ABC's of Money with Alan Akina - Lesson 2: The Three S's of Money

Good morning everyone and welcome to another edition of the ABCs of Money. We welcome you all the way from Hawaii to the East Coast. We have a lot of you on today. I'm super excited to be able to teach you today and, and teach you lesson number 2. Before we get into lesson number 2, I want to check on your homework. Okay, kids? I gave you 3 financial projects. If you remember this, the first project was to research 3 different jobs that you could see yourself in the future. And we want to look at the pros and cons. So if you can go ahead and comment in there the job that you found, like your best job, what was the best job you found and how much money did it bring in? Right. Income, paycheck. How much is going into your pocket? So I want to hear, you know, know, what you found and about how much, what your research was. Okay, so that's financial project number 1. The other project I gave you was to research a business that you would like to start, maybe a business idea, or you see some other businesses out there that you'd like to own. I want you to comment about that. I'm very curious to see. I've got a lot of messages from your parents saying that my kids were working hard on this, Uncle Alan. And I'm very proud of them and they got some really cool ideas. So, you know, type it in. Let's see. Let's see what it is. And if you can and if you did your, your project, you can get an idea of what you typically could earn in that business or that industry. And the 3rd financial project I gave you was investments that you like to own. So, so I want you to type in like, Uncle Alan, I'd like to own a hotel one day, or I'd like to own an apartment building, or I want to own this, you know, maybe an NBA team. That's like my dream. I'll own an NBA team one day. So go ahead and comment. I'm going to, I'm going to check in on you and see what you got put down. Okay. All right. Let's see here. Welcome, Alex. Okay, so let's see. What, uh, Scarlet, marine biologist. That is really, really cool. $57,000 a year. Uh, Tulani, a lawyer in Arizona, average about $76,000. Very good, Tulani. You did your research. Um, Keaka, let's see, anesthetic nurse, $70,000 to $90,000 a year. Felipe's, your kids, photographer, $86,000. Really cool. Baseball player, $10 million a year. I love it. Really, really awesome. Sarah, video game engineer, $107,500 a year. Very good. Mechanical engineer, Carrie, your kids are at $87,000. Really good. My model, an average of $49,000 a year, but could make more. I tried that. I did. I lost money in that. So real estate agents, about $4,000 a month. Dermatology. Coach Scoville. Sadie says graphic designer, $63,000. Investments. Okay, now we're getting into investments. So Kelly, your kids. Kaikoa wants to own 43 acres of land in Hawaii. Wow. Can I come live with you someday on Kauai? Vet. So Taylor, welcome. And $87,000, almost $88,000 a year on average. Let's see. Fortune cookie writer. Interesting. NFL, Napua NFL. Yes, that's a great job there. Child psychologist, $44,000 to about $100,000 a year. Lifeguard, around $20,000. Backpacking guide, ooh, nice. Okay, software engineer, private island caterer, $150,000 a year. Helena, your kids want to own a hotel. Very good. Stocks for Delta. Okay, good job, guys. I appreciate that, and I can tell you did your homework because you really wouldn't know what the average salary is for a job unless you looked it up online. There's a lot of resources like monster.com, Glassdoor, so I'm glad you were resourceful and went and found that. Okay, so, um, put that up on your, on your board or whatever. Look at your, your jobs. Business and investments and keep that in mind. Okay, we're going to come back to that at the end. I'm going to tie it in, in our, our plan here with your real— your money coming in. But today our lesson is going to be on the 3 S's of money, and then I have a cool exercise for you at the end. Okay, so the first S, here's what it stands for: money that we save. Okay. See, we first started with money coming in, and once you have money coming in, now you have to have a plan for it. Because here's what happens, kids. If you don't have a plan for your money, your money makes plans of its own, and it's typically to leave your pocket. Well, a smart person like you are, kids, is you want to have a plan for that money. So as soon as it comes in, you're directing it, you're telling it where to go. You're like, you're like the air traffic controller at the airport. This plane's going to go here. We're going to land at this time. Very, very precise. Because if an air traffic controller is not precise, then it is deadly, right? There's accidents and planes will collide at different times. So we want to be like air traffic controller where that money comes in. We're going to tell it where to go. And today I'm going to give you 3 places to tell it to go. The first place is money that we save. Okay, so this is going to be