00:00:00
Podcast Intro: You’re listening to ChooseFI. The blueprint for financial independence lives here. If you’re looking to unlock the secrets to financial independence and early retirement, you’re in the right place. Stay tuned and join a community of like-minded people who are getting off the Instagram and taking control of their lives in the pursuit of financial independence. ChooseFI, your home for financial independence online.
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Brad: Hello and welcome to ChooseFI. Today on the show, we have Rishi from Easy Peasy Finance. He’s actually 15 years old and he got into personal finance at six, if you would believe that. He gives the inception story on the podcast. He started investing at seven and he created his YouTube channel at eight, and he’s put out over 1,000 videos now. While we talk about second-generation FI here as a way that those of us who are a bit older can teach our kids, nieces or nephews, or family friends, Rishi speaks to everyone. He speaks to people who are just getting started with FI. Even though he’s 15, I urge you to look past that because he’s extraordinarily wise. What we talk about throughout this episode is really experimentation. We can experiment teaching our kids, teaching family members, etc. And frankly, we can experiment teaching ourselves. That mindset is what is going to set you apart and make this a really successful journey to FI. I think you’re really gonna enjoy this episode. With that, welcome to ChooseFI.
00:01:16
Brad: Rishi, welcome to ChooseFI. I’ve been looking forward to this for a while. This should be fun.
00:01:21
Rishi: Yeah, definitely. Thank you so much for having me, Brad.
00:01:25
Brad: You are 15 years old and you have a YouTube channel, Easy Peasy Finance, that has, at last check, about 40,000 subscribers. You’ve produced content over the last seven years, which is seven plus, you might correct me on that. It’s extraordinary that you’ve produced over 1,000 videos. We talk here at ChooseFI about second-generation FI because many of us are a bit older than you. It’s about how we teach financial independence to the next generation, whether they are teenagers, or people getting started in their early 20s with jobs. How do we get this to sink in? A lot of us didn’t get this education when we were growing up, and we want to pass it on. I think you are the perfect ambassador to help teach that next generation. Why don’t we start with your money story? Because I know it started really early. This wasn’t like, “Hey, I just happened upon this at 15.” Tell me the inception story.
00:02:27
Rishi: Thank you so much. My interest in finance and my finance journey started when I was six. My parents were reading a book on personal finance called “I Will Teach You to Be Rich,” which is about practical money management. Some of you might have read it, but that book is definitely not meant for kids to learn concepts. It’s more for practical application for what adults and young adults can do to manage their money. Even though I was just six at the time, I was enamored with it. After that, it really sparked my interest in personal finance.
00:03:00
Based on what I read in that book, when I was seven, my parents had to change the date for one of our flights while traveling. Because of that, they were charged a fee to change the date. I learned that when you’re using a credit card to book the flight, you can actually waive the fees through the credit card provider. So I kept nagging my parents for a few weeks, telling them to use their credit card to get the money back. At first, they didn’t think it would work, but I persisted. Once we got back, they decided to try it and called the credit card company, and it actually worked. They got the fee back, which was a big win for me at just seven years old. This showed me that finance isn’t just theory; it’s very practical. It was a proud moment because I was already seeing the benefits of financial knowledge.
00:04:11
Since then, my interest in finance just grew. When I was seven, I also started investing through my dad’s brokerage account. Initially, I was investing in individual stocks, which was the first thing I learned about, but soon, I switched to investing in index funds as my knowledge improved. Over time, I realized there was a lack of resources for teaching personal finance, especially for kids and beginners. After saving my parents money on the flight cancellation, I wanted to share my passion for finance. I decided to create a personal finance resource that broke down concepts and made it simple for kids and beginners to understand.
00:05:20
I had the videos animated and presented in a question-and-answer format, making them more engaging and easier for kids to grasp. I also included lots of visuals and interesting graphics to help explain concepts. I ensured the videos were short, mostly two to three minutes long, as kids have shorter attention spans. This way, they wouldn’t be so bored that they missed half the concepts. I continued to publish at least one video every week, as consistency is very important to me. Over time, I’ve evolved my content to include practical money management videos for young adults and teenagers, covering topics like how to earn money online, psychological tricks that affect earning potential, and investment strategies for Gen Z. I still apply the principles I used in the animated videos by avoiding complex language and maintaining concise, engaging content.
00:07:27
Brad: I love it. I’m actually on your YouTube channel right now and sorting by popularity. The first six videos have about 200,000 views each up to 600,000. It’s brilliant that the most popular one is “What is a Bank Account? A Simple Explanation for Kids and Beginners,” which is just a minute and 43 seconds. You’ve created important nuggets of knowledge that can be shared quickly. It’s amazing to see how you’ve evolved as you’ve grown, too! I’m curious about how you go about learning. You mentioned psychological concepts and deeper personal finance topics. Where do you personally go for information?
00:08:40
Rishi: Since I first got interested in personal finance, I’ve read a lot of magazines and books related to the field. One of the first books I read after “I Will Teach You to Be Rich” was “Blue Chip Kids,” which was also significant in getting me interested. I read magazines like Kiplinger, Fortune, and Forbes to stay updated on what’s happening with money and learn new concepts. I am also pursuing certified financial planner certification. I’ve completed the coursework and earned a certificate in financial planning through NYU. This broadens my knowledge, allowing me to create diverse videos and reach a wider audience as I grow up. My studies toward certification have provided insights into more advanced topics like retirement planning, tax planning, and estate planning, enhancing my understanding of practical money management.
