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School Doesn't Teach Money, It's On You | Series 5.3
Episode 327th September 2021 • Enjoy More 30s: Family Finance • Joseph P. Okaly
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Their money mindset will inevitably be influenced. Shouldn't it be by you?

  • And so building that financial literacy, that practical application, and more than anything is really that healthy mindset and relationship when it comes to money. (01:44)
  • The biggest thing you can do is to expose your kids to anything to do with money to any degree that you're comfortable with. (04:37)
  • Something is going to influence them and start subconsciously setting up these expectations and these relationships when it comes to money. (08:56)

Quote for the episode. "The point is that some relationship is going to develop. So you can either let it come together however it happens, letting those chips fall wherever they may, or you can attempt to actively influence what that end result may be." (04:15)

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Transcripts

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Welcome to the EnjoyMore30s Family Finance

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podcast. The only podcast dedicated to making life more

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enjoyable for young families by hitting on the financial topics

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that tend to weigh on us, stress us out, and distract our focus

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from simply enjoying life.

Joseph Okaly:

Hello and welcome once again to the EnjoyMore30s

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Family Finance podcast. We are in the third episode here of the

Joseph Okaly:

Your Kids Money Mindset series. We have I would say what is

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probably the most important episode of this entire series

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that we're going to go over. And that's what your

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responsibilities are when it comes to really teaching your

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kids about money.

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As always, if you like what you're hearing, please make sure

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to subscribe, follow us on Apple podcasts, any of those apps out

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there, wherever you listen. Clicking a star leaving that

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review really helps us reach the literally millions of other

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young families out there just like you. Last week, we

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discussed many different ways you could save for your kids,

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and education in particular and it really boiled down to two

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main trade offs that you're going to have to decide between.

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Do you more value flexibility, meaning the ability to use funds

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for college, or anything else you really might want to for

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your children? So think weddings, think houses, cars,

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all that kind of stuff. Or are you of the mindset of going all

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in on trying to maximize that college or school specific

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funding? So if you haven't checked out that episode yet,

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definitely do that soon.

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Today's episode, though, is titled School Doesn't Teach

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Money, It's On You, where we're going to cover just how much is

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really on your shoulders as parents because nobody's really

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telling you how important it is that you talk to your kids about

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money. And so building that financial literacy, that

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practical application, and more than anything I would say is

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really that healthy mindset and relationship when it comes to

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money. So if you think back to your own schooling, you know,

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raise your hand as you're listening to me here. How many o

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you guys had financial literac classes? I'm guessing there ar

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no hands up, zero. It was t e same for me. I there w

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s a personal finance class w ere they taught you how to balan

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e a checkbook and other ery outdated things like that.

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And from what I've heard, what I can tell, what I can see, t

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at's pretty much exactly the ame today. I've one, let's call

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im an extended family member, wh is involved in the school sys

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em, and told me once that there ere some kind of a basic finan

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ial literacy seminar as part of the freshman orientation. And t

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at, you know, is the most I've ver heard of. I don't know why

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hey designed it for freshmen, who are eight years away likely

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rom earning any money at all. But still, that was the most

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've ever heard of anybody d ing trying to help kids out

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ith financial literacy, lear ing some things about money

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hat would actually be practical and useful to them down the road

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So overall, this first par is simple. And it's really the

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oal of the entire episode. And that's for you to realize

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how much is on your shoulder as parents. And in my opinion

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at least, it's close, if no at exactly 100% of it.

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Now, one of the great things that was taught to me in my life

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was that everyone is going to form an impression of you. One

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way or another, they're going to have some kind of an impression

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of you by you interacting with them. You can either just

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completely accept that as is, kind of just let those chips

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fall wherever they may fall, or you can attempt to actively

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influence that impression. So if you think of whatever the last

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job interview was that you went to, you didn't just wear, you

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know, one shoe and that comfy 20 year old sweatshirt with stains

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all over it. No, you wanted to look good, you wanted to look a

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certain way to influence that person who is going to be

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interviewing you and deciding whether or not they wanted to

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give you the job. So you wanted it to be positive in the way

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that you looked. If you went there and you were all

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disheveled, they would say this person doesn't care and that

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would be the impression that they would form of you. So when

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it comes to your kids, they're going to form some relationship

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with money. They may turn out to be spenders, they may be savers,

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they may be completely oblivious and just ignore it fully. And

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all those are possible. The point though, is that some

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relationship is going to develop. So you can either let

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it come together however it happens again, letting those

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chips fall maybe wherever they may, or you can attempt to

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actively influence what that end result may be.

