how do/did you teach your kids finances/investing?

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bling
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how do/did you teach your kids finances/investing?

Post by bling » Sun Sep 16, 2018 6:00 pm

my daughter's almost 5, and i don't want to be always saying "no" to any and every thing she asks me for. she'll play some games on her tablet, and inevitably she'll find some in-app purchase, and then she'll bring it to me, and then i have to say no. or we'll be at the store, and she'll see some toy she wants, and again, i'll say no.

i want to teach her the virtues of delayed gratification. that nothing in life comes for free, and you need to work for it.

my parents were not really good with money. they taught me two things: 1) save everything, 2) pay for it in cash. while this produces a frugal lifestyle, it doesn't touch anything on the investing side, of risk/reward, tolerance, etc.

back in my college years, my side hustle was playing poker. i don't play anymore, but i do have a set of poker chips. i was thinking of using them as a prop to give "tokens" to my daughter. whenever she wants something that costs money, she has to trade chips for it. i haven't decided what she needs to do to earn these chips, but of course the two competing schools of thought are chores vs allowance (i grew up with neither). one thing i do want to do for sure, though, is provide interest, so that she learns about compound interest early.

what do you guys think? what worked for you? thanks!

bloom2708
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Re: how do/did you teach your kids finances/investing?

Post by bloom2708 » Mon Sep 17, 2018 1:30 pm

5 is likely too young for anything but the basics.

A Save/Give/Spend approach with 3 jars might be a good tool. If the child has $5 (from a gift), try a Save $3, give $1, spend $1 approach. Let the child spend the $1 on anything. When the "give" jar gets some money, think of a way to show your kid how to give and what a difference it makes.

Our youngest is 10. We try to talk about finances and help her understand money comes from work. We save, we give and we spend. If we spend $800 on an iPhone X, that means we have to spend a lot less on other things. Houses, cars, utilities, food, TV, cell phones. These things take money.

Lead by example. Short lessons. Kids like to see beneath the covers. Give them information. "Because I said so" doesn't teach much.

Dave Ramsey and his daughter Rachel Cruze wrote a Smart Money Smart Kids book that might be worth a read from the local library.
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aristotelian
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Re: how do/did you teach your kids finances/investing?

Post by aristotelian » Mon Sep 17, 2018 1:39 pm

Just came up with a new system for this with my 9 and 11 year olds. Anticipating some negotiating and begging for Halloween costumes and knowing that they will always beg to spend more when it is Dad's money, I gave them a fixed budget of $25, allowing them to keep any of the budget that they don't spend. Youngest still spent the full $25 on a new costume, but at least took some time to find a good deal on eBay. Oldest found a used costume at the thrift store and pocketed $17. Dad spent what he budgeted to spend without any blowback from ungrateful kids.

We have used poker chips as well but it caused a lot of poker chips scattered about the house and fighting over who they belonged to.

Now we just have a chore list that they are expected to use. They have bank accounts and I cut them a check at the end of the month for their allowance. That forces them to deposit the money and then think twice before spending it.

KlangFool
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Re: how do/did you teach your kids finances/investing?

Post by KlangFool » Mon Sep 17, 2018 1:43 pm

OP,

You want your daughter to manage her money/budget. But, you would not let her manage any money. So, how could she learn anything?

Why do you need to say "no" to her anyhow? We give our kid $25 for birthday and X'mas. They receive a few hundred as gift annually from the extended family. They get to choose how to spend that money. It is their money.

My parenting philosophy is to let my children make as much decision on their own as early age possible. It is cheaper and better for them to make as much mistake as early as possible. They bought their X'mas present before X'mas one year. We did not stop them. We brought them to after X'mas sale and show them that they could get the same present a few days later at 50% off. After that, they only buy X'mas present before X'mas for stuff that they are willing to pay full price for.

After 20+ years, they had saved and invested 20K to 30K.

A person could only learn to manage money by doing it. Experience teaches.

KlangFool

zuzimb
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Re: how do/did you teach your kids finances/investing?

Post by zuzimb » Mon Sep 17, 2018 2:07 pm

Here's what my parents did with me, which I know is what helped me learn that it is good to save money.

I was given a monthly allowance, not directly tied to chores if memory serves. The monthly amount was tied to my age, increasing by a dollar each birthday (might have been irrelevant to the what made the lesson stick). What did make a huge impact on my mindset is that they would match on every dollar I didn't spend. IE if I got $20 and spent $5 they would give me an extra $15 at the end of the month. The result was that I ended up viewing everything as twice the direct cost.

Times where I was given money for a specific purpose (souvenirs mainly), any money not spent I could keep. Everything was cash and I would deposit to a bank account when I had $XXX. I didn't get to see the balance regularly till late teens.

An additional caveat was that any purchase over $50 had to have a 24 hour wait period. Anything lower than that my parents wouldn't question.

Little did I know it was an example of delayed gratification, opportunity costs, self-restraint and all that good stuff. And my parents could always say I could spend my money when out shopping

gretah
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Re: how do/did you teach your kids finances/investing?

Post by gretah » Mon Sep 17, 2018 2:30 pm

The Dave Ramsey book is good:
Smart Money, Smart Kids.

Badly written but advice is sound.

ThatGuy
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Re: how do/did you teach your kids finances/investing?

