Teaching kids about saving money and investing

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Mario2222
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Teaching kids about saving money and investing

Post by Mario2222 »

Any recommendations for a good way to teach kids about saving and investing. We have Two kids 10&13. Thanks.
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Re: Teaching kids about saving money and investing

Post by retired@50 »

Mario2222 wrote: Tue Feb 25, 2020 5:31 pm Any recommendations for a good way to teach kids about saving and investing. We have Two kids 10&13. Thanks.
Most financial material gets pretty dry, pretty quickly, at least for youngsters.

However, Allan Roth wrote a book called "How a second grader beats Wall Street". You might be able to find a copy at your local library. There are passages in the book where Allan discusses the explanations and conversations he had with his second grader child. Perhaps you could read the book and adapt the ideas to your children...???

Regards,
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Thesaints
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Re: Teaching kids about saving money and investing

Post by Thesaints »

Mario2222 wrote: Tue Feb 25, 2020 5:31 pm Any recommendations for a good way to teach kids about saving and investing. We have Two kids 10&13. Thanks.
Give them $20 a week and tell them that for every $20 they show you the following week they'll get an extra buck. Make sure they show you the dough at the same time
They'll quickly learn about compounding, trade off between a present egg and a future hen, and maybe they'll seek external funding sources.
Puretaxableindexer
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Re: Teaching kids about saving money and investing

Post by Puretaxableindexer »

This may be a way. When I was in 5th grade at my Catholic elementary school my teacher would break out the newspaper business section/stock quotes (this was long ago) and have groups of us pick out stocks we looked at and invested a fictitious sum. We would do it once a week by tracking what stocks, how much they went up/down and why we bought them. This simple exercise by this teacher long long ago is why I got into this investment business. It may not have meant much to my classmates, but it meant a lot to me. Maybe you can do something similar with your kids. Good luck.
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Re: Teaching kids about saving money and investing

Post by Triple digit golfer »

Thesaints wrote: Tue Feb 25, 2020 5:50 pm
Mario2222 wrote: Tue Feb 25, 2020 5:31 pm Any recommendations for a good way to teach kids about saving and investing. We have Two kids 10&13. Thanks.
Give them $20 a week and tell them that for every $20 they show you the following week they'll get an extra buck. Make sure they show you the dough at the same time
They'll quickly learn about compounding, trade off between a present egg and a future hen, and maybe they'll seek external funding sources.
Can I invest in your fund? I'll give you $20 a week for four years for a weekly return of 5%!

:moneybag :moneybag :moneybag
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Re: Teaching kids about saving money and investing

Post by Thesaints »

Triple digit golfer wrote: Tue Feb 25, 2020 7:09 pm Can I invest in your fund? I'll give you $20 a week for four years for a weekly return of 5%!

:moneybag :moneybag :moneybag
That depends. Are you between the age of 10 and 13 and, more importantly, my son ?
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Re: Teaching kids about saving money and investing

Post by abuss368 »

Mario2222 wrote: Tue Feb 25, 2020 5:31 pm Any recommendations for a good way to teach kids about saving and investing. We have Two kids 10&13. Thanks.
There was a cartoon book that Warren Buffett wrote a few years ago. Warren Buffett's Advice on life, money or something....

My daughter read it, and took a picture of the book with her school t shirt on. She sent the picture and a letter to Warren Buffett and received a response!
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Teaching kids about saving money and investing

Post by Mr. Rumples »

If they have an interest, perhaps a variation on what the Wall Street Journal did years ago. Put the stock quotes up on a board and throw darts. Then compare those random selections against what the "experts" propose.

In my case, it was almost by accident...there was always a copy of Changing Times magazine (now Kiplinger) laying around and I would read it and it got me interested. My uncle bought me my first shares of stock when I was 13, that got me more interested.
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Re: Teaching kids about saving money and investing

Post by Triple digit golfer »

Thesaints wrote: Tue Feb 25, 2020 7:16 pm
Triple digit golfer wrote: Tue Feb 25, 2020 7:09 pm Can I invest in your fund? I'll give you $20 a week for four years for a weekly return of 5%!

:moneybag :moneybag :moneybag
That depends. Are you between the age of 10 and 13 and, more importantly, my son ?
I turn 35 tomorrow and am happy to be adopted, Dad.
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Re: Teaching kids about saving money and investing

Post by abuss368 »

Triple digit golfer wrote: Tue Feb 25, 2020 7:32 pm
Thesaints wrote: Tue Feb 25, 2020 7:16 pm
Triple digit golfer wrote: Tue Feb 25, 2020 7:09 pm Can I invest in your fund? I'll give you $20 a week for four years for a weekly return of 5%!

