Teaching kids to invest

I have written a lot about why it’s expensive to be poor, why we are in need of better tools for handling money, and how to maneuver out of a labour mindset into a funding mindset. A major takeaway for me is that amassing wealth is not only a functional activity, it is a mindset that has to be learned, and taught.

It’s taken me a long time — generationally speaking — to start to figure this out. My dad grew up particularly poor, but was able to break out. From the 1960s he took a computer programming class and learned to code (50 decades ahead of his time!) , and then just before I was born he began a small company , which my parents operate together for this day.

Although this company has been transformative for our loved ones (it sent me to school — I am the first one in my dad’s side to graduate), I think it’s fair to say that it has not yet completed the task of helping us relate to cash in the ideal way. By way of instance, I don’t believe I ever actually heard, at a young age (or actually in my husband ), the idea of **investing**. Saving was always a good idea, but spending was simpler, and spending on debt much easier than that. Basically, I think there’s this transition, from having no cash, to getting some money (but spending it all ), to (in some instances ) spending more than you have, to (if you are lucky) learning how to find money to work for you.

Now that I have children of my own, I am trying to consider how to educate them about money. I need them to view today’s spending needs/wants as not the entire picture. I want them to learn that if you are smart about money, not only are you going to set a good base on your own, but other great things can happen (e.g., compounding interest).

We’ve got a Roku TV in our living room, and sometimes they rent or purchase TV shows or films. So, for starters, instead of having them just ask every time if they could do it, we are instituting a budget. The budget is $20 a month per child. (that gets you about two pictures or ten episodes).

The spin is that, at the end of every month, whatever they do not spend rolls into the next month — with 20% interest. So next month they would begin with $32. The 20% monthly interest might appear unrealistic and too generous, but I am trying to compensate for the low dollar amounts (difficult to get excited about 1% monthly on $5), and for converting to”child time” (per month to them feels like a year to us).

I explained the new plan to them another day (March is our first month), and my heart jumped a beat when my daughter promptly responded:”I believe I will save most of it”. :–RRB-. We’ll see what happens. I hope that one of them realizes that the 20% will compound fairly fast, and decides to not invest any at all.

I am interested to know what approaches others have taken to teaching children about investing and saving.

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