Post by ThatGuy » Mon Sep 17, 2018 2:42 pm

My system is as follows:
  • $X in allowance every week. This tends to get spent nearly as quickly as it comes out of my wallet, but it's important for them to have ownership of their decisions, and also to be able to determine value to cost.
  • 20% * X is given at the same time as allowance, but must be saved in a clear jar in their room. This saved money may be spent every year on the child's birthday so that they see the benefit of saving for large purchases.
  • On days when kiddo expects gifts, like bdays or Christmas, they are required to pick out toys/goods for drop off at the local children's charity. I pay for these, however.
Investing will come when they have outside employment, or show interest, whichever comes first.
Work is the curse of the drinking class - Oscar Wilde

l2ridehd
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Re: how do/did you teach your kids finances/investing?

Post by l2ridehd » Mon Sep 17, 2018 2:54 pm

Once old enough for an allowance, think it was around 5 or 6, I took an old check book from a bank I no longer used and made them use it for allowance. Each week I would add X dollars to the check register and when ever they wanted something using allowance, they wrote me a check and deducted it from the check register and I gave them the money to use. Once every couple months we would go through reconciliation. It helped teach how to save up for something bigger, how a bank works, how to save, and how to use a checking account. Also when ever there was something I might pay them for, it would get deposited in this fake checking account. When they turned 14 we actually moved the process to a real bank. I made the allowance deposits and they used real checks. Any earnings were also deposited in the bank.

Really turned out to be educational and value. I tried to come up with a way to allow borrowing and earning interest, but that got a little complicated because it would really only work if I could hold collateral.

livesoft
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Re: how do/did you teach your kids finances/investing?

Post by livesoft » Mon Sep 17, 2018 3:52 pm

I told them to buy their own cars and get a loan if they needed to. Very motivating to them.
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bling
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Re: how do/did you teach your kids finances/investing?

Post by bling » Mon Sep 17, 2018 5:38 pm

KlangFool wrote:
Mon Sep 17, 2018 1:43 pm
You want your daughter to manage her money/budget. But, you would not let her manage any money. So, how could she learn anything?

Why do you need to say "no" to her anyhow? We give our kid $25 for birthday and X'mas. They receive a few hundred as gift annually from the extended family. They get to choose how to spend that money. It is their money.
because she's not even 5 yet! and i'm not going to pay for a $50 in-app purchase, no matter what it is!

when she gets older i'll give her real money, but for now, i think using poker chips could be helpful as it allows me to detach the monetary value. so if she picks something really educational and/or has lasting impact, i might be inclined to spend more money (and give her a discount) to do it.

but sounds like some folks are giving real money allowances even at an early age of 5.

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Jazztonight
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Re: how do/did you teach your kids finances/investing?

Post by Jazztonight » Mon Sep 17, 2018 6:23 pm

How did I teach my kids about finance & investing?

Ha.

I have two adult children. The older has never learned how to manage her money. She and her husband spend their income faster than it comes in, and run credit card balances that scare me. I've stepped in and used part of her inheritance to liquidate old school loans and some CC debt, which gave her some financial relief. But I expect no "lesson" was really learned. There is always a new iPhone to buy, or private school fees to pay. It makes me sad, but they use a non-Boglehead financial model. She only asked me for financial advice once, when she was drowning in debt.

The younger spent more time with me when he was a child and observed how my second wife and I live. That's the model he followed and it pleasantly surprised me. He's allocated in Vanguard funds in an appropriate manner, invests as much as he can in IRAs and his wife's 401k, he has a school fund for his son, and he drives used cars. He held on to a house he bought on a short sale which provides a rental stream of income; he and his family live in a second house he bought in a similar way. He sends his child to public school. If he has a financial question, he asks me for my opinion/advice.

You never know how or where the acorns will fall.
"What does not destroy me, makes me stronger." Nietzsche

fourwheelcycle
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Re: how do/did you teach your kids finances/investing?

Post by fourwheelcycle » Mon Sep 17, 2018 6:47 pm

We never did any formal finance training with our two sons, although I do remember our older son had a course in high school that required him to go to a car store with one of his parents (me) to "shop" for a car, including asking about car loans, interest rates, and requirements to qualify for a loan. I also remember our younger son, then around age twelve, came home from a trip downtown with a friend and asked his mother "Can you get me one of those cards you put in a machine at the bank to get money?" My wife explained that you have to have your own money in the bank first in order to get money out with an ATM card. At that time we did not use ATM cards ourselves, and we were surprised the other boy's parents would give him a card and PIN number.

When our sons finished college and began working I gave them just a few basic guidelines: spend within your means and never carry debt on your credit cards; try to max out your savings at work and definitely save enough to take advantage of any employer match, max out your annual ROTH IRA savings, and keep your invested savings in a 70/30 mix of equity and bond index funds. As far as I know, they are following this advice.

KlangFool
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Re: how do/did you teach your kids finances/investing?

Post by KlangFool » Mon Sep 17, 2018 7:44 pm

bling wrote:
Mon Sep 17, 2018 5:38 pm
KlangFool wrote:
Mon Sep 17, 2018 1:43 pm
You want your daughter to manage her money/budget. But, you would not let her manage any money. So, how could she learn anything?

