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🌍 Empowering Gen Z with Dan Sheeks: Financial Literacy in High Schools 🎓
229 Plays9 months ago
Today, we have the honor of hosting Dan Sheeks, the visionary behind Sheeks Freaks and the author of "First to a Million: A Teenager's Guide to Achieving Early Financial Independence." 🌟
Join us as we explore the critical role of financial literacy in high schools and learn from Dan's unique insights. 📘🚀 📚
Episode Summary: Dan Sheeks, a beacon of financial education for youth, joins host David Baughier on the Forget About Money podcast. As an author and founder of Sheeks Freaks, Dan shares his expertise on financial literacy and its growing importance in high schools across the US.
This episode is packed with valuable insights, emphasizing early financial education and showcasing the power of like-minded communities in nurturing financially savvy young minds. 🧠💼 🕒
Time-Stamped Show Highlights:
00:00 Introduction: Meet Dan Sheeks, a trailblazer in youth financial education
01:09 Current State of Financial Education: The journey of personal finance in high schools
04:34 Evolution of Sheeks Freaks: How a community empowers Gen Z towards financial independence
11:03 Mandated Curriculum: The shaping of personal finance classes
19:36 Starting "Pay Yourself First" Habit Early: The magic of early financial planning
26:45 Teenagers' Investment Strategies: Guiding young minds in their financial journey
38:34 House Hacking: Unlocking a cheat code for investment
Connect with Dan Sheeks:
🌐 Website: Sheeks Freaks
📖 Book: "First to a Million"
Connect with Forget About Money:
📱 Social Media: @forgetaboutmoneypodcast (YouTube), @forgetaboutmoney (other platforms)
📝 Additional Resource:
Financial Literacy in High Schools
Join us for this enlightening conversation and get ready to transform your financial mindset!
Don't forget to like, share, and subscribe for more empowering episodes!
💫🎙️ #financialliteracy , #dansheeks, #highschool #earlyretirement , #sheeksfreaks , #househacking
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Transcript
Introduction to Financial Literacy for Teens
00:00:00
Speaker
What financial literacy concepts do teenagers need to know to live financially successful lives? We discuss this and more with Dan Sheeks in today's episode. Here we go.
00:00:12
Speaker
Welcome to the Forget About Money podcast. Today, we are speaking with Dan Sheets. He is the author of First to a Million, A Teenager's Guide to Achieving Early Financial Independence. He has been passionate about financial literacy in our young people for a number of years now.
State Mandates and Curriculum Integration
00:00:30
Speaker
I've known him for a number of years now, and I have been on the receiving end of some of his talks, and they're both motivational and informative.
00:00:39
Speaker
think that we're going to get a lot of that today. Dan is also teaching financial literacy across colleges and universities. So I'm very lucky to have him here. Thanks for joining me, Dan. Thanks for having me. Glad to be here. Yeah. So I do know that financial literacy in high schools is becoming more and more mandatory. And I believe as of now, or at least at the end of 2023, 25 states are requiring some form of financial education in order for students to graduate.
00:01:09
Speaker
And while that's promising, there's still a lot of variance between what's required and what isn't required and what topics are covered and how does it fit into the current curriculum. Many of the programs, they offer it, but it's inside of an economics class or it's inside of even maybe something seemingly unrelated like political science class. And so every state has different guidance and different rules on how they're incorporating it.
00:01:35
Speaker
I don't think anybody disagrees that it's something that is absolutely needed for our young people as they transition from high school into adulthood. And you are on the cutting edge of this kind of education. You've been doing this for how long now?
Advocacy and Nonprofit Efforts
00:01:51
Speaker
A lot of years, too many years to count, but it's progressed over time.
00:01:56
Speaker
Have you been a part of any of the organizations who are trying to incorporate financial literacy in high schools? Not directly, but the organization that I know best is called NextGen Personal Finance. It's a nonprofit. Tim Renzetta and his team there have done an enormous amount of work advocating for personal finance education in our high schools as a requirement for graduation.
00:02:23
Speaker
You know, they've been at it for several years as well. And I've been a guest on their podcast and done guests speaking to other personal finance teachers through their organization. And you're right. You know, I think it was wasn't too long ago, maybe five years ago that it was in the single digits for sure. Seven or eight states required a person, a standalone semester long personal finance class for high school graduation. And that number now is around 20.
00:02:51
Speaker
And it's getting better. We are moving in the right direction. It's very slow, but it is going the right way. A lot of those states, though, they're in the phase-in stage of implementing that legislation. So it's usually like a four-year phase-in, which is understandable, and that's fine. But it's still a very small percentage of high school graduates in our country that
00:03:14
Speaker
have taken a semester long personal finance class, which I think, and many other people would think, that's just a disservice to our youth. We're not doing our job, but it's getting better.
Challenges in Teaching Financial Literacy
00:03:23
Speaker
I do think that a challenge might be that in addition to resources being continuously constrained or throughout many of, particularly our public school systems, maybe teachers aren't confident in their ability to provide this kind of education.
00:03:39
Speaker
They're an English teacher or they're a math teacher, but they haven't necessarily gotten degrees in personal finance or an economics degree. And then we're expecting them to provide quality education. I guess that is where then the policy comes into place. They have to be very specific on what they're going to teach and maybe even how they're going to teach it. But then the implementation, as every education knows,
00:04:01
Speaker
That's like a whole other ballgame because there's so many pulls on the resources, time, money, and competition between classes. It's a complex problem, but one that I'm glad that we're moving forward to try to solve because it doesn't take a lot of looking around to notice that people are not financially literate even as adults.
00:04:24
Speaker
And it's scary, so anything we can do to help out the young generation as they transition into adulthood is definitely something I'm all for, and we all should be all for.