money that we, we put away. And that money is going to be put away to be used for Maybe a rainy day, right, for emergencies. But most likely you're going to want to use it to start a business or to buy an investment or an asset. That's why we need to have money. Now, I do want to point this out, kids, is that to, to build wealth and to get rich— some of you want to be rich or successful financially— you can't really save your way to wealth. Having it in the savings account is not going to get you anywhere. A savings account is a temporary holding place for your money. So this savings account is very temporary. So your money comes into the savings. It's just there to hold it until you find a really good place for it to work for you. Okay. And that's typically to start a business or to buy an asset or assets. Now, What do I recommend? Okay, so you want to write this down? Okay, kids, recommended percentage is a minimum, minimum of 10% of your money coming in is going to be used to save. What do I really suggest? Like, it would be ideal if you could do this, especially as you are an adult. You're going to want to be anywhere between 20 to 25%. Okay, so write that down. 20 to 25% of your money coming in is going to be used for into a savings, which you now will use to invest or to buy an asset. Okay, so that's the first S of money— money that we save. So everybody repeat after me by typing it in the comments. Okay, kids, money First thing is money that we save. Type that in. Okay, good. We're going to come back to that. But now we're going to move on to the second S of money. The second S of money is called money that we spend. Write that down. Money that we spend. I call this the B word. This is where we have a budget. Okay. Not too many people like budgets. Adults are afraid of that word budgets. But I don't want you as a kid— you don't have any of those preconceived ideas. So just know that budgets are actually good. Budgets are telling your money where to go and what to do for you. Okay. And it's having control over the budget, which really makes you happy. Okay. So the B word budget is control again, telling where your money to go. And so In budgets, here's 2 things I want to teach you today. There's 2 main categories of a budget. The first category is what we call— I want to zoom into this— needs. Okay, that's the first category. The second category of a budget is called, and you might know this, Wants. Okay, so there's needs and wants when it comes to a budget. Let me explain. A need is just that. It's something that you need in your life. Like, you need to live in a house, so you got to pay your rent or mortgage. Okay, you need food. Okay, so you've got to go grocery shopping. We need clothes. Now, that could be a misconception because some of the clothes that my kids get, or some you might get, or maybe your parents fall into the wants. Do you really need that many shoes? Do you really need that nice of a backpack? Or do you really need that nice of a shirt? Okay. Can you look for deals? So that could fall into a want. But there's things that you need. And so what I want you to do, kids, is type in in the comments or type in in the comments some of the things that you need that, that, that have to take place for you to live and to, to be safe in this world. What are some things that you need? I already mentioned a house, right? Clothes and food. What are some other things that you need? I want to see your comments. Okay, kids. Okay. Tara's daughters. Tara's daughters in the big on electricity. That's right. That that was the next thing I was looking for. Shampoo, Wi-Fi, water, water. Yes. Toothpaste very good. Probably toothbrush along with that. God. That God is number one. Yes, very, very good. Yeah, you need a car, right? A car for most people is, is what I would consider a need. Why? Because you got to get to work, get to school. It's safe, right? It keeps your family safe. Utilities, your family money. So, okay, good. Phone. Yes, those are all great examples. Okay, so these are things that we need. And so I appreciate you sharing that with me. Now, Owen says medication. Yes. And brush your teeth, guys. Very good tip, Ezekiel. I want to talk about a want. Okay. What are wants? I think you got the needs down. You know what a need is. Do you really need this to live? Okay. Or does it fall into the category of a want? Do I really need this or do I just want this? So let's, let's take, for example, a phone. If somebody said a phone, yes, we need a phone. But do you really need the newest, nicest phone? Not really, because the technology that the iPhone had last year was Really, really good. So it's not going to change your quality of life by having to get the newest phone, okay, or the newest shoes every time it comes out. And I think, kids, if you can get this down, this, this is very crucial. If you can understand the needs and wants, first thing that's going to happen is you're going to help your parents now, because your