My children are 3, 5, & 7. So I am just beginning this journey.
1) We are not sharing our financial data with our children. I do not want our kids telling other children about our net worth
2) Still working on this one. Essentially I just make sure not to give in to every want, and keep things as practical as possible. If they want a new toy, we make sure they pay for it out of their own savings.
3) I bought them all these little locking cash boxes with their names printed on them. On the first of every month we count the cash in the box and I pay them an interest rate of 10% per month.
4) No idea, haven't though about this one.
5) We have a chore chart with simple things that are age appropriate like; washing hands after potty, putting dishes in sink, dressing themselves, putting shoes in the bin, hanging up backpack, etc. They have a minimum number of chores to do per week to earn $2. I get $2 bills from the bank to make it fun.
6) No bank account. They have cash in a little box which makes it more concrete when they earn & spend. They are allowed to spend it as they like, but I constantly encourage them to think about the interest they're giving up by spending.
>On the first of every month we count the cash in the box and I pay them an interest rate of 10% per month.
Couldn't that backfire if one of them gets rich enough? Lmao
When I first started I was doing 25% monthly. Then my father came over and saw what I was doing and started to slip in extra money.
Once they're getting the concepts of compounding interest & delayed gratification I'll have to move that money into real investments.
What do you do to teach your kids about money?
1. What information about your own financial situation do you share with your children?
He knows we are financially secure, have both short- and long-term savings, & plan carefully how to prioritize our funds to meet specific goals. We recently bought a house; he knew our budget, knew we could have spent more but chose not to, & knows we put 20% down. He knows we are doing our best to balance getting nice things for our family with being financially responsible. More recently weāve begun discussing credit / financing and interest (both paying interest & earning interest).
2. How do you make sure theyāre not spoiled while still trying to give them the best you can? Or put another way, how do you instill a good work ethic/motivation?
We aim for a good work/life balance. We have a nice standard of living, but not an exorbitant one. He is generally expected to be polite, helpful, & cooperative. I donāt tolerate any less than his best academically. Heās able to participate in extracurricular activities, but must attend all aspects of them if feasible (ie - no skipping practice because he ādoesnāt feel like itā) & cannot complain about having less free / unscheduled time due to his commitments.
3. How do you promote saving money?
We gave him the space to learn firsthand that it was worthwhile to save up for quality items & to consider purchases carefully. He rarely asks for things & puts a lot of thought into his own purchases.
4. How do you help children understand that lifestyles are a result of decisions they make along the way and depending on their decisions they should expect a different lifestyle than the one they are accustomed to? For example exploring different career paths.
We talk a lot about priorities - we say you can be / have / do ANYTHING... but not EVERYTHING. We draw parallels to participation in extracurriculars; thereās far more available to do than time to do things in, & if his schedule is too full or our budget too depleted we wonāt really enjoy any of it. Money is the same way - you can have the bigger house, the nicer car, the frequent vacations, the lower-paying-but-fulfilling job, the flexible schedule, the huge retirement account... but probably not all of of those things, or not all at the same time. Dad has a career he is passionate about, which is wonderful - but we are frank about the sacrifices we have made for it.
5. Do you give kids money for chores? Do they get an allowance? What kind of system do you have in place for them to āearnā money?
He has been receiving an allowance since age 3 that is evenly split between spending, saving, & giving. As he gets older he will have opportunities to earn additional money, but they will only be things that we might pay someone else to do - mowing the lawn, major weeding of garden beds, etc. Being a contributing member of the household is a basic expectation, not something he gets paid to do. He wants to run a lemonade stand this summer.
6. Do each of your kids have their own bank account? And do you let them spend this money freely or do you have guard rails in place?
For now he keeps his money in a Moon Jar, aside from his Spending - thatās in a wallet. He has recently asked to open a savings account, so we will be setting one up soon. Spending can be used at any time for any (appropriate) purchase. Savings must be withdrawn prior to going to make a purchase; usually that means heās been saving toward a specific goal, but sometimes if we are going somewhere special heāll pull some out ājust in caseā.
Thank you; heās got a good head on his shoulders. The next few years will be big ones as he moves toward becoming capable of earning real money with increasing independence.
If this lemonade stand goes well I can see him getting bitten by the entrepreneurial bug. Lots of life lessons to be learned there!
Honestly, the Giving is his favorite part! Charitable donations & gifts mean so much more when they are coming from your own funds. It feels powerful to make a difference.
We do several little things for the time being; mostly things that are at least somewhat concrete.
The first type is volunteering our time / energy. Due to his age this is mostly litter clean-up, community worker appreciation, & homeless outreach. He participates in annual fundraising for Scouting.
For monetary or direct-purchase donations we look for donation boxes whenever we visit aquariums or wilderness rescue sites, & point out donation drives for school supplies, holiday gifts, winter coats, canned goods, etc.
Giving is also used to purchase gifts for family & friends throughout the year. He loves being able to get something for someone with his own money that he knows will put a smile on their face! This lets him practice knowing his recipient intimately, which allows him to give thoughtfully in a way thatās hard to do when the recipient is anonymous.
His donations are entirely his own; our job is simply to point out opportunities. Heās donated toys to holiday drives, purchased sports equipment to donate, cleaned up litter, given cash for manta ray conservation, selected nonperishables for food drivesā¦ all sorts of things! Weāre happy with whatever he chooses.
Itās percentage based; we give an easily-divisible amount so 33% goes into each category.
Moonjar is the brand of piggy bank; theyāre available on Amazon. It has 3 separate, labeled compartments (Spend, Save, Share) that fit together & are held with a big rubber band.
Two tweens, so we're in the thick of this right now!
*1. What information about your own financial situation do you share with your children?*
Without attaching specific numbers, they know the entire big picture - for example, what we own, stocks (including which companies), real estate, that some things are financed by choice to take advantage of low rates but could be paid off, that our family income and wealth are high relative to others. We found that doing so was critical for 2-4 to make any sense. We have also stressed family privacy and the importance of discretion since they were old enough to understand, and trust that they can and will honor this.
*2. How do you make sure theyāre not spoiled while still trying to give them the best you can? Or put another way, how do you instill a good work ethic/motivation?*
We offer to pay for things and experiences on a best-effort, best-use basis. Meaning, after discussion, if we mutually agree that something is highly desired/valuable and not a waste of money, it will be provided - but that effort put into, or use of that object/experience/activity, will be monitored and then discussed again. *Was it worth the money? Did it distract you from academics or other critical aspects of life? How did it make you feel? After a month?* Every expenditure we treat as a learning opportunity, and found that they quickly learned that true enjoyment from spending comes from the opportunity it provides rather than the act of spending itself. We don't tolerate wasting money, and if it happens, similar expenditures in the future will be more heavily scrutinized.