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So what can you do to help as parents? The biggest thing you

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can do is to expose your kids to anything to do with money to any

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degree that you're comfortable with. You don't have to open up

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the entire checkbook and give them monthly statements. But we

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have this notion in our society that finances are too taboo. We

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have to hide it from our children, not burden them with

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those things. But sharing with your kids gives that opportunity

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for them to start to learn. Kids absorb and emulate more than you

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think. If that wasn't true, we wouldn't be, you know, so afraid

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of turning into our parents. You know, whenever I say to my

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children, they, at some point, parrot back out to me at some

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point in the future so I have to watch what I say. And you know

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every parent talks like that, everybody parent, everybody's

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parent says, 'Oh, you know, at some point, we have to be really

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careful what we said around them, because they would just

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repeat it out in the open.' And it's not just what they hear and

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repeat when they're really young. So when you show them or

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even just speak to them about how you pay bills online or how

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you save into your work plan every month, or why you started

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to use a credit card versus cash or vice versa, or whatever

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system you have for budgeting. Or maybe even better, how about

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some of the mistakes that you made with money when you were

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younger? You're opening their mind to start thinking to even

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some small subconscious degree about money. And you know, I

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shared in a previous episode, how my Grandpa Joe used to put

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money in envelopes for all his expenses. So here's my grocery

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envelope, here's my mortgage envelope. His daughter's

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remember that. All five of them, remember that. So I've spoken to

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others who used to write out their bills on an envelope every

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month, add it up, send out the checks, their kids remember that

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too. I don't know if it's now because so much stuff is done on

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the computer, that it's not out in the open as much. But that

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doesn't mean that your kids can't see it. Show them that

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Excel sheet, show them something. And if you have

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really young kids like me, it's more just showing them that

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money is this somewhat intangible thing that exists.

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I'm sure you play, you know, grocery store. I guess for me,

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it's it's Trader Joe's, because that's the only grocery store my

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kids really know. Adding up that pretend cost and seeing if you

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have enough money. So seeing how money isn't infinite is a great,

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you know, play exercise to go through with them.

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I mean, personally, I probably learned the most when I was 16

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years old, and had my first job working at CVS. My best friend

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growing up, his name was Peter, he worked there and you know, so

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I decided to work there, too. You were paid whatever the

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minimum wage is at the time, and from a 16 year old's

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perspective, I had to work pretty hard for basically no

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money. And I learned working for money is hard. And for me, that

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was easy motivation to want something a little bit more than

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that. So everything that I just went through is having to do

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with that mindset, respect for money and what you were

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spending.

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However, you know, when you're trying to teach your kids about

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money growing, there is another really cool way to go about it.

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If you do have children that have reported income, so not

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under the table income from the restaurant, or whatever it might

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be, but real reported income, that makes them eligible for a

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retirement account, or specifically what I like to go

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through a Roth IRA. Now a Roth IRA, as you may know, from other

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episodes, they go tax free, no tax deduction when you go in,

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but they all grow tax free. So let's say Johnny earned $2,500.

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You know, either Johnny or mom and dad as an incentive can put

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up to that same amount, up to $2,500 in the Roth IRA. Whatever

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you earn, that's now the amount that you qualify for, up to the

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$6,000 a year limit if you're under 50 years old. Now, that

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may not seem like a big deal when Johnny is 16 years old but

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that $2,500 would come out to over $100,000 of fully tax free

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income if we assume an 8% rate of return, when Johnny turns 65.

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"You see this account I set up for you, Johnny, with the

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assumptions on making this is actually $100,000 for your

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retirement."

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So again, the goal for this episode is to realize that the

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relationship your children will eventually have with money, that

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responsibility that's fully on you. They're going to develop

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some money mindset one way or another. Is it going to be from

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TV, their friends, some music video of a guy throwing money

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out of a car window? You know, what is it going to be?

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Something is going to influence them and start subconsciously

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setting up these expectations and these relationships when it

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comes to money. So the last person it could be is you.

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Remember that any exposure will make a greater impact on them

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than you may know. Remember how when they were you know two

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years old and starting to talk, they would repeat everything

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that you said. It's getting in there even if they don't

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necessarily show it in the in the moment. So really, you know,

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put a very high price very high priority on setting that example

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and that exposure for your kids is the best advice I could give

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there.

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Thanks for tuning in today and join us for next week's episode

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called What a Nice Gift! where we're going to cover all things

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gifting, from how much you can gift to what happens if you go

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over that limit, to interesting ways to consider making the most

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of that gifting money to kids.

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Overall, if you're able to implement what we cover today

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and every day, fantastic as always, less to worry about them

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before and he could focus more on enjoying life. If you are

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wanting help with these things though or have questions you

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need help in clarifying. Check out the Ask Joe section on the

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show's website www.enjoymore30s.com. That's

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EnjoyMore30s.com. Until next week, thanks for joining me

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today and I look forward to connecting with you again soon.

Voiceover Audio:

The conversations on this show are

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Joe's opinions and provided for general information purposes

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only. They do not constitute accounting, legal, tax or other

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professional advice for your specific situation. You should

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always seek appropriate advice from a financial advisor,

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accountant, lawyer or other professional before acting upon

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any content or information found here first. Joe is affiliated

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with New Horizons Wealth Management LLC, a branch office

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of TFS Securities, Inc., and TFS Advisory Services an SEC

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registered Investment Advisor member FINRA/SIPC.

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