Alternative Investments

Good enough is good enough.

Once you get that bag of money working for you…

Let it ride.