:moneybag :moneybag :moneybag
That depends. Are you between the age of 10 and 13 and, more importantly, my son ?
I turn 35 tomorrow and am happy to be adopted, Dad.
Too much! :D
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Teaching kids about saving money and investing

Post by Tiger85 »

Mario2222 wrote: Tue Feb 25, 2020 5:31 pm Any recommendations for a good way to teach kids about saving and investing. We have Two kids 10&13. Thanks.
We give our kids a weekly allowance based on their age ($1 per year) and break it into 4 categories: tax, charity, savings, and spending. It takes a little more effort on my part, but trying to teach them some basic concepts.

The "tax" money is in a jar that I put my spare change in too, and when it gets to a certain amount we go to a movie, get ice cream, etc.

Charity is pretty self explanatory.

Savings is for larger items they want (like Lego sets or video games).

Spending is for whatever impulse they want until they don't have any left.

I'm not trying to teach investing, just basic money management. Will likely expand to the investing topic once they are older and start working.

It's interesting to see how each kid handles it. My 13 year old spends as soon as he can, whereas my 7 year old will walk around Target with my wife and put items back after a while because she thought about it and "x" isn't worth $7 to her.
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Re: Teaching kids about saving money and investing

Post by Sandtrap »

Everyone, including children, understand spending money, and the more the better.

What is not taught in school or much of society, is how to make money, dependably, and lots of it.

Once having money then the concern is saving some of it and investing, etc.

But, one comes before the other.

I can't remember the adage, "teach them how to farm and they'll eat forever, but. . . . "

So, first the love of work and honest ambition, then exposure to how to earn money with skills, brains, hard work, toil, etc, willingly and eagerly and with passion.

Thus: IE: there's a difference between what's learned when anyone is "given" money vs "earning" it . . . something in return. . .

Imprinting starts early.

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Re: Teaching kids about saving money and investing

Post by flaccidsteele »

Mario2222 wrote: Tue Feb 25, 2020 5:31 pm Any recommendations for a good way to teach kids about saving and investing. We have Two kids 10&13. Thanks.
Unless the parents have a particular wealth skill, all their teachings will be limited to their socio-Economic class

Nothing beyond what the parents know can be taught simply because the parent won’t understand the lessons outside their socio-Economic class. If they did, they wouldn't be where they are

Self improvement should be encouraged if the parents have any hope of their children doing better
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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Re: Teaching kids about saving money and investing

Post by helloeveryone »

Mario2222 wrote: Tue Feb 25, 2020 5:31 pm Any recommendations for a good way to teach kids about saving and investing. We have Two kids 10&13. Thanks.
Someone on this site recommended this book. (get it used - many used cheap copies) I thought it was helpful and implemented it. It's been good so far. Kids 9 and 10
https://www.amazon.com/First-National-B ... 529&sr=8-2
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Re: Teaching kids about saving money and investing

Post by BullMoose »

If you're so lucky, Junior Achievement has a number of wonderful programs that are age appropriate. They start with simple concepts like the difference between paper and coin money and then move into banking, investing and, most importantly, budgeting. JA typically does their work through the schools. They have defined lesson plans, including leave-behinds for the students. Great stuff if you can find yourself into one of their classes.
“It is hard to fail, but it is worse never to have tried to succeed.” ~ Theodore Roosevelt
Normchad
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Re: Teaching kids about saving money and investing

Post by Normchad »

Maybe not exactly what you’re asking, but it worked great for us.

The kid got an allowance, it wasn’t tied to chores or anything like that. I think it was $5/week starting at age six.

At the same time, we would never buy “stuff” she wanted when we were out.

She was free to use it as she pleased. Could spend it all on cupcakes if she wanted. This way if we were out at a store and she wanted something, she had the freedom to buy it.

Our goal at the time was to give her some control in her life, but also to eliminate any “I want this, I want that” type of squabbling we see at stores.

The outcome was she became a savvy consumer, and a good saver. She also didn’t buy much stuff, basically ever. And she never has developed a materialistic streak. We never had a single fight about buying stuff.

Now, she’s nearing college graduation. Got a good head on her shoulders. And I’m trying to figure out what to do next. I just picked up Bogles simple book on investing to give her for spring break. Back in the day, I also found Ric Edelmans Truth about Money to be a very approachable, easily digestible book.
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Re: Teaching kids about saving money and investing

Post by Normchad »

BullMoose wrote: Tue Feb 25, 2020 9:59 pm If you're so lucky, Junior Achievement has a number of wonderful programs that are age appropriate. They start with simple concepts like the difference between paper and coin money and then move into banking, investing and, most importantly, budgeting. JA typically does their work through the schools. They have defined lesson plans, including leave-behinds for the students. Great stuff if you can find yourself into one of their classes.
This sounds wonderful. We would have taken advantage of it if we knew. Great idea!
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Re: Teaching kids about saving money and investing