00:10:00
Brad: That’s wonderful and extraordinary for someone your age!
00:10:06
Brad: And going for your CFP, that is worthy of its own 20-minute segment here. But you actually answered a better question than I asked, frankly, which was what were the beginning sources of knowledge?
00:10:18
Brad: So you said Blue Chip Kids, which is one I’ve never heard of before. You started with I Will Teach You To Be Rich by Rumi Tseti, which is an incredibly popular book. I don’t know necessarily that a ton of other six to eight-year-olds are gonna gravitate towards that, but they might, they might, frankly. A friend of mine named Rav Phelan, who’s a great friend of the show, has a book called M is for Money, which is another one that I recommend. Do you have other sources?
00:10:45
Brad: Because, yeah, like I said, you answered a better question, which is what sources of info do you think really work for other kids, but say from when you started six up to teenage years? I’d say, especially compared to when I started, there’s definitely more resources now.
00:11:02
Rishi: In addition to what I was using, there’s more things that have been made. My resource, Easy Peasy Finance, definitely is something that parents, schools, and kids have been using to learn about financial concepts. One thing that parents might also overlook is what they can do to help teach their kids about personal finance, starting when they’re very young. Most kids develop a lot of their finance-related habits or ideas by the time they’re only seven, but most people don’t learn about money until they’re adults, or at least until they’re near adults. So it’s really important to start the financial literacy journey really early, which is something that I’m working toward.
00:11:56
Rishi: There are a few things that parents can do that are really useful toward this, since unfortunately a lot of schools don’t teach personal finance. It really falls to the parents to do this. One really important thing that my parents also did with me is to give their kid an allowance, because that allows the kid to manage money on their own and have some freedom, but it also lets them make mistakes early when the stakes are a lot lower. For example, if a kid wants to buy some new sneakers, then if there’s a concert in town like a week later, they won’t be able to go because they’ll have spent all the money. Those kinds of lessons about how earning money is a lot harder than spending money, and about the importance of saving and delayed gratification, are really important to learn.
00:12:55
Rishi: It’s a lot more powerful when kids or teenagers learn them through action than just the concepts alone. That’s a really important thing parents can do. My parents gave me an allowance of my age every week in money. When I was six, they gave me $6 per week. That helped me significantly.
00:13:08
Rishi: Another thing parents can do related to an allowance is to match their kids’ savings, similar to a 401k. This incentivizes kids to build these habits of savings that will help them in the long run. One more thing my parents did with me that’s really helpful is to involve me in day-to-day activities that relate to money and use those as teachable moments. For example, when we were checking out at the store, my parents would explain how we were using money to buy things and how credit cards work.
00:13:44
Rishi: Or, when we’re taking money out of an ATM, they explained that it isn’t just coming out of nowhere; it’s coming out of the bank account and money that you earn. Depending on age, the topics parents can cover are different. For middle school students, for example, parents can talk about investing or about taxes. If the kids are older, like in high school, they can involve the kids in creating a household budget, which is also a really important skill that adults unfortunately sometimes lack.
00:14:19
Rishi: Involvement in day-to-day activities related to money can really help a kid gain a strong understanding starting when they’re really young. One last thing that parents can do is to be good financial role models. Even if they don’t actively teach kids financial literacy skills when they’re young, just by observing what the parents do, kids will build a lot of beliefs and habits related to money. By practicing good money skills, as well as other strategies like giving an allowance and engaging in day-to-day activities, parents can take significant steps in making their kids financially literate and help them in the future when they’ll have to manage their own money.
00:14:50
Brad: Yeah, there are so many important things you just said. It’s intriguing because I have a 17-year-old daughter and a now 14-year-old daughter. It’s been interesting to see how our financial education has really changed and evolved over the years. As your kids get older, there are different lessons and different capacities for them to get involved.
00:15:07
Brad: I love that concept of the household budget because, in fairness, I don’t know how my girls could possibly know this, but they have no idea what things cost or even the categories, like that there is a water bill. Many kids might not know that you have to pay a bill for trash disposal to come every Thursday or whatever it is in your town. Any type of financial awareness that we can pass along as day-to-day lessons, as a natural part of life, is really important.
00:15:58
Brad: I’ve tried to do that with my own girls, making it okay to talk about finance. I’m curious, regarding the allowance, we did something very similar in giving a dollar figure of allowance equating to their age. When they were eight years old, they got $8. But now we put stipulations on it in terms of three buckets: saving, spending, and charity. It sounds like your parents did not do that and left it up to you, which I appreciate a lot more because it allows for the incentivization of behavior based on your choices.
00:16:46
Rishi: Definitely, the type of allowance and the structure that works best depends on the parents and the kids, as well as how parents see their kids managing their allowance. My parents gave me the money, but they didn’t dictate how to use it. Since I was learning about money and finance, I was really interested in investing, especially because I could see the magical power of compounding. The earlier you start investing, the exponentially more money you’ll have by the time you use it in retirement.
00:17:48
Rishi: Naturally, I wanted to invest all of my allowance from the time I was seven, which, of course, most kids wouldn’t want to do. But for me, I wanted to because I was aware of the importance of investing. A lot of things happened when I was seven. I decided to stop having birthday parties because once my parents told me how expensive they were, I thought I wasn’t really getting as much enjoyment out of them as they were paying for the parties.