Why do you need to say "no" to her anyhow? We give our kid $25 for birthday and X'mas. They receive a few hundred as gift annually from the extended family. They get to choose how to spend that money. It is their money.
because she's not even 5 yet! and i'm not going to pay for a $50 in-app purchase, no matter what it is!

when she gets older i'll give her real money, but for now, i think using poker chips could be helpful as it allows me to detach the monetary value. so if she picks something really educational and/or has lasting impact, i might be inclined to spend more money (and give her a discount) to do it.

but sounds like some folks are giving real money allowances even at an early age of 5.
bling,

<< my daughter's almost 5, and i don't want to be always saying "no" to any and every thing she asks me for. she'll play some games on her tablet, and inevitably she'll find some in-app purchase, and then she'll bring it to me, and then i have to say no. or we'll be at the store, and she'll see some toy she wants, and again, i'll say no.>>

Pick your poison. You have a choice. Keep on saying no. Or, give her some money and let her decide.

<<but sounds like some folks are giving real money allowances even at an early age of 5.>>

It is not an allowance. Under Chinese culture, kids, since they were born, are given cash by family members in a red envelope every Chinese new year. I have a big family with many millionaires. My kids have about $500 to $1,000 when they were 5 years old. It is their money. They are free to spend that money if they want to.

If I do not have to say "no", I just say spend your own money if you want to buy that stuff. After a few times, they will learn their lessons.

They had saved about 20K to 30K each before they graduated from college. They can see how their investment grew every year.

KlangFool

Starfish
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Re: how do/did you teach your kids finances/investing?

Post by Starfish » Mon Sep 17, 2018 8:14 pm

I had my own money when I did not know how to count money.
So, at six, my kid has his own money.
I took him yesterday to the local county fair. A ride is 5-10$ and some require 2 people. I allowed for 1 ride, he chose an expensive one, I gave him 4$ cash if he doesn't go in the ride. He took the money.
My target is to give hime some money every month (10$?) and let him buy for himself his toys. If he wants something more expensive he has to wait longer.

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Toons
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Re: how do/did you teach your kids finances/investing?

Post by Toons » Mon Sep 17, 2018 8:18 pm

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

StealthRabbit
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Re: how do/did you teach your kids finances/investing?

Post by StealthRabbit » Mon Sep 17, 2018 8:23 pm

bloom2708 wrote:
Mon Sep 17, 2018 1:30 pm
5 is likely too young for anything but the basics.
...
Lead by example. Short lessons. Kids like to see beneath the covers. Give them information. "Because I said so" doesn't teach much.

Dave Ramsey and his daughter Rachel Cruze wrote a Smart Money Smart Kids book that might be worth a read from the local library.

My kids never got allowance, but they ALWAYS could work for $$ 8-) (I preferred that they worked for the neighbors and neighbor kids worked for us :!: ) more work output, less complaining, good experience and fresh perspectives. (for all)
4-H is an excellent way to learn to 'Manage' projects / money, leadership * don't need a 'chicken / pig /livestock' , they do pets and sewing / cooking / preserving / building art / drama... projects. *Every POTUS candidate should submit their 4-H project book from 4-9th grade, then they would not need to campaign! Proof of managing a project is adequate. (much more telling than we currently get)

older kids...
Started ours in self directed Roths at age 12, they had $20k+ by age 18 (bonus is that Fafsa took ZERO of Roths as school eligible)
Our kids managed our food budget
Helped with travel planning and budgets *we lived overseas and homeschooled
Went to fresh markets daily and used foreign currency to bring home the chicken...and bread and cheese.

then... ~ age 15
Post by livesoft » Mon Sep 17, 2018 3:52 pm

I told them to buy their own cars and get a loan if they needed to. Very motivating to them.
:sharebeer

They needed to get the cars early... by age 13-15 so they could FIX them by the time they needed to DRIVE them.

Bought at towing auctions $30 - $150 for the whole car, then we started fixing (and for yrs to come...) maintaining cars and learning to repair and SPEND / budget . * 10 yrs past college... the kids ALL drive much nicer cars than I have :confused

Oh... they paid 100% for college. Very motivating (to finish well and get to work)
They also covered their expenses (clothes and such) after age 12.

No TV, so that would have been their first purchase if they had it their way. (decades later... still no TV...) :mrgreen:

It will all work out...
Give your kids a LOT of SPACE and responsibility... they will shine!
Last edited by StealthRabbit on Mon Sep 17, 2018 11:04 pm, edited 1 time in total.

bubbadog
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Re: how do/did you teach your kids finances/investing?

Post by bubbadog » Mon Sep 17, 2018 8:46 pm

I have teenage/college children who have part time jobs.

I have an agreement with my children that I will match 100% whatever earned income they decide to save up to 50% of their earnings.

For example, if they make $100 and are willing to invest/save up to $50, I will match that with an additional $50. That leaves them with $50 to spend as they choose and $100 invested. (Great deal for them, right?)

They both have Vanguard UTMA accounts and I make the deposits to their accounts from my linked local checking account.

We discuss what to invest in and what are the pros and cons of different options. Admittedly, I steer them in a Boglehead direction.

So far they have taken me up on the full match. (smart kids)

Since it is their money and I am just a temporary custodian, their level of interest is much higher than previously when I would try to discuss saving/investing.

The intent is for them to use this money as they see fit after college and not for funding their college education.

Watching their balances grow over time and showing them their unrealized capital gains hopefully helps them understand the value of investing for the long term.

StealthRabbit
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Re: how do/did you teach your kids finances/investing?

Post by StealthRabbit » Mon Sep 17, 2018 11:01 pm

bubbadog wrote:
Mon Sep 17, 2018 8:46 pm
I have teenage/college children who have part time jobs.

I have an agreement with my children that I will match 100% whatever earned income they decide to save up to 50% of their earnings.

For example, if they make $100 and are willing to invest/save up to $50, I will match that with an additional $50. That leaves them with $50 to spend as they choose and $100 invested. (Great deal for them, right?)