parents have the B word. Whether you know it or not, your parents are living with the B word, a budget. Everybody has a budget, whether they know it or not. So once you as kids understand needs and wants, you can help your parents with your— with their budget. But then you also will develop good habits at this age, at a young age, being able to decipher. I mean, how many kids know the difference between a need and a want? So let's take a couple of minutes and let's talk about wants. Okay. What are some things that you know you don't need but you want? I want a new iPad. PS4 cards, iPhone 11. Yes. Yeah, Kaleo, do you really need McDonald's, or could you have a peanut butter and jelly sandwich? Now that's one of my favorite go-to meals. Uh, phone, video game, shoes. Okay, I don't know what that is, but Tulani, do you really need a pug? What does a pug cost, like 8 grand? Probably not. Cable, use Wi-Fi to stream Hulu, Netflix cheaper. Okay, very good. More studios than Goku. A group bigger than 10. All right. A new windbreaker. Do you need a new windbreaker, or is that the one that you still have good? Do you need a new watch or a new iPad? Do you need a Tesla, Christine? Now let me tell you guys about something. So, um, I've been very blessed to do well financially, and, uh, yeah, I think it would be nice to have a new car, but my car that I drive, it's a nice car, But it's a 2013. It's 7 years old and it's still good. I take care of it for the most part, but I like to keep things for a while. Okay. Foosball table. Do we need that or can we play with something else? So, okay, good. I think, I think you guys got the difference between a need and a want. Now I want to talk to you about the golden rule. Okay, so there's a golden rule when it comes to money that we spend. Write this down, kids. Okay, write this down in your notes. Never ever spend more than you make each month. Write that down. Okay, write that down. You can even type it in. Your parents, your parents probably should type this in to reinforce the golden rule in their minds, but Try to never spend more than we make each month. So you know the money that you bring in? Try not to spend more of that than you take out of your pocket. In fact, you kids are probably thinking, well, Uncle Alan, how, how can we spend more than we bring in? Because I only bring in a certain amount. How can I spend more? Well, there's only one way that you can spend more. And write this down. It's one word, starts with the letter C. And ends in it. Okay, who knows what that is? Credit. That is the only way that you can spend more than you make is through credit. And I'm going to talk about that on Thursday in lesson three, which is what we call good debt versus bad debt. Okay, so so now the golden rule. I hope you wrote that down. Try never, ever to spend more than you make each month. Now, what do I recommend? What is the recommended spending amount? So if you bring in $100 every month, I'm going to recommend— it's a great starting point— to spend anywhere between 50% and 60%. You can keep it to that. You are golden because this gives you up to 20% to 25% in your savings. And then you can also contribute more To good causes, okay? Which is what I'm going to talk about next. So typically what happens is kids is when we bring money in, okay, the money that we bring in goes into our checking account. And what I've seen across the country now is what most people do is in their checking account, all their money's here. They spend all of it every month. So there's nothing left over for savings to invest or to buy assets. Okay, so try not to do that. All right. Third money. S money that we put this down share money that we share very very important here. Very important fact of life that the more we are given, the more it is expected of us to help others. Now, when I talk about money we share, here are some things that, you know, I want to actually— I want you to comment. Think about places that you could share your money, share what you've been blessed with. Okay, so comment in there a few ideas of money that we share, and I'm going to look it up. With the homeless, with church, very, very good. And so in church they call that tithing. Okay, tithing is to help out your church, which helps out your community. Hospitals need us, charity, okay, your kids at church, homeless shelters. These are all very, very good places to do it. And what we've done is We've done that before. I'm sure a lot of you have done these things where you shared some of the money you have. Now, here's the thing. If you don't have a lot of money, and right now I'm not saying you have to share everything you have, but you can share that little bit of money that you have in the form of tithing. And tithe means a tenth. Okay, so I'm going to talk about that in the percentages. Homeless shelters, right? Our medical professionals, even just people in your community. Maybe there's older folks that can't go out and go shopping because of the