Sheik's Freaks Community for Gen Z
00:04:34
Speaker
And you've been doing this for a while. You've even started up a site called Sheik's Freaks. Can you talk about how that came about? Yeah, it came around
00:04:43
Speaker
about the same time that my book and my workbook launched, actually a little before that. So about four years ago I started Sheik's Freaks. Originally it was a blog site where I was posting content and articles for Gen Z, which today that would be like 15 to 25 years old, give or take. Around, specifically my niche is yes, the basics of personal finance. I teach some of that and I cover some of that because that's so important. It has to be there. But my niche is more than like the next level
00:05:13
Speaker
when we're talking about early financial independence strategies topics so that's my books are about the community she speaks as a ball so now it's not just a website it is an online community for you gen z young people who are highly motivated to maximize your financial future.
00:05:32
Speaker
and they are looking to connect with other young like-minded individuals that are of the same mindset. So the members of my community, they are the exception. That's why I call them freaks because they are freakish. They are young and engaging in their own self-advocacy around personal finance education. And I bring them all together in that online community. And it's fun for me to facilitate.
00:05:56
Speaker
And you've been doing that for five years, and the iterations have gone through from just the book launch, which is not a small feat to launch a book and a successful book as you have. And then you open that up as you were seeing the demand for the knowledge show up in that generation. Or did you do it more locally at first, like with your current high school, and then expand it? How did that go? I've always kept
00:06:21
Speaker
because I do teach business classes in high school currently and have been doing that for over 20 years. But it's kind of funny, I keep my teaching life very separate from my passion project, which is financial education for young people and the Sheik's Freaks and the books and stuff. They're very separate and they kind of should be. But
00:06:44
Speaker
Yeah, so the community that I started has always been online. It's always been virtual. Members from around the country that I've connected with in one way or another, a lot of referrals as well that they're interested in entrepreneurship, side hustles, frugality. We have a high interest level in real estate investing for young people.
00:07:03
Speaker
And all of them are interested in early financial independence. So it's a very niche group. We will be 4 years this May. May 2024 will celebrate 4 years. We do Zoom calls. We have expert guests. We have a Slack group.
00:07:19
Speaker
small accountability groups and stuff like that in the community. So yeah, I'm more the facilitator of the community and I schedule the Zoom calls and the guests in our topics, but really it's their own motivated mindsets that create all of the electricity in the community that makes it so awesome. And your Sheik's Freaks, are these 18 and up or are they a handful of some high schoolers and some young
Essential Financial Topics for Teens
00:07:45
Speaker
adults?
00:07:45
Speaker
They're 15 to 26. Okay. And you mentioned that these are freaks because they have an innate interest in learning this stuff, but that is not always the case. And it's not commonly the case or else they wouldn't be so aptly named.
00:08:04
Speaker
But that doesn't make the topics any less important for everyone to understand. And as a high school teacher, you've seen kids come through and graduate with varying degrees of financial knowledge, life knowledge, all that good stuff.
00:08:22
Speaker
But as high schools are requiring financial education, what do you think the core concepts of financial literacy are crucial for teens? And how do these differ from adult financial education? It doesn't differ too much from adult financial education.
00:08:39
Speaker
So you're right. If I have a classroom full of 30 students and I'm teaching personal finance, which is a class I have taught in the past, probably one out of those 30 students is going to be freakish enough to join my community. So that community is for the exceptional kiddo. The other 29, that information and those strategies and topics around
00:09:01
Speaker
your basic personal finance stuff that is just as important to them as it is to the one who's self-motivated to learn about it. So in the classroom, it's a very different role that I play in that I am trying to cover all the basics of personal finance in a way that's engaging. The trouble is, personal finance, some of the topics embedded in personal finance like taxes,
00:09:23
Speaker
and insurance are not the most exciting things to talk about as a teacher and definitely not that exciting to a teenager. So you do have to come up with creative ways to make it engaging. But the bottom line is this, if a student is in a personal finance class,
00:09:38
Speaker
All students, young people like high school kids, they do know that understanding how money works is important. They're just not seeing the relevance to it in their lives in the immediate future. But they still know that it's important enough that they need to pay attention. And so I know that I'm planting seeds around topics like, well, insurance and checking accounts and credit cards and credit history.
00:10:03
Speaker
how to buy a car, how to rent an apartment. I know I'm planting those seeds and they will blossom when needed for that young person, even if they're not super engaged. But at least they know that that information is out there and they know that it's not as complicated. Money is not as complicated as some people may think. It really is actually pretty simple and you can get more complicated later in life. But when you're in your twenties,
00:10:29
Speaker
Money and investing and earning is not that complicated and shouldn't be overwhelming or intimidating, which is why a semester-long personal finance class is so important. But the topics I'm going to cover are kind of the ones I've just mentioned, how to file taxes every year and why that's important, how to understand your your pay stub once you get a W-2 job, going through all that stuff, laying the foundation, and then the Shakespeare community and my book really are kind of like the AP level of that class.
00:10:59
Speaker
Are you guided by, does the school tell you what you have to teach in your personal finance classes that you're giving? Yes, to a degree. And especially with the class that I've taught, it's a concurrent enrollment class. So it is following a curriculum that has been laid out at the community college level here in Colorado. So I'm teaching in Colorado. So the students are getting high school credit and college credit at the same time for that class.