Post by Eagle33 »

Sandtrap wrote: Tue Feb 25, 2020 9:14 pm I can't remember the adage, "teach them how to farm and they'll eat forever, but. . . . "
“Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime” reads the old proverb.
Rocket science is not “rocket science” to a rocket scientist, just as personal finance is not “rocket science” to a Boglehead.
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Re: Teaching kids about saving money and investing

Post by BullMoose »

helloeveryone wrote: Tue Feb 25, 2020 9:53 pm
Mario2222 wrote: Tue Feb 25, 2020 5:31 pm Any recommendations for a good way to teach kids about saving and investing. We have Two kids 10&13. Thanks.
Someone on this site recommended this book. (get it used - many used cheap copies) I thought it was helpful and implemented it. It's been good so far. Kids 9 and 10
https://www.amazon.com/First-National-B ... 529&sr=8-2
Thanks for this - I just ordered a copy. I've got a handful of little ones to teach!
“It is hard to fail, but it is worse never to have tried to succeed.” ~ Theodore Roosevelt
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Re: Teaching kids about saving money and investing

Post by helloeveryone »

BullMoose wrote: Tue Feb 25, 2020 10:13 pm
helloeveryone wrote: Tue Feb 25, 2020 9:53 pm
Mario2222 wrote: Tue Feb 25, 2020 5:31 pm Any recommendations for a good way to teach kids about saving and investing. We have Two kids 10&13. Thanks.
Someone on this site recommended this book. (get it used - many used cheap copies) I thought it was helpful and implemented it. It's been good so far. Kids 9 and 10
https://www.amazon.com/First-National-B ... 529&sr=8-2
Thanks for this - I just ordered a copy. I've got a handful of little ones to teach!
This week one asked if we would buy her a $50 nintendo switch game. we said it has to come of of the bank of dad. She said okay - then later asked her sibling if she would be playing the game. That sibling said yes - so she convinced her to split the price =)
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Re: Teaching kids about saving money and investing

Post by beernutz »

No one has mentioned it and I think it is a great book so:
If You Can: How Millennials Can Get Rich Slowly
https://www.amazon.com/gp/product/09887 ... UTF8&psc=1

I think high school kids could grasp the concepts, perhaps even savvy middle schoolers.
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. --Will Rogers
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Re: Teaching kids about saving money and investing

Post by beernutz »

double post
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. --Will Rogers
NotWhoYouThink
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Re: Teaching kids about saving money and investing

Post by NotWhoYouThink »

Normchad wrote: Tue Feb 25, 2020 10:09 pm Maybe not exactly what you’re asking, but it worked great for us.

The kid got an allowance, it wasn’t tied to chores or anything like that. I think it was $5/week starting at age six.

At the same time, we would never buy “stuff” she wanted when we were out.

She was free to use it as she pleased. Could spend it all on cupcakes if she wanted. This way if we were out at a store and she wanted something, she had the freedom to buy it.

Our goal at the time was to give her some control in her life, but also to eliminate any “I want this, I want that” type of squabbling we see at stores.

The outcome was she became a savvy consumer, and a good saver. She also didn’t buy much stuff, basically ever. And she never has developed a materialistic streak. We never had a single fight about buying stuff.

Now, she’s nearing college graduation. Got a good head on her shoulders. And I’m trying to figure out what to do next. I just picked up Bogles simple book on investing to give her for spring break. Back in the day, I also found Ric Edelmans Truth about Money to be a very approachable, easily digestible book.
This is a good approach. At young ages, getting practice making spending and saving decisions is key. They can blow it all as soon as they get it, or save it for something they really want, or horde it and go without luxuries. Their choice. By high school my kids got more allowance, but were also responsible for paying for their own clothes and entertainment.

I didn't worry too much about educating them on investments before college. They did know that their college was paid for because of savings and investments their parents had made, because we talked just over the course of our lives about things we didn't spend money on because we were saving for college and retirement.