They both have Vanguard UTMA accounts and I make the deposits to their accounts from my linked local checking account.

We discuss what to invest in and what are the pros and cons of different options. Admittedly, I steer them in a Boglehead direction.

So far they have taken me up on the full match. (smart kids)

Since it is their money and I am just a temporary custodian, their level of interest is much higher than previously when I would try to discuss saving/investing.

The intent is for them to use this money as they see fit after college and not for funding their college education.

Watching their balances grow over time and showing them their unrealized capital gains hopefully helps them understand the value of investing for the long term.
note: ANY personal savings of the 'student', is grabbed by Fafsa and determined to be 100% applicable to tuition.

Consider have kids roll their savings into Roth (they can use Roth as a bank account / withdraw contributions AFTER college... but...Fafsa will purpose to have them SPEND ALL their personal savings on college. Many of my co-workers who returned to college for advanced degrees stashed all their savings BEFORE applying for financial aid (usually bought investment props). Student money is VERY cheap to get, compared to parent money (opportunity costs). Fafsa didn't consider my kid's homes (~$80k equity) or retirement accts ($20k+) when they applied for college financial aid. But had they had a dime of savings... it would have been 100% considered for School, (Even tho they were living on their own, working, claiming themselves on taxes, and fully self supporting by age 18) Fafsa seems to think students are 'dependents' until age 26 (unless they marry).

My kids 'consolidated' their student debt @ 2.4% for 20 yrs. They made 30 - 50% on investment income from equivalent personal funds (to college loans), and will still dong so for next 10 yrs. They had excellent timing ... Amazon, APPL, Netflix. +$$$$ during during college. (made several times more than college cost them)

They do 'finance' as careers. They are pretty well set on the investment / retirement end, and are good international traders / investors / investment researchers.

One of my bosses (engineering manager) did a couple summers on the CBOT and made enough to pay for 5 yrs college. there is money (and education) to be had in engaging early!

Loik098
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Re: how do/did you teach your kids finances/investing?

Post by Loik098 » Mon Sep 17, 2018 11:30 pm

I don't understand your desire to "detach the monetary value", or avoid giving/teaching your daughter about real money. If she's asking you for things, she's ready to learn about the cost of those things. You wouldn't use "fake lessons" like poker chips in any other facet of her education, so why this one? Will she also clean the house with fake cleaner, put away fake groceries, or brush her teeth with fake toothpaste? Talk about confusing for a little one.

An almost-5 year old is perfectly capable of learning what things cost at the grocery store or toy store. Simply ask them to tell you the price they see on the sticker, and correct them if they are wrong. Then (assuming you have already taught her what a quarter, dollar, ten dollar bill, etc look like), demonstrate how much money that price tag represents. Over time, when they want something, ask them if they have enough money to buy it. You can even start small, such as discussing things that cost less than a dollar. They'll catch on quickly, even if all of the math isn't there yet. If they don't have enough money, the answer is no, but not because it's "because I said so" or some other silly reason.

The source for their money? Give them a small, set amount each week or month. Please don't attach an allowance to housework or chores. Kids already have plenty of opportunity to learn about work ethic elsewhere. They also shouldn't need to be incentivized to function as part of a family. You can optionally choose how much they save, invest, donate, etc., however you wish. See other suggestions on that above.

Moreover, if you are investing money into your kids' education in the form of a 529, schooling, activities, etc., then why are you not also investing some of that money into actually giving a little bit of it to them, so that they can practice how to properly manage it? Is that part of their education too taboo or unimportant? You will no doubt loan them your car one day so they can learn to drive, give them a lawnmower so they can learn how to mow, give them a vacuum so they can learn how to vacuum, etc ad nauseam. All of those things cost money too, and hold value.....just at a "second-level". Don't be tempted to let actual money lessons be on a separate level from all of the other lessons you'll teach (which also cost you money).

Starfish
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Re: how do/did you teach your kids finances/investing?

Post by Starfish » Mon Sep 17, 2018 11:46 pm

StealthRabbit wrote:
Mon Sep 17, 2018 8:23 pm
bloom2708 wrote:
Mon Sep 17, 2018 1:30 pm
5 is likely too young for anything but the basics.
...
Lead by example. Short lessons. Kids like to see beneath the covers. Give them information. "Because I said so" doesn't teach much.

Dave Ramsey and his daughter Rachel Cruze wrote a Smart Money Smart Kids book that might be worth a read from the local library.

My kids never got allowance, but they ALWAYS could work for $$ 8-) (I preferred that they worked for the neighbors and neighbor kids worked for us :!: ) more work output, less complaining, good experience and fresh perspectives. (for all)
4-H is an excellent way to learn to 'Manage' projects / money, leadership * don't need a 'chicken / pig /livestock' , they do pets and sewing / cooking / preserving / building art / drama... projects. *Every POTUS candidate should submit their 4-H project book from 4-9th grade, then they would not need to campaign! Proof of managing a project is adequate. (much more telling than we currently get)

older kids...
Started ours in self directed Roths at age 12, they had $20k+ by age 18 (bonus is that Fafsa took ZERO of Roths as school eligible)
Our kids managed our food budget
Helped with travel planning and budgets *we lived overseas and homeschooled
Went to fresh markets daily and used foreign currency to bring home the chicken...and bread and cheese.

then... ~ age 15
Post by livesoft » Mon Sep 17, 2018 3:52 pm

I told them to buy their own cars and get a loan if they needed to. Very motivating to them.
:sharebeer

They needed to get the cars early... by age 13-15 so they could FIX them by the time they needed to DRIVE them.

