How to teach your kids about money/wealth

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pepperz
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How to teach your kids about money/wealth

Post by pepperz »

Can you recommend any programs / frameworks that teach kids about money and help instill a mindset for wealth?

At this point Im interested for my own planning purposes as one child is 3 years old and the other is 1.5 years old.

I am quite sure that having chores / responsibilities + learned behaviors from parents are big keys. I’m more looking for a framework to help plan on how/when to convey.
TheLaughingCow
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Re: How to teach your kids about money/wealth

Post by TheLaughingCow »

Small allowance at age 6 (5$ weekly)

As they age, larger amounts with more time in between (15$ biweekly, $40 monthly) to teach self control and saving.

At age 10 or so give them interest on their saved money to teach about saving and the power of compounding interest.

It's important to have your spouse on board. If they just buy the child whatever they want, then the allowance means nothing to the kid.
mike_in_ny
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Re: How to teach your kids about money/wealth

Post by mike_in_ny »

I think the important thing is to talk about money matters as they grow up. This goes
a long way to build the foundation and for them to get an idea of your money values.

We've done a lot of the things you hear about including allowance, having them have a
"clothing allowance" for back to school shopping in middle school, getting them a
passbook savings account, and having them plan a family vacation with a budget.

That said, for my kids, it doesn't really "click" until they have a job and paycheck. Then
they really learn about the value of money in terms of their time. (Its amazing how quickly
they learn to bring their lunch to a $12/hr job when lunch out costs $10.)

The expression that I've said innumerable times, "We can afford anything we want, just
not everything we want."
Dottie57
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Re: How to teach your kids about money/wealth

Post by Dottie57 »

mike_in_ny wrote: Sun Nov 22, 2020 12:03 pm I think the important thing is to talk about money matters as they grow up. This goes
a long way to build the foundation and for them to get an idea of your money values.

We've done a lot of the things you hear about including allowance, having them have a
"clothing allowance" for back to school shopping in middle school, getting them a
passbook savings account, and having them plan a family vacation with a budget.

That said, for my kids, it doesn't really "click" until they have a job and paycheck. Then
they really learn about the value of money in terms of their time. (Its amazing how quickly
they learn to bring their lunch to a $12/hr job when lunch out costs $10.)

The expression that I've said innumerable times, "We can afford anything we want, just
not everything we want."
+1. My parents talked about money matters at the dinner table. I paid attention and brother did not - difference between kids.
MikeG62
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Re: How to teach your kids about money/wealth

Post by MikeG62 »

mike_in_ny wrote: Sun Nov 22, 2020 12:03 pm I think the important thing is to talk about money matters as they grow up. This goes
a long way to build the foundation and for them to get an idea of your money values.

We've done a lot of the things you hear about including allowance, having them have a
"clothing allowance" for back to school shopping in middle school, getting them a
passbook savings account, and having them plan a family vacation with a budget.

That said, for my kids, it doesn't really "click" until they have a job and paycheck. Then
they really learn about the value of money in terms of their time. (Its amazing how quickly
they learn to bring their lunch to a $12/hr job when lunch out costs $10.)

The expression that I've said innumerable times, "We can afford anything we want, just
not everything we want."
Agree with this.

Despite your best efforts OP, they tend to be influenced tremendously by their friends and how their friends behave (and what they believe). Sadly, what their friends think can at times (and for certain topics) carry more weight than what we (their parents) say (at least in our experience) - as they feel we are out of touch with reality.

A funny story. When my youngest daughter was very small (like around 5) I was explaining to her the reason I went to work (that's where I go to get the money we need as a family). She turns to me once day and says, "Dad, I have a great idea...why don't we all drive to your office and you run in and pick up the money and then we can all go home". :eek: If it were only that easy...
Real Knowledge Comes Only From Experience
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wander
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Re: How to teach your kids about money/wealth

Post by wander »

I think kids like to copy from parents. They do learn from parents almost everything. My parents never taught me about money but I am kind of frugal and responsible with money by nature. So, I wouldn't be worried too much. If you do volunteer, take them with you, they may learn something too. :D
runner3081
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Re: How to teach your kids about money/wealth

Post by runner3081 »

Agree about talking.