00:18:20
Rishi: I told them to stop paying for parties and to use half the money to buy me gifts that I would enjoy more than just one day of celebration and invest the other half into my investment account for my retirement. That way, I could enjoy my birthday while also investing for my future. Those types of decisions had a stronger impact because I made them organically, rather than being told what to do.
00:19:09
Rishi: It’s critical that the lessons stick, whether a kid wants to save or spend; those choices can be very powerful. Today, with so much consumerism and advertising, kids are often tempted to spend more than they should or can afford to. Therefore, developing strong skills to differentiate between needs and wants and to create a budget becomes a crucial skill.
00:19:29
Brad: Yeah, this is really great. As you were talking about the parties, I thought about the billions of dollars spent on weddings. People often spend $20,000 to $100,000 on a five-hour party. It’s eye-opening to think how much better served people would be if they used a portion of that for their financial well-being.
00:20:12
Rishi: Sure, go on a big trip, go on a fancy honeymoon, and then take the rest and just save it. I mean, goodness, it’s obviously outside the scope of what you’re talking about, but the point holds. That’s actually something that I was thinking about when I was first getting interested in money. When I was around six to eight, that’s an idea that I had, and I also told my parents at the time that I didn’t want to have a fancy wedding. I’d instead use that on a honeymoon, like you said, to travel and enjoy it, and then put the rest toward either buying a house or investing. And like you said, that’s not something that a lot of people consider, and my parents were also really surprised, but that’s something I was thinking, similar to birthday parties, but like you said, on a much larger scale because that amount of money, especially for a young adult who has a lot of time to let the money grow, that can be really beneficial if they use the money. But of course, most people wouldn’t want to do that, so it’s really about balancing what you want and what makes you happy versus where you’re able to cut back and where you’re able to save and invest more. Yes, I love that we’re on the same wavelength with that.
00:21:16
Rishi: And yeah, I think, again, we’re trying to set people up for how do they teach their kids, or there are gonna be many, many teenagers who are listening to this episode, so let’s be clear, it’s not entirely passing on from one generation to the next. But I think what you and I, to a lesser degree, are trying to get across here is, it’s about lessons. It’s about how do you pass along lessons that give people, and give children options, right, and give them the ability to make choices, because everything, at the end of the day, it’s decision-making and trade-offs, right? So how can you build more of that in? I’m thinking about your party, right? Okay, you said, I’m gonna take $100, well, in my mind, okay, a $200 party, I’m just making that up, right? Okay, $100, my parents take and buy gifts, and then 100, we’re gonna invest. But it would be interesting if your parents said, hey, what about for every extra dollar you put from spending to saving will then match a dollar for dollar, right? Like, okay, that might change your answer.
00:22:17
Rishi: And I like what you said, and no, I know you were joking about the, I was gonna be sad on my birthday, but because you’re such an investor, I’m certain you wouldn’t have been sad. But nevertheless, that’s one of the cool things. The three of you together could have set this up in any way, which is really neat, and I think that’s what we’re trying to get across to people listening, right? Is like, you can incentivize behavior. You can try to get your kids to save or frankly, sometimes spending money, we both know this, spending money is a really important part of financial life, right? Like, nobody’s advocating save 100% of your income. That is not a good life, it just simply isn’t.
00:23:01
Rishi: So, okay, as you well know, this podcast is about taking action, and I always wanna get these little tips because people really thrive in them. Going back to the allowance, did your parents give you actual tangible cash? And then second to that is if they did, or maybe this was on a spreadsheet, I’m not sure exactly how they gave you the money, but then how did you invest it? Like, and how hands-on did your parents let you be? Did you have the logins to the brokerage account? Did you have to ask your mom or dad to log in? How did you track this? Like, this kind of stuff is really the difference between, oh, it sounds good, I’ll let my kid invest too. This is how it’s actually done.
00:23:41
Rishi: Yeah, definitely, the specifics are really important if you want to put it into action. So like, for me personally, when I was first getting an allowance, they did give it to me in cash, but soon after I decided I wanted to invest everything. So at that point, it really didn’t make sense to give me the money and then invest it. So I invested through my dad’s brokerage account and I kept track of everything in a spreadsheet that he made and he kept updating based on what I wanted to do. For example, when I first started, I wanted to invest in individual stocks. So I looked at a list of companies that he thought were good based on his research from earlier. And then I talked to him and said that I wanted to invest in these. So anytime that my allowance grew to enough to buy one stock, then he would invest in the one that I wanted to invest in.
00:24:27
Rishi: But then, it’s not like I had the brokerage account login or anything like that, but like every month I would talk to my dad about what I wanted to do and then he would implement that. But then soon after, I learned that index funds are a much better way to invest, especially for people like me or other young people where you have a lot of time on your side. So soon after, I just invested in an S&P 500 based index fund. And at that point, it was really hands-off because that’s also the goal of dollar-cost averaging, not having to think about investing and being able to just consistently invest over time and grow your money. So for a long time now, I haven’t actually been doing much related to my investments. It’s just happening automatically, which is how it should be and how I also tell my viewers to set up their investments because that way you’re growing money for the long term automatically and you don’t have to think about it or get scared when the market drops or anything like that.