00:11:25
Speaker
So I definitely have a curriculum that I need to follow. And something you said earlier, I wanted to comment on the personal finance curriculum for a semester long curriculum for high school students is there. You know, it's been developed for years, decades, even the class personal finance has been around for a long time, just just as an elective class in most schools, some schools don't have it at all, especially the smaller schools, but your larger schools are going to have
00:11:51
Speaker
a personal finance type class already in their system as an elective and now in many more states as a required class. The curriculum is not the problem. I don't even think the teachers are the problem. The problem is the legislation to make it mandatory, the funding of those programs
00:12:12
Speaker
But the community buy-in is there. Everyone knows how important it is, especially with all the financial troubles that adults go through because they didn't have this education. It's not a hard sell. But yeah, like we said before, it's growing. It's gaining momentum, which is great. And we're just planting seeds so that when a major financial decision does come up in their lives, they have the confidence to at least go out and research a little bit more about it and not run away from that decision.
00:12:40
Speaker
As someone who watches high school kids graduate high school and then venture out into the world, whether it be to college or entrepreneurial endeavors or gap year or whatever it is they're doing, they're working with that transition. If you were making your own personal finance class and it wasn't a semester long,
00:12:57
Speaker
or you're a parent and you're wanting to know exactly what the most important things a parent can focus on or a teacher can focus on to do the most good for a child going through that transition to adulthood. What are the topics that you would take the time and energy to make sure are understood?
00:13:16
Speaker
Yeah. So if it wasn't a semester long, it feels much, much shorter. Yes. Yeah. I think the most important topics are going to be around debt, consumer debt, avoiding consumer debt, avoiding student loan debt, avoiding auto loans and credit cards. I shouldn't say not avoiding credit cards because they're an amazing tool, but avoiding credit card debt.
00:13:38
Speaker
and paying credit card interest. That's going to be a big one. How to earn extra money through a side hustle or a part-time job while you're in school, whether that's high school or college? How to save correctly? How to invest correctly? What are the best ways to invest long-term? And what are the more risky ones that maybe you should avoid? The concept of pay yourself first fits in there, which I think is the most important concept.
00:14:04
Speaker
because it kind of automatically encompasses and incorporates all the other things we've just talked about. I would definitely cover all of that. And if there's some time left, there's so many other pieces to the puzzle that are important, but those are the main ones. Let's talk about the pay yourself first.
00:14:19
Speaker
stepping into adulthood, whether it's college or into the workforce or both. This might be the first time I've had real money coming in, a real W2 job or stipends or whatever it is. I'm getting something deposited into my checking account. And because that's the first time I've seen that kind of money, I might want to go spend it. I want to get those new clothes. I want to buy meals for my friends. How do you pay yourself first when you have all those other things pulling at you for the first time in your life and you're wanting to do those other things?
00:14:49
Speaker
Yeah. So we're talking about someone who just graduated from high school and got a full-time job or graduate from college and got a full-time job. They have full-time income for the first time in their lives. And so first I would say it's much easier at that specific point in time.
00:15:04
Speaker
to, to, to initiate and build and sustain healthy spending habits and money habits than it is, let's say five or 10 years down the road when you've already, when now you've, you have some poor money management habits in your life, especially like lifestyle inflation. So first of all, and I will say this, let's say that, let's say that person is making $50,000 a year and you know, before they were a broke college student, now they have a solid monthly income.
00:15:34
Speaker
I don't think it's wrong or bad for them to spend money as long as they're not overspending from what they make. It is everyone's choice and they have the freedom to spend. If you're making $50,000 a year and you want to spend $50,000 a year, then go for it. Don't spend more than that, but it's your right to do that. Now, if you're looking long-term,
00:15:58
Speaker
and you're planning financially for the future, then you don't want to do that. But if someone does that, that's fine. So if you want to be smart about your financial future and plan ahead, then you're going to spend less than that $50,000, which is where pay yourself first comes into play. And so most people when they get that check, and this is what I tell
00:16:17
Speaker
students and members. And when I talk about this all the time, the concept of pay yourself first is, I think, the most important one. And I stole it from The Richest Man in Babylon, great book. But basically, people in the United States, generally speaking, when they have income coming in, they do this, right? Number one, I pay for my necessities.
00:16:38
Speaker
my rent or mortgage, food, insurance, taxes, et cetera. Number two, I pay for the stuff that I want, vacations, clothing, eating out, hobbies, that kind of stuff. And then number three, with whatever is left, they save and invest that for their future. Maybe it's a retirement account, maybe it's a savings account, maybe it's real estate. And that's the
00:17:01
Speaker
That's a great way to live because you get to buy a lot of stuff, but it's not. And by the way, the average American saves 7%. So when you get down to that third level, 7% of their income is left on average and that's being saved and invested. That plan works. If you want to work all the way to your 65 and retire, that's fine, but pay yourself first looks like this. So income comes in, you get that paycheck deposited into your checking account. Number one,
00:17:30
Speaker
First, you pay yourself first, which means you take a percentage of that income and you put it into a savings account that is earmarked for your financial future. And maybe it stays there or maybe it gets put into an investment. And if the average person is doing seven, you obviously want to be higher than that.
00:17:49
Speaker
I advocate for 25% to be the minimum to my young people, and perhaps even much higher than that. So at a minimum, if you're putting 25% of your income into a savings account to be invested in your future self, that comes off the top. That's number one. Number two, you then pay for your necessities. And then number three, with whatever is left, and there should be some left, you pay for those wants.
00:18:14
Speaker
It is definitely delayed gratification. You're not spending as much on your wants as your peer might be who's making an equal amount of money and in the same stage of life. You are maybe making some sacrifices, but the idea is you're just not spending money on things that you don't really value. You should still spend money on things you do.
00:18:35
Speaker
and you are having fun, you're still, if you value travel, you're still traveling. If you value a certain hobby, you're still spending money on that, but you're not spending money on things you don't, which allows you to save that 25% off the top. So pay yourself first, changes everything. And I tell my students, if you do this one thing, pay yourself first 25%.
