Why “A” Students Work for “C” Students and “B” Students Work for the Government

“How do we teach our kids to navigate a world where money management isn't a school subject? By becoming their financial teachers at home.”

1. Teach Financial Lessons Early and Tailored to a Child's Development

Children's financial education starts when they can recognize the value of money, like the difference between a one-dollar and five-dollar bill. Education during childhood adapts to different developmental stages.

From birth to twelve years, kids enter the "Quantum Learning" phase, a time when they absorb information rapidly. Parents can harness games like Monopoly to teach about financial concepts like money flow or assets and liabilities during this stage. Games appeal to both analytical and creative sides of the brain, ensuring kids engage and learn naturally.

From age twelve, kids enter the "Rebellious Learning" stage, where they seek independence. Here, parents can discuss real-world financial challenges openly, sharing the consequences of spending or saving. Finally, as they enter young adulthood, they step into "Professional Learning". This is where they apply knowledge to real life, navigating early career decisions.

Examples

• Using Monopoly to teach buying properties and earning from rent.
• Sharing real-world issues like managing household expenses with a teenager.
• Encouraging a college student to test career options without fear of failure.

2. Understand the Cashflow Quadrant for Career and Income Choices

The Cashflow Quadrant represents the four types of income earners: employees (E), small business owners (S), big business owners (B), and investors (I). Understanding this distinction can shape better career decisions.

Traditional schools prepare students only for the "E" and "S" quadrants, teaching them to aim for steady paychecks but ignoring other paths. Unfortunately, these quadrants come with high taxes and limited financial independence. On the other hand, "B" and "I" quadrants provide options like entrepreneurship and investments, which allow for impactful wealth creation with lower tax burdens.

Parents can guide their children to assess the benefits of entrepreneurship (B) or investing (I). These paths require a mindset shift toward being a generalist rather than a specialist, empowering them to manage teams or identify lucrative investment strategies. Moving quadrants isn't impossible, but it starts with clarity on income sources.

Examples

• Explaining pros and cons of salaried jobs (E) versus investment portfolios (I).
• Discussing how entrepreneurs like Steve Jobs built businesses in the "B" quadrant.
• Breaking down tax burden differences between W-2 jobs and rental property incomes.

3. Recognize the Three Types of Income for Financial Flexibility

Not all income is created equal. There are three types: ordinary, portfolio, and passive income—and each has distinct taxation and benefits.

Ordinary income comes from salaries or wages and is the most taxed. Portfolio income stems from capital gains like stock profits, carrying less tax but higher risks. Passive income includes earnings from assets like rental properties and is taxed at the lowest rate. Children should practice understanding these types and prioritize passive income to secure financial independence.

Teaching this can be as simple as framing lessons around Monopoly. Building Hotels in the game mirrors earning passive income. Similarly, parents can discuss real-world examples: renting apartments or investing in dividends.

Examples

• Comparing how a full-time job (ordinary) and real estate rental (passive) generate income.
• Showing tax differences between salary and rental profits.
• Explaining diversification risks with portfolio income.

4. Financial Education Meets a Fundamental Human Need: Safety

Money isn't just about buying power; it's also about ensuring security. Without financial knowledge, people often succumb to desperation, a state that can lead to greed or entitlement.

Maslow's Hierarchy of Needs places safety—employment, property, and resources—just after basic needs. Schools focus on landing jobs but ignore preparing students for sustained long-term safety. Parents should shift the narrative by emphasizing proactive wealth-building strategies over job dependency.

Encourage children to seek learning experiences, like working for a successful entrepreneur, to comprehend wealth-building methods. Safety isn't found in handouts; it's found in skill acquisition.

Examples

• Encouraging experience-based jobs over easy part-time paychecks.
• Relating stories of people creating wealth rather than chasing pay raises.
• Explaining how security leads to generosity rather than greed.

5. Don’t Give Kids Money—Teach Them Value Instead

Handing children money might seem like an act of love, but it's a habit that can nurture entitlement and erode financial responsibility.

Instead of allowances, parents should reward hard work. Create a system where their effort translates into rewards, teaching kids the direct relationship between effort and earnings. Ultimately, it instills the true meaning of money as a tool for exchange, not entitlement.

Encourage children to think of money they earn as an achievement and foster generosity by demonstrating how contributions of time or effort often yield higher returns than direct rewards.

Examples

• Providing money as payment for completing extra chores instead of weekly allowances.
• Explaining market exchanges through selling homemade crafts.
• Asking young kids to save for a desired toy.

6. Teach Children the Difference Between Financial Advice and Education

There is a fine but critical difference between advice and education. Financial advice is someone telling you how to use your money. Financial education teaches kids how to assess options for themselves.

Kids need to learn critical thinking when receiving money-related guidance. For instance, a financial advisor might recommend mutual funds for commissions, or a banker may urge saving while profiting from your loans. Empowering kids with financial language helps them decide independently, from understanding assets versus liabilities to distinguishing good and bad debt.

Examples

• Discussing how loans can either burden (bad debt) or create value (good debt).
• Showing how rental property income offsets purchased liabilities.
• Demonstrating how "income" in Monopoly changes with owned assets.

7. Greed Stems from Desperation, Not Wealth

Society often labels wealthy individuals as greedy, but the truth is greed often stems from financial fear or desperation. Addressing these misconceptions can change how kids perceive wealth.

Many associate millionaire figures with selfishness due to portrayals in media, such as Dickens’s Scrooge. Explaining real-life generosity from wealthy individuals and showing the generosity achievable with financial security can reshape these thoughts.

When kids understand that desperation, not wealth, causes greed, they are more motivated to seek financial independence responsibly.

Examples

• Stories of philanthropy by investors like Warren Buffett.
• Explaining how poor financial planning fosters greediness out of fear.
• Showing how unsecured debt leads to financial panic.

8. Use Games to Teach Children About Money

Games create engaging learning environments, providing practical lessons on finance. Monopoly is a standout option for building early comprehension around assets, liabilities, and cash flow strategies.

Kids can visualize wealth accumulation by buying properties and watching cashflow increase. Losing in Monopoly also shows how failure to invest or rely on wages alone leads to losses.

Gamified lessons stay longer in a child’s memory, offering early-stage insights necessary for their real-world financial choices later.

Examples

• Building hotels in Monopoly to show how income compounds.
• Playing a role-playing game about budgeting choices.
• Investing imaginary money in a family stock market game.

9. Focus on Building Independence, Not Dependence

The end goal of financial teaching isn't just passing knowledge—it's empowering kids to take control.

Responsibility and independence grow when kids make financial choices themselves instead of following commands. Parents can subtly guide decisions, ensuring children understand long-term impact while thinking critically over short-term satisfaction.

By focusing on teaching kids to manage their financial decisions early, they develop confidence navigating competitive and unpredictable environments when they grow older.

Examples

• Allowing them to budget a teen birthday party.
• Helping them save towards their goals like a bicycle purchase.
• Encouraging them to plan dinner expenses within a set budget.

Takeaways

1. Dedicate one evening weekly to teaching finance through games or real-life examples like bill payments.
2. Encourage children to start earning money in creative ways, such as selling old toys or engaging in neighborhood jobs.
3. Share age-appropriate lessons from your own financial decisions, showing both successes and mistakes.