00:25:20
Rishi: How do you explain to the people that you educate about index funds? How do you explain what an index fund is and why that is, in your opinion, a more optimal investing strategy for your investing lifetime, which frankly is another 80 plus years, right, as opposed to individual stocks? How do you get that point across?
00:25:42
Rishi: Definitely individual stocks are something that most beginners would probably gravitate towards like I did because they’re a lot more exciting and you can actually understand what they are really quickly because they’re like companies that you see all the time, like household names. But the thing is, it’s index funds. It’s basically a basket of all the, if it’s a broad based index fund, it’s a basket of all the biggest companies. For example, the S&P 500 is the 500 biggest US companies and it’s meant to represent a certain market. So when I explain it, I say that instead of trying to choose one or two winning stocks, which even the pros more often than not fail to do and end up losing money, instead of trying to choose a few winning stocks out of the entire market, why not just invest in the whole market? Because that way you’re over the long term, you’re guaranteed to earn money at around 10 or 11% per year.
00:26:38
Rishi: And instead of having to constantly worry about what to invest in, when to buy or sell, day trading, things like that, you’re just invested and you’re guaranteed to make money. So that’s one thing where it saves a lot of time and energy doing thinking about where to invest and also worrying about if you made the right investment, when to buy and sell, things like that. And also if you have to make a portfolio from scratch using individual stocks, you need to think a lot harder about what sectors to invest in, different market caps to invest in, also different regions, things like that. But if you’re investing in a total market index fund or even an S&P 500 based index fund, then you don’t have to worry about diversification at all. At least when you’re young and you still have a long time until your retirement, you can just invest everything or close to everything into index fund and not have to worry about that at all.
00:27:37
Rishi: And just know that your money is going to be working for you and continuing to grow. And another thing that’s especially important now is that a lot of people think you need a lot of money to start investing, but it couldn’t be further from the truth because it’s not timing the market, it’s time in the market that matters most. So the earlier you start, you’ll have a lot more money than if you start later. So one example I also use in some of my videos is that if you start investing at 20, just $150 a month, by the time you retire at around 65, you’ll have $2 million. But if you start investing later, even at just 40, you’ll have only around a tenth of that money because you waited until you have more money to start investing or you waited until you learned more. These kinds of things that people think they need, but of course they don’t actually need to be experts. The most important thing is to just start early.
00:28:24
Rishi: And one thing that’s great with index funds is that you, especially now, you don’t need a lot of money to start, especially with fractional shares and zero commission brokerages. Even if you just have 10 or $20 a month, you can start investing and you can get the ball rolling. And then once you’re able to afford more, of course you should increase your investing, but that way you can start really early and with a smaller amount and you can begin your investing journey, which can be the hardest step, especially for beginners, but it’s also the most important if you want to start growing your money and building a nest egg for retirement or some other.
00:29:08
Brad: I totally agree. And yeah, the power of compounding is just absolutely enormous. And this truly is the golden age of investing. It has never been easier or cheaper to invest, right? We don’t advocate any particular platform, but we usually mention Fidelity, Vanguard, and Schwab as three very reputable places that are very easy to start investing.
00:29:23
Brad: And yeah, I mean, in this day and age with expense ratios being minuscule on these S&P 500 or total stock market funds, usually three or four or five one hundredths of a percent and there being no commissions or trading fees, you really can get started with those small sums that you talked about, which is awesome, right?
00:29:44
Brad: And I guess my question to you, and it’s funny because I asked my daughters if they had any questions for you, and Molly wrote basically saying, what are the best tips to balance between saving money and spending money? Which I would add on to that, which is how do you convince people that they want to save in the first place? I think a lot of people, a lot of children, a lot of adults, frankly, spend all their money because that’s what they, it’s fun to spend, right? Like, that’s what they want to do, but yet, they’re obviously, if you spend all of your money,
00:30:15
Brad: You can never reach financial independence. You can never retire, just by definition, if you have a 0% savings rate, right? Where you have to get lucky or somehow hope that Social Security can cover everything, right? But that’s not a winning strategy. So I guess, to my daughter’s question, how do you balance saving and spending? And how do you talk to people about the importance of saving when it’s so easy to spend?
00:30:39
Rishi: Definitely, especially nowadays, a lot of people focus on spending, which is natural, like you said. It’s fun to spend, people like buying things, and consumerism is really common. But I think it’s really about finding the right balance between spending and saving.
00:30:56
Rishi: And one interesting story that my dad told me a few years ago, which really relates to this, is between a hedge fund manager and an author, where the hedge fund manager says that in just a day, he earned more than the author made in his entire career, but the author said that he has something that the hedge fund manager will never have, which is enough. And I think that’s really important when thinking about saving and spending because wealth is not necessarily about having more but needing less and being content with what you have.
00:31:29
Rishi: So like you said, people shouldn’t think about it as just saving 100% of their income and then sometime in the future being able to have financial independence. You can enjoy life right now but also start working toward saving for the future and building a better future for yourself, where you’ll be able to enjoy a lot more because of decisions you make today.
00:31:48
Rishi: And this also is similar to what I was doing when I was younger. Like when I was around five, my parents tell me stories of how once I learned about Black Friday and how things often go on deep discounts, I wanted to not buy anything when it wasn’t Black Friday. Of course, that’s not practical, but I still try to buy everything on sale wherever possible.
