Why Hard Work Yields Good Money Values

Why Hard Work Yields Good Money Values

Sean: The next question would be: What advice do you give your kids with regards to building wealth and managing finances?

Randell: All right! Here’s where people are surprised because I’m the finance guy. People think that my kids are really experts in finance. Contrary to popular belief, I do not open my powerpoint on the dining table or put it on my tv and talk about these things. I do have a little bit of talk with them, but it’s not like that.

As a parent, it’s really more like setting examples for them. I want them to see that their daddy is hard working, doesn’t spend unnecessarily, takes care of the future and they see it that way. From time to time, we remind them they need to save but I don’t force it. At the end of the day, number one, there’s way too much pressure on kids.You don’t want to add that pressure to your kid. I’m very careful about that.

I want them to make their mistakes. I want them to learn from those mistakes and even finances. So I teach them the basics. Like when they were very young, I taught them that money needs to be earned. It’s the value of work. You know I want them to understand that my money is my money, it’s not theirs, so they have to earn it. They have to create it so work on it. That’s number one.

Number two, I teach them how to spend properly so they don’t just buy anything they want. Number three, following that, it means that they need to save, that not all of their money is being spent. And finally, I also teach them to give because generosity needs to be taught. If not, they might become greedy and think it’s all about.

So earn, spend, save, and give. These are the basics that I taught them. Then later on, when they saved, I told them to put it in a mutual fund. Now they’re older, my wife asked me to teach them how to invest in crypto. You know it’s hard for a person to get used to earning big right away without really exerting that much effort. You’re teaching them the wrong values.

Look at those young crypto millionaires, it’s like they don’t do anything anymore, anything productive, anything of value, because they have money. What do they do with that? I don’t know where they spend it. That’s not the kind of value system that I want to teach my kids. I want them to work hard and then later be wise in managing money.

I will not get into the secrets and all these things. They have to learn it and they have to see it from me. I picked up a lot of my entrepreneurial skills from my dad. So it’s like that. My dad wasn’t a businessman all his life. He’s not giving us lectures and talking about it. We see it, then we ask about it. When we’re a little bit older, we get more curious. Sometimes he involves me, asks for my opinion, and that’s why I learn.

Sean: That’s great! And that’s also in the Bible, in Proverbs, right? Money fast gained is money fast gone as well.

Randell: Yeah! So again my tip to parents, you have to be very careful. Don’t try to teach everything to your kids because sometimes part of the learning is experimenting, trying things, making mistakes and don’t compare your kids with other kids.

That’s the challenge now, because now you see Instagram families, looking perfect and all these things. I protect my kids from that, the pressure of society. Now two of them are adults. I’d like to say I taught them something and they’re practicing but far from the public eye.

Sean: That’s great! That’s good stuff and I’m learning from you as well.

Randell: And I’ve seen a lot of people who homeschool their kids. Here’s the problem. A lot of people in the Philippines were like, “Oh, they have a home school thing and they’re called something like a dynasty.” Things like that. And then everything’s perfect. My kids are not like that. This room is a study room for homeschooling which they never use because they prefer it in the dining table, in their bed, and there’s nothing wrong with that.

My son, when he entered senior high regular school he became an honor student right away, so you know, it doesn’t have to be that way. You have to be careful and you understand the uniqueness of your children. Even in finances, it’s important they saw it from their parents and they know.

Here’s the thing that we teach in behavioral finance. If your bond with your children is good, there’s a high tendency they will repeat what you’re doing. So I’m banking on that and I’ve seen this with my two elder daughters. They have a good head on their shoulders.

They wouldn’t say that they are stock market experts. They do cost averaging and when they start to work they know how to invest. Now that they’re married, I always talk to their husbands. So we even have a group chat for crypto with my son-in-law. Whatever I learned, I put it there. Whatever they learned, they put it there.

Sean: That’s great! That’s really good. The next question would be: What advice would you give to aspiring entrepreneurs who are financing their first business from their own pockets?