00:18:54
Speaker
everything else is forced to work for you. You will reach early financial independence. You will not have to work all the way until you're 65. You will have an emergency account and you will have solid investments. Well, you still have to invest wisely, but you will have investments that will grow very quickly. And so that's the main concept. That's the secret. It's that simple. Save and invest 25%, do it on a consistent basis, build that habit very early in life. Even when you're in high school,
00:19:22
Speaker
because high school students do have income. They have gifts, part-time job, side hustles, maybe an allowance. So 25% of that can be saved and invested already, building that habit now and using it in the future. So if you're a parent and you just heard that, if your child has a part-time job,
00:19:40
Speaker
or it's making money some way, take that 25% of that and put it in the bank of mom or dad or an actual bank and check that over time to get that habit started. That's one way. 25% sounds like a lot, but it's not a lot at that level of income. And if you're going from
00:20:01
Speaker
no money to some money, and you're stocking away 25%, that transition's still easier than waiting until you're 30, climbing out of a hole of debt, backed by a decade of tricking your brain to make poor financial decisions justified in some way, and knowing that you're still trying to get to point B, which is financial independence, or at least financially comfortable at some point in the near future. So I think when you say 25%, it sounds like a lot.
00:20:28
Speaker
But it's a lot from what to what. And I would argue that that transition when you're starting out, just like you said, is much easier to make than waiting another decade to do it. I think it's I think it's almost impossible to if you're 30 or 40 or even 25 and you already have a lifestyle set up where you are spending everything you make to transition from that lifestyle, especially if you have a family like that 10 times harder. But even if you're single and you're spending
00:20:57
Speaker
everything you make, which is better than the average person because most people are digging themselves into debt through credit cards. But if you're not doing that and you're just breaking even to go from that and to then downsize your lifestyle, meaning maybe you sell your fancy car and get a used car. Maybe you move out of that really nice apartment downtown and into a suburb condo with roommates, whatever it might be. That's tough at that point.
00:21:23
Speaker
But if you can do it from the beginning, and most people out of high school and college don't mind having roommates, they're used to it. And it's kind of fun if you have your friends, doesn't have to be your friends that live with you, but you're saving money by having roommates. And they don't have to have the nice car, they probably don't have a really nice car at that point in life. So to not have to not be able to buy a brand new fancy luxury sports car,
00:21:46
Speaker
doesn't really hurt so much because you've never had one. So yes, starting early is the key. And I always laugh. People like to tell me that I'm doing a lot of great work with young people. And I say, oh, I'm doing the easy work because the people I work with, Gen Z, they have yet to make the mistakes.
Building Good Financial Habits Early
00:22:02
Speaker
They have yet to build the bad habits. They are a blank slate. Whereas the people maybe like yourself and others who are working with adults, trying to get them back on track or to change their lifestyle to become
00:22:15
Speaker
financially independent or even just financially stable. And you're trying to teach those new tricks to those old dogs, so to speak. That is much more difficult. I don't know how to do that. I'd rather work with the blank slates. Yeah. And there's this YOLO and you mentioned sacrifice. And I honestly, I don't even like to use the word sacrifice because it has such a negative connotation, but that is what people bring up. Like, so let's say I have a decent job, I make good money.
00:22:43
Speaker
And I'm out there living life. I've got the new car. I've got the big house. I've got the lawn service that comes every other week. I've got wine nights with the ladies or poker night with the fellas. Life is good, except for my balance sheet, which is negative. Everything's great. And somebody in that situation might say, you only live once. And then they'll say, well, I don't want to sacrifice all this.
00:23:09
Speaker
Well, you really don't even, you really don't even own that. It's not yours. It's owned by somebody else because it's dead. It's not yours. You're just kind of like floating through there. And now you have the psychological, emotional and mental burden of having that kind of debilitating debt. But to really, again, it depends on what your objective is, is if it's to be financially independent and to be able to buy back your time, then something's got to change. And the word sacrifice gets thrown out there so much.
00:23:34
Speaker
I like to reframe it. So every time I hear somebody say it, I like to say, have you ever thought about reframing sacrifice as just service to your future self? And you are doing this in service of your future self. Time slows down for none of us. And before we know it, we're our ages. We can still remember high school. We can still remember college. Time flies. And that's what's challenging to impart on younger people because they just don't see that time doesn't
00:23:59
Speaker
You know, they're not worried about retirement at 18 years old. They're worried about going to get that brand new car or that, you know, that Dodge Charger racing down the street, whatever it might be. So instead of sacrifice, I like to say in service of your future self and it changes the tone. It changes kind of like the mindset and
00:24:17
Speaker
And I don't think I came up with that. I think I heard that somewhere. So wherever, I'm not trying to take credit for it. I heard that somewhere else. Yeah, you're investing now for your future self. And I think the, and there is no right way to do it. I never tell people what to do. I just give them information and say, now you decide. But if someone does have that YOLO or you only, you know, I want to live now in the moment mentality, okay. So if you want to spend or even go into debt now because
00:24:44
Speaker
your rationale is I might get hit by a bus tomorrow and my life is over, game over, and I will have lived to my fullest up until that day. If that's the way you want to live your life, then that's fine. Then yeah, spend as much money as you can, enjoy life now, but know that if you happen to live 20, 30, 40 years, you're going to be paying off all that stuff and paying the Piper, so to speak, down the road, and you're going to probably look back and regret it.
00:25:13
Speaker
if you don't get hit by a bus, this is the best plan and chances are you will not get hit by that bus. And so yeah, invest in your future now, pay the dividends now and reap the rewards later. So let's say we've got a young person saving that 25%. You mentioned saving 25% and to savings account. Now is this to initially build an emergency fund? And then at what point do you shift from savings account to actual investing account?
