Starting young - teaching a 5 and 7 yo about investing

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lucha
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Starting young - teaching a 5 and 7 yo about investing

Post by lucha »

My partner is going to start teaching his kids (5.5 and 7.5 years old) about money and investing. Their grandma sends them $5 bills on a weekly basis and since my partner pays for everything, they never spend the cash. He has opened up accounts for them through his Charles Shwab and wants to invite them to deposit grandma’s weekly $5, with a $1 match for every deposit made. He wants to show them how it will grow if invested in something that generates interest. He is also thinking about opening a 529 for them

His main question is: when your kids are young and you’re divorced, what is the best way to both help them save for future expenses and learn about money, as well as save for college?
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retired@50
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Re: Starting young - teaching a 5 and 7 yo about investing

Post by retired@50 »

lucha wrote: Sun Feb 11, 2024 10:27 am
His main question is: when your kids are young and you’re divorced, what is the best way to both help them save for future expenses and learn about money, as well as save for college?
Consider the image I posted in this thread: viewtopic.php?p=6915533#p6915533

It's basically a guide for which topics to discuss based on age. It might help keep the lessons age-appropriate so he doesn't go over their head.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
Ricola
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Re: Starting young - teaching a 5 and 7 yo about investing

Post by Ricola »

Read to or have them read The Richest Man in Babylon, by George Samuel Clason.
Doctor Rhythm
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Re: Starting young - teaching a 5 and 7 yo about investing

Post by Doctor Rhythm »

Age 5 - teach them not to be selfish, that they can’t always have what they want, and to delay gratification. Do this by example.

Then, at age 6, they can learn about the efficient frontier.
Grt2bOutdoors
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Re: Starting young - teaching a 5 and 7 yo about investing

Post by Grt2bOutdoors »

lucha wrote: Sun Feb 11, 2024 10:27 am My partner is going to start teaching his kids (5.5 and 7.5 years old) about money and investing. Their grandma sends them $5 bills on a weekly basis and since my partner pays for everything, they never spend the cash. He has opened up accounts for them through his Charles Shwab and wants to invite them to deposit grandma’s weekly $5, with a $1 match for every deposit made. He wants to show them how it will grow if invested in something that generates interest. He is also thinking about opening a 529 for them

His main question is: when your kids are young and you’re divorced, what is the best way to both help them save for future expenses and learn about money, as well as save for college?
Take the kids shopping, no really! Take them shopping - the grocery store, whereever - explain that the products - each of the boxes on the shelves generate a small profit for the seller. As an investor in those companies, they become owners of those companies and a small share of the profits generated as people buy them. Simple! No need for biblical verses to explain it, although the Richest Man of Babylon is something more suitable for a teenager to understand.

Your kids will learn by example, how your partner allocates his limited resources between spending on both necessary and discretionary items, saving and investing will rub off on them. If he opens a 529 plan for them - he can share that he is starting to save for college to help them pay for those expenses in the future.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Grt2bOutdoors
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Re: Starting young - teaching a 5 and 7 yo about investing

Post by Grt2bOutdoors »

Doctor Rhythm wrote: Sun Feb 11, 2024 10:45 am Age 5 - teach them not to be selfish, that they can’t always have what they want, and to delay gratification. Do this by example.

Then, at age 6, they can learn about the efficient frontier.
I hope you are joking about the efficient frontier at age 6. The only frontier the kids should learn about is the national parks at that age.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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TomatoTomahto
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Re: Starting young - teaching a 5 and 7 yo about investing

Post by TomatoTomahto »

lucha wrote: Sun Feb 11, 2024 10:27 am He has opened up accounts for them through his Charles Shwab and wants to invite them to deposit grandma’s weekly $5, with a $1 match for every deposit made. He wants to show them how it will grow if invested in something that generates interest.
I don’t think that teaches them anything other than it’s nice to have Dad giving them a match.

