Stop Wasting $168,000 on Youth Sports; Do This Instead (Ep. 265)

"We really need to think about how we are utilizing cash, because our kids are draining us. Especially in today's world where, if your kid is any bit athletic or you want them to be in sports, you almost have to start when they're 2, 4, 6 years old. It's insane. We started in fifth grade. If we started in sixth grade, we're behind. We had games during the week. We didn't have all this travel stuff. It is crazy."

Hello, hello, and welcome back to the podcast. Thank you very much for being here. All right. Today I want to talk to you guys about your kids making you money instead of draining your money.

This is something that I've just been hearing more and more about over the years. Recently it has just kind of hit me like a brick. I don't know why, but it's just kind of hit me like a brick that we are spending all of this money on our kids. For private school, maybe we are sending them to — we have 'em in sports, they're doing travel sports, they're doing camps, those sort of things. You know, I always talk about putting braces on the kids: oh, put that money through a policy first.

But what I am seeing happen currently, which is absolutely a little bit crazy to me, is that the amount of money being spent on kids for sports, all of that is cash just going out. It's not hitting mom and dad's retirement account. It's not hitting mom and dad's savings account. It is literally money gone.

I was talking to a friend the other day and she was telling me that she has family members that spend $1,500 a month on their kids. $1,500 a month. That's a mortgage in some cases. But that is money that is gone over their entire lifetime.

So let's just say $1,500 a month times 12 — that's $18,000 a year. Now, I'm just gonna do the math on the spot here, and a lot of these kids are in sports for a very long time, so let's even just go down to a thousand dollars a month on average. Maybe it gets more expensive as they get older. But how many people do you know that have kids in dance? Or they have kids in wrestling and they're two years old, three years old, four years old?

So let's say that those kids are gonna play a sport, or they're gonna be in dance, until they're 18. And so $12,000 times 14 years — that's $168,000 over our lifetime for one child. That's not even every kid.

Because we can say, Mary Jo, I don't spend a thousand dollars a month on dance. Okay? You have the leotard, you have the monthly cost, you have the gas to get there. You have competitions to go to. You have hotel rooms. You have the gas to get to those hotel rooms. You have eating out while you're there. All of these things are so expensive.

And what I'm hearing from parents is, we want them to be good at football or basketball or track or whatever it is, so that they can then get a scholarship to college. Now think about it. If we have spent $168,000 for these kids to be in sports, we could have paid cash for their college. Even if you said, I don't know about infinite banking, we could have paid cash for the kids' college.

But what if we could still allow them to be in the sports? They could still be doing their thing, they could still get their scholarship, but we moved some of that money into a policy over our lifetime.

So I have done the courtesy to run the numbers, and I just picked a $12,000 a year policy. And let's just say we're gonna move this money into a policy, and I did it 21 years. And the reason that I'm gonna go 21 years and not feel bad about it is not because that one particular kid is gonna be in a sport for 21 years — although they may, through college — but it's because we probably have multiple kids, right? So it's not just 14 years for one kid. We might have kids coming in behind them.

So let's just say that we fund a policy over a 21-year period with $12,000 a year. At the end of that 21 years, we've put in $252,000 of premium. Okay? $252,000. And our cash value is $367,000. So we've made $110,000 of compound interest and dividends, all while we paid for the kids' sports, and we paid that money back, and then we used it again next year to pay for their sports. And we paid it back throughout the year and we used it again next year. All we're doing is moving that money through a policy first.

Along the way, maybe we paid for sports. Maybe we showed them how to grow a business with that money. Maybe in addition, we bought them a car, we did put braces on, we did these other things with some of this money.

Because if we look at the policy — and I'm not gonna share the policy, 'cause that's kind of a pain in the butt to share my screen — but if we look at the policy at year five, your premium is $12,000, but your cash value goes up by $13,000. So at year 10, your premium is $12,000, but your cash value increased by $16,000. And so at year 15, your premium was $12,000, cash value went up by 20. You've paid in $180,000, and your cash value was $223,000. So $223,000 minus $180,000 is $43,000 more in 15 years.

If we need to buy a car, we can buy a used car for our child and they can pay it back if they have a job. What we're doing is saying, hey, we're going to put you guys through a sport, and we're gonna pay cash for that in hopes that you can get some grants on the other side, you can get some scholarships on the other side.