00:25:41
Speaker
Yeah, so in my book, I talk about even for a teenager to have, they should have three savings accounts. One is for an emergency fund, and that should be built first. So even most teenagers have expenses, like monthly expenses that they need to cover, whether that's their share of the phone bill or gas in their car, or maybe
00:26:02
Speaker
maybe just going out to you with their friends. They have a certain budget for each month that they spend of their own money. Emergency fund covers three to six months of that. Do that first. Second savings account is for your future investments. We'll come back to that. The third savings account is for fun stuff. I call it the Fun Fund. If that teenager decides that they want to buy a new snowboard, and that's going to cost $700,
00:26:26
Speaker
Well, then let's take a piece of your income every month and put it into that fun fund. And when it reaches $700, absolutely go buy that snowboard. Now you've thought about it for a few months and you probably really do want it. And if it's something you value, then you should absolutely go buy it. That's, you know, part of life is to enjoy it. So going back to that second one though,
00:26:47
Speaker
the future investment fund savings account, most teenagers are going to put money in there and they're just going to kind of leave it for now because unless they're 18, they really can't invest it unless they do it through a parent, which is possible through a custodial fund, say in a brokerage account, but
00:27:02
Speaker
In my book, I talk about the two best ways to invest long-term are real estate or index funds. Index funds are much easier. When that teenager turns 18, they can start putting money into an index fund from that savings account into the brokerage account and then into an index fund. Or if they want to be a little bit more aggressive or they're a little bit more
00:27:22
Speaker
of the freakish mindset and they want to invest in real estate at a young age, then they can save that up enough until you have enough for down payment, closing costs, emergency fund for the real estate, and then invest in real estate. Most likely, that's going to be a house hack for young people. That's the best way to get started in real estate investing, which a lot of my members are doing.
00:27:43
Speaker
But even if it just sits in the savings account and never goes anywhere beyond that, which I wouldn't recommend. But even if that is the case, if you're saving 25% of your income over a number of years, that is going to be a significant amount of money. And it could provide even just a runway where if someone who's in their late twenties, thirties decide they want to take a year off from work, you have this money where you could pay your expenses and take a year off from work or more or start a new business or something like that.
00:28:11
Speaker
Dan, in your Sheik's Freaks group, what are some of the highlights of the successes of these young people? And is there a particular, I know you mentioned real estate, but as technology changes, you have a lot of social media influencing, you've got, even inside that social media influencing, you've got different trends. What are you seeing right now that the
00:28:32
Speaker
the young people are gravitating towards and it could be a good or negative thing in your opinion, but can you share what feedback you're getting from your young people and then just kind of give us your opinion on if that's a good thing or not for the long-term financial
Diverse Financial Paths and Entrepreneurship
00:28:50
Speaker
independence.
00:28:50
Speaker
Yeah. So there are a ton of success stories when it comes to members in Sheik's Freaks. A lot of them are around real estate because we are, again, the community is all about early financial independence. So every member is interested in that topic. Most of them, I would say 80% are interested in real estate investing. And so we have several members that own real estate at a very young age. And again, going back to the house hacking strategy, that's what they're doing.
00:29:18
Speaker
Some have gone beyond that first house hack and have now invested in more properties. Maybe house hack number two, or perhaps just a straight up investment property. We have members that are doing short term rentals, partner deals, stuff like that. But the majority of them are not there yet. Majority are still learning, saving, educating themselves, getting ready to take that next step. We have a large number that are in the pipeline to buy their first property within the next year.
00:29:47
Speaker
But then we have also a large number of students or members in the community who are entrepreneurial. And so they maybe don't have an interest in real estate, but they have built a side hustle or even a small business with one member, Gloria, who is actually technically still in high school.
00:30:03
Speaker
in Minnesota, who for the last three years has been building, it started as a social media marketing agency and SMMA, but she's transitioned and pivoted a couple of times. And so now she does online marketing. It's a digital marketing firm, and she focuses on mortgage lenders out of all things. And so she has built a significant business with, I mean, tens of thousands of dollars of monthly revenue, gross revenue coming into her business,
00:30:33
Speaker
by running digital marketing campaigns for these clients. And they're seeing results, so they are happy to pay her money. We actually have a couple members that are in that space. And we have other members that are doing other things, entrepreneurial too.
00:30:49
Speaker
Lots of different stuff. But again, most of our members are still in that building phase and they're getting ready to take action. They're dabbling in this or that. They're kind of feeling things out before they decide on their one thing, whether that's a side hustle business or a house hack. But they all are very engaged and they all are freakish when it comes to, you know, they're reading books to listen to podcasts or watching YouTubes.
00:31:15
Speaker
They're going to in-person meetups in their hometowns as well as being a part of my community. So a little bit of everything. Yeah, lots of success story. And as someone who is a fan of financial independence, index funds, do you feel yourself maybe trying to influence
00:31:31
Speaker
more simple route to financial independence rather than entrepreneurship or are you just meeting where they're at, fueling their passions. And then as they go through and data changes, maybe they might make some money in their entrepreneurial endeavors while not necessarily investing so much in an index fund as they go in their 20s. And the great thing is they got time on their side so they can fumble or get knocked down a few times by life or
00:31:56
Speaker
business or things just happen, they can always recover and they take all those lessons learned and, you know, shape the next step towards their financial independence. How do you balance the traditional financial independence, like gospel, for lack of better words, with the excitement and the, I want to just push forward and do big things rather than simplicity of just maybe just traditional index fund investing?