Bought at towing auctions $30 - $150 for the whole car, then we started fixing (and for yrs to come...) maintaining cars and learning to repair and SPEND / budget . * 10 yrs past college... the kids ALL drive much nicer cars than I have :confused

Oh... they paid 100% for college. Very motivating (to finish well and get to work)
They also covered their expenses (clothes and such) after age 12.

No TV, so that would have been their first purchase if they had it their way. (decades later... still no TV...) :mrgreen:

It will all work out...
Give your kids a LOT of SPACE and responsibility... they will shine!

I completely disagree with all this.
I will specifically tie my help for college, allowance etc with a requirement that work is not allowed. The ideas of kids working is too middle ages/3rd world for me.
The reason for this is that the most important years for education are the early years, up to, at most, 25. Any year at that age is just pure gold. To waste it on menial work is just a terrible waste. That kind of time and brain capacity does not come back, ever.
All the money they could earn washing cars and selling hamburgers for 8$/h are dwarfed in a months or two at a good job. A good job they will never have otherwise.
Kids and young people should have only 2 responsibilities:
1. To learn and get a good education
2. Have fun and make memories

I grew up exactly like this and I am very happy I had this chance comparing to my american friends. I could at least offer my kid what a divorced mother in eastern Europe offered me.

marcopolo
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Re: how do/did you teach your kids finances/investing?

Post by marcopolo » Mon Sep 17, 2018 11:57 pm

KlangFool wrote:
Mon Sep 17, 2018 1:43 pm
OP,

You want your daughter to manage her money/budget. But, you would not let her manage any money. So, how could she learn anything?

Why do you need to say "no" to her anyhow? We give our kid $25 for birthday and X'mas. They receive a few hundred as gift annually from the extended family. They get to choose how to spend that money. It is their money.

My parenting philosophy is to let my children make as much decision on their own as early age possible. It is cheaper and better for them to make as much mistake as early as possible. They bought their X'mas present before X'mas one year. We did not stop them. We brought them to after X'mas sale and show them that they could get the same present a few days later at 50% off. After that, they only buy X'mas present before X'mas for stuff that they are willing to pay full price for.

After 20+ years, they had saved and invested 20K to 30K.

A person could only learn to manage money by doing it. Experience teaches.

KlangFool
I think this is really good advice, especially the bolded part. Below is part of a post i made a while back discussing similar issues. Age 5 might be a little too early to dive too deep into this, but you can start with small steps:
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 there 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.
Once in a while you get shown the light, in the strangest of places if you look at it right.

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Re: how do/did you teach your kids finances/investing?

Post by epilnk » Tue Sep 18, 2018 1:31 am

I started my kids with tiny weekly allowances - initially 75 cents for the 4 year old and 50 cents for the 3 year old - and brought them to the dollar store to spend it. This forced them to save up. It also functioned as a math lesson - they were paid in an assortment of coins and had to accurately total change before they could spend it.

The dollar store was perfect - the fixed price simplified comparison shopping. They could choose whatever they wanted, anything in the store. This was a mindblowing amount of choice and spending power at that age; an entire world of consumer products was at their feet and it was a bit overwhelming. They could choose toys or candy or chips or a flashlight or a batman cape or tools. (They both bought plastic dart guns with their first allowance but the 3 year old did buy himself pliers on one visit.)

Over time I added more lessons. They learned to use unit pricing to get the most chips for their dollar. Then they learned that 18 oz of chips that taste bad is not a better value than 14 oz of chips that taste good (though why that lesson needed to be tested a second time is a mystery to me). Initially I paid sales tax, but later made them calculate the tax before I'd pay it. And eventually they learned that a $1 gun wasn't always a great bargain; they started saving up for the $7.50 gun at the drug store instead, and aged out of the dollar store lessons. But they learned so much there.

Kids learn about money by controlling money. By making good decisions and bad decisions, and although I sometimes offered my opinion I never interfered in a bad spending decision. My kids are in high school now and are proficient, careful shoppers. Both are interested in finance and economics.

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peterinjapan
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Re: how do/did you teach your kids finances/investing?

Post by peterinjapan » Tue Sep 18, 2018 2:01 am

Gave all three of my kids a 15 point document explaining what investing is, what saving is, what stocks and bonds are. Gave them six months to digest.

Son took to it and we have great fun reading books and sharing stock ideas together.

Daughter was not interested in learning, so I set her up with Betterment. She'll come around eventually.

Other daughter is also not big on learning about socks, since she's still young and headstrong, and thinks "the rich" or bad by default. So do a very simple investing account for her, so she can learn along the way and be less cynical in the future, hopefully.

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Meg77
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Re: how do/did you teach your kids finances/investing?

Post by Meg77 » Tue Sep 18, 2018 4:44 pm

bling wrote:
Mon Sep 17, 2018 5:38 pm
KlangFool wrote:
Mon Sep 17, 2018 1:43 pm
You want your daughter to manage her money/budget. But, you would not let her manage any money. So, how could she learn anything?