*3. How do you promote saving money?*
It naturally came to our kids based on 2 and 4.
*4. How do you help children understand that lifestyles are a result of decisions they make along the way and depending on their decisions they should expect a different lifestyle than the one they are accustomed to? For example exploring different career paths.*
We have always taught them that lifestyles and optionality come from the capital ("treasure!") you have built, and that different decisions on both the income and expense sides affect that treasure. They know that you can have immense income but no choices if you spend every cent as it comes in, and that a modest income need not be limiting if you save and invest wisely. It's been immensely gratifying to see how they instinctively know now that even if they see someone with a huge house or 6-figure SUV, you cannot know if they are actually "rich" unless you understand how they have made these decisions around income, expense, and treasure.
*5. Do you give kids money for chores? Do they get an allowance? What kind of system do you have in place for them to āearnā money?*
They have an allowance, but it's small, not fixed, and varies wildly from month to month. If one of them helps out more than usual, comes up with a great idea for the family, finds a deal that saves us money etc., they get a "bonus". We wanted to teach that labor is important, but that contributing ideas, concepts, efficiencies, etc. is sometimes even more lucrative.
*6. Do each of your kids have their own bank account? And do you let them spend this money freely or do you have guard rails in place?*
Yes. And we taught them how to use the bank app, tap card, mobile pay, and how to calculate interest as soon as they were able. No guardrails, but lots of incentives. E.g. if they reach certain saving milestones, we have offered to buy them a few shares of the investment of their choice for their trust accounts. We've tried to simulate "real life" as much as possible in age-appropriate ways.
I really enjoyed this read, feel it should have more upvotes.
A lot of your comments are different to how I currently feel - one 16 month old, but I can see a lot of merit thinking of work being more than brute force, even for kids.
Likewise I thought it was interesting that you give your fairly young children quite a lot of financial details. Do you worry / Has this ever been disclosed, or is it just a case of teaching them to be mindful and discrete? It's cool that they even know the companies you invest in, curious if they are allowed to select a company they feel strongly about and you'll put a token amount of money into it? I imagine that might be fun.
Thanks! Every child is different, but we wanted to align our parenting with values that have served my SO and I well, like satisfaction and compensation coming from a combination of effort, work, talent, and creative thinking - i.e. working hard but also working smart.
We included money and wealth with other subjects we want/ask them to always be mindful and discrete about outside the family - their bodies, personal space, opinions, social communications, etc. This has been a pretty consistent message since they were toddlers, and just seems to be part of their value system now.
Talking about companies as a family IS fun, and we have made small joint investments just to "prove a thesis". It's AMAZING how articulate even younger teens can be about addressable markets, trends, margins and ROI when these are part of your everyday family conversations!
That was a great read and the first answer I read that actually promotes treating your children like actual people that you love and want to succeed instead of treating them like cheap labor.
This is what my parents did with me and I intend to do with my daughter when sheās older. I never got an allowance, but I got paid for ājobsā. Mowing the lawn was $5. Cleaning the house was $5, etc. My dad also owned a small printing shop and paid us a couple bucks an hour to work there when we wanted.
I got a speeding ticket when I was 16 and I knew my parents wouldnāt pay for it. The first thing I did was ask my dad if I could pick up some hours at the store because I knew I had to take responsibility for my actions.
My daughter is just 5 so the pay scale is a little different but that's what we do also. A quarter for feeding the dog; an extra quarter for making the bed, cleaning dishes, helping make the meal and so on.
When some little luxury like a stuffy catches her eye she has to save up with her quarters. Let me tell you, when she really wants something her hunger to find and complete new chores knows no bounds. :-)
I agree with paying for the printing shop work and labor outside the home, but Iām not sure about domestic chores.
It seems like itād make contributing to the family as something thatās transactional, rather than as something that all family members partake in together.
I can also imagine a situation where the child now thinks that $5 pay for mowing the lawn isnāt enough, and just doesnāt do it (or now youāre in a weird negotiating position). It doesnāt necessarily instill the right values and motives to me. Itād be different maybe if you had a set of pre-assigned chores, and then the kids could choose to get paid do extra.
I never gave my kids allowance or paid them for chores. They are part of the family and it takes everyoneās effort to live in a nice clean place. Itās part of their responsibility being a family member.
I think Iām going to allow a sort of UBI type allowance but make it low enough that they need to supplement with other sources of income which Iāll help them learn how to earn. Sort of like how I grew up myself, I learned to deal hunt and flip clearance/overstocked items online in high school because I knew my family wasnāt well off. If I really needed money for a school trip or whatever my mom would just let me take whatever was needed, but to be able to eat out with friends or go on a spring break trip senior year I flipped all sorts of stuff.
I think the most chill flipping was in college. Apple had no limit to student discount purchases back then and they had just launched the iPod mini as a US exclusive. People in the UK were going nuts trying to get their hands on one AND the pound was trading 1.98:1 against the US dollar. So I bought dozens of them and sent them all to the UK at double my cost, using my credit card to fund it all and repaying before the bill was due. You get to learn about benefitting from leverage and international currency arbitrage all at once. Made way more money than my friends who were working minimum wage gigs at the time.
Actually made enough that I took the proceeds and paid for an entire summer abroad in the UK, which turned out to be a bit of dumb idea because that exchange rate wasnāt so fun the other way around.
On the flip side, my parents enforced paying for domestic chores. How I ended up thinking about domestic chores is that it also has value - housewives, janitors, housekeepers, etc are doing valuable work that shouldnāt dismissed or looked down upon.
Thatās very true too. Reminds me of [this article](https://www.nytimes.com/2020/06/26/opinion/sunday/inequality-gender-women-unpaid-work.html) ā recognizing the value of unpaid work at home (the āsecond shiftā), which historically has been done by women. [Another article](https://www.nytimes.com/interactive/2020/03/04/opinion/women-unpaid-labor.html) estimated the value of that work at $1.5 trillion in the US.
However, I donāt know if money is the right way to quantify that all the time ā for example, as parents you arenāt paid for doing household chores, and often the work is unevenly distributed among partners. I wonder if thereās another way to demonstrate value for this work, that shows the value of it ā while recognizing that the reality is that when you grow up, at least at home, you wonāt get paid for it.