00:32:24
Speaker
Yeah. That's a really interesting question. I haven't thought about that a lot. Yeah. So the simplest path to early financial independence is just suck as much money as you can into index funds and let it grow and work for you until you have enough, until you kind of reach that 4% rule, your phi number, and then you're good, right? And there's nothing wrong with that path.
00:32:48
Speaker
But I think the nature of my community is that these young people are not just ready, but they are already hustling and grinding. And they have that energy and that enthusiasm because they're so young and motivated with that mindset that just putting money into an index fund and letting it sit there for 10, 15, 20 years isn't exciting to them. Some of them are doing that. Part of their money is going in there. But most of them are focused on building and creating, whether that's
00:33:16
Speaker
a real estate portfolio or a business. So we definitely talk about index funds, but it is not near as common of a topic of discussion as the building and creating stuff, which is a little more exciting, a lot more exciting to them, I think.
00:33:32
Speaker
if the majority are pursuing entrepreneurial endeavors and actual real businesses out in the real world doing things, attempting to make legal entities and real contractual agreements and business agreements, what kind of guidance do they get through Sheik's Freaks? I don't think you're not an attorney or I don't believe you are. No.
00:33:55
Speaker
Do you bring in people to help guide them through those things or are they on their own to go establish those LLCs or S-corps or even understanding the tax implications of all these things and make sure that they're hitting their marks as they go through towards success? Oh yeah, another good question.
00:34:10
Speaker
The members who are forming LLCs and legitimate businesses, like not just a side hustle where I'm doing lawn care for the neighborhood or something like that, they are, I think one, they're in more than one community, not just mine. And two, this is the great part about having a community is
00:34:30
Speaker
they are connecting with other members in Sheik's Reeks who are a step or two ahead of them. So in our Slack group all the time, members are posting about, hey, does anybody know what I should do in this situation? Or has anyone already done this? I'm about to do this and would like some advice. And so someone who has started an LLC or who is onboarding clients and signing contracts can connect with them offline, like their own little phone call outside of the community, which I highly recommend and encourage,
00:34:58
Speaker
to get advice from other members. But of course, it's always a good idea for members to seek some legal advice or a tax professional, a business entity professional to make sure they're on the up and up. But that happens over time, right? It's not like they just wake up one day and say, okay, I'm going to start a six-figure business. They're growing slowly and taking those steps as needed to go from a budding side hustle to a legitimate business
00:35:27
Speaker
with clients and contracts and using different software packages to help run their business. It's an evolution. It's a process that happens over time for them. You mentioned a lot of your members are delving into real estate. Do you give any guidance as far as current market conditions?
Real Estate Strategies for Young Investors
00:35:49
Speaker
Nationwide, we're
00:35:50
Speaker
at or near all-time highs in real estate where the numbers really don't pan out in many, many markets for rentals, even house hacking. I live in San Diego, and I know that's probably an anomaly compared to where many people live who might be listening to this, but I've run the numbers, I'm a numbers guy, and it just, to me, it makes no sense to buy here in San Diego, even if you were going to house hack. In the 1% rule, forget it.
00:36:17
Speaker
And if you find it, if you find the one percent rule in markets like this, don't tell anyone, just go buy the property. But how do you what kind of guidance do you give for that or what challenges are they seeing as they're out there looking for real estate? Yeah, so it is the market dependent. And we talk about this a lot in the community because it is we do have a lot of members interested in real estate. So hopefully they're in a market where prices are not too crazy and a one percent deal or a cash flowing house hack can work. And by cash flowing, I don't mean that they're
00:36:47
Speaker
Covering all their their expenses but they're getting to live there for let's say five hundred or thousand dollars a month so there you know it's not cash flow positive at that point but they're there it is if you consider that they're living there for say seven hundred dollars a month versus
00:37:03
Speaker
If they were renting a one-bedroom apartment for $1,500, they're actually cash flowing $700, $750 by living in that house hack. I remember when it was the 2% rules, what everyone went for. Then it went to 1%, which is really hard to find. House hacking goes even deeper with that because first of all, you have that low down payment because it's a primary residence.
00:37:24
Speaker
get a little bit better financing. But when you, the house hacking, there's lots of different ways to house hack. The one that's becoming much, much more common, especially with members of my community that I see is the rent by the room strategy where you're buying a four, maybe five bedroom house, perhaps adding another bedroom in a creative way in that house, like a den becomes a bedroom kind of thing.
00:37:45
Speaker
And then you have roommates in the house and they share the common areas. So most people think of that and they're like, well, that sounds really intrusive and I would never live in that. But if you're 19 or 20 or 21, it absolutely can work. And it can be very similar to, say, a college experience.
00:38:04
Speaker
those types of properties where you're maximizing the income because you have say four tenants and four bedrooms, house hacks can still work. In the Denver metro area, we also not as bad as San Diego, but we have very high real estate. We have members who are finding properties in places like Denver and other similar cities that are
00:38:26
Speaker
still good investments as a house hack. House hacking, it's a cheat code for getting into an investment. Now, once you move out, you're probably going to have to keep that as a rent by the bedroom investment property, which again is doable. It's a little more high maintenance, but it's doable to keep the cash flowing, but better that than nothing.
00:38:48
Speaker
Yeah, or better that than 10 years later, realize house hacking is a way to better your and then now you're already setting your adult ways, maybe even have a child or a spouse and house hacking then is really not a practical option or may not be a practical options. So this is another vote for make these steps early before life sets in and you're setting your ways and you have other other factors that play into these decisions. Very big financial decisions.
00:39:15
Speaker
But I will say that, I was gonna say anybody can house sack, almost anybody can house sack. So my, for example, my wife and I are in our forties. We have a two year old son and we house sack in the way of, we have a three bedroom house. The lower level, which is the basement has a bedroom and a bathroom and a living area. And we rent the basement out to a woman, a professional woman who's, she's great. She lives down there. She pays us good rent. We share the same entrance. We share laundry.