Why do you need to say "no" to her anyhow? We give our kid $25 for birthday and X'mas. They receive a few hundred as gift annually from the extended family. They get to choose how to spend that money. It is their money.
because she's not even 5 yet! and i'm not going to pay for a $50 in-app purchase, no matter what it is!

when she gets older i'll give her real money, but for now, i think using poker chips could be helpful as it allows me to detach the monetary value. so if she picks something really educational and/or has lasting impact, i might be inclined to spend more money (and give her a discount) to do it.

but sounds like some folks are giving real money allowances even at an early age of 5.
I think using tokens/chips is confusing. You'll just have to transition the framework to real money at some point - which they start learning about in first grade by the way, if not kindergarten in some schools (this is a nickel, how many pennies in a dollar, etc.). You don't want your kid in class being like, "but what about red chips?" Even if you pennies, I'd stick to real money so that the connection is made. You can do that very cheaply.

My sisters and I all had piggy banks from pretty much birth and were paid in coins to do extra chores or go to bed early or whatever my dad came up with (some regular chores were mandatory). 50 cent pieces for lost teeth, $10 for birthdays, later $20 as the years went on - the money added up. Of course even in the 80s that couldn't buy much, but we were allowed to spend some at the gas station on treats, and we were encouraged to put some in the offering plate at church on Sunday. At 8 he took me to the bank to open my first bank account. Birthday and Christmas money went in, or when the piggy bank got full; and when it came time to shop for others a big show was made of going in person to the bank and making a withdrawal and talking about how to spend it.

I like the idea of matching funds, but 4-5 is probably too early for that connection to be meaningful. And feel free to just say NO to anything. Until a kid makes the connection between work and money, and then between saving in order to spend, it won't compute - especially regarding an app which makes even rational adults feel like it's all play money. You might just make general conceptual explanations like, "dad has to work a whole hour in order to make that much" or "we have to pay for your clothes which are more important, and so we are doing that instead of spending money on apps this month." It's just the practice and awareness of money matters that you want to focus on - the amounts don't matter until later. Just talking about money in general can be helpful, and you'll be surprised what they soak up.
"An investment in knowledge pays the best interest." - Benjamin Franklin

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Lieutenant.Columbo
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Re: how do/did you teach your kids finances/investing?

Post by Lieutenant.Columbo » Tue Sep 18, 2018 5:30 pm

Meg77 wrote:
Tue Sep 18, 2018 4:44 pm
bling wrote:
Mon Sep 17, 2018 5:38 pm
KlangFool wrote:
Mon Sep 17, 2018 1:43 pm
You want your daughter to manage her money/budget. But, you would not let her manage any money. So, how could she learn anything?

Why do you need to say "no" to her anyhow? We give our kid $25 for birthday and X'mas. They receive a few hundred as gift annually from the extended family. They get to choose how to spend that money. It is their money.
because she's not even 5 yet! and i'm not going to pay for a $50 in-app purchase, no matter what it is!

when she gets older i'll give her real money, but for now, i think using poker chips could be helpful as it allows me to detach the monetary value. so if she picks something really educational and/or has lasting impact, i might be inclined to spend more money (and give her a discount) to do it.

but sounds like some folks are giving real money allowances even at an early age of 5.
I think using tokens/chips is confusing. You'll just have to transition the framework to real money at some point - which they start learning about in first grade by the way, if not kindergarten in some schools (this is a nickel, how many pennies in a dollar, etc.). You don't want your kid in class being like, "but what about red chips?" Even if you pennies, I'd stick to real money so that the connection is made. You can do that very cheaply.

My sisters and I all had piggy banks from pretty much birth and were paid in coins to do extra chores or go to bed early or whatever my dad came up with (some regular chores were mandatory). 50 cent pieces for lost teeth, $10 for birthdays, later $20 as the years went on - the money added up. Of course even in the 80s that couldn't buy much, but we were allowed to spend some at the gas station on treats, and we were encouraged to put some in the offering plate at church on Sunday. At 8 he took me to the bank to open my first bank account. Birthday and Christmas money went in, or when the piggy bank got full; and when it came time to shop for others a big show was made of going in person to the bank and making a withdrawal and talking about how to spend it.

I like the idea of matching funds, but 4-5 is probably too early for that connection to be meaningful. And feel free to just say NO to anything. Until a kid makes the connection between work and money, and then between saving in order to spend, it won't compute - especially regarding an app which makes even rational adults feel like it's all play money. You might just make general conceptual explanations like, "dad has to work a whole hour in order to make that much" or "we have to pay for your clothes which are more important, and so we are doing that instead of spending money on apps this month." It's just the practice and awareness of money matters that you want to focus on - the amounts don't matter until later. Just talking about money in general can be helpful, and you'll be surprised what they soak up.
I thought this comment was excellent.
Meg77
What are your thoughts on whether children should have jobs or be paid for doing chores versus non of that as long as they're performing (very?) well at school? I see "doing very well at school" as the child's main task, and I don't think they should work or do chores for money. Doing chores as part of how the family take care of their needs is fine in my opinion, but doing it so that they can make money seems wrong to me. What do you think?
Lt. Columbo: Well, what do you know. Here I am talking with some of the smartest people in the world, and I didn't even notice!

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Re: how do/did you teach your kids finances/investing?

Post by Peppergrass » Tue Sep 18, 2018 7:16 pm

I'm highly opinionated so let me try to approach this.. and take my advice with anything.. it's a strangers advice

I grew up poor... like food bank, ramen noodle poor.. .35 cents for lunch.. I didn't have things in life that all the other kids had, it taught me

1. life is not good when you are poor
2. other people have it, why don't I


one problem I think is approaching it from the standpoint as an adult.. not as a kid. Kids don't have an capacity to "earn" something.. done. second point is viewed through a Childs eyes, they want something to provide them with some experience.. how many times can you honestly say looking back at your childhood your parents should not have bought you all that junk... NONE, because it was all worth something at some point, and has value to that moment, even if for one hour or one day or one week, the child gets something from it and it's shapes them it a very very small degree and is a part of them.

another point I think is focusing on it or making it a "thing" makes it worse then just doing it and not giving it energy.. whats the best way to raise your kids to not be consumers... not make it a focal point or a point of any attention.