After college, each got a copy of If You Can.
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Re: Teaching kids about saving money and investing

Post by cutterinnj »

BullMoose wrote: Tue Feb 25, 2020 10:13 pm
helloeveryone wrote: Tue Feb 25, 2020 9:53 pm
Mario2222 wrote: Tue Feb 25, 2020 5:31 pm Any recommendations for a good way to teach kids about saving and investing. We have Two kids 10&13. Thanks.
Someone on this site recommended this book. (get it used - many used cheap copies) I thought it was helpful and implemented it. It's been good so far. Kids 9 and 10
https://www.amazon.com/First-National-B ... 529&sr=8-2
Thanks for this - I just ordered a copy. I've got a handful of little ones to teach!
Just bought a copy of the 2007 version for $4.33 shipped off of Ebay. Thanks!
Careful; there is a 2007 version (newest) and 2003 version.
saveinvestbecomefree
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Re: Teaching kids about saving money and investing

Post by saveinvestbecomefree »

YMMV but what I did with my kids (now 8 and 11) was start an "investment" fund with a very high interest rate. Kids have short attention spans so small annual compounding like we get in the real world won't make an impact but a high rate of return can be grasped even by young kids. We review the spreadsheet periodically and then can see the "investment return" by week and how it goes up nicely over time. Plus the effect of subtractions as they spend money and additions as they add it. They took to this quite quickly to the point they are very careful spenders and I've had to reduce their interest rate 3 times now as their investment grew too fast! It's still high but in a realistic range equivalent to a credit card now (I've promised not to reduce it further). It's basically a weekly return similar to an allowance at this point. They get super excited to put birthday money, found coins, etc into their "investment". They also check the spreadsheet when deciding if a purchase is worth it or not (often they delay or say no but if they do really want something, they will buy it after considering carefully). One also has created crafts that he sells and puts the money he earns into his investment. I'm not saying it will work for everyone but giving them a high return on their savings has demonstrated the power of compounding nicely and seems to have created some good habits.
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Re: Teaching kids about saving money and investing

Post by Normchad »

NotWhoYouThink wrote: Wed Feb 26, 2020 8:09 am
I didn't worry too much about educating them on investments before college. They did know that their college was paid for because of savings and investments their parents had made, because we talked just over the course of our lives about things we didn't spend money on because we were saving for college and retirement.

After college, each got a copy of If You Can.
I just looked up that book and am ordering a copy for my daughter. Thanks for posting that!
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Re: Teaching kids about saving money and investing

Post by tibbitts »

Puretaxableindexer wrote: Tue Feb 25, 2020 7:04 pm This may be a way. When I was in 5th grade at my Catholic elementary school my teacher would break out the newspaper business section/stock quotes (this was long ago) and have groups of us pick out stocks we looked at and invested a fictitious sum. We would do it once a week by tracking what stocks, how much they went up/down and why we bought them. This simple exercise by this teacher long long ago is why I got into this investment business. It may not have meant much to my classmates, but it meant a lot to me. Maybe you can do something similar with your kids. Good luck.
I think most of us have been exposed to that same process, and I think it's a bad idea. Maybe it's good for the fraction of one percent of people who will go into securities analysis. Everybody else just gets mixed messages from it, but overall they learn that picking stocks is how someone should invest, and I don't think that's something most Bogleheads would endorse.
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Re: Teaching kids about saving money and investing

Post by seymore92 »

tibbitts wrote: Wed Feb 26, 2020 5:42 pm
Puretaxableindexer wrote: Tue Feb 25, 2020 7:04 pm This may be a way. When I was in 5th grade at my Catholic elementary school my teacher would break out the newspaper business section/stock quotes (this was long ago) and have groups of us pick out stocks we looked at and invested a fictitious sum. We would do it once a week by tracking what stocks, how much they went up/down and why we bought them. This simple exercise by this teacher long long ago is why I got into this investment business. It may not have meant much to my classmates, but it meant a lot to me. Maybe you can do something similar with your kids. Good luck.
I think most of us have been exposed to that same process, and I think it's a bad idea. Maybe it's good for the fraction of one percent of people who will go into securities analysis. Everybody else just gets mixed messages from it, but overall they learn that picking stocks is how someone should invest, and I don't think that's something most Bogleheads would endorse.
I picked Sizzler (SZ) in 7th grade math. :oops:

Fortunately it did spur my later financial interests and goals for self-management away from advisors
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Re: Teaching kids about saving money and investing

Post by Puretaxableindexer »

tibbitts wrote: Wed Feb 26, 2020 5:42 pm
Puretaxableindexer wrote: Tue Feb 25, 2020 7:04 pm This may be a way. When I was in 5th grade at my Catholic elementary school my teacher would break out the newspaper business section/stock quotes (this was long ago) and have groups of us pick out stocks we looked at and invested a fictitious sum. We would do it once a week by tracking what stocks, how much they went up/down and why we bought them. This simple exercise by this teacher long long ago is why I got into this investment business. It may not have meant much to my classmates, but it meant a lot to me. Maybe you can do something similar with your kids. Good luck.
I think most of us have been exposed to that same process, and I think it's a bad idea. Maybe it's good for the fraction of one percent of people who will go into securities analysis. Everybody else just gets mixed messages from it, but overall they learn that picking stocks is how someone should invest, and I don't think that's something most Bogleheads would endorse.
I don't think most people have been exposed to the same process as you said, and that's the problem. There are no mixed messages involved with that process either. You are 100% wrong on all points!
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Re: Teaching kids about saving money and investing