00:39:44
Speaker
We do not share a kitchen, but that gives us over $10,000 a year of extra income, which is super helpful. We're married and we're older and we have a kid and we still make it work. It's doable by just about anybody, but especially when you're young, it fits so well.
00:40:02
Speaker
How are your young people making extra
Side Hustles and Income Diversification
00:40:04
Speaker
money? Because that's one of the big things that you promote, make extra money so that you can invest that 25%. How are young people making extra money right now other than starting their own businesses? Are they ride sharing? Are they delivering meals? Yep, doored in your life.
00:40:18
Speaker
Uber couch slipping is huge in my community. It's a great side hustle. One member has built some yard games and he rents them out to different neighborhood functions in like 4th of July parties. Online stuff, they're doing basically buying stuff for a little and selling it for more, whether that's Facebook market like couch flipping, but with different types of products.
00:40:44
Speaker
We talk about side hustles a lot. And I talk to students about side hustles a lot when I talk to classes. And there's hundreds of different ways to make money for anyone. I mean, just Google, I tell students like, just go Google, great side hustles for teenagers or college students or whatever. And you will find hundreds and hundreds of ideas. And the toughest thing is you have to pick one, just an only one to start
00:41:10
Speaker
researching and working towards getting that side hustle going, if you have four or five good ideas, but you never whittle it down to one to focus on, then you're stuck. So you do have to figure out what is that one I want to focus on? What is that one that's going to make me some money? And there are hundreds of examples. So the toughest part is figuring out what is that one I want to do? That's going to be kind of fun.
00:41:31
Speaker
you want it to be interesting. Maybe it's photography. We have members that do some professional photography. And so if that's interesting to you and you want to pursue that and buy the equipment and learn a little bit and start marketing yourself and make some money, then focus on that for four or five months. If it doesn't work out, then go to option number two.
00:41:49
Speaker
And one great benefit other than financial for these types of experiences is you learn. You learn how to be uncomfortable. You learn how to get rejection. Let's say you're doing sales early on or you're doing say you want to do something like this, like start a podcast. You might take a
00:42:07
Speaker
Udemy class or something like that for audio production or something like that. Now you have a skill set and you don't know how that skill set is going to play into your future. That might not work out, but you might do something in the future and you've learned something that you can build on and use for that next opportunity. You said that your oldest member is 26, is that correct?
00:42:31
Speaker
Actually, I think our oldest is 27. Yeah. He got in the community when he was 24, but now he's 27. What kinds of problems are your members showing up with, if any, that need to be immediately resolved or that they want immediately resolved before they can go to those next steps that you promote?
00:42:49
Speaker
I think, too, one of them is that they have so many ideas and so many possibilities that they have trouble focusing on one thing, whether that's a side hustle or educating themselves. And then the second one would be money. Young people, the one thing that they have the motivation, they have the energy, they don't have any problem learning the stuff because there's a ton of stuff out there for free that's
00:43:17
Speaker
a lot of good stuff that's for free that they can learn or an inexpensive book, but it's getting the money saved to start that side hustle, to start that business, to buy the real estate. That's the main problem most of them have. How do you help them resolve the financial
00:43:34
Speaker
like the financial hurdle to get things going. Do you connect them with investors? Is that some aspect of your program? No. I mean, we have had members that have met other members in the community and they have done some deals together, real estate deals, so they could potentially meet investing partners within the community. Or whenever I bring in the guest speakers,
00:43:57
Speaker
they generally will always say, if, if anybody in the community wants to reach out to me, here's my email or DM me on Instagram, whatever. And so they potentially could get some possible partners that way, but really it's just, you know, my community is, it serves a purpose. And the main purpose is surrounding yourself with like-minded young people and, and having our own network, but it isn't an all encompassing community. They still need to be out there doing other things, networking on their own to find those connections.
00:44:27
Speaker
What's your relationship with the parents of these members? I'm assuming this is a paid membership at some level. I'm sure it's very rewarding for all involved. Are these kids usually turned on by their parents to your group or by independent means? A little of both. Most of the members come to the community from on their own or I've connected with them like say in a forum somewhere.
00:44:50
Speaker
or they're referred by a current member. Sometimes parents bring their members to me. But yeah, I haven't had many interactions with parents. I'm always happy to. I think, you know, when they find out that I've been a high school teacher for over 20 years that that automatically kind of lowers their guard like, okay, this guy's
00:45:07
Speaker
not in it to make a ton of money. He's not trying to scam my kid. He's legitimately just a guy that's trying to help them reach their goals. The cost for the community is $9 a month, so it's very, very affordable. I don't run the community for me to make a lot of money. That's not the purpose. It's my way of giving back. It's my passion project. I enjoy it.
00:45:30
Speaker
It used to be free. Honestly, the community used to be free. We had like a ton of members, like 300, 400 members, but none of them engaged because they had no skin in the game. So it was actually the members that came to me, the members that were engaged and came to me and said, listen, we have all these people and none of them are doing anything. You should charge some money.
00:45:48
Speaker
Um, so that we know that people in the community are invested in the community and they have incentive because they're spending money to engage so that, you know, when I, when I messaged somebody, I don't get ghosted by everybody in the group. I want to know that the people I'm messaging, cause you can DM each other in the Slack group, the people I'm measuring are going to reply. They're going to connect with me. So that's when I decided to start charging. Um, originally it was like a hundred dollars a year. And then we did,
00:46:14
Speaker
we change it to $9 a month, which is really the same ish, but it's month to month so people can cancel anytime. So there's my goal is like very little risk. I don't want to have, I don't want to charge a hundred dollars a month, like some communities or more because they are young, but at least it's something so they can say, well, if I'm spending a money on this, I probably should engage. I probably should go to the zoom call. I probably should open the slack app and get my money's worth.