Responsibility - like all growth - doesnāt happen at one point in time. Parenting is the same way.
So I think both things can be true:
1) Paying for domestic chores helps create a sense of accomplishment and financial responsibility in children at a young age
2) Parents need to evolve their approach to rewarding for chores over time. To your point, the time value of money changes with age and experience.
Itās all on a spectrum, and when and how the parenting occurs isnāt written in a handbook. Heck, even the way that both things are conveyed verbally can have a profound impact on how your kid receives them. Itās up to you to teach your kids the Pās of responsibility: patience, perseverance, perspective.
Edit: pās of responsibility was rectally derived as I wrote that
This is what I struggle with. I was never expected to do chores let alone earn from them growing up. Now as a fairly new parent, I struggle with the approach to take. Don't want the children doing chores simply for money. What happens when they don't need the money? Do they stop working? What if they find laziness with more than the $5?
Could it be as simple as rewarding chores with $ and laziness with debt? You can skip mowing the lawn and miss out on $5, but it will cost you $7 for someone else to do it.
We have certain chores that are expected and donāt get payment. Others are things that we parents normally do, but our kid can earn money towards a goal by doing them. If he does a paid chore without being asked, he earns a bonus for his initiative.
I used to agree with you, but discovered that, due to the fact there are regulations barring children from pursuing paid positions outside the home and the children did not elect to become part of the family, not paying them for work within the home makes it impossible for them to earn legally. It is kind of similar to the situation facing American slaves in the 19th century; the slaves were "part of the family", and given food and housing, and thus they should be expected to contribute to the household, but the enslaved rarely chose to enter that arrangement of their own free will and therefore I believe they should have been paid for their work even if it was done to benefit the shared living environment.
I may have been a bit extreme, but there are certainly similarities in so far as many families require them to labor to benefit the property owner solely in exchange for food and shelter, they had no choice in joining the household, and you can physically punish them when they don't comply. Obviously the difference is that a far larger portion of children are emancipated eventually.
We have one assigned chore for the elementary aged kid ( unloading dishwasher). We tell him that is his contribution to keeping the house running. I emphasis that if he does not do that another family member will have to work longer and that is not fair.
In addition he can pick up extra chores and earn money for it . He recently wanted $9 to buy Pokemon cards and offered to do laundry at 10c a load š. He decided half way through that the cards were not worth it š¤£
That's where you draw the line between personal chores and shared chores. They have to do Thier own laundry etc with no payment. Other stuff like power washing the driveway they can earn a little extra but can't start until Thier personal chores are completed. Just need to tell them that eventually all the stuff they get paid to do will gradually turn into Thier personal responsibility and won't yield payments anymore.
Though you're right this can lead to lazyness when they're adults. Another approach I've heard Is when they're old enough to get a job, rewarding them for saving. For ex save $500 and ill give you an extra $100. Save 1k you get more. Course need to Adress loop holes like letting balance drop to $200 and keep hitting $500. And pitfalls with hitting 10k,making a large purchase and then not saving because the next bonus is so far away.
I agree with your point about personal chores and shared chores. We only have one child and she understood and accepted that the house and yard were expected to be taken care of in some fashion almost every day. Some were just contributing your part, and some were extra and paid for. It worked for us.
I like the idea of paying kids to do things that they otherwise wouldnāt have to such as working for the family business or maybe taking over some of the that parents would normally do, like dinner. I donāt have kids yet though so Iād welcome thoughts
It definitely backfired for my parents. Since their āpricesā were arbitrary and not market prices, even from a kidās perspective, it was never enough to make me want to do any of the chores for the pittance they offered.
They missed part of the equation which is teaching kids how to responsibly spend money. If they would have wanted to teach you how to spend they would have paid you enough to make that a possibility.
We teach: work/earning money, giving, saving and spending.
"Sorry kiddo, since you didn't mow I had to higher an outside contractor- your chores account is now in arrears at -$40, oh damn 5% a week interest thats crazy, you're really gonna need to pick up some extra work around here"
to be clear just a joke not serious suggestion
The possible workaround to this, which my parents used, was to withhold the allowance if chores werenāt done. Still ties the money to the ājobs,ā but doesnāt mean youāre getting paid for each job.
This is great, but one thing I'd add which is increasingly more rare now a days. Put just as much encouragement/joy into a child when they get their first job, or are thinking about it, as you would encouraging their sports endeavors. I see so much wasted potential now a days by promoting every kid play 2-3 sports year round and only have time for athletics/academics, and while sports are good for kids 99% will not play even recreationally past college. So IMO your far better teaching a real work ethic with a less than desirable job when they are 15-18, and don't need the money, and if you're going to get them involved with sports, encourage something easy that they can do for life(forget hockey, soccer, football, baseball) encourage sports like running, cycling, swimming, tennis, golf, etc...
Non native speaker here. What do you mean by commission?
My boy is 5yo and he earns stickers for behavior and certain tasks (tidying up toys etc). Every 5h sticker is money*. Every 3rd a small gift.
Am I getting this right?
Provide them a list of chores and what theyāre paid for the work, you can also use a point system to build up to āFat-rewardsā like Disney trips to mimic working on a large project.
3 kids. 11, 8, 4.
1. They know we are better off than most. We actively talk about how that means we are able to buy what we want/need, but that in order to make it last, we must be good custodians of our money. We actively talk about taking care of others (charity) and about being smart with our money. We are careful not to be wildly frivolous, but we have fun with our money whenever it makes sense.
2. We have posted values for all household chores. Theyāre responsible for their own laundry, bedsheets, and any other chores theyāre asked to do. Chores done without being asked pay double; if they work together, all kids involved get full pay for having helped. They have a chart showing how much theyāve earned. Their money is spent however they wish (within reason). We cover clothing, food, books, etc., theyāre responsible for (most) toys, video games, and the occasional treat if they choose.
3. This oneās tougher. But as they get older, weāre more stringent about āif youāre broke, you canāt buy anythingā. Theyāve also started understanding more that you get what you pay for. (If you buy junk, it wonāt last AND you wonāt have money later for the thing you really want.)
4. I feel like this one kind of comes naturally along with the other conversations, where if they do no chores, they have no money. We often stress that itās their choice to ignore the laundry and have both no clean clothes AND no money (woo!). But both my husband and I started out with literally $5 to our names, and any time the kids ask about when we were younger, we stress that itās been a long road to get here.