coronavirus and they're a little nervous. Maybe we can drop off some things. Like last night, my kids and my wife dropped off bread, homemade bread, to a few families in our community. And there was an older lady that had a birthday and my wife got a bouquet of flowers. So just something small, homemade bread. Didn't cost a lot, but that was huge, a huge way to give. And now here's the thing: if you don't have any money, that doesn't matter. That shouldn't stop us from sharing. Why? Because we give up our time. We can serve. We have talents that we have that that we can share with others. You know, some kids you might want to clean a yard for an elderly neighbor or deliver some groceries for people that can't go out shopping. So there's so many ways. To share, and this is a great opportunity for you to start to give back into, into the world. Okay, so keep that in mind. Now, what do I recommend? About right around 10%. 10% is what you should be planning on sharing. Okay, so you can, you can adjust these numbers however you want. I just Wanted to give you some suggestions and a place to start, start your mind thinking. I have here an original 3 S's drawer set. Okay, so I had my kids do this probably 8, 9 years ago. This is about, yeah, about 8 years ago. I had them build what we call the 3 S's drawers. Okay, so money that we save, which they put tithing, money that we spend, and money that we save. So my kids, they were little, and as they would earn money by working for different things that we did, or, you know, whatever projects they had, or they would get money from like birthdays, we'd have them take those dollars and then go to the bank and then split it up, whatever percentage. We let them figure out the percentages that they wanted to do, and they would put money in their drawers. Okay, so Here's my financial project for you for this week. For today is I want you to build something similar to this. Now, it doesn't need to be exactly this drawer set, but something similar. But here's the challenge. I want you to build something similar to this, but with stuff that's already existing in your home. So what I mean by this, I don't want you to rush out to go buy this. Or go buy something at the store. Okay, I, I want you to be creative. So around your house, look for things that can help you to build something very similar. So maybe an idea would be if you have glass jars, glass jars, you get some duct tape and tape them all together. And so they're all in one and you can write on each one money we save, money we spend, money we share. And then you can start putting your dollars away and start allocating and put the percentage down on each bottle, whatever it is. Be creative and be creative. And then I want you to try to do it without buying anything. Do it from what you have at home. Okay. What if all my money is online? Very good question. Then you have to create a little notebook. So get a notebook and then you can start to— you can write it down in a notebook. So it doesn't necessarily have to be in a drawer set. Okay. So this is kind of a way to get you started. Now, you obviously see that it's all empty because my kids eventually— we started them here and then we moved their money online and into various investments and accounts. Okay. So. Get the visual, start, start checking and playing around with the concept. Okay. Now, part of your assignment, part of your financial project is to once you have it built, I want you to build the thing or your notebook or whatever it is that you build. And this week I want you to take a picture of it with you in it. Okay. So you grab your drawer set. I want you to take a picture of it and then tag me either on Facebook Look on Instagram with it and use the hashtags #MoneyABCs. Okay, so let's zoom into that again. Money ABCs and #101Financial. Okay, so use those 2 hashtags. I want to see your picture with, uh, with your 3 S's of money set. I want to see how creative you are. Okay. And, um, when you tag me in it and use the #MoneyABCs and #101Financial, I'm going to use this in my drawings that we're going to have Later this month, remember Uncle Alan said he's going to be giving away a Tesla and Disney and Apple? Well, that's going to be in stocks. Okay, so we're going to start to take the most creative three draw three S's set, and uncle's going to choose a few winners throughout the month for this, and we'll have winners for other. Lessons as we as we go down the go down the road. Okay, so again, I I'm happy to be able to help you, and I hope this is getting your brain working, and you're you're actually taking the information and and doing some work after. So go to work today, put your your three S's of money system together, and I want to see who has the best. Okay. Kids, thank you for joining me. I, I hope you had a great day today. I'm wishing you all be safe, OK? Be smart, be healthy. Listen to your parents, OK? Listen to your parents and help them with their budgets, OK? So thank you.