00:32:06
Rishi: I also use the same backpack for many years. I’ve had this current one since the start of high school and I’ll keep it till I graduate because, of course, backpacks don’t break after a year; you can keep using it. So things like that, wherever you find opportunities to save money in your life, is where you need to find the right balance.
00:32:36
Rishi: It’s not about just saving everything or spending everything; you need to really find a middle ground. For example, I don’t really care about brands or fashion or sneakers, but I do care about experiences. So instead of spending money on those things, when I’m traveling with my family, I spend on experiences in the places I visit or I also look for sales on things that make me happy, like video games or fishing gear. Because to me, a $50 t-shirt is the same as a $10 one; I don’t really get any enjoyment out of that.
00:33:30
Rishi: But if I save that money and instead buy a video game for $50, that would be a lot better because that would give me many hours of entertainment. But if I bought both, then that would not be an ideal situation because, like you were saying, if people spend all their money, then they’ll never achieve financial independence.
00:33:46
Rishi: So it’s really about finding what makes you happy and what brings you value now, and being able to balance that with where you’re okay cutting back so that you can have more enjoyment and have more wealth in the future. Because through this intentional spending, you’re really able to enjoy life in the moment while also building toward financial independence in the future, without having to sacrifice all of your quality of life now.
00:34:50
Brad: Yeah, Rishi, the audience can’t see this, but you can. I have a big smile on my face the entire time you’re talking. The reason why, aside from the fact that what you’re saying is profound, is that you and I are so similar, it’s unbelievable. I kid you not, I have my high school backpack that I literally go to the gym basically seven days a week now, and I bring my Jansport backpack from when I was literally your age, 15. I’ve had this for 30 years.
00:35:17
Brad: And it still holds up; it’s a great bag. The zipper’s starting to break, so I think I might have to finally get a new one. But that’s the nice thing. We have a phrase around here that was coined many years ago by a good friend of mine; he’s a doctor named Bo, and he’s been on the show a number of times. We call it being a valuist, okay? So it’s not being cheap, frugal, or a miser, or all the negative connotations. It’s buying what you value.
00:35:44
Brad: And that is in the eye of the beholder. And it sounds like you see that in terms of, it’s not about trying to spend as little money as you possibly can on things. Like you said, it’s about utility and finding the sweet spot for you. The $50 t-shirt, in your case, your example, the $10 t-shirt is going to be just as warm as the $50 one. It might even last just as long. I have plenty of t-shirts that I try to optimize for shirts that I like. I’ll find a type of shirt that I like, and then just buy five or 10 of them. That’s my wardrobe for the next year or two.
00:36:38
Brad: And it cuts down on decision-making; that’s how my valuist brain works. It’s interesting how, I think that’s a really good way of going through life. Again, it’s not trying to buy cheap things that are going to break. There are many things that I buy that are much more expensive than the lower level version. If I plan on using it for years, I’m getting value and utility out of that.
00:36:59
Brad: And again, it’s case by case, of course. But I think everybody should really think about that. What are you looking to get out of this purchase? And how can you optimize it for however that works for you?
00:37:12
Rishi: So, yeah, I really, really like how you said that. Thanks.
00:37:15
Brad: I am curious, and we can jump around so much, but how and where do you invest now? So both, and you don’t have to say specifically what brokerage, but you obviously earn, I imagine you earn some YouTube revenue and maybe other types of revenue. Are you putting that still into a taxable brokerage account? Are you putting it into a Roth IRA? How do you personally think about the different buckets where you can invest?
00:37:41
Rishi: Yeah, it’s a great point that you’re bringing up. When I started, I wasn’t earning anything from Easy Peasy Finance. Even now, it’s only very little from ad revenue. Because one of the most important things in investing, especially for retirement, is being mindful of tax advantages and how to best use them. I do invest the little earnings that I get from Easy Peasy Finance through a Roth IRA because that way, especially since my money has so long to grow, and I’m not earning so much that I’ll have to pay a high tax rate now compared to in retirement.
00:38:07
Rishi: Definitely. That way I can make the most of what I’m getting by investing it for the long term through compounding, like with a traditional account, but also save a lot on taxes. This is in addition to what I’ve been doing through my dad’s brokerage account, which is taxable contributions of my allowance. But I am investing the little earnings that I get now in a Roth IRA.
00:38:27
Brad: Okay, I like that. And yeah, I also like, just because you have a YouTube channel, even if it’s successful, it doesn’t mean you’re rolling in money by any stretch. But the nice thing is yeah, net of expenses, whatever expenses you have, I assume you have production expenses and such, all that profit can just go in a Roth and grow forever.
00:38:49
Brad: You will never, because of the definition of the Roth account, you’re never going to have to pay tax on that. So, I mean, goodness, the compounding of working from 15 years old to even 59 ½, and not less than 60, 70, 80, 90, when you may or may not need it, that’s really, really cool.
00:39:06
Brad: Okay, so right, you said low-cost index funds, and that’s what you advise. How do you personally think about college? I think this is a big sticking point for a lot of people, and you can never know where the world is going. Just like in investing, right, we don’t try to prognosticate in terms of is the market going up, is it going down? Nobody knows. Like, nobody knows if AI is going to change the entire landscape of jobs. I think it’s kind of foolhardy to try to even do that.
00:39:40
Brad: But nevertheless, the world is constantly changing. We know for sure that the world is changing. I think for many decades, certainly people my age and older, college was the path. I’m curious both how you think about college and how many people your generation think about college. Is it still just the de facto like we are going to college after high school? Are people starting to think about other options?