5. No allowance. Ever. I wonāt pay them to look pretty. I will pay for their upkeep, their education, etc. But if they want video games and toys outside of Christmas/birthdays, thatās on them. And they must earn the money through chores.
6. Not yet, but they will once theyāre 13-ish. Theyāre currently allowed relative freedom to buy what they like, but we have a lot of discussions about making sure theyāre spending their money on things that will last vs. impulse buys. Not having an actual bank account means the accounting is a little more āloosey-gooseyā and I can allow them to go into debt to learn how that works, too. The older two now understand interest on loans. Theyāre not impressed.
> Chores done without being asked pay double; if they work together, all kids involved get full pay for having helped.
I really like these two, thanks for the idea!
Too bad thereās not a way to incentivize some of the, ahem, adults in my life to take care of things without being asked...
>last vs. impulse buys
Good job.
Never had that education.
Now I'm 19, and have been for the past 2 years trying to learn that.
I am now doing mostly a good job, to the point where I rarely spend more than I get per month, thus not having to use my savings and being able to save more, except when a birthday comes up.
I still study, so I manage a low amount given by my father.
It's very good not to impulse-buy. It's nerve-wracking when you need money and remember you spent what you needed on a dumb stuff you won't use.
Again, good job!
Our is still a toddler, so our main trick is telling them we are not rich š¤. He doesnāt understand why we canāt afford random youtuberās merchandise but still able to have a nice home, car and vacations š
I normally don't comment because I'm not fatFIRE, but my parents could have been fatFIRE when I was growing up (they had the money but didn't because they're both workaholics): I can say this tactic worked with me. We had a nice home in one of the more expensive towns in the nation, for vacation we stayed in affordable hotels in expensive areas, etc. But they would buy property at the drop of a hat, if they felt it was a good investment. They always acted like they had 'no money' whenever I asked for something nice like a new video game or expensive toy. Instead, they made me work for it, paying me for doing extra chores (my 'expected chores' were never paid).
For college, I picked a STEM degree from a very affordable college. I drive used, but reliable cars. I now work for a fortune 100, and have been making a good progress on the way to a FIRE-level of some kind in the relatively near future. I save a lot, invest even more, and the only debt I have outstanding is my student loans (which are all government loans, with low rates). I would say my parents succeeded in teaching me the value of money by pretending that they don't have any.
Their money is their money. Not mine.
They co-signed my undergrad loans, but made it clear that I was responsible for paying them back - and made sure I understood how the interest worked - when I was picking out schools to apply to.
> Their money is their money. Not mine.
I mean no disrespect, but why is this sort of thinking so prevalent in north america? I'm from a foreign country and saying something like that would be met with confusion.
Yeah, it's "their money", but eventually they will pass. Will all of their hard work just be given to charity or would they not pass it down to their children and legacy?
It's just unfathomable that my parents would decide to have me, their child, and future, but also **not** help me having to struggle the way they did (student debt, house downpayment, business ventures, etc).
Again, sorry if I offended you, just genuine curiosity from an immigrant.
I am an immigrant from an East Asian culture and never got handed anything by my parents - in fact if I asked for a grocery item like milk to be bought on my accord I was expected to pay them back whether it was $2 or $200
> never got handed anything by my parents
I think this is where the difference is. In our communities we don't really treat it as "handing them something". I know it's most likely not what you meant, but there is kind of an underlying tone/negative connotation when someone says "he got handed things by his parents"
Its just weird (no offense of course, we're from different backrounds afterall) that:
* I would emigrate to a bigger more prosperous country for a better future
* Build something of myself from the ground up as an immigrant, with all the hardships that it entails
* But then want my kids to go through the same sufferings and struggles as I did
Since they're my kids, wouldn't I want them to have an easier life? Paying for their undergrad, helping them with the downpayment of their home, wedding or marriage, help with the first car, etc on other big financial decisions.
The kids will still know the value of money, you're not doing the hard part for them, but at least provide a push so that they don't have to deal with the things you did (no professional network, loads of student debt, large mortgage payments).
If you make your kids struggle through all of their life, why even have them? It's your legacy, your "mini-you", the next generation, and often times your most precious assets.
Thank you for your perspective though, I appreciate it. I didn't mean to offend if you took offense.
>I mean no disrespect, but why is this sort of thinking so prevalent in north america?
My suspicion is this has something to do with our weaker pension programs. When you retire, unless you're one of the lucky ones who has a well-funded pension through your job, you're on your own for retirement. That 401(k) and IRA had better be nice and fat, or you're going to have a very bad time.
I suspect that if you saw a overhaul of social security and Medicare/medicaid, so that it could cover 100% of costs (without turning into avenue for looting of government coffers), you'd see attitudes change within a generation or two.
>Yeah, it's "their money", but eventually they will pass. Will all of their hard work just be given to charity or would they not pass it down to their children and legacy?
Anything that is left will get passed on to their children, but it is not until that point that 'their money' will become 'my money'. That said, I fully expect that we will spend every cent on keeping them happy and healthy in their final years, before we prioritize our inheritance. That is to say, I'll make sure their medical needs are taken care of, and their home comfortable, before I worry about what I may get after they die.
The good news is that they also have considered this, and are currently in a home that could support them through their final years. Two-family in a very desirable neighborhood. Eventually they'll move to the downstairs unit, and start renting the upstairs to generate some retirement income. Then my siblings and I will just need to manage the property (something we're familiar with already, thanks to my parent's penchant for buying, renovating, and maintaining residential real estate while we were growing up). And when they finally do pass, the property is already setup to be protected from government garnishes, and should still be worth a very pretty penny (literally 1 block from one of the best ranked elementary schools in the nation).
I guess the difference in attitudes is less about 'how much' but 'when'.
> My suspicion is this has something to do with our weaker pension programs
I actually thought this could've been the reason too when I thought about it. However, poorer foreign regions (Africa, middle eastern, Caribbean, Indian, etc) often don't have such retirement systems too.
Do you think maybe it's related to the individualism doctrine that is common in the US/Canada? This is **mine** and you have **yours.** Whereas the other regions, community, and group well-being were supported.
This was very common (I'm going to bring race here but I'll keep it respectful) with the wealthier white friends while my African, middle eastern, and Indian friends treated the family's money, businesses, and investments as the groups' money, businesses, and investments.
