In this blog, I focus on the impressions we have about people and their financial health. This is a very important lesson for kids as they grow up as many people (especially young adults) mismanage their money as they compare themselves to others without the full picture.
Below I have set out a quiz for you and your kids to do together. For this quiz, please read through the 5 descriptions of people and then discuss with your kids whether they believe these people are financially healthy (or not) based on the information provided.
The quiz below is from one of the lessons I created for secondary schools. If you believe your school should be teaching kids these lessons, then please send your school this link so they can learn more: Financial Education Program for Secondary Schools
Financially Healthy Definition:
It's worth asking your kids what 'Financially Healthy' means.
There are many potential definitions of Financially Healthy. The key point is that it isn’t a specific amount of money. It means having a lifestyle in which you don’t worry about money, i.e., not living paycheck to paycheck.
I'll come back to this definition later.
Quiz - Part 1 - Financially Healthy?
The examples below are not real people - the photos are stock images.
1. Cheryl
What we know about them ...
Working as a lawyer for a large law firm
Lives in a big house and drives a BMW car
Married with two children
Went to a top private school
Is Cheryl financially healthy?
2. Cassey
What you know about them ...
Primary School Teacher
Married with two young children
Takes the bus to work
Is Cassey financially healthy?
3. Jason
What you know about them ...
Professional Football Player, 25 years old
Earns over $400,000 per year
Not married and has no kids
Came from a poor family
Is Jason financially healthy?
4. Leo
What you know about them ...
TikTok star - 10 million followers
Made $2 million last year
Drives a Ferrari
Is Leo financially healthy?
5. Kara
What you know about them ...
Works as a school janitor
Left school when she was 16
Married with 3 grown-up children
Is Kara financially healthy?
Don't judge a book by its cover!
Before we go through the quiz and find out who is financially healthy, we should go back to the definition.
As mentioned above, being financially healthy means not worrying about money. There are many people who might not appear to have lots of money but never worry about it as they have plenty saved away which no one sees.
One of the most famous examples is Ronald Read. He worked as a janitor, never earning much money, and managed to accumulate millions of dollars. Many people would have judged him as not being financially healthy based on what they saw but in fact, he was!
Further reading: Ronald Read - The Secret Millionaire Janitor
To become financially healthy, people need to be following the 3 Rules of Wealth:
Spend less than you earn
Invest what you save
Be patient
We should want our kids to aspire to be financially healthy (also known as being wealthy), rather than simply appear financially healthy (also known as being rich).
Let's go back to our 5 people in the quiz to see if they are financially healthy or not.
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Quiz - Part 2 - Rich or Wealthy?
For this part of the quiz, I will provide more information (which you wouldn't usually be able to see) for the 5 different people we've been looking at. With this new information, does this change your and your kids' views on whether or not they are financially healthy?
1. Cheryl
What we know about them ...
Working as a lawyer for a large law firm
Lives in a big house and drives a BMW car
Married with two children
Went to a top private school
What you didn’t know about them ...
Her love of luxuries means she spends more than she earns
Has thousands of dollars on her credit cards
Has no savings or investments
Is Cheryl financially healthy?
Answer: No - based on the new information it appears that she isn't following the 3 Rules of Wealth and could be worried about keeping up appearances and ensuring she doesn't ever lose her job as she won't be able to repay her credit card.
2. Cassey
What you know about them ...
Primary School Teacher
Married with two young children
Takes the bus to work
What you didn’t know about them ...
Started investing when she was 15 years old
Saves 10% of her salary each month
Is planning on retiring when she is 50 to travel the world
Is Cassey financially healthy?
Answer: Yes - based on the new information it would appear that Cassey is following the 3 Rules of Wealth. Whilst she might not appear to be wealthy as she is taking the bus, this means she will be able to save more and achieve her dream of retiring early.
3. Jason
What you know about them ...
Professional Football Player, 25 years old
Earns over $400,000 per year
Not married and has no kids
Came from a poor family
What you didn’t know about them ...
Has been learning to invest his money
Lives in a modest house
Never wants to be poor again
Is Jason financially healthy?
Answer: Yes - again, he appears to be following the 3 Rules of Wealth. Interestingly, this is not the case for many sports stars in the real-world. Many of them start earning a lot of money from a young age and never learn to look after it. Then they run out of money shortly after their playing career finishes.
4. Leo
What you know about them ...
TikTok star - 10 million followers
Made $2 million last year
Drives a Ferrari
What you didn’t know about them ...
His house and cars cost him over $500,000 each year in expenses
He has to keep buying new cars and clothes as that is what his followers expect from him
He has no savings or investments
Is Leo financially healthy?
Answer: No - Leo appears to have fallen into the mindset that money is easy to make and therefore does not worry about the future. He is therefore not following the 3 Rules of Wealth and could be in financial trouble if he suddenly becomes less popular on TikTok.
5. Kara
What you know about them ...
Works as a school janitor
Left school when she was 16
Married with 3 grown-up children
What you didn’t know about them ...
Despite her low income, she still spends on luxuries to appear RICH
No savings or investments
Is Kara financially healthy?
Answer: No - Not all janitors are wealthy like Ronald Read!
Summary
I hope that this quiz will help your kids realise that it is almost impossible to know if someone is financially healthy as we never get to see what they are doing with all their money. We generally only get to see what they are spending, not what they are saving or investing.
This means there is no point in comparing yourself to others as we don't have the full picture.
Comparison is the thief of joy!
I hope after this quiz, your kids will ignore what others are doing with their money and focus on building their wealth and becoming financially healthy.
If you enjoyed this quiz, please share and subscribe to get more tips to ensure your kids grow up financially healthy and wealthy.
Thanks for reading!
Will
P.S., the difference between being Rich and Wealthy (and the 3 Rules of Wealth), is a key part of my book, Grandpa's Fortune Fables. Grab a copy for your kids so they get to learn these lessons via fun stories. Available on Amazon.