Post by Puretaxableindexer »

Puretaxableindexer wrote: Wed Feb 26, 2020 5:47 pm
tibbitts wrote: Wed Feb 26, 2020 5:42 pm
Puretaxableindexer wrote: Tue Feb 25, 2020 7:04 pm This may be a way. When I was in 5th grade at my Catholic elementary school my teacher would break out the newspaper business section/stock quotes (this was long ago) and have groups of us pick out stocks we looked at and invested a fictitious sum. We would do it once a week by tracking what stocks, how much they went up/down and why we bought them. This simple exercise by this teacher long long ago is why I got into this investment business. It may not have meant much to my classmates, but it meant a lot to me. Maybe you can do something similar with your kids. Good luck.
I think most of us have been exposed to that same process, and I think it's a bad idea. Maybe it's good for the fraction of one percent of people who will go into securities analysis. Everybody else just gets mixed messages from it, but overall they learn that picking stocks is how someone should invest, and I don't think that's something most Bogleheads would endorse.
I don't think most people have been exposed to the same process as you said, and that's the problem. There are no mixed messages involved with that process either. You are 100% wrong on all points!
[ quote fixed by admin LadyGeek]

BTW, I am not a Boglehead, I am a trained investment advisor that knows how to make investment decisions myself. [OT comment removed by admin LadyGeek]
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Re: Teaching kids about saving money and investing

Post by tibbitts »

Puretaxableindexer wrote: Wed Feb 26, 2020 5:47 pm
tibbitts wrote: Wed Feb 26, 2020 5:42 pm
Puretaxableindexer wrote: Tue Feb 25, 2020 7:04 pm This may be a way. When I was in 5th grade at my Catholic elementary school my teacher would break out the newspaper business section/stock quotes (this was long ago) and have groups of us pick out stocks we looked at and invested a fictitious sum. We would do it once a week by tracking what stocks, how much they went up/down and why we bought them. This simple exercise by this teacher long long ago is why I got into this investment business. It may not have meant much to my classmates, but it meant a lot to me. Maybe you can do something similar with your kids. Good luck.
I think most of us have been exposed to that same process, and I think it's a bad idea. Maybe it's good for the fraction of one percent of people who will go into securities analysis. Everybody else just gets mixed messages from it, but overall they learn that picking stocks is how someone should invest, and I don't think that's something most Bogleheads would endorse.
I don't think most people have been exposed to the same process as you said, and that's the problem. There are no mixed messages involved with that process either. You are 100% wrong on all points!
So to make it clear you believe in teaching people to invest by selecting from the entire array of investible securities those specific ones that will perform the best? And then analyzing the daily market movements of your selected individual security - reviewing analyst reports, charts, etc.? From a Boglehead perspective that's certainly not a typical approach.
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Re: Teaching kids about saving money and investing

Post by LadyGeek »

This thread is now in the Personal Finance (Not Investing) forum (personal finance).

I removed an off-topic comment. As a reminder, see: General Etiquette
We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones.

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Re: Teaching kids about saving money and investing

Post by InMyDreams »

OK, it's cheesy, but basic principles in story form, The Richest Man in Babylon
https://www.amazon.com/Richest-Man-Baby ... s9dHJ1ZQ==

and you probably have a copy in your local library.
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Re: Teaching kids about saving money and investing

Post by helloeveryone »

Puretaxableindexer wrote: Wed Feb 26, 2020 5:47 pm
tibbitts wrote: Wed Feb 26, 2020 5:42 pm
Puretaxableindexer wrote: Tue Feb 25, 2020 7:04 pm This may be a way. When I was in 5th grade at my Catholic elementary school my teacher would break out the newspaper business section/stock quotes (this was long ago) and have groups of us pick out stocks we looked at and invested a fictitious sum. We would do it once a week by tracking what stocks, how much they went up/down and why we bought them. This simple exercise by this teacher long long ago is why I got into this investment business. It may not have meant much to my classmates, but it meant a lot to me. Maybe you can do something similar with your kids. Good luck.
I think most of us have been exposed to that same process, and I think it's a bad idea. Maybe it's good for the fraction of one percent of people who will go into securities analysis. Everybody else just gets mixed messages from it, but overall they learn that picking stocks is how someone should invest, and I don't think that's something most Bogleheads would endorse.
I don't think most people have been exposed to the same process as you said, and that's the problem. There are no mixed messages involved with that process either. You are 100% wrong on all points!
this was part of my sixth grade curriculum in 80s. i still remember having to track some stocks in the newspaper as part of a class. i think it just followed either the state curriculum or national curriculum. many people i know had to do something similar in school
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Re: Teaching kids about saving money and investing

