Talking To Kids About Money
I’m a huge fan of talking to kids about money (actually, I’ll talk an adult’s ears off about money, too, if given half a chance – I once lectured Matt Pietrek and his girlfriend on the topic for an hour over pancakes [sorry, guys…]). When I was growing up, the training I got in school about money management has how to write a check, i.e. how to be a good little consumer. I also learned the basics of compound interest, but not as related to anything real, e.g. buying a house or saving for retirement. Most of what I didn’t learn in school, I also didn’t learn from my parents because one of them (who managed to buy high and sell low during the recent market correction) isn’t any good at money management and the other was very private about such things (although has been opening up on this topic recently).
Me, I go the other way. While they know not to talk about it outside of our immediate family, my kids know how much my wife and I make, how much we spend month to month, how we’re saving for their college education, how we’re saving for retirement, the investment property I’ve purchased with my money-savvy brother-in-law (whose parents also refused to talk money with him), etc. The Sells brothers have their own allowance that goes up annually on their hire date aka their birthday. I act as their bank, keeping track of their income and expenses in an Excel spreadsheet as they deposit and withdraw money, limiting them to a single week’s “advance” on their allowance (giving them the choice of spending what they’ve got now vs. saving for what they want in the future). In the future, I plan on letting them maintain their own balance sheet (subject to random audit), like my Mom let me maintain mine on a paper check register (I guess I did learn a little something from my parents — come to think of it, the way I award allowance is just like my Mom, too — way to go, Mom! : ).
Anyway, as open as I am about our money and as much as I bring it up with them in an attempt to stamp the consumer culture out of my children before it takes hold, there are still more things to be done, as I learned this morning on “the mint,” a web site dedicated to what kids should know about money and how teachers and parents can help. Check it out.
BTW, I’ve recently come to the conclusion that a parent paying for their child’s college education is a sucker’s game, as it drains much needed funds out of the parent’s own investments when it should be enjoying the magic of compound interest. Instead, grandparents should pay for college, letting each generation have another 20-30 years of compound interest before skimming off the top for college. The problem with this, of course, is that it requires one generation to pay for both their kids and their grandkids to shift into this new thinking (assuming, of course, that the parents can pay for their kid’s college at all, which isn’t a given with our current consumer-oriented society). I plan on being that bridge in my family, i.e. I plan to pay for my kids’ and my grandkids’ college education. I also plan to have myself cryogenically frozen, putting half of my money into a trust for myself when I’m rejuvenated, leaving the other half for my wife. Neither of these has anything to do with this subject, but I thought I’d stick them on the end here anyway. : )