00:40:03
Rishi: I guess it really depends on the person. Like a lot of things in finance, it depends on what someone wants to do as their career. Of course, a lot of it is the cost of college, which is a really big, not problem, but it’s a really important thing to plan for, both for parents and the student. College is getting a lot more expensive, way faster than other things because education inflation is really high.
00:40:28
Rishi: So the cost of college is definitely going up. But then on the other hand, there’s also definitely value to a college education. Of course, it depends on the field you’re going into, but college graduates can expect to earn significantly more over their life. However, there are other options, like going to a trade school.
00:40:50
Rishi: I think it really is on a case-by-case basis. You can’t say there are definitely trends for how people are thinking about college, and I guess definitely fewer people are considering college, like you said, the de facto option. They’re more considering alternative paths. I think college is still really important, and especially paying for college is something that parents and kids must think about, like whether they’re going to a private college or an in-state school for cost, where they’ll be able to get more scholarships or financial aid or looking for third-party scholarships, things like that.
00:41:24
Rishi: So there are definitely more factors to consider when thinking about both how to pay for college and whether to go to college, but I still think for most people, it’s an important option that they’ll consider.
00:40:27
Brad: Okay, yeah, that sounds about right. And that ties to, so I have a high school senior; my older daughter is a high school senior, so she is in the thick of it. She just got her applications in, so yeah, we are really in the thick of it now. It is interesting because there are a lot of potential optimizations, and we’ve talked about them here for years.
00:40:48
Brad: I actually, I’m gonna ask you in a second if you have any thoughts on paying for college because you actually told me before we had recorded that you’re in 11th grade. So you’re 15, but you’re in 11th grade. The college decisions are right around the corner for you. So based on your financial knowledge and wherewithal, I suspect you’ve already been thinking about this, but there are lots of things you can do. Like you said, there are many private scholarships. We’ve highlighted a bunch of them over the years, just some wacky ones.
00:41:16
Brad: Even way back when, there was a college caddy scholarship, a golf caddy scholarship that somebody talked about in the Big 10, which is interesting. Recent guest, Sonny Burns, talked about a scholarship that the Department of Defense offers. I think it’s called the SMART Scholarship for people going into engineering and tech, which is remarkable. They pay for your college and they give you a $25,000 stipend per year. So there are lots of these one-off things, but one of the most reliable ways that I’ve seen is going to community college.
00:41:43
Brad: In many states, you get an associate’s degree in two years if you’re diligent, and you can get rid of a lot of the initial requirements that many four-year universities ask for, and you’ve paid a tiny, tiny fraction of the total cost of that private school or even public school. I know here in the state of Virginia, people are probably tired of me saying this, but I suspect this exists in many states, which is here we have a guaranteed admissions program.
00:42:09
Brad: So if you go to a community college here in Virginia and you get a 3.4 GPA, which is very doable for many people, and you take certain classes, etc., you follow all the stipulations of the contract, you are guaranteed admissions to any state university in Virginia, which includes two of the best colleges in America, the University of Virginia and the College of William and Mary, not to mention Virginia Tech, James Madison, and a whole bunch of other amazing schools.
00:42:45
Brad: I mean, that’s a really cool way. That’s essentially saving half on college. I can’t even convince my own daughter to do this, so it’s easy to say and harder to do, but I’m curious, how do you think about your upcoming college decision and paying for it?
00:43:00
Rishi: Definitely, paying for college is really important and can be a challenge, but it’s important, like you said, to consider all the different options. What you mentioned is also something that I’ve shared in some past videos about how you can go to a much less expensive school for the first two years of college. Then, if it benefits you in your chosen career, you can go to a more expensive school later on.
00:43:23
Rishi: But, like you said, a lot of the things that sound good in theory or on paper are not things that people want to do. So it’s important to consider other options. Since a lot of these things don’t work as well in practice, there are also other things, like the scholarships or going to less expensive schools that are still good for all four years, things like that.
00:43:45
Rishi: Personally, for my paying for college, what I was saying earlier about involving kids in day-to-day activities is something that my parents have related to paying for college. Now that I’m a lot closer to needing to use the money in my 529, we’ve been discussing how to rebalance it because for a while it’s been all in stocks, but now it’s time to include more fixed income and make it more conservative.
00:44:10
Rishi: That’s just another example where involving kids can be really useful. And that’s also helping me see how important it is to save for college, as well as how much college costs compared to what I’ve saved, and what I’ll need to take out as a student loan or pay for with scholarships, things like that.
00:44:28
Rishi: Yeah, and I think this goes back to really the theme of the entire conversation, which is including your kids in the decision-making, right? There are trade-offs to every decision. This is life. This is personal finance. It’s trade-offs.
00:44:43
Rishi: So, okay, let’s say your parents did save diligently in a 529, which is wonderful, and it puts you in a very comfortable, privileged place. But there are still lessons to be had from that. What if I went to a private school that costs $80,000 a year, and even if we’re in this amazing position where we have $100,000 in a 529, well, that’s gonna go pretty darn quick. That’s gonna last about a year and change. What if you went to a state school?