Post by tibbitts »

helloeveryone wrote: Wed Feb 26, 2020 10:57 pm
Puretaxableindexer wrote: Wed Feb 26, 2020 5:47 pm
tibbitts wrote: Wed Feb 26, 2020 5:42 pm
Puretaxableindexer wrote: Tue Feb 25, 2020 7:04 pm This may be a way. When I was in 5th grade at my Catholic elementary school my teacher would break out the newspaper business section/stock quotes (this was long ago) and have groups of us pick out stocks we looked at and invested a fictitious sum. We would do it once a week by tracking what stocks, how much they went up/down and why we bought them. This simple exercise by this teacher long long ago is why I got into this investment business. It may not have meant much to my classmates, but it meant a lot to me. Maybe you can do something similar with your kids. Good luck.
I think most of us have been exposed to that same process, and I think it's a bad idea. Maybe it's good for the fraction of one percent of people who will go into securities analysis. Everybody else just gets mixed messages from it, but overall they learn that picking stocks is how someone should invest, and I don't think that's something most Bogleheads would endorse.
I don't think most people have been exposed to the same process as you said, and that's the problem. There are no mixed messages involved with that process either. You are 100% wrong on all points!
this was part of my sixth grade curriculum in 80s. i still remember having to track some stocks in the newspaper as part of a class. i think it just followed either the state curriculum or national curriculum. many people i know had to do something similar in school
I actually encountered this not once but twice, the second time in a freshmen-level college class. Interestingly, the instructors never made it clear what lesson we should learn from the exercise - you were left to draw your own conclusions. Admittedly this was before today's popularity and wide-availabiltiy of index funds, and that's partly why I find it unhelpful today - it seems like a relic of the past.
SQRT
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Re: Teaching kids about saving money and investing

Post by SQRT »

I think the best way to “teach” your kids is through example. Most kids don’t really listen to their parents when they are younger, I certainly didn’t. Basic lesson is LBYM. If they “get” that you can talk about your approach to saving for retirement, if they express an interest.
medic
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Re: Teaching kids about saving money and investing

Post by medic »

Agree about teaching by example. When you're planning your next larger purchase (vacation, car, etc), bring your kids in on it and let them discuss the tradeoffs. This helped our kids realize that it's not an endless supply and while we're well off, we are in this position because we make choices to prioritize the items that are important to us.

For saving, check with your local credit union to see if they have kids accounts. Ours has a 6% rate account for kids with <$500 balances. Kid gets to go to the bank and see them count the money in a machine, sign some forms, get a withdrawal card for the ATM, and monthly statements. If your kids are younger this a BIG deal. Ours was talking to everyone about it for a month. This was more real to the younger and older ones than the bank of dad or using jars to divide up any money they got.

Btw, this a good book for parents - https://www.amazon.com/Opposite-Spoiled ... 0062247026
DarthSage
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Re: Teaching kids about saving money and investing

Post by DarthSage »

Our kids have a few different accounts--regular savings, then a couple trust accounts. Every 6 months or so, we show them statements from their trusts (these are NOT huge trust--more like 5 figures). We show them how much money they made by doing nothing but LEAVING THEM ALONE. This is really important--kids usually have a tough time leaving money to grow versus spending it on the next shiny thing.

We talk about goals and plans for the money. In our case, their money is inherited, so we discuss legacies and honoring grandparents and how we have a duty to invest well, both for them and to honor the people who earned the money to gift them. You could do similar with a 529 or other college account--talk about giving up some shiny things now, so that they can gain an education later. You could even throw in something about "their part", which would be to work hard in school, so that you're all working towards the goal of getting them a quality education.

You could also consider letting them pick a stock or two to track. Either with play money, or real if you can swing it. We did this quite young with our kids. We bought Disney for our oldest (what kid doesn't get that one?), but she switched to Walmart--they have a wide selection and their prices were good (her reasoning, not ours). For our older son, we got Caterpillar when he was 3, because he loved construction vehicles. It did very well for him--and we were tickled to see him "studying" the annual report (with all it's colorful photos of shiny vehicles).
tibbitts
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Re: Teaching kids about saving money and investing

Post by tibbitts »