I am never one for restriction on a childhood.. you never know what it might lead to... or what stepping stone it creates for them.. children needs the resources to explore their kingdom and to shape it at their will.. this could be as simple as a fishing pole to the kid wanting material things to create or learn about something..

now, I'm not for buy whatever and as much toys as you want... but to be quite honest I also believe "brats" are born, not made, and it is also influenced by their parents behavior to a very large degree.. like when you buy them a toy, do you go home and play with it with them or do you head up to your room or clean the house. while they play alone.... engaged play and learning to me is the difference factor.. buying your kid stuff and him being a rich kid because dad isn't home isn't a replacement for all the stuff he gets...



secondly.. I think it's an extremely horrible idea to involve children and money. children have no care in the world until things are presented to them.. no of course everyone is saying, well how are they ever going to learn to take care of themselves then... in all due time... you don't plant a orange tree and expect it to produce 100 oranges the first season or second or third or fourth do you??? I've heard of kids wanting to be a fireman a helper, a animal rescuer... never ever a banker..

I believe children and not allowed to be children anymore, and its the disease we see today of materialism and wanting things to replace real happiness.. children have everything they need in them to thrive, but we mess it up always saying, NO, come over here, don't touch that, put that down.... children are incredibly curious, ever wonder why they don't ask you to explain to them money or what that card you always pull out is... because they know and don't care!

children minds should also not be centered on money, which I believe mine was as my siblings, as when you grow up in a lacking situation, you feel the off balance and seek hat it is that is making it that way.. we all have problems with money from the lack of it, and I believe the best thing you can do as the adult is never mention money to them, and work to make their situations secure..


as to your question, I would not do chips or anything this again will instill the behavior that they get something if they have it, not if they don't... what's that going to create in a child.. HAVE CHIPS AND I WIN THE GAME OF LIFE, don't and I fail and don't feel good.

I would just monitor how much they are getting, and layout whatever that is how you feel and is in your budget.. they buy that app and two days later say dad I want this,, say you got that thing two days ago so in a few days.. or make them decide, say you can pick one thing today, sometimes it might be two things.. they want a really expensive thing tell them to wait a week and get it and then for another week nothing. again I go back and say quality time spent with that they bought produces the best situation, not buying them something and walking away..

I can only speak for myself, my kid is autistic so my situation is different.. they have meltdowns and go to level 10 in an instant.. I let him buy something when we go out and we play with it at home. If he wants two lego sets I get it, I tell him we can do one today, the other gets put away and what one does he really want to do first. one time he wanted this whole set, I bought it with the condition we open one at a time... and seriously two sets are still sitting unopened as he is still playing with the first two we built. he wants to go to Legoland and when we get there he wants to buy a lego, we get a drink and start building out on a table, it's really fun! then we play with it at home. my kid, I actually introduce him to things, I show him movies to download and what one he wants to watch... guess what, he doesn't ask for all five, he asks for the one he wants and we watch it, again and again and again, and no after watching it he doesn't say, HEY DAD what about those other ones. my point I'm making is though it seems I'm a pushover and do whatever, there is a method to my madness in that I'm providing experiences for my kid and I don't think of it as "buying something", in return he lives a life full of experience and creativity.. some of his lego sets are smashed when he plays with them, but then he goes and collects the bits and builds something new.

I don't think it's so much as a money thing, as needing to turn it into an experience thing. want to know the ultimate gift yo can give your children, trips.. they last forever, photos forever and then tell them they can get one thing on the trip asa reminder.. now that's the ultimate.. my family spends 90% of our are money traveling as it's priceless! next time they ask for that new phone say why not instead go to Hawaii..


second I don't think you can teach something something if it doesn't fit to them. I am the only one in my family that saves. I'm financially smart and will be fine, them, no. I tell them, buy them books, nothing.... they don't want to, it's just the way it is. some people want to be finally sure later in life, some apparently don't care or don't want to save and sacrifice anything to do so... so be it. look at the other guy above, he told you the story of his two kids, one is smart with money, other is not.. not much you can do


another thing I think to do is ask yourself if you were an adult and someone gave you an allowance.. you would be upset.. life I think is best lived when you don't think about money and you buy something when you really want it, and you don't when something doesn't mean anything to you.. your kid obviously isn't asking you for everything.. everything they do there must be a reason..


hope that helps any think about something differently, or cement your ideas to being the best.. either way hope that helped. I wish mom could step in and tell you her viewpoint as it's the smartest thing I've ever heard on kids and materialism and being "brats' and such... I've tried to mirror it as best as I could with what I see... and trust me it took me a long time to get to this point..

MrBeaver
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Re: how do/did you teach your kids finances/investing?

Post by MrBeaver » Tue Sep 18, 2018 9:39 pm

Great ideas here.

Mine aren’t old enough to have gone through this, but I remember a formative experience during my growing up was my mother taking me to a bank to get a CD with my unspent allowance and birthday money when I was in elementary school. At the time (80s), rates were high enough (7-9%) that it really had an impact on me and I learned the power of exponential functions and compounding as a result. That lead me further down the road of delayed gratification and learning about investing, and I never looked back.