Okay, but is that the only reason we have 'em in the sport? Because if we only have 'em in the sport so that we can get the scholarship or we can get a grant — or most of the time it's a scholarship, right? If we can get 'em a scholarship, how much did we actually pay for that scholarship? The scholarship's not free, because we paid to have those kids in that sport.

And what percentage of these kids actually end up with scholarships? What percentage of these kids are actually learning something and doing a great job?

I am not a big sports fan, as you can probably tell. I think that there's a time and a place for that. We had our child in taekwondo. I'm very much an individual-sports person. I'm not like the group sports person, in case you didn't know ahead of time.

But we've got these kids in sports and we're doing it. Is it so that they can be better to society? Is it so that we keep 'em out of trouble? I've heard all the things. But when I look at the financials behind it, is that the best thing? Or could we be taking this money, putting it through the system, teaching them how to create a business, teaching them a bunch of things that they could be using later in life? And what is it costing us for retirement?

In my Life Without the Bank book, I actually talk about this. I have a calculator that shows the cost of paying cash for your kids' college. What we haven't run through the calculator is paying cash for your kids' sports. How much of this money are you losing at retirement?

Well, I can tell you, I ran it. So at 65, you would've had $570,000 of cash value if you started this thing — I started it at 35. Okay, so if you go from 35 to 65 — now, you didn't pay $12,000 every year. You paid $12,000 for 21 years, and then you put $3,000 a year in. So at 65 you've paid $279,000 in premium, and your cash value is $570,000.

That $279,000 in premium would've been gone in cash. You would've had no retirement. But if you've borrowed that money and paid it back — because the kids are out of high school now, they're in college, you don't have the sports to pay for — you have $570,000.

If you decide at that point, hey, we're gonna pay for the kids' college, we're gonna keep borrowing this cash value and pay for the kids' college — well, fantastic. Then you can pay that back, and later in life you will have that cash value to use again for retirement. This is an amazing asset for that scenario.

Now, a lot of people might say, oh, Mary Jo, these 529 plans, like, we're just gonna put money there. They've changed the 529 plan and they've made it all better. Okay. Did they make it better, or did they just add more guidelines onto the 529 plan?

So some people will say, well, that 529 is gonna be a great option. Well, here are the changes that they made, because I just heard this the other day from a friend that said, hey, these 529 plans have changed, now you can roll 'em to a Roth.

Well, you can kind of roll 'em to a Roth, because there are some guidelines. And those guidelines are, you have to have the money in there for 15 years. If the money has not been in there for 15 years, you can't roll it to a Roth. You have to have at least earned income of $7,500 in order to roll it to a Roth. So if the beneficiary is the kid and they're in college and it's been in there 15 years, you still can't roll it to a Roth. Or maybe they didn't go to college, if they're not making $7,500.

There's an annual cap of what you can roll, and that is the $7,500, because it's 2026. There are just a bunch of rules around the 529 and how it can be rolled. I think it has to be in there 15 years, but you can't roll anything that's been paid in the last five years. I do believe that's one of the criteria as well.

So you're putting money into this 529 plan. Yes, you can use it for tech colleges now. But there's all these rules around what you can and can't do with it. What happens if the market crashes right before your kid goes to college? That's a thing. It hasn't happened lately, but it has happened in the past, and so we don't have as much control. We don't have as much liquidity. The government's putting rules on that stuff.

So if we're paying for our kids' sports and we're putting money in a 529, what if we just move that over into a life insurance premium? We use it as a 529 to pay for college, and we use it to pay for sports. Win-win, right?

We really need to think about how we are utilizing cash, because our kids are draining us. Especially in today's world where, if your kid is any bit athletic or you want them to be in sports, you almost have to start when they're 2, 4, 6 years old. It's insane. We started in fifth grade. If we started in sixth grade, we're behind. We had games during the week. We didn't have all this travel stuff. It is crazy.

I think of the people — we have an Airbnb, as you guys know. We had people stay in our Airbnb last weekend because their kid is in a wrestling tournament. We went to eat on Friday night and we happened to be on the south side of town, which is where all the happenings are. That's where our civic center is. That's where everything happens. Insane trying to get a pizza. Oh my gosh. I was like, get me out of this side of town. Because I think there was also maybe some kind of dance competition or something going on. I don't know. It was kids everywhere with parents.