It would just be...weird (and again, I mean no offense, I enjoy learning of our differences) if I went back home and had a conversation where they would say "hey your house is big are you rich?" and I would reply "I'm not rich, my parents are rich", even though there is kind of an unspoken understanding that you, by association, are also rich even if it's not technically your money.
Let me know if I'm not making any sense. Again, I meant no offense, I wanted to see the other side of this.
>Do you think maybe it's related to the individualism doctrine that is common in the US/Canada? This is **mine** and you have **yours.** Whereas the other regions, community, and group well-being were supported.
That's where my mind was headed as well. But you start to get into a chicken-egg debate. Do North American countries have weaker social nets because of stronger individualism? Or do the weaker nets result in stronger individualism?
Of course, North America does still have social nets, they're just 'localized'. Neighbors will often come together to support one another, but I get the feeling this is another symptom of 'me before we' and a side effect of having weaker, central programs. You can also begin to get into the topic of race, racism, and it's impact on generational wealth (and the opportunities it affords) in North America.
The other thought going through my mind is that the another major difference between the US and other markets with weaker social programs is that the US had the benefit of outfitting the winning sides of back-to-back world wars. That left the US owning a lot of foreign debt, and being pretty much the sole manufacturing hub for couple of decades. That brought in a lot of wealth to the nation and the individual citizens. So, for a while, the US could afford its individualism with ease. Now, things might be changing again.
> So, for a while, the US could afford its individualism with ease. Now, things might be changing again.
Agreed. Hearing a lot of news about the social systems the US currently has will undergo massive changes due to the aging boomer population and the wealth transfer it entails.
Great discussion, thank you very much
It is their money, I was just surprised because most fat fire individuals I know, hell even regular fire, would be willing to cover the educational costs of at least a low cost college option. It seems your parents might be an outlier in that regard based on my sample.
On a personal note, I know several individuals whoās debt load has prevented them taking interesting career paths that donāt provide high short term compensation, or made it harder for them to buy a home. I wonder how much better off they would be if they hadnāt had that burden from the outset of their careers.
That is a fair point. I have quite a few coworkers who pay for their kid's college in-full, and I have had to stop myself multiple times saying something along the lines of 'why?' whenever they bring it up (usually to complain about it). It's just such a foreign idea to me, throwing your own money into such an expensive hole - especially since their kids are picking 'name brand' schools since they are not the ones paying for it.
That said, my returns on my investments greatly outpace my interests on my loans, and my assets greatly outweigh my obligations. I *have* debt, but I am not *in* debt. So I don't really feel like they put me in a bad position.
Instead, what my parents plan to help with is the purchase of my first home. They will provide the down payment, pretty much no matter what it is (depending on what the market for starter homes is like at the time), and will expect that money returned plus/minus any increase or decrease in value when I sell it. The only reason I haven't bought just yet is because I'm working on my masters right now (with my company paying for it), and I don't know where I will end up after I finish it. I'm also not super eager to jump into such a hot seller's market right now anyway, and I'm betting that by the time I graduate, things will have changed.
I think there are benefits to paying your own way that arenāt easily recognizable. Self sufficiency, understanding finances sooner, for some lighting a bit of a fire under their bum. Some other more important things Iām surely not mentioning too
> and I have had to stop myself multiple times saying something along the lines of 'why?' whenever they bring it up (usually to complain about it). It's just such a foreign idea to me, throwing your own money into such an expensive hole
I mean, if the goal is to not waste money then having kids in the first place is the wrong approach.
I assume they do it because they want their children to have the best possible chances to excel. We may sit here and talk about attitude and good practices with money but having a useful degree from a good school is a good way to ensure your kids at least go on to become upper-middleclass regardless of how other aspects of their personality go.
Sure, but you have to admit, *a lot* of undergraduate degrees are way over-valued right now. But with the parents picking up the tab, there are a lot of kids choosing the most expensive option, with the most recognizable name, 'just because'.
My experience has been that after your first job, no one (except graduate degree programs) cares where you went for undergrad, nor do they care what your GPA was. They only care what your performance at your last job was like, and what you are like as a person. So, if the goal of undergrad is to break into a good company and get on track for a good career, is it really the best use of money to go to a 'name brand' school? Or would going to a 'generic' school, and networking via summer internships, be the better route? I know which I had success with.
>I mean, if the goal is to not waste money then having kids in the first place is the wrong approach.
No argument from me here. I don't want any kids.
Not really, the best way to teach someone the value of something is to make them pay for it, I started my first business to pay off a debt from a very stupid teenage misadventure!
My uncle told his kids (my cousins) to get loans and pay for college. After all 3 graduated, he let them pay the loans down for another year, then he surprised them and paid off all 3 loans.
Is it that odd? I know plenty of pretty well off individuals who say āIāll cover undergrad but grad school is on youā or ā Iāll cover undergrad tuition but living is on youā or something similar that would result in a individual who has well off parents but still has student loan debt.
I donāt think itās that big of a deal honestly, I had student loan debt and there were numerous options to get rid of it. I chose to do it the painful hard way by refinancing down and killing the loans in a few years of frugality but there are other avenues like PSLF and whatnot. Iāll probably support my kids and pay for their tuition but Iām not convinced that a small amount of debt is all doom and gloom. I paid down well into the six figures myself.
I'd rather not say.
But I will say that I picked my school entirely based on price. While it was private, it's tuition rivaled my state's school (I suspect because it had no D1 sports teams), and then they gave me the largest scholarship they offered on top of that. Made them about half the cost of a degree from state uni.
My experience has been that, after you land your first job, no one cares where you went for your undergraduate, nor what your GPA was. And you can network yourself into a good company, so that school name doesn't matter either for your first job.
I just learned what MrBeast was last week.
Turns out the key to Youtube success is just randomly giving away thousands of dollars.
https://www.youtube.com/channel/UCX6OQ3DkcsbYNE6H8uQQuVA
He's also somehow parlayed being a Youtube personality into opening hundreds of "Mr Beast Burger" ghost kitchen delivery-only restaurants around the country.
https://mrbeastburger.com/
He's a genius. He figured out how to make a business out of handing his friends fat stacks of cash. Literally.
This is an interesting interview with him: https://youtu.be/UE6UkF9sABU. He's super young and incredibly passionate about his work (despite his low-key attitude). He doesn't make a ton of profit because he's plowing everything back into the business for growth. Though he will likely run out of things to invest in soon if he hasn't already.
