The Money System I Wish Every Kid Learned Before Adulthood

(Transcript edited for clarity.)

Hi, I'm Wes. Welcome to The Money System I Wish Every Kid Learned Before Adulthood.

This is Your Life Systems, and this is one of my favorite things to talk about.

I've presented this many times in front of many different audiences.

This is something that's probably helped as many people as anything I've ever done.

While I say it's The Money System I Wish Every Kid Learned Before Adulthood, that's true.

But even if you've reached adulthood, this money system can help you immensely.

This is not about budgeting.

I even wrote a book about this several years ago, and it was called something about the Generational Wealth System.

This can create generational wealth.

As I go through this and explain it, I hope you'll see how powerful it can be.

If you have children, especially teenagers or young adults in your family in their early 20s, this is something that can change their entire lives.

It's not that complicated.

It's more about following a simple system and the mindset of it.

I've taught both of my kids this as they were growing up, and I've taught others.

I've taught this to youth groups over the years.

If you get this down, especially at a young age, it can really change your entire financial future.

It's a fairly simple system.

Before I dig into it too far, I'm going to give you the whole system here in this episode.

I'm not going to hold anything back.

I'm not selling you something else.

This is a powerful, simple system, and I'm going to give you the whole thing here.

I adapted this system from a system I read about years and years ago.

It was a system Jim Rohn wrote about in one of his books.

He calls it the 70-30 system.

I call it the 70-10-10-10 system.

You don't have to go find his book.

I'm going to give you the whole system I use and teach here.

Basically, whatever your income is, whatever money is coming into your life, you learn how to live off 70% of it.

If you're older, you're probably already spending 100% of your income.

So this might be a little more challenging.

That's why I say I wish every kid would learn this system and the power of it before reaching adulthood.

If you start this before you get out there and the world starts kicking your head in, you get behind, and everything becomes overwhelming, then you've got a chance to put this into place at the very beginning.

So that's step number one: learn to live off 70% of all the money coming in.

Then you've got 30% left: 10-10-10.

I break it into three things of 10%.

You use 10% for what I call traditional investing.

I recommend investing in something safe.

I'm not an investment professional, and I'm not going to tell you where to invest that 10%.

When I say traditional investing, it might be stocks, bonds, exchange-traded funds, mutual funds, things like that.

Traditional investing.

Something that, hopefully, like Warren Buffett says, you find good companies and invest in companies that are going to be more valuable over time.

That's 10% in traditional investing.

Another 10% you use in commerce.

Here's what commerce is.

Commerce is starting a side hustle or a part-time business.

It might be buying products at wholesale and reselling them for more.

It might be buying two or three different products and combining them into something you can sell for more.

Commerce is basically anything you can create.

Think about entrepreneurship, business, and small business.

Commerce is using 10% of your income to create more income through commerce of some sort.

It might be buying stuff that's underpriced at yard sales and reselling it online or whatever.

It can be anything.

Then the last 10%, you give away or do something good with it.

I know that sounds counterproductive for a system that's supposed to be about building wealth or a money system.

However, I've found - and I don't know why this is true - that if I can do good with 10%, give away 10%, or help people with 10%, it does something to me mentally that helps me become more successful.

That's the basic system.

Live off 70%, invest 10% in traditional investing, use 10% in some kind of commerce to make money, and use 10% to do something good.

Now, let's say you're teaching this to a young adult or a child growing up.

They've got a chance to learn how to live on 70% of their income.

But many of you are probably saying right now, "I can hardly pay the bills now. I'm spending 100% of my income. I can't possibly live off 70% of my income."

I understand that.

I've been there many times throughout my life before I learned this system.

So here's what you do.

Start where you are.

Let's say you can't possibly live off 70%.

Start here: live off 97% of your income, invest 1%, use 1% for commerce, and do something good with 1%.

Start with where you are, and then do it religiously.

You've got to start somewhere.

So if you can't do anything else, start with 3%: 97-1-1-1.

Then expand it as you can.

Now, here's what happens.

Let's say you're saying, "I'm not entrepreneurial. I don't know anything about commerce, running a business, or using money to make money."

You need to start somewhere.

Go to a yard sale.

Find stuff that looks inexpensive.

Get on your phone and look it up.

See if there's anything there you can buy and sell for a little bit more.

Or maybe you're into crafting.

Maybe you can crochet, do woodwork, or arrange flowers.

It doesn't matter.

Figure out anything you can invest this 1% or 10% in that you can make more money on.

You don't have to make a lot at first.

Part of it, especially at the beginning, is learning this stuff.

Find something you like to do that you can make a little money on.

Don't worry about making a ton of money at first.

Figure out how to turn $10 into $11.

You invest $10 in something and sell it for $11.

You've got your $10 investment back, and you made $1.

That's perfectly fine.

You're not worried about doubling or tripling your money.

Just figure out how to get into some kind of commerce.

As you invest, hopefully 10%, and use 10% for commerce, over time the interest from your investments and the profit from your commerce start increasing how much you make.

Let's use a good round number.

Say you've got $1,000 of income.

I know you can't live on $1,000, but that's not the point here.

We're using it for good round numbers.

You've got $1,000 coming in.

You learn to live on $700.

You invest $100 in traditional investing, and you use $100 for commerce to start making money.

Eventually, the money you're investing and the money you're using in commerce start making money.

Maybe eventually you go from $1,000 to $1,100.

Now you've got an extra 10% - an extra $10 of that $100 - to invest, and an extra $10 every month or whatever that you can use for commerce.

As your investments and commerce continue to increase your income, your income goes up.

You have more money to invest and use in commerce.

The goal isn't to stay at 70-10-10-10 forever.

The goal is to eventually get to where you're living on 50% of your income, investing 20% in traditional investments, using 20% in commerce, and still doing something good with 10%.

If you become more and more successful with your investments and commerce, the money you make goes up, and you can invest more.

Then things can go even faster.

You might get to where you can live on 30% of your income, invest 30%, and use 30% for commerce.

Then you can get to where you're living on 10% of your income, investing 40%, and putting 40% into commerce.

You see how this works, but you've got to start somewhere.

The more you can put into your investments and commerce, the faster your returns build, and you end up with a larger pie to work from.

That's why this is a money system.

Like I said, this is a money system I wish every kid learned before reaching adulthood.

Again, no matter where you are, start right where you are.

If you can't possibly do more, start with 97-1-1-1.

Then go to 91-3-3-3.

Keep working until you get to 70-10-10-10.

Then keep working until you get to 50-20-20-10.

By that point, this will be working.

It's like a snowball: interest on interest, things like that.

So there it is.

That's a very simple money system.

Teach your kids.

Teach everybody you know.

Start using it.

Start wherever you are, even if you can only do 97-1-1-1 to start, and work toward getting to 70-10-10-10.

Then you'll start seeing real gains from your investments and commerce.

Again, don't worry about, "I'm not entrepreneurial."

Find something to get started, and you'll learn more as you go along.

I hope you use this.

I hope you teach your kids.

I hope you teach everyone you know this, and it changes your financial future.

This was Your Life Systems.

Please like and subscribe.

Good luck.

I'll see you soon.

What's Next?

·        Calculate the percentage of your current income you are already spending.

·        Choose a starting split you can actually repeat, even if it is only 97-1-1-1.

·        Decide how you will handle the traditional-investing portion without guessing about investments you do not understand.

·        Choose one tiny commerce experiment that helps you learn how to turn a small amount of money into slightly more.

·        Choose how you want to use the giving portion to help someone or do something good.

·        Review the percentages over time and increase the investment and commerce portions only as your real situation allows.

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