And so this particular couple, they had their whole family at the Airbnb. By the time they were done, they were in $700 plus dollars just for the Airbnb, maybe closer to nine, because they had to pay the cleaning fee. And they were hardly there, because they were gone at wrestling tournaments all day. So now you've got food at the wrestling tournament, the Airbnb cost. It's crazy.

It's a great way to get out of town. But are we utilizing that money correctly? I'm gonna say no. And that we can do that better. Let's actually think about how we're using the money to support our children. And if they're not good at things, are we just making them go do that sport because we think that's gonna be better for them?

I also have an issue with sports and bad coaches. Because if you sit back and think about it, we are telling our kids, okay, you go play this sport, but you're not good enough, so you're gonna get benched. You're not gonna get your fair shot.

Or if you are good and you live in a small town — which is what happened in our family. My brother was the country kid, so he did not get to play. Even though he was phenomenal, super, super talented and gifted, he did not get to play because he wasn't the city kid, right? So he got benched. Needless to say, he didn't play longer than a year. He was done.

Why are we saying it's okay to have a coach that mistreats you? Are we actually teaching them how to stick it out, or are we teaching them how to be mistreated and overlooked and not go towards their potential?

I'm not a big — you know, like I've already said, I'm not a big group sports person. I am an individual type person. Do I still play well with a team of people? I think I do. But I am more apt to say, nope, not being brainwashed by your nonsense. And so I do tend to do well when I am in more of a control situation, because I know I'm sort of a control freak. However, that is what works for me.

I wanted my daughter to be competing against herself and encouraging her other taekwondo classmates to do well as well. Individually, it's not a competition amongst all of them — who can break the board the fastest, who can get their motions down the quickest. It's a competition with herself. And then I want you to encourage your fellow classmates, not be in competition with them, and then not be putting up with a coach that is not great. Because not all coaches are.

So we're gonna tell them to go work in an environment — what would you tell your kid if they work in an environment with a boss that belittles them all the time, that manipulates them, that doesn't allow them to have good sales because somebody else is stealing?

That happened to my daughter as well. The boss was fantastic, but one girl would always steal everybody's sales and they were never reprimanded. So she should just put up with it? She didn't, because she was never taught that you just put up and shut up. That's not what she was taught. She was taught you speak up for yourself, and you make sure that you are doing what's honoring you.

People are gonna have a different opinion on that. I'm probably gonna get some hate mail from that, but that's just how I see it. I don't see sports as the be-all to teach a child how to play nice in an environment and stick something out if they're not good at it.

Why are we spending all of our retirement and all of our time and our family time taking our kids around everywhere? And we could have helped them start a business. We could have helped them do a bunch of other things.

If you're a parent that hasn't started a business, can you find a friend who maybe is a business owner that can help your child start a business? And you might learn something along the way as well.

Business is not for everybody either. But you may have that child that you're like, man, they were selling stuff to their classmates in school. We just know that they are going to be business owners. Because your C and D students typically are not good employees. They are typically better employers. And so if you have that kid that's like that, what can we do to encourage them and use that money more wisely?

That's my take today on having your kids make money for you instead of drain you. You might like it, you may not like it. But all in all, how are we utilizing this money in whatever sport they're in? I don't care if it's archery. I have a niece that does archery, and that too now has competition, and they have to travel for that. That's an individual sport. I love that, because that's what I love. But can we use that money more efficiently so we have money for retirement?

All right, you guys, you know the routine. Email me if you have comments, questions, concerns: maryjo@withoutthebank.com. You can email Theresa at tarisa@withoutthebank.com, or John. Grab the books, read them, set up your strategy appointment so that we can look at how this can help you.

A lot of people think it's just us trying to sell, when in fact it is very much a strategy situation where we're looking at all of your numbers and figuring out how this can work best for you and your operation, or your family, or your business, or whatever it is that you're doing.

The gentleman that I just met with today said, man, this is a game changer when I can see my numbers. He waited two years. It is a game changer now. He knows what the numbers look like for him with his situation, and how to use it, 'cause we went over some strategies. So set that up. It's free, and then we'll go from there. All right, you guys have a fantastic rest of your day.