Randell: First, that’s good for you. I never recommend somebody to start into debt and borrow money to start. That’s very risky. That’s very dangerous. My only advice to you is take it slowly.

Number one, good business does not happen because you have good capital. I’m sure Sean did not start with a big amount of capital. You are building it as you come, right? Because a good businessman, a good entrepreneur, would want to make sure there is a return before putting money into it.

Maybe now you scaled up, but I remember seeing you were like, “Let’s do it this way then it can sustain.” So that’s how you finance your business. Of course you know your initial capital is not required. Like in my case, my initial capital was the ingredients then I built on it. Before I bought a new oven, I think I’ve probably baked 140 or 150 already. Now I can justify the oven.

Don’t try to put resources there until you’ve seen it’s going to work. And then even if you put resources, just be careful. You know there’s a story that my good friend, Dodong Cacanando always says: You have to build your abilities first. A true entrepreneur should be resourceful. That’s one. It doesn’t mean that you have to have a lot of resources, especially capital.

Same story with this. Rich kids like Sean, their parents will send them to Switzerland to study culinary, because they have the money. When they return, they want to put up a restaurant in BGC. They have the capital, they put it up, and after six months, it closed down. Why?

They know culinary, they have the capital, but they forgot how to run a restaurant, manage people, marketing and cash flow management. They forgot all of these things. The resources spoiled them. The resources did not teach them the abilities. It didn’t teach them those things.

Somebody who started from a food cart and built it up will really outperform them. So those are very important. So be careful with your cash flow and only use it as needed.

Sean: Yeah, that’s true.

Randell: When you’re expanding, that’s another story, because you already have a track record. Let’s say, this looks okay and good for you or it’s Christmas season and you anticipate it, then maybe I can put a little bit of money there. You know this. You have an exit, a way out.

Sean: Yeah, and you probably have a better projection and a more stable projection as well. I definitely agree with that. For you guys who are tuning in and whoever asked the question, that’s also how I did it. Php 1,300, that’s my capital. I wasn’t a rich kid. I got kicked out of the house.

Randell: Money is not beget money. It’s you who makes the money, and these are just resources that you use. I do risk planning a lot and I’m very careful. How do you exit here? What’s the exit plan? What’s the burn rate?

In the modern business, burn rate and all these things, and they’re putting in money. I’m still old school when it comes to that. So I don’t want to lose everything. It’s hard to earn money and it’s hard to save it only for you to burn it. In the past, I’ve been burned, so you kinda learn a lesson from that.

Sean: Yeah. Those companies who are looking at burn rate, they have deep pockets most of the time. That’s why.

Randell: And they are not burning their own money.

Sean: Yes.

Randell: And don’t burn your money

Sean: Yeah, I mean who does that right? Just light up your money. You don’t do that.

Sean: Here’s the next question. As a pillar of the Philippine financial industry, what are the common mistakes a financial advisor makes, and how can they avoid them?

Randell: Don’t say pillar, that makes me look so old. All right! So a financial advisor’s biggest mistake is if the only thing in your mind is selling. It has to be greater than that. It has to be advocating. It has to be really educating people, and the sale is a byproduct of doing your job well.

That’s why in 2005, I co-founded the Registered Financial Planner Institute, because we need to change the way people are doing this. That’s the biggest mistake. Of course, you know making a sale is part of what you do, it’s based on that.

If you make your work just about selling, you won’t last very long because you have to have a deeper purpose in doing what you’re doing. So how do you avoid it? Understand why you are an advisor and how you can build value to other people.

Sean: That’s really good stuff. Alright! So that’s it for tonight, guys. Thank you so much for tuning in. I hope you learned a lot and I hope that Randell has provided so much. I’ve learned so much tonight from him. I am better for it and I hope you are as well.

Randell: I just want to say, thanks for having me. Thank you for having me.

Sean: It’s a pleasure. That’s it guys. Thank you so much and I’ll see you next week.