6 School Lessons From “Why A Students Work for C Students”

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Why A Students Work for C Students Lessons

1️⃣ Adapt Learning to Fit the Needs of Students

When is the ideal time to start teaching a child about finance?

While there’s no fixed rule, a good guideline is when a child can distinguish between a one dollar bill and a five dollar bill.

This marks the beginning of their financial education journey, but it’s important to note that this isn’t a quick process spanning weeks or months.

Financial education is a gradual process that unfolds over years, divided into three distinct windows of learning, each with its unique requirements.

The key message here is that a solid financial education adapts to the evolving needs and experiences of the student.

During a child’s first window of learning, known as Quantum Learning, which spans from birth to around age twelve, children are like sponges, effortlessly absorbing information from their surroundings.

Around age four, their brain undergoes a significant development, dividing into left (analytical) and right (creative) hemispheres.

Leveraging this change, parents can introduce financial education through engaging games like Monopoly, stimulating both hemispheres and catering to individual learning preferences.

As a child enters the age of twelve, a new phase called Rebellious Learning begins. At this stage, they crave independence, wanting to make their own decisions and choose their learning path.

However, they may not fully grasp the consequences of their choices. Openly discussing your own financial concerns can guide them through this critical period, strengthening the parent-child relationship.

The third window, Professional Learning, unfolds in young adulthood when individuals step into the real world. Armed with the lessons from childhood, they apply them to real-life scenarios.

This phase becomes a testing ground for career choices, offering an opportunity to reassess and redirect if necessary.

The next lesson will delve into the nuances of helping your child navigate the maze of choosing the right career path.

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2️⃣ Find Your Place in the Cashflow Quadrant First

While choosing the right career is significant, the specific profession you pick isn’t the most pivotal decision. What truly matters is determining where you fit within the Cashflow Quadrant.

The key message is here is that finding your place in the Cashflow Quadrant holds more weight than choosing a specific profession.

The Cashflow Quadrant comprises four income quadrants, each represented by a letter.

“E” stands for employee, where the majority finds themselves.

“S” is for small business or self-employed individuals, including those working on commission or fees, like doctors and lawyers.

“B” denotes big business, encompassing entrepreneurs like Steve Jobs who initiate companies employing hundreds.

Lastly, “I” stands for investors, such as financial experts like Warren Buffett, excluding passive investors in pensions and 401(k)s.

Schools predominantly prepare students for a life in the “E” or “S” quadrants, emphasizing the pursuit of a stable job with a regular paycheck.

Unfortunately, these quadrants also bear the heaviest tax burden. True financial independence lies in the “B” and “I” quadrants, where individuals can legally minimize or eliminate taxes.

However, reaching the pinnacle of the “B” and “I” quadrants demands a different skill set than that cultivated by specialization, as encouraged in the educational system.

The educational system’s focus on creating specialists aligns with success in the “E” and “S” quadrants.

However, ascending to the top of the “B” and “I” quadrants requires a broader skill set. Successful entrepreneurs and investors thrive as generalists, not specialists.

In the academic realm, grades reflect mastery in a specific subject, adhering to a binary system of right or wrong, pass or fail.

“A” students often become specialists working in the “E” or “S” quadrants, while those with “C” grades may possess talents allowing them to grasp the bigger picture.

This is why we observe that “A” students often end up working for “C” students.

Remember, starting your career in one quadrant doesn’t condemn you to stay there forever.

Transitioning between quadrants is possible, especially as your Professional Learning curve provides insights into your strengths and weaknesses.

The next lesson will explore different types of income.

3️⃣ Teach Kids All Types of Income

Transitioning between cashflow quadrants, as mentioned earlier, necessitates a shift in your primary source of income. There exist three types: ordinary, portfolio, and passive.

The key message here is that you need to educate your children on the distinction between ordinary, portfolio, and passive income.

Most schools predominantly focus on teaching ordinary income – the regular, steady paychecks that are taxed at the highest rates, even affecting savings accounts and 401(k) plans.

Understanding taxes is complex for everyone, making it crucial to start teaching your kids about it early on.

Moving up the income ladder, portfolio income, or capital gains, is where many investors place their money. While it’s an improvement from ordinary income, it still carries higher tax burdens and risks.

Even a supposedly diversified stock portfolio may not truly diversify, as investments often align within a similar field, making them susceptible to shared vulnerabilities.

On the other hand, passive income, also known as cash flow, comes from assets – things that put money into your pocket.

It’s essential to distinguish assets from liabilities; for instance, a rental property is a true asset, providing a consistent income source taxed at the lowest rates.

Passive income is the type that paves the way for financial independence.

Using Monopoly as a teaching tool can help illustrate passive income to your kids.

When you build houses or hotels in the game, you establish a steady income source, a strategy crucial for winning. Holding onto money without investing in properties leads to losses.

Teaching your kids about these three income types equips them with a financial advantage in the future. However, it’s unwise to rely solely on the school system for this education.

Most teachers operate within the realm of ordinary income and may not even be aware of the three income categories.

Therefore, it becomes the responsibility of parents to provide their children with this essential financial education.

4️⃣ Financial Education Gives Kids a Sense of Security

Without a proper financial education, many individuals graduate from school in a state of financial desperation. Even if they secure a well-paying job, the fear of losing it often takes precedence.