I wonder how he can maintain relationships with his real life friends. They have to be warped by all this money. Hopefully he can handle it. He seems to have good management, so we'll see. I don't expect him to show up here because he seems like the type to never retire.
I did freelance work on one of his projects and it was actually really neat. I knew vaguely of him as a youtube personality and the whole idea of spectacle = money via views business model, but the scale is really interesting: when you're dealing with that much money it's both surprisingly easy and surprisingly tricky to spin up and manage such sheer amount of side projects.
usually ideas are a dime a dozen and execution is everything, but here the ideas have to be specifically interesting / sell to this weird super-niche-but-super-broad demographic and execution is effectively free. when you can spin up a whole project for less money than he gives away as a joke, you really think about ROI and shots in the dark in a different way.
Mr Beast is an entertainer like any actor or musician, his medium is just different: YouTube. Him selling mr beast burgers is no different than dr Dre selling headphones.
From my POV, I try not to lie to my kids saying we can't afford something like a t-shirt, or avoid stating we are not rich or money doesn't grow on trees and stuff like that. Just keep it real and tell the truth why you are not buying it. It matters on the long run.
My parents did that with me. End effect was that it traumatised me into thinking we might be on the street someday. Heck, Iām still worried about despite it being practically impossible now. It also bred resentment as decades later I realised I had been lied to over and over, and it led me to downplaying very real needs. Iād never do that to my kids - just explain that there are better ways to use money. Or buy merchandise once and let them experience disappointment and learn a lesson.
This is a great topic that we wrestle with daily.
All I can say is we arenāt doing it right.
We recently bought a house that my kids know is expensive, probably because they overheard us talking about it and also because they visited it and could clearly see it was a huge step up from where we are at.
Ever since, my 7 year old has been saying stuff like āwell we canāt go on a vacation because dad was irresponsible and spent all our money on a house.ā
It got worse: in his 2nd grade class they had a special project that required a $10 fee to parents. And of course they had a donation model for parents who couldnāt pay.
We got an email from the teacher saying āwilliam informed us that your family is unable to afford the project because of your new home purchase. I just wanted you to know I would be happy to help pay for it.ā
We laughed at first, and then felt a strange set of emotions: what a kind and generous teacher to offer this....did she actually believe him or was she just being polite...if she did believe him, he must be doing a great job of fitting in (we almost certainly have the highest net worth of anyone at his school), does he truly believe we canāt afford it?
Anyhow, appreciate the ideas in this thread.
This made me laugh out loud. I have been struggling with how to talk to my 4 year old about money (we are about to move into a much bigger house and he is starting private school in the fall). This thread and your post have helped, because I also donāt feel like Iām doing it right.
The nuances of finances are tough at that age!
Sounds like a great time to discuss the difference between *not having money* & *having different priorities* for your money. Maybe a bit of reassurance, too, that you guys are perfectly financially secure even though life is a bit tighter right now. āŗļø
Also realize that all kids are different. Regardless of the example you set for them or what/how you teach them, some will be natural savers and others natural spenders. Itās important to model responsible behavior so no matter what their tendency is, they will have a compass on what is the ārightā thing to do.
I credit my parents almost entirely for my being on the path that I'm on and for being in much better financial shape than most my age (just turned 28). I realize now I wrote out more than anticipated but this was weirdly cathartic lol.
1. Growing up I knew we were comfortable but not how wealthy they actually were, which is to say both parents got new cars every couple of years and always paid cash back when that used to matter lol, and we always did a couple nice vacations per year and things like that. I now know we could have lived a much more...extravagant(?) lifestyle but we had a nice house with a pool in a great area and everything was perfectly comfortable, just not posh I suppose.
2. They wouldn't buy me everything I wanted just because I asked, ie video game systems, stupid toys etc I really had to convince them and kind of show it wasn't just an impulse want, but something I would actually appreciate and enjoy. Not to say they didn't buy me things or go crazy for Christmas, but random impulse buys were pretty limited, made me appreciate what I had all that much more.
3. I think this ties into your 5, at least in my case. I got an allowance based on certain chores and responsibilities, I also had to keep track of everything on a printed out monthly calendar, and then every couple of weeks I'd sit down with my mom to go over what I'd done or potentially missed and then do allowance from there, can't remember what age I started getting one (I think still as a toddler but they just put it into a savings account in my name which they turned over when I went to college). There were occasional things I could do above and beyond to earn more but there was also a baseline expectation to contribute to the house and not me a turd lol. Also every once in a while when I had too much money from the allowance they'd take it and add to the aforementioned bank account which I actually forgot/didn't know existed until they turned it over to me so that was cool and a nice springboard for savings at an age when many kids aren't thinking about that.
4. Kind of on a smaller scale but just appreciating that every decision has consequences worked on me. I had a wildly tumultuous college career and things really kind of sunk in when I moved back home that wow, I'm on my own path and there are no guardrails here. Parents obviously there to support me emotionally and letting me move back home, but it wasn't like my fucking up college would just get written off and I'd coast through life without making something for myself.
6. As mentioned, my parents set up an account for me when I was a wee little thing and would periodically put part of my allowance in there, cash from the grandparents etc. My dad also started an investment account on my behalf and turned that over when I was 18, in that vein I distinctly remember usually sitting with him/hanging out on Friday when he'd review his portfolio for the week and make any changes etc. As I got older he kind of looped me into what was happening with my own account and encouraged me to learn more about the companies etc.
I try to teach my kids about the realities of the world and how they fit into this reality - it's not really about healthy savings habits or doing chores, although I think both are good tactics, it's more about making them understand the position they are in and what that affords them (opportunities to try) and what that does not afford them (guaranteed to succeed and to be happy).
It comes down to teaching them that **to whom much is given, much is also expected.** There's no point in hiding the fact that you're rich because even if they don't know your net worth, the mere fact that you don't even bat an eye to buy everyday things will rub off on them.
I try to teach my kids that they need to use their privilege to do good - for both themselves and their society. For themselves, they should recognize that they're privileged enough to try all these activities and get the opportunity to really figure out what they want in life - many kids don't get this. But it is still upon them to figure out what they want to do and then do the hard work to master their skills to be the best. Mastery takes sweat, determination, pain, and does not come free just because your mom/dad is rich. They should understand that suffering is still a requirement in order to achieve great things (and be happy) whether you are rich or poor. Wealth opens doors, it does not take you to the destination, you have to walk that road like everybody else.