DarthSage wrote: Thu Feb 27, 2020 7:06 am You could also consider letting them pick a stock or two to track. Either with play money, or real if you can swing it. We did this quite young with our kids. We bought Disney for our oldest (what kid doesn't get that one?), but she switched to Walmart--they have a wide selection and their prices were good (her reasoning, not ours). For our older son, we got Caterpillar when he was 3, because he loved construction vehicles. It did very well for him--and we were tickled to see him "studying" the annual report (with all it's colorful photos of shiny vehicles).
This is exactly the problem with teaching kids about markets too early: they learn extremely well. I did, from the market of the '60s and '70s, and it kept me away from stocks for a very long time. When you say "did extremely well", you have to consider the opposite and the chilling effect that can have. Obviously, as in my case, the entire market can tank (or at least perform very poorly) for a decade or more, but the odds of an individual stock you or they select tanking are dramatically higher. Yes, that includes Caterpillar and Walmart and Disney. Look at the forum right now for the effect a tiny drop over a week has on adult Bogleheads armed with experience and research: some are running for the exits. Multiply that effect by ten or a hundred and ask yourself just how "real" you want that experirence to be for young kids.
TheOscarGuy
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Re: Teaching kids about saving money and investing

Post by TheOscarGuy »

Mario2222 wrote: Tue Feb 25, 2020 5:31 pm Any recommendations for a good way to teach kids about saving and investing. We have Two kids 10&13. Thanks.
1. By teaching them time value of money. Every chance I get, I tell my kid about how money makes more money :happy
2. Showing which companies "he owns" in his college fund. Its our favorite game -- do we own this company dad? :happy I do have to remind him its a minuscule fraction of the company we own, but its fun.
3. Opening savings bank account for him, and putting "interest" in it ( its too hard to explain equity vs savings bank rates at this stage), I put 10% yearly on whatever amount he has in his savings account.
4. By always asking question "is it a want or a need"? For anything that's more than say $50, he gets that question from me. And then, what will you do if you didn't have what you want to buy -- what's the alternative.
A440
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Re: Teaching kids about saving money and investing

Post by A440 »

Inquire with their school to see if the Stock Market Game is offered as an after school club or as a class. I use it with my 7th grade students as part of a teen finance elective.
I don't know what the future holds, but I know who holds my future.
IMO
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Re: Teaching kids about saving money and investing

Post by IMO »

Appreciate this post/topic as we have a teenager.

I would wonder if it's really a good idea to promote a kid looking at individual stocks? It seems like that is almost just like gambling unless they were really really studying the company and the particular sector. Even then, seems like the professionals that do that often don't do a great job of picking stocks.

We did have our son put money into some index funds and review regularly how that investment is doing.

We are going to have our son start to track a detailed version of our monthly spending vs. budget. We want to make sure there is good understanding of what life costs and this ties into the thought of how important it is to do well in school and with choosing a productive career.

He does actively see us always trying to maximize the value of a dollar and we hope that concept wears off on him.

Next school year were looking at him finding a local job for after school as I hope that helps him understand things better.

But honestly, who really knows the future outcome for one's kids? Seems like in many families, with kids essentially raised in the same environment, some end up doing better (sometimes dramatically) in life including the saving money/investing part.
DarthSage
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Re: Teaching kids about saving money and investing

Post by DarthSage »

We have no problem with having kids look at individual stocks. I should have mentioned, when we picked (or had kids pick) stocks, we also researched them--it wasn't blindly, "Oh, Coca-cola--they'll understand that!" We also discuss market corrections with them--obviously, they're not going to make money every single month.

As it happens, we inherited a number of individual stocks when my MIL died 3 years ago. I mentioned to my DH--those stocks made sense to her, in the time frame that she managed them. She was an active trader until the day she died. But, time marches on--some are still great investments, others, not so much, and one is a sentimental favorite (my FIL worked for the company for many years). We owe it to his mom to be clear-eyed in our stock investments--if she were here, she'd smack him upside the head if he refused to change the mix, merely because that's what was handed to him. We try to pass this message on to the kids, as well--you need to understand what makes a stock a good pick, and check back on it now and again.
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Re: Teaching kids about saving money and investing

Post by basspond »

The best thing you can do is setting an example of your controlled lifestyle, saving, and charitable life.

We opened a savings account for ours and matched dollar for dollar what they put in. They could use their savings for college expenses and once they graduated they got our match. We also set up stock accounts and gave them seed money. They choose several stocks and they got to keep the appreciation. It was a good lesson because the money was invested in 2007. They have almost tripled the original investment.
NotWhoYouThink
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Re: Teaching kids about saving money and investing

Post by NotWhoYouThink »

The best lesson that kids can learn about individual stocks is that even when you know a company's products and market that doesn't mean you can predict the future stock movements. Probably most stock picking games don't last long enough to develop that insight.

The worst lesson that kids can get from picking individual stocks is that sometimes you pick a winner that really takes off, or that sometimes you pick a loser that tanks spectacularly. That can encourage false confidence or discourage them from investing in the market for years.