00:45:21
Rishi: Well, maybe that’s only $30,000 or $40,000 a year. That makes a big difference. What if you went to a school where you could get a merit scholarship that might not have as big of a or fancy of a reputation? That’s a whole thing altogether, right? Now, you have some money left over. Maybe some people have siblings that that money could go towards. Maybe your parents would say, okay, if you go to the school where you get this full scholarship, we’ll give you this money we have in the 529 and put it in your brokerage account or a portion of it or something like that.
00:46:02
Rishi: Again, we’re not trying to be prescriptive here. I think this is the most important thing to get across. There’s no prescription when you teach lessons to your kids. You can play around with this, and the more that you include your kids in the conversation, I think the better. The more that you give them age-appropriate decisions, the better off all of you will be, and the more well-suited they will be when it comes time for them to make decisions on their own because, frankly, that’s coming quickly.
00:46:23
Brad: All right, so Rishi, I think we talked about college sufficiently. I want to go back to the larger concept of financial independence. How do you think about FI? Is FI even on your radar screen, or is it just the 4% rule and all these things? Has this crossed your plate, or are you just really focused on working on the inputs?
00:46:44
Brad: I’m saving as much as I can. I’m investing for the long term, and I’m just doing that week after week, or do you think about the larger picture?
00:46:54
Rishi: I’m definitely considering the larger picture as well, but right now at my age, there are a lot of unknowns about what my situation will be, like exactly what my career will be, how much I’ll need in my retirement per month, and how the situation of the economy and the world in general will be, things like that.
00:47:13
Rishi: So right now I’m mostly focusing on the inputs of investing my allowance and also the little earnings that I get from Easy Peasy Finance. I’m also familiarizing myself with different concepts related to FI and money management, which I’m sharing through my videos and website. But definitely, right now it’s more focused on the inputs, and once I get more clarity about how my life will be as an adult, then I’ll start to specifically work toward FI goals that are tailored to my situation.
00:47:44
Brad: Okay, yeah, and that makes perfect sense. And of course, yeah, there’s no way you could have any sense of what your life costs, not to mention come up with an FI number, obviously. But it is just interesting that you’re even aware of the concept of FI and that there is some number, there’s some endpoint. And that goes back to that quote you said about enough.
00:48:05
Brad: I think that was Joseph Heller, the author of Catch-22. I remember it was Kurt Vonnegut and Joseph Heller, at least whether it’s an apocryphal story or not, I think it was a real story. There is a point where you have enough, and I think this is one of the real fundamental underpinnings of FI is that most people don’t have a sense that there’s some endpoint, that it’s based on what does their life cost.
00:48:30
Brad: In essence, okay, my life costs $60,000 a year; I multiply by 25, and that’s my FI number. I spend $200,000 a year; I multiply by 25, that’s my FI number, right? It’s agnostic as to how much you spend. Your life costs what your life costs. But the nice thing is there is some number as opposed to, I think a lot of people get scared when it sounds so uncertain to them.
00:49:01
Brad: The word I always use is nebulous. Like it just sounds nebulous. Am I ever gonna retire? Is this possible? A lot of people fear-monger in the personal finance world about everything being so expensive, and you can never do this. I think that’s a real shame because it turns people off, and it makes them not even want to get started.
00:49:19
Brad: What you and I are trying to do is to get people, embolden them to take action. I think that is really critical that you don’t just sit and A, be scared, or B, take in information. Like, I think that’s what you’re trying to do; you’re giving these bite-sized nuggets of information to get people to get off the couch and take action, even in that small way, even investing $10.
00:49:41
Brad: I’m curious, you teach a lot of kids your age about money; is there a first step? The answer might simply be no, but is there something that you tell people? Like, just do this, just take action. For me, while you’re thinking about that, I’ll tell you what I do, which is for adults who maybe don’t really know what their finances look like. It’s just to get it down on paper.
00:50:06
Brad: Now, this isn’t the same for a 12-year-old or a 15-year-old because your personal finance world is not that complicated, but for adults, it’s just be honest with yourself. Just write everything down, and then you can move forward from there.
00:50:17
Rishi: I think the first thing that’s really important is to know the difference between needs and wants and how to spend consciously and mindfully. Since especially for teenagers, there are a lot of things they can spend on, but like adults as well, they don’t have unlimited money to spend with.
00:50:41
Rishi: So I’d say for people my age, the most important thing, like we were discussing earlier, is to find out what you really value and what brings you the most utility, but also know where you’re willing to not spend money and instead use that money to save for the future or also to give to charity. Knowing needs and wants and also what makes you happy is a great foundation and upon that you can build with your future knowledge, like getting financial literacy skills, learning how to make a household budget for when you’re older and have to actually manage your money, starting to invest either with allowance or things like that, or from your first paycheck.
00:51:18
Rishi: But for people my age, I’d say the foundation is knowing needs versus wants and how to spend mindfully. One thing related to that is some teenagers think that credit cards are free money, which might sound crazy to people who are more aware about things like that, but to young people who don’t have the financial literacy education, unfortunately, those kinds of mistakes can lead to significant consequences.
00:51:43
Rishi: So just becoming more familiar with finance-related concepts and practical money management, and especially to start with needs versus wants can be really helpful, both now when the person’s a teenager and especially when they’re an adult and have to manage money and when mistakes that they make when they’re having a job and getting a paycheck can lead to far worse consequences than if they make the mistakes now with an allowance.