Just in the past week, my 8yo daughter has been educated on:

1) What is renting (good friends sold house and rented back, so we explained this all to her)
2) What is buying
3) Stock investing
joeblow
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Re: How to teach your kids about money/wealth

Post by joeblow »

Start now...

3 piggy banks: "spending" "saving" and "giving"

Our kids learned very early on that a large portion if not most of the money they get (spare change, gifts in cards, etc.) should go into the savings bank.

Both our kids are great savers. We laugh that they both have more money than we did when we were first married.

Edit: we also, instead of buying them things (e.g. "can I have this?" at the store), we gave them an allowance and made them pay for those types of things themselves. They learned quickly when it is "their" money, they no longer wanted things as bad.
flaccidsteele
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Re: How to teach your kids about money/wealth

Post by flaccidsteele »

Once I realized that school didn’t teach money, that everybody giving advice traded their Life for money for a salary, and yet the wealthy didn’t seem to be working for a salary, I knew I had to learn from others
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
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abuss368
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Re: How to teach your kids about money/wealth

Post by abuss368 »

pepperz wrote: Sun Nov 22, 2020 11:00 am Can you recommend any programs / frameworks that teach kids about money and help instill a mindset for wealth?

At this point Im interested for my own planning purposes as one child is 3 years old and the other is 1.5 years old.

I am quite sure that having chores / responsibilities + learned behaviors from parents are big keys. I’m more looking for a framework to help plan on how/when to convey.
I purchased Warren Buffett’s book aimed at young kids and our children loved it. In fact, our one child wrote a letter to Mr. Buffett and enclosed a picture of herself holding the book. She received a response back from Omaha!

You can review here: https://www.amazon.com/Secret-Millionai ... 158&sr=8-3
John C. Bogle: “Simplicity is the master key to financial success."
invest4
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Re: How to teach your kids about money/wealth

Post by invest4 »

mike_in_ny wrote: Sun Nov 22, 2020 12:03 pm I think the important thing is to talk about money matters as they grow up. This goes
a long way to build the foundation and for them to get an idea of your money values.

We've done a lot of the things you hear about including allowance, having them have a
"clothing allowance" for back to school shopping in middle school, getting them a
passbook savings account, and having them plan a family vacation with a budget.

That said, for my kids, it doesn't really "click" until they have a job and paycheck. Then
they really learn about the value of money in terms of their time. (Its amazing how quickly
they learn to bring their lunch to a $12/hr job when lunch out costs $10.)

The expression that I've said innumerable times, "We can afford anything we want, just
not everything we want."
Emphatically agreed...regularly discussing money with your children (we have 4)...the what, why, and how you do it is vital. Living beneath your means, buying used vs new cars, purchasing children's clothes at resale shops when possible, whatever your approach...we strongly believe (and see) that it can have a profound impact on them.

We always struggled with the allowance as we expected the children to do chores as a contribution to the household / family. When young (<10), the kids received sufficient funding via birthdays, holidays, etc.

When a bit older (<16), they started doing some babysitting on the side and we also provided some allowance as their responsibilities increased. As they became responsible with more money, we discussed their decision making on various purchases with emphasis on the larger ones (buying an expensive, newly released video game right away vs purchasing an older (but new to them) title as an alternative and / or waiting for the price to drop on the latest one for example), but let them decide. Once eligible, we opened checking accounts for them (every one of them was very excited at the prospect!).

Once working (16+), everything opens up wide. We don't do allowances any more for them and they slowly begin taking on more of their own financial responsibilities. For example, we purchase their car, but they pay the gas, regular maintenance such as oil changes, annual registration, etc. At 18 they pay for their phone, at 19 their car insurance as well. Of course, we are closely watching and discussing together along the way how they balance it all (work, school, etc.).