My dad once showed me the scatter chart he generated (in pencil, on green-gridded graph paper) of past vs. future performance from a date a couple of years back on some mutual funds his advisor was pitching him. This would have been back in the early 1970s. He showed me that he showed his advisor that past performance did not predict future returns. The advisor professed not to get it, but the lesson stuck with me. If you don't have pencils and green-gridded graph paper handy, search for some of nisiprius' posts on this forum. They are a tremendous resource.

Edited to add:
And really, show any kids you are trying to educate charts for what has happened this week, and what has happened over the last 11 years. Stuff happens, be ready, have some hope and some humility.
helloeveryone
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Re: Teaching kids about saving money and investing

Post by helloeveryone »

Mario2222 wrote: Tue Feb 25, 2020 5:31 pm Any recommendations for a good way to teach kids about saving and investing. We have Two kids 10&13. Thanks.
This was a great book for us.
https://www.amazon.com/First-National-B ... 529&sr=8-2
neverpanic
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Re: Teaching kids about saving money and investing

Post by neverpanic »

Awesome thread.

When my daughter was 3 or 4, she got her first savings account at WF. After all, my mother had banked at WF. Her parents had banked at WF. This brand was in our blood. They took her picture and gave her a little ID. She was so proud and was able to endorse birthday checks and make deposits. As she got older, she always enjoyed saving up to make big purchases.

The best lesson she learned, however, is NEVER to trust a bank, banker, or broker. When she was around 8 or 9, I took a peek at the account and noticed a series of $10 service fees for about the previous 6 months. I took her into the local branch, sat down with a banker, and I asked him to explain to her why the bank was taking her money. Even though he was not personally responsible for what had happened, he was rather embarrassed, of course. The custodial account was supposed to be free because of her age and we also were guaranteed 2-3 additional free accounts for having our mortgage there. The error was corrected, life went on.

Until they did it again last year. At that point, I walked her into the bank, once again, with instructions to withdraw every penny and to close the account. It was quite the tragic comedy as the staff assumed their "are you sure there's nothing we can do? so sad to see you go" positions.

"If you don't watch your money, someone else will and you will be taken advantage of."

She's 17 now, went out and got herself a job, and checks her account at least 3-4 times/week. She has also filed a tax return and has a ROTH IRA on e*trade that she manages herself. She has the app on her phone and loves being an active trader.
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.
Normchad
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Re: Teaching kids about saving money and investing

Post by Normchad »

neverpanic wrote: Sun May 31, 2020 9:39 pm Awesome thread.

When my daughter was 3 or 4, she got her first savings account at WF. After all, my mother had banked at WF. Her parents had banked at WF. This brand was in our blood. They took her picture and gave her a little ID. She was so proud and was able to endorse birthday checks and make deposits. As she got older, she always enjoyed saving up to make big purchases.

The best lesson she learned, however, is NEVER to trust a bank, banker, or broker. When she was around 8 or 9, I took a peek at the account and noticed a series of $10 service fees for about the previous 6 months. I took her into the local branch, sat down with a banker, and I asked him to explain to her why the bank was taking her money. Even though he was not personally responsible for what had happened, he was rather embarrassed, of course. The custodial account was supposed to be free because of her age and we also were guaranteed 2-3 additional free accounts for having our mortgage there. The error was corrected, life went on.

Until they did it again last year. At that point, I walked her into the bank, once again, with instructions to withdraw every penny and to close the account. It was quite the tragic comedy as the staff assumed their "are you sure there's nothing we can do? so sad to see you go" positions.

"If you don't watch your money, someone else will and you will be taken advantage of."

She's 17 now, went out and got herself a job, and checks her account at least 3-4 times/week. She has also filed a tax return and has a ROTH IRA on e*trade that she manages herself. She has the app on her phone and loves being an active trader.
That is a terrific lesson, and one I never thought to teach. So important.
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gr7070
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Re: Teaching kids about saving money and investing

Post by gr7070 »

Mario2222 wrote: Tue Feb 25, 2020 5:31 pm Any recommendations for a good way to teach kids about saving and investing. We have Two kids 10&13. Thanks.
I'd focus largely on living frugally, that includes giving and also spending reasonably (that means not hyper-saving) for fun, as well.

You can very slowly let them know about good investing - mutual funds, expenses, sucks bonds, etc. They're 529 is good simple introduction that these things exist. Just knowing the vehicles exist and there's a good and bad is enough for now.

I wouldn't at all focus on informing how to truly invest. Just instill your values and plant the seeds for them to eventually learn when they're on their own.

Largely most everyone here is some version of frugal and has reasonably talented, intelligent kids. When it's time for them to actually invest they'll be inclined to do it frugally and will research how to do so, which you'll have already planted those seeds.

I'd talk way more about it when they're 16-18ish and then especially at 22 and started saving for retirement.

Your basic value are what really matters. Frugal being the biggest factor in financial success.
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