I’m a parent of four, and perhaps I didn’t do enough as a parent, but I think very young children should be taught to be kind and generous of spirit. And reading and writing and math and which way clockwise is.
I get the FI part but not the RE part of FIRE.
thedaybeforetoday
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Re: Starting young - teaching a 5 and 7 yo about investing

Post by thedaybeforetoday »

lucha wrote: Sun Feb 11, 2024 10:27 am My partner is going to start teaching his kids (5.5 and 7.5 years old) about money and investing. Their grandma sends them $5 bills on a weekly basis and since my partner pays for everything, they never spend the cash. He has opened up accounts for them through his Charles Shwab and wants to invite them to deposit grandma’s weekly $5, with a $1 match for every deposit made. He wants to show them how it will grow if invested in something that generates interest. He is also thinking about opening a 529 for them

His main question is: when your kids are young and you’re divorced, what is the best way to both help them save for future expenses and learn about money, as well as save for college?
With our three kids, we started with imparting upon them the value of money. We were concerned that our kids were just given money without having the experience of realizing the value of the gift, sooooo....

They all had chores to earn their own $ on the regular. That for us as parents was important. No work, no money. It's how society functions, so it's how we had our home function so our kids would be ready to fly the nest when they were older. No basement dwellers was the saying between DW and I.

The second part of this for us was teaching our kids how much things cost in the real world. So having our kids tell look up/research on amazon or walmart to let us know how much things cost that they desired was the first step for them before making any kind of birthday/holiday gift list. Or it was part of the list once they could write.

The third part was letting our kids know that their money could make money ; become a bigger pile of money, and in fact if they didn't put their money to work, it's going to leave and become a smaller pile of money. Money likes to work, it will go to people who put it to work. This is the investing part.

So three part process. Many details/questions in each part, but that's the overview that we used. As they got to be 12 (it was a right of passage at our home), we would pay our kids, on the first of every month, whatever we calculated to be what we would spend on them per month for their personal items and necessities like: clothing, sports/activity fees, hair ties, class trips, etc and they would then handle these purchases/concerns as they arose.

Happy to say, we have three 20 somethings and no basement dwellers!
Last edited by thedaybeforetoday on Sun Feb 11, 2024 11:52 am, edited 1 time in total.
"When I was a kid my parents moved a lot, but I always found them." R. Dangerfield
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MrBobcat
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Re: Starting young - teaching a 5 and 7 yo about investing

Post by MrBobcat »

lucha wrote: Sun Feb 11, 2024 10:27 am My partner is going to start teaching his kids (5.5 and 7.5 years old) about money and investing. Their grandma sends them $5 bills on a weekly basis and since my partner pays for everything, they never spend the cash. He has opened up accounts for them through his Charles Shwab and wants to invite them to deposit grandma’s weekly $5, with a $1 match for every deposit made. He wants to show them how it will grow if invested in something that generates interest. He is also thinking about opening a 529 for them

His main question is: when your kids are young and you’re divorced, what is the best way to both help them save for future expenses and learn about money, as well as save for college?
He should stop paying for everything and let them spend their $5. Then they will learn about money. After that they can learn about delayed gratification.
nyclon
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Re: Starting young - teaching a 5 and 7 yo about investing

Post by nyclon »

lucha wrote: Sun Feb 11, 2024 10:27 am My partner is going to start teaching his kids (5.5 and 7.5 years old) about money and investing. Their grandma sends them $5 bills on a weekly basis and since my partner pays for everything, they never spend the cash. He has opened up accounts for them through his Charles Shwab and wants to invite them to deposit grandma’s weekly $5, with a $1 match for every deposit made. He wants to show them how it will grow if invested in something that generates interest. He is also thinking about opening a 529 for them

His main question is: when your kids are young and you’re divorced, what is the best way to both help them save for future expenses and learn about money, as well as save for college?
Have them use the money to buy juice boxes, stickers, tattoos or something else they can sell to other kids. Set up a stand, and have them sell for several hours once a week for a few weeks. Then explain sales, cost of goods, profit, etc.

They’ll start to understand the basics of business, and ultimately, what investing in stocks really means.
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