00:46:39
Speaker
So to recap, we talked about concepts such as pay yourself first, effectively earn more, whether that's earning more money by a side hustle or using house hacking to your advantage and the power saving 25% of your income. What else do you see from your youngest to your oldest member, the difference in the needs for those two demographics? Those two demographics being, oh, the oldest and the youngest.
Networking and Community Support
00:47:08
Speaker
Yes. They're in very different places, right? So my youngest members are still in high school, a couple of years away from graduation. They can have a side hustle, most of them do. They're earning money in some way, shape or form, but they are years away from potentially buying real estate or starting, you know, I won't say legitimate business, but you know, a full time business where they can devote all their time to it versus the older members who are,
00:47:36
Speaker
Either they didn't go to college or they have been out of college for two or three years. They are working full time, whether that's a W2 or their own business. They are buying real estate investment properties or they are putting a good chunk of money, 25% or much higher than that into index funds, investing in their future self. So it is kind of difficult at times for me to facilitate the group knowing that I have members that are in very different places. They all are of the same generation, Gen Z,
00:48:06
Speaker
and they are within, say, 10 years of each other, there's a drastic difference between 15 and 25. Even when I schedule guests, I'm always thinking, okay, is that guest going to be more for this end or this end? I haven't had anyone talk to this end for a while. Maybe I should do that. Some of the guests can easily cover topics that all of them are interested in, but some don't.
00:48:29
Speaker
But no matter how old you are, where you're at, the power of networking and surrounding yourself with like-minded people is huge. And it's everything. The networking piece is everything. And so I tell members, if you are not reaching out to other members in the community that are
00:48:47
Speaker
where you're at or a step or two ahead of you, then you are missing the value of this group. You need to connect offline, phone call, FaceTime, Zoom with other members. And as many of them are making lifelong friends and they've traveled the country to meet other members that they've met in the community, they go to conferences together, they room together at conferences. So it's happening, fun to watch, but yeah, it is sometimes difficult to hit all of their needs.
00:49:15
Speaker
I just thought of one benefit that differs between membership groups like yours and maybe those designed for adults and adult life. And I think a benefit of yours would be the second and third order effects of young people. Because if you think as the older you get your
00:49:36
Speaker
your sphere of influence, your bubble gets a little tighter, whether you're married, have kids, you go to works and coworkers, but in your high school, there's hundreds of people around you and your peers. That goes away when you grow up. And let's say, I don't know anything about compound interest or entrepreneurship. I don't even know how to spell it. But if my best friend, Julie, is excited one day,
00:49:55
Speaker
because she's in your group and she got a cool idea and just started that side hustle, then that's a good influence on me. The older we get, unfortunately, our vigor seems to wane a little bit just because part of aging, I think. But to have that passion and that excitement of youth, that's pretty great. So I think your second third order effects of groups like this is pretty powerful. And I don't know of any other groups that are doing what you're doing in the way that you're doing it.
00:50:24
Speaker
Are there any other groups doing this? Not really. I mean, there are like, let's say some Facebook groups or some discord groups that are focused on Gen Z and are focused on creating wealth. But those that are out that I've run into or that I've heard about from my members, those groups are focused on like the get rich quick kind of stuff. And the mentality of you're not successful unless you have
00:50:49
Speaker
the Lamborghini and the mansion and stuff like that. And that is not my target market. That's not the audience I want to reach. I want to reach the frugal entrepreneurial minded young person who wants early financial independence and knows that it's work to get there and it's not going to happen overnight.
00:51:06
Speaker
You bring up, you know, get rich quick and I'm uneducated on crypto, but that doesn't mean it's not a big topic everywhere. Is crypto a topic inside your group? And if so, what are the general opinions or thoughts about
Traditional vs. Crypto Investments
00:51:19
Speaker
it? It depends how well crypto is doing. So like two to three years ago, there was a lot of talk about crypto in my group.
00:51:26
Speaker
We even had a guest on one time, an expert guest I brought in who talked about his expertise in investing in cryptocurrencies, specifically Bitcoin. He was kind of a Bitcoin guy and the members were really excited to have him on. And then about a year or two years ago, Bitcoin went down really, they just crashed. And so crickets, no one wanted to talk about cryptocurrencies anymore, but now it's back up.
00:51:50
Speaker
It'll be interesting to see if that comes back up. But I think my members are savvy enough to know that although that is an investment and it can make you money, it is very volatile. It's extremely risky. But the tried and true investment strategies that I've worked overtime for decades, if not centuries, are real estate investment index funds. So let's focus on those.
00:52:12
Speaker
Dan, thank you so much for sharing your insights for the younger generation, Gen Z. And I know that they are going to be better off and their families are going to be better off and their future generations are going to be better off because of the influence that you've given them. And for that, I appreciate you and I look forward to actually hanging out with you in person again soon. Please tell the audience where they can find more about you and what they can do to support
00:52:38
Speaker
whatever it is you got going on these days. Yeah, two things that you can do. So my website is sheeksfreaks.com on there. There's a link to join the community or at least learn more about the community and join if Gen Z or wants to. If they want to reach out to me, best email is dan at sheeksfreaks.com.
00:52:57
Speaker
or I'm on Instagram and LinkedIn and other things. Also, though, I do speak at colleges and universities and to student groups. So if you're interested in having me as a speaker, just go to the website, send me an email. We can figure that out. All right. Thank you so much, Dan. Talk to you again soon. Thanks, David. Take care. And thank you all for listening.