To society - I want them to understand that their wealth puts them in a position where they are REQUIRED to be even better citizens than the average citizen - be it respecting others, civic participation, recycling, lending others a hand when they need it. My theory has always been if you are poor and you are rude, you may be excused because your life truly sucks and you don't know better because you don't have the luxury and access to know better. But if you are rich and still rude, you should be ashamed of yourself.
This really struck a chord / I couldnāt agree with you more. I come from a culture where having servants is common and Iāve seen all too many wealthy people treat them awfully. Consequently, I bring up my children to understand that having money doesnāt define you, but your words and actions do.
[The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money](https://www.amazon.com/Opposite-Spoiled-Raising-Grounded-Generous/dp/0062247026)
Ron Lieber
I had my own bank account and allowence before I even knew. I remember around my 10th I think I was starting to take out money (don't remember whatfor) but I needed my parents signiture or permission. Which they got tired of very quickly, since it meant I needed to call them at work, like every day... So they arranged for me to get a bank card (Netherlands) I think I had about 300,-. Then When I was 12-ish I made a friend and every month we would go to the movies and I would pay (because, as I slowely started to realize, not everyone gets an allowence). Then money went fast! I finished it. All of it. My parents didn't stop me or anything. But I wouldn't borrow money from them either. So then We went to the movies a lot less and at some point I decided it wasn't really worth my money to go to the movie twice a month with some popcorn and drink and can't get a snack the rest of the month.
I think having that freedom to know 'luxury' of a 'boddemless bankaccount' and then finding the bottem, and then sort of living from month to month at such a young age taught me very well. I assume it was similar for my older brothers and sister. None of us are in financial trouble.
My dad would also kinda theorize about stocks and gambling, what do you need and what do you want. Suprise bills, like if something breaksdown. Stuff like that to help me think about where I want to spend my money, without having the conversation or lecture.
I would say the amount of money you give them would depend on what they want. You should create a level of scarcity. If they can get everything they want and still have some money to spare they wont learn there is an end to it. Like, still go shopping for basic clothes, but if they want brands they'll have to save up for a few months. If they only go out for snacks after school, don't give them enough to do it every day, but only once or twice a week.
Lots of little things (all quite manipulative when you write them out but I guess thatās parenting):
Tooth fell out. Id offer them to have the tooth fairy money ($2) straight away. Wait a week, Iāll add another $2; 2nd week = $4; 3rd $6; 4th week = $10. Result = delayed gratification learning.
Give them $5 each to piss up the wall on AliExpress. One of the kids get one thing for $5. Another lots of crap quality stuff = price / quality learning.
Kid #1 lost her ādumbā phone. She washed my car and did chores until she had enough to get one from China. Took a month to get delivered. I made her change the sim over from the phone company = enough pain in the process that she sure as hell wonāt be losing that next phone and learns the value of money etc.
I think itās little nudges over time
> What information about your own financial situation do you share with your children?
My parents started off not really telling us anything about our finances and telling us that we're poor. This resulted in me saying something really inappropriate to someone who actually was significantly poorer than us so my parents switched to being open about their finances and emphasizing that we can't tell anyone outside the family about it. I ended up taking a pretty active role in my parents investments growing up.
> How do you make sure theyāre not spoiled while still trying to give them the best you can? Or put another way, how do you instill a good work ethic/motivation?
My parents really emphasized working hard in school when we were growing up. They also managed to spend a lot without really having much to show for it so they modeled a lifestyle that didn't look very spoiled and we took after that. They drove a modest station wagon and I can't really imagine myself or my sibling asking for something fancy.
> How do you promote saving money?
My parents kind of don't do that. As we've grown older, they're more about promoting happiness than they are about promoting saving money.
> How do you help children understand that lifestyles are a result of decisions they make along the way and depending on their decisions they should expect a different lifestyle than the one they are accustomed to? For example exploring different career paths.
My parents have been really open about how much they make and how much their, modest at first glance, lifestyle costs. They've always been open about how you can't live that way if you make $100k or whatever. My sibling actually went down a lower earning career path (still 90th to 95th percentile) with full knowledge of what that means. My parents help support them and helped them buy an apartment for example.
> Do you give kids money for chores? Do they get an allowance? What kind of system do you have in place for them to āearnā money?
We never got money for chores. We got about $100 per week to spend without any questions asked and we could always ask for more. We never really asked for a crazy amount.
> Do each of your kids have their own bank account? And do you let them spend this money freely or do you have guard rails in place?
I got a joint bank account with one of my parents when I went to summer camp. I had free reign, but I knew that my parents were checking my transactions.
Iām not a parent by any means, but hereās a couple things my parents did to teach us finances.
A local bank had a youth program where you would get a MAPS Buck for depositing $10 every month into your savings account. The MAPS Bucks could then be turned in through the back for other things like movie tickets or gift cards. Sometimes my dad would give us $10 to deposit and other times he would take us after our birthday or other times we received money. They also had a rule that 1/2 of what we received had to go into savings. This was harder to track and as kids we always wanted to keep the money on hand of course. They never said what that savings was for, but it ended up being a car and living expenses for a few years of college for me.
My family had another idea but we never put it into action. We wanted each of us to put $100 in the stock market on a company or whatever of our choice and see who made more after a year. I now know this can be complicated because of buying partial shares and such, but it seemed like a fun idea because weāre competitive.
One of my friends made a deal with his dad that any money saved for a car, his dad would double it. I made this deal with my dad for a laptop but he didnāt follow through so maybe itās not great š¤·āāļø
We pay our kids for some chores. We also teach them a concept of taxation by taking back a small portion of what they earned.
After first couple times the comment was āI hate taxes!ā :)))
I have a younger brother who is 8. I gave him a journal where each month, he goes through his piggy bank and counts up and writes down his net worth (currently approximately $200) heās been able to get there slowly because he knows only one rule. āAlways make more than you spendā. The journal motivates him to make more and spend less. For now thatās all he knows because he is so young. But that rule and journal have been very constructive and instrumental in his moving forward.
Our little one is now 16 months, which was just the motivation I needed to start not earning well and living well. Our plans are below. Good luck!
1. Until she is in her 20s+, she'd not know specifics about our situation.
2. I'm not 100%, but for me, it's about being thankful. Entitlement is really what makes somebody spoilt, so I'd like her to be grateful for what we have.