I also agree that the interest level has its limits until they have a job and paycheck. Our working teenagers often talk about "how expensive things really are". Discussions are broader and deeper including decisions such as opening up a Roth IRA, how to think about and manage credit, learning how to do their own tax returns...and on and on. Of course, we know that all of the children are not the same. Some have a more natural interest in personal finance / investing while others a bit less. Much to my surprise, I guess not everyone becomes giddy at the prospect of opening up a Roth IRA. :wink:

Best wishes
Mr.BB
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Re: How to teach your kids about money/wealth

Post by Mr.BB »

Have them do chores around the house to earn an allowance. Have them learn the value of money, especially for working for it.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."
Broken Man 1999
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Re: How to teach your kids about money/wealth

Post by Broken Man 1999 »

I do think the best financial education does come from parents. Frivolous spending on the parent's part doesn't represent a positive observation for children. Savings and delayed gratification can provide such a positive observation.

Though my sample is admittedly small, I observe responsible parents seem to raise responsible children. There will be outliers at both ends of the spectrum, responsible children who wolves could have done a better job of raising them, and irresponsible children raised by responsible parents.

A lot of people seem to want to diminish personal achievement of many kinds by introducing luck to the equation. Maybe so, but luck seems to be present in multiple generations of people, both good luck and bad luck. Apparently our children are enjoying their lot in life because their great-grandparents, grandparents, and parents were all very lucky.

Having said all that, the next best education for our DDs was when they received their first paycheck from Busch Gardens. They worked a few hours while in HS and worked many more hours during summers. The shock on their faces was priceless, as they saw their expected check amount had melted away some through taxes. Certainly a learning opportunity.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go. " -Mark Twain
oldfort
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Re: How to teach your kids about money/wealth

Post by oldfort »

Money is all theoretical until you have a real job with a W2 and real bills, so 14 is about the time when you can start teaching about money in a serious way. Yes, you can start kids younger on an allowance they get for free, but this doesn't approximate real life unless you want to teach them what it's like to have a trust fund. Paying kids for chores, as if the parents owe the kids for washing their own dishes, sends the wrong message imho. After they're old enough, kids should be required to do chores to prevent the house from becoming a pigsty, not because they feel entitled to compensation.

The biggest way to teach frugality is to live frugally, from your neighborhood and house to your cars to your vacations. Everything affects whether your kids perceive getting clothes from Gucci or Goodwill is more normal.

I don't think budgeting for toys, with no real expenses, teaches you much about real life budgeting, where your main expenses go to taxes/health care/retirement savings/college savings/student loans/day care/private school tuition/PITI/home maintenance and remodels/utilities/cell phones/cellular plans/groceries/restaurants/car payment/car insurance/car maintenance/gas, and then some tiny slice of what remains goes to toys.
Last edited by oldfort on Sun Nov 22, 2020 9:13 pm, edited 7 times in total.
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arcticpineapplecorp.
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Re: How to teach your kids about money/wealth

Post by arcticpineapplecorp. »

when they get old enough to be interested in cartoons have them watch Buffett's secret millionaires club:
https://www.google.com/search?client=fi ... aires+club
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
marcopolo
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Re: How to teach your kids about money/wealth

Post by marcopolo »

Here is a post I made a few years ago in a thread about using UTMA accounts for kids savings, hope it gives some ideas:
We used them (UTMA Accounts) as way to teach our kids about finances. The schools do a great job of teaching math, sciences, humanities, etc., but there is no curriculum on personal finance, so we took it upon ourselves to try to teach our kids.

At an early age we gave our kids an allowance (salary) and made them responsible for some of their expenses, the amount and the expense they were responsible for grew as they got older. By about age 13 they were handling just about all of their expenses except housing and eating at home (going out, clothes, electronics, etc.). They were also given the option of forgoing some portion of their "salary" to be put into the UTMA account. Whatever they chose to put in their got doubled (think of it as a 401k with 100% match). We also add additional funds from time to time (profit sharing plan!). I have always viewed this as their money, so no concerns about loss of control. I think of it as a 401k plan, with cliff vesting at age 21.

Over time, they have learned to differentiate between wants and needs. They are pretty frugal about how they spend their money (comparison shop for what they need). They have a very high savings rate, which we hope will continue when they have real jobs. They have learned to prioritize their wants, we are happy to see that they value experiences over stuff.