I think there was value in it being a ‘real’ product from a bank. Great experiences.

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Meg77
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Re: how do/did you teach your kids finances/investing?

Post by Meg77 » Thu Sep 20, 2018 12:42 pm

Lieutenant.Columbo wrote:
Tue Sep 18, 2018 5:30 pm
Meg77 wrote:
Tue Sep 18, 2018 4:44 pm
bling wrote:
Mon Sep 17, 2018 5:38 pm
KlangFool wrote:
Mon Sep 17, 2018 1:43 pm
You want your daughter to manage her money/budget. But, you would not let her manage any money. So, how could she learn anything?

Why do you need to say "no" to her anyhow? We give our kid $25 for birthday and X'mas. They receive a few hundred as gift annually from the extended family. They get to choose how to spend that money. It is their money.
because she's not even 5 yet! and i'm not going to pay for a $50 in-app purchase, no matter what it is!

when she gets older i'll give her real money, but for now, i think using poker chips could be helpful as it allows me to detach the monetary value. so if she picks something really educational and/or has lasting impact, i might be inclined to spend more money (and give her a discount) to do it.

but sounds like some folks are giving real money allowances even at an early age of 5.
I think using tokens/chips is confusing. You'll just have to transition the framework to real money at some point - which they start learning about in first grade by the way, if not kindergarten in some schools (this is a nickel, how many pennies in a dollar, etc.). You don't want your kid in class being like, "but what about red chips?" Even if you pennies, I'd stick to real money so that the connection is made. You can do that very cheaply.

My sisters and I all had piggy banks from pretty much birth and were paid in coins to do extra chores or go to bed early or whatever my dad came up with (some regular chores were mandatory). 50 cent pieces for lost teeth, $10 for birthdays, later $20 as the years went on - the money added up. Of course even in the 80s that couldn't buy much, but we were allowed to spend some at the gas station on treats, and we were encouraged to put some in the offering plate at church on Sunday. At 8 he took me to the bank to open my first bank account. Birthday and Christmas money went in, or when the piggy bank got full; and when it came time to shop for others a big show was made of going in person to the bank and making a withdrawal and talking about how to spend it.

I like the idea of matching funds, but 4-5 is probably too early for that connection to be meaningful. And feel free to just say NO to anything. Until a kid makes the connection between work and money, and then between saving in order to spend, it won't compute - especially regarding an app which makes even rational adults feel like it's all play money. You might just make general conceptual explanations like, "dad has to work a whole hour in order to make that much" or "we have to pay for your clothes which are more important, and so we are doing that instead of spending money on apps this month." It's just the practice and awareness of money matters that you want to focus on - the amounts don't matter until later. Just talking about money in general can be helpful, and you'll be surprised what they soak up.
I thought this comment was excellent.
Meg77
What are your thoughts on whether children should have jobs or be paid for doing chores versus non of that as long as they're performing (very?) well at school? I see "doing very well at school" as the child's main task, and I don't think they should work or do chores for money. Doing chores as part of how the family take care of their needs is fine in my opinion, but doing it so that they can make money seems wrong to me. What do you think?
I personally agree that every member of a household should be expected to do basic age-appropriate chores, including cleaning up after themselves. A lot of the psychological literature seems to indicate that rewards in general (and financial rewards specifically) can actually discourage the activity you're trying to promote. This goes for chores as well as grades and eating healthy foods and forming any type of habit. My understanding is that once people are paid to do something, their brains learn that the activity must be bad or unenjoyable, hence the need for a reward. So they end up ONLY doing the thing when they are being rewarded.

That said, I think that teaching kids that money comes from work is also valuable, and it's also a way to get some extra funds in their hands that they can be autonomous with (within reason of course - just because they earned it doesn't mean they can spend it on things outside your values since they are still kids under your roof). So I think it's good to allow or possibly even require kids and teens to do extra things for money - difficult chores or those not part of their regular obligation, odd jobs like babysitting or lawn mowing or shoveling snow, tutoring, or whatever. But I realize that in some families there simply isn't time or it won't work for whatever reason.
"An investment in knowledge pays the best interest." - Benjamin Franklin

MrBeaver
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Re: how do/did you teach your kids finances/investing?

Post by MrBeaver » Thu Sep 20, 2018 4:35 pm

Meg77 wrote:
Thu Sep 20, 2018 12:42 pm
I think that teaching kids that money comes from work is also valuable, and it's also a way to get some extra funds in their hands that they can be autonomous with (within reason of course - just because they earned it doesn't mean they can spend it on things outside your values since they are still kids under your roof). So I think it's good to allow or possibly even require kids and teens to do extra things for money - difficult chores or those not part of their regular obligation, odd jobs like babysitting or lawn mowing or shoveling snow, tutoring, or whatever. But I realize that in some families there simply isn't time or it won't work for whatever reason.
Completely agree on this. The best piece of advice I've heard which I hope to follow is for a parent to participate WITH the child in an economic venture for someone else. This can be a classic lemonade stand where you charge the child for supplies to let them learn about expenses and profit, or working for someone else, for instance by doing paid yard work for a neighbor. This way, you get to direct and model proper behavior in these contexts. It takes intentionality and time commitment from the parents, but it strikes me as a superb suggestion, and an easy way to separate 'helping your own family' from which you shouldn't expect compensation from learning about the value of work and money in the context of society.

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