This phenomenon is evident in the corporate world, where CEOs prioritize their own retirement packages over the well-being of the companies they lead.

This situation directly results from schools failing to address one of our most fundamental needs: safety.

The key message here is that financial education allows young people to feel a sense of control and security over their future.

In 1943, psychologist Abraham Maslow introduced the Hierarchy of Needs, depicting a pyramid starting with basic physiological needs at the bottom and advancing to safety, love, esteem, and self-actualization.

Safety, the second level, encompasses employment, morality, property, and resources.

By neglecting financial education, schools fail to meet this crucial safety need in students, leaving graduates uncertain about their future and desperate for employment.

Desperation often leads to drastic measures.

Contrary to the stereotype that portrays rich individuals as greedy, it’s desperation that drives people toward greed.

True capitalism is not aligned with a sense of entitlement fostered by desperation. Rich individuals can, in fact, be remarkably generous.

Parents can address this need for safety through education by encouraging their children, as they enter the workforce, to seek opportunities beyond traditional part-time jobs.

This might involve working for a mentor, gaining compensation in real-world experience rather than just a paycheck.

Alternatively, finding a job in a fast-food restaurant that allows them to experience various roles within the business can be valuable.

At this stage, accumulating diverse experiences can be more beneficial than a minimum wage paycheck.

These simple strategies can instill a sense of control over young people’s financial futures. Only when they feel secure can they progress toward total self-actualization.

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• Top 5 Legendary Money Managers of All Time (Besides Buffett)

5️⃣ Don’t Just Give Kids Money for Nothing

As discussed previously, the pervasive sense of entitlement in society can be fueled by desperation.

In our world, many individuals believe they deserve something for nothing, a mindset we wouldn’t want to pass on to our children.

The key message here is that you shouldn’t just give your kids money for nothing.

Regardless of their financial status, some parents have the habit of expressing love through monetary gifts, from expensive shoes to toys and even cars.

When this becomes a consistent practice, children grow up expecting to receive whatever they ask for.

The entitlement mentality is further fueled by societal practices, such as everyone getting a trophy in school tournaments just for participating.

It’s crucial for children to understand the true nature of money – a means of exchange. If you do something, you receive something in return, and the more you give, the more you receive.

Entitlement takes root when children are simply handed things without earning them.

Instead of a regular allowance, consider a system where children are rewarded for their hard work and exceeding expectations.

This approach not only instills a strong work ethic but also introduces the concept of generosity. The more they contribute, the more they gain – not just monetarily but in experience and education.

The proverb, “Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime,” encapsulates the case against the entitlement mentality.

Before providing a handout to your children, ask yourself whether you are teaching them to fish or merely showing them how to ask for a fish.

6️⃣ Financial Advise Is Not Financial Education

Many financial challenges stem from a common root cause: the confusion between financial advice and financial education. Though they may sound similar, there’s a substantial difference.

Seeking financial advice means asking someone to dictate what you should do with your money.

In contrast, financial education involves learning what to study so that you can make informed decisions independently.

The key message here is to teach your kids to distinguish between financial advice and financial education.

When someone offers financial advice, it’s crucial to question their motives. Financial advisors may recommend diversifying your stock portfolio, but they often lack insight into individual stock performance.

Their commission-driven incentives may overshadow their concern for your financial well-being.

Similarly, bankers encouraging savings might have ulterior motives, seeking to promote credit cards and home loans where they profit from your debt, not your savings.

In such scenarios, you become a customer, and your financial ignorance contributes to the profits of stockbrokers and banks.

A financial education empowers you to retain those profits for yourself. The foundation of financial education lies in understanding the language of money, not just the words but the relationships between them.

For instance, a fundamental term in the language of money is “income.” By purchasing an asset like a rental property, you can visibly demonstrate how income increases.

Conversely, it’s evident how a liability can cause income to decrease.

The term “debt” is often misunderstood. While conventional wisdom may paint debt as inherently bad, it can be used strategically to your advantage.

Taking a bank loan to invest in a rental property, for instance, can not only repay the loan but also boost passive income, turning the debt into an asset.

True education lies in the ability to see multiple perspectives simultaneously. Debt can be both good and bad, depending on its purpose. This is the critical skill we want to impart to our children.

Instead of dictating what they should do with their money, equip them with the tools to make informed decisions on their own.

👉 Discover More:

• An Open Letter to My Future Son & Daughter: Step 2
• An Open Letter to My Future Son & Daughter: Step 1
• An Open Letter to My Future Son & Daughter: Intro

Why A Students Work for C Students Review

The key message emphasized in these insights is the pivotal role of a good financial education in providing our children with a significant advantage in life.

Rather than relying on external sources, it becomes the responsibility of parents to impart this crucial knowledge in the language of money.

Designate one night each week as “Financial Education Night.”

Utilize this time to engage in activities such as playing educational games like Monopoly, discussing your family’s financial situation, or setting goals for your children’s financial future.

Consistently dedicating a small amount of time each week to financial education can have a profound impact on your children’s financial literacy and preparedness for the future.

Why A Students Work for C Students Quotes

🔥 Daily Inspiration 🔥

The steadfast love of the Lord never ceases; his mercies never come to an end; they are new every morning; great is your faithfulness.

— Lamentations 3:22-23