They have also learned a lot about investing, Asset Allocation, power of compounding, etc. At age 16, I let them start managing the investments as well. So far, they are adhering to a boglehead type investing regimen.

Sure, there is the risk that their behavior might turn on a dime at age 21, but I am OK with that. It has served as a useful tool for our parenting style. Certainly not recommending this for anyone else, just describing one possible use of it. This was completely separate from 529 plans set up for their college expenses.

Since that post, my older son is now 22 and gainfully employed in a good career. He is saving over 30% of his income in a low-cost index-based portfolio, while still doing a lot fun things with his free time. So, some of this seems to have sunk in.
Once in a while you get shown the light, in the strangest of places if you look at it right.
mr_brightside
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Re: How to teach your kids about money/wealth

Post by mr_brightside »

hundreds of small conversations (over the years)

and they still might not 'get it' initially (young adulthood)

it's a journey that's for sure

-------------------------------
remember Enron?? I do
KlangFool
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Re: How to teach your kids about money/wealth

Post by KlangFool »

OP,

Play the monopoly game with your kids.


KlangFool
RobLyons
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Re: How to teach your kids about money/wealth

Post by RobLyons »

Just do it yourself. We started from an early age, maybe around 2 or 3 when the kids would "want" things at the store or see big ticket items, we would point out the price tag and it's really stuck with them now they are 11 and 8. Since then, any cash gifts we encourage them to save and only spend a small amount on things they really want. School had a bank day where kids opened youth savings accounts from a local branch and kids brought in money to put in their account. A year or two later I started introducing them to the idea of how that money can grow more by choosing to invest and the idea of compound interest. Now they do chores with the money reward in mind. We don't set a weekly allowance, rather it's pay for services provided.
"Great parenting sets the foundation for a better world"
momvesting
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Re: How to teach your kids about money/wealth

Post by momvesting »

This thread reminds me of when my daughter was in 5th grade. They sent home a permission slip for a financial education class they were starting. She was so excited, for some reason, she was fixated on insurance. She wanted to know how and when the insurance payments are saved and invested and how they know they have enough money. She came home so disappointed the first day when they taught what a savings account is and how to do a ledger.

Seriously, conversations as they go is the best way. Also, not theoretical but real situations. When my daughter was in middle school we sold one house and bought another. She knew the price range, how much we were putting down, what kind of mortgage we were getting, etc. She started college this year and seems to be the only one of her friends who knew how to use the net price calculators, knew how much was in her 529, knew how much we were willing to cash flow, etc. Her applications were not just based on how much she liked the campuses, what was offered for her major, etc. but also she applied for schools within a certain price range and knew roughly what kind of aid or merit money she could get from each school.
tibbitts
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Re: How to teach your kids about money/wealth

Post by tibbitts »

Every Friday night starting at about age 12, force the kids to watch reruns of Wall Street Week with Louis Rukeyser every Friday night. Worked for me.

Seriously I don't think any of this early-age financial education is necessary; kids will take what they choose to from watching you.
EvelynTroy
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Re: How to teach your kids about money/wealth

Post by EvelynTroy »

The financial blogger and author Morgan Housel - has much to teach about lots of things.
You might find this blog entry of interest.
This beautifully written piece - good lessons to teach your children, as well as lessons that are valuable for all of us. This article is less about money and more about good principles by which to live your life.

https://www.collaborativefund.com/blog/ ... daughter/
Be safe - mask up! Evelyn
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Toons
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Re: How to teach your kids about money/wealth

Post by Toons »

Lead By Example
For Years.
:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
Normchad
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Re: How to teach your kids about money/wealth

Post by Normchad »

For ours, we started an allowance at age 5. It wasn’t tied to doing chores, etc. our thinking is, we are not paying you to keep your room clean, do your laundry, those are things you have to do as part of a family.

Anyway, there were no strings attached to the allowance. They could buy whatever they wanted with it. But, we never bought extras, etc for them at the store. If they wanted gum, they paid for it. They quickly learned to save to buy the big stuff, like a cell phone, etc.

A nice side effect was, we never had fights or tantrums at the store about buying stuff. If they wanted it, and had the money, they could have it. Otherwise, they understood it wouldn’t happen.
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