00:52:08
Brad: Yes, I love that. I absolutely love that. Rishi, the last thing I wanted to ask you is another question that just came in from my daughters who are texting me. So they wanted to ask what kind of jobs, if they wanted to earn some money, do you talk about the earning side as well? I think the saving side, the investing side, we’ve covered. But what about jobs for teenagers?
00:52:30
Rishi: Definitely, when I started, it was more on the concept, but now I’ve actually made a video about that, and it’s one of my most popular recent videos about how teenagers can make money online or using only their smartphone. I think that’s really important because for teenagers, to be able to learn the best lessons, they also need to have money to use, especially if they don’t get an allowance, or even if they do and they want to add to that. Getting a job is really great to get practical experience and to get money to start to learn money management skills with.
00:53:05
Rishi: And in that, for teenagers, a lot of the best jobs are online. Things like designing thumbnails, updating websites, making websites load faster, or creating TikToks or things like that that don’t require a lot of physical labor are things that teenagers are already familiar with because they’re really tech-savvy usually. Those kinds of jobs are really the best because they’re things that teenagers would want to do, and after getting money from that, they can start to learn personal finance lessons and of course, also spend some of it to really get the benefits of hard work.
00:53:43
Brad: Yeah, I love that. It’s funny that you mentioned thumbnails because I’m vaguely thinking about putting a video back on our podcast, and I spoke with a friend of mine yesterday and we were talking about YouTube and he was saying about the thumbnails, and I just recoiled in horror at the thought of having to do all these silly faces and other things, and I don’t think I could ever at this point in my life do that, but nevertheless, I could get my kids to create thumbnails for me. I know they do that.
00:54:09
Brad: My daughter has a rollercoaster channel. She’s a rollercoaster enthusiast, and I think she calls it the Coaster Authority for anybody who’s interested. And yeah, she’s just getting started, so there’s not a lot of content there by any means, but she has these skills, and I’m blown away by the editing skills that she has, and it’s just innate because kids your generation grew up on these things.
00:54:30
Brad: And people like me who, I’m certainly pretty darn tech-savvy, but I did not grow up on this, so they’re just skills that have eluded me. And yeah, I just wanted to close out really parroting back something you just said, which I think really summarizes our conversation perfectly, which is the kids, they’re getting money to learn money management skills. That is the key here, okay?
00:55:09
Brad: So both internally, but if you wanna make this, if you’re listening to this and you have someone, a niece or a nephew or a friend or a child, the key is not making them wealthy at eight years old or 12 or 15. The key is teaching them money management skills and teaching them the concept of trade-offs and making decisions, and like you said repeatedly, you can make mistakes, small mistakes now, and they don’t matter nearly as much as making a big mistake when you’re 25 or 35 or 55.
00:55:30
Brad: And I think you’ve explained that just so beautifully.
00:55:34
Rishi: Thank you.
00:55:34
Brad: Honestly, Rishi, I’m just really impressed by you. I think, yeah, I’m just blown away, and I would love, so we’ve mentioned repeatedly, so it’s Easy Peasy. Easy Peasy Finance is your channel, so you have a website of the same name, easypeasyfinance.com, Easy Peasy Finance on YouTube. There are just, I think, 1,000-plus videos. These are amazing places to start.
00:56:06
Rishi: Yeah.
00:56:06
Brad: Rishi, is there any last advice you wanna give or just simply how somebody could get in touch with you, or is it really those two ways are the best?
00:56:11
Rishi: Yeah, those are the best. My YouTube channel is Easy Peasy Finance, and if you want to get access to quizzes, infographics, free courses, and other resources, then go to my website, easypeasyfinance.com.
00:56:18
Rishi: And as a final thought, I’d say it really depends on who’s watching this. If you’re a parent, then, as you’ve seen in the conversation so far, definitely don’t underestimate the role you play in making your kid gain financial literacy skills.
00:56:34
Rishi: You have the biggest role of anyone, so really involving them in the day-to-day topics related to money and bringing them into the conversation, as well as giving them an allowance and teaching using resources. Those things are really important to make your kid financially savvy for their future, and if you’re a teenager or a young adult watching this, it’s really important to start learning money management skills now if you’re young and start investing from the first paycheck especially, since you have time on your side like I do, and by using the right strategies.
00:57:07
Rishi: Don’t get tempted by day trading or Bitcoin or hot stocks. I know a lot of young people do unfortunately fall for things like that, but investing for the long term using index funds is the best strategy, and one thing that I also like to say in my videos is that the best time to start investing was yesterday, but the second best time is today, so don’t wait until you have a lot of money or you think you need a lot of experience or knowledge to start. Just start investing now with whatever money you have.
00:57:37
Brad: Rishi, that is brilliant advice. I love it. Thank you so much for reaching out to me. Thank you so much for coming on the podcast.
00:57:44
Rishi: Thanks so much for having me. It’s really important what you’re doing, so thank you again.
00:57:48
Brad: All right everyone, thanks for being here. Thanks for being part of the ChooseFI community. As always, get involved, take action, pass this on to somebody. That’s the point. You’re not just sitting here passively taking in information. You’re getting up and you’re taking action. You’re making your life better and the lives of the people in your world better. That’s the key.
00:58:08
Brad: That’s what we’re doing here. Thanks for being part of the community, and until next time, thanks for listening to ChooseFI.
[FINAL TIMESTAMP] Podcast Extro: You’ve been listening to ChooseFI Podcast, where we help middle-class America build wealth one life hack at a time.