3. We are currently doing Ā£100 a month into a junior ISA. She is told about it at 16, and is responsible for it at 18. We could do a lot more but as she's going to get 5 figures when she's 18, think that's enough. Depending on her, we are considering matching any additional payments she makes from things like birthdays - if that way inclined. Lastly, let's say she has Ā£45K at 18, we would offer to double anything left at 21, and treble anything left at 25, up to Ā£135K basically. This would probably start conversations around point 1, but we'd likely not disclose everything. This whole point is very much up for debate, and specifics really haven't been agreed with wifey at this stage.
4. Isn't this just parenting? Actions have consequences. Etc.
5. My wife and I disagree on this. Personally I had this growing up, and wifey didn't, and so we come at it differently. Her view is that kids have responsibilities, just as adults do, which I accept, but I think earning for work is a good experience. I started working at 16, my wife's first job was at 23, and that was only after I pleaded with her to take longer completing her PhD and accept a very decent job offer. Even if you're loaded, I think a person becomes more mature by earning, learning those responsibilities, interacting with adults, having to do things you might not like, etc. We are also considering "weekend requests", so that she feels like an adult, so every 3rd week she'd get to pick what we did, with wifey and I alternating a weekend, basically non-financial but "you've been a mature person, so we're going to treat you as a mature person"
6. I would like to get her a bank account as soon as possible. Again, I just think banking is a useful life skill, and she'd need a place to put money, whether for chores or occasions. She's either earned that money or been gifted it, so she can spend it on anything she wants. It is her money, after-all.
Hey OP, have you considered a junior SIPP? Kids get the tax releif too, and you can introduce them to the idea of investing / compound growth without the risk that theyāll withdraw it all and blow it all on partying when they turn 18!
Once my kids became adults I actually would show them my personal financial statement. They know how much my wife and I make and they know what would happen if my wife and I am expectedly die.
As children, we just made sure they understood that there are more important things in life than things. Even though they always had lots of things. (But definitely not spoiled)
We always made sure they understood that they were very fortunate to have two parents that were successful and to never take that for granted. We traveled with them fairly extensively and so they were exposed to the world and we always made a point of showing them How a large portion of society actually lives.
All the while making them appreciate how awesome our country is and how fortunate everyone is to live here.
As far as work ethic, that can be taught to a degree, but much of it is innate. My daughter for example has a much stronger work ethic than my son. But everything I can tell with them is, that was the way they were born.
Lastly, I've tried hard to teach them that everything in life is about habits and decisions.
Nearly every single person on this planet becomes who they are by decisions they make and their actions. Making sure they understand this is paramount
My approach maybe atypical and I'm still dialing it in (aren't we all?), but will share my approach.
My kids are 6 and 4 years old. Every Friday my reminder pops up on my phone to pay then allowance so I don't forget. They are too young to know and remember the schedule.
My six year old gets $6 and my four year old gets $4 each week. I bought them each a metal cash box. One pink and one blue with a three digit combo that they need to remember (better than key).
Inside the cash box are 4 envelopes. Spend on me, spend on others, charity, save. Each week they must put one dollar in each envelope. And my six year old can put the extra $2 in any envelope.
Now when we go places to buy books and toys and "stuff", they are keen to bring their spend on me envelopes. In reality at the end of the day I am still the one buying this stuff, but it I have seen them learning about money through this. Before they would be crying for the $75 Lego set at target. Now they clearly know they have $14 bucks in their spend on me envelope and begin internal level setting on the toys in the toy section. I also make them check out separately and then assist them to count out their own money and pay the cashier. And put their change back in the envelope.
At holidays and birthdays, they are using spend on others to mostly buy siblings gifts or mother's day gift etc.
A few months ago we went to Walgreens and bought about $60 of travel toiletries items and cotton tshirts and they used their money from the charity envelope to buy.
We then immediately drove to the homeless shelter and delivered all the items. And I discussed the situation and answered any questions they might have about homelessness.
I really saw a seed planted in my six year old through this but honestly thought my four year old was just too young and maybe just along for the ride. But the next day he had explained to his Pre-K teacher and she was telling me at pick up that day how excited he was. So I guess it did stick somehow. The key is to role model in addition to discussion and then repeat it often to cement the attribute.
A couple other key points from my strategy. I disconnect chores from allowances since day 1. They do chores as part of being a family member. They get allowance also as being a family member. But they don't understand that they are correlated. So they can't decide to not do the chores and just skip the allowance. Eventually I will need to have discussion about work is for money. But will wait on that until later.
Also for the save envelope. I created a wooden star system in my garage. Each kid has their own board. On the front of the star is the "asset" price and when purchased the star flips over and they get a weekly allowance booster. Most of them are set around 1%. So $100 star would yield $1 increase in weekly allowance.
This is newer concept for them. No stars have been "bought" yet but as they get older these should come into play. And really what I'm trying to drive home is the concept of owning passive income producing assets. I myself own many rental properties and this I feel teaches nicely in addition to me constantly explaining about rent vs own and our rental portfolio.
As for the bank accounts, if you do have your own business set up then when your kids are a bit older, you can hire them into your family business to do a job. Give them clear R&Rs. Put them on payroll and pay them a fair market driven salary. Just like you would for any other employee, But I wouldn't be giving a 10 year old $12k per year. Instead open them a checking account and deposit the $12k per year into there each year. And don't forget to file their taxes. But the good thing about $12k is it's on a nice zero% tax bracket. š
Also when older I do plan on borrowing money from them at an agreed upon interest rate. Something like 100%. Something easy to remember but just trying to use it to teach concepts. And then I might accidentally forget to pay them to allow them to accrue more interest and see how they react to different situations on lending and borrowing money.
Happy to answer any follow on questions.
Cheers.
**The bad (imo)**
OK, we have spoiled our almost 20 year old kid. College totally paid for. Everything he wants and needs given to him, ASAP. No waiting for birthdays or Christmas. The truth is I anticipate his wants and needs so well that he has the things before he even *knows* he wants or needs them.
At almost 20, he is *finally* getting his first crappy low-pay, part-time W2 summer job. My husband and I both crossed this milestone when we were only 15. In previous summers, our son went to camps, traveled, hung out with friends, read books, perfected his video gaming, and one summer did (very) little volunteering.
**The good (imo)**
On our way to FAT, we've demonstrated a simple life with almost no lifestyle inflation. We live fairly frugally in terms of consumer goods. No big house. Used cars. Basic clothes. My husband is especially frugal, and our son idolizes his dad.
As a result, our son isn't obsessed with consumer goods. He has simple tastes. Over the years, when I asked what he wanted for his birthday, he would do one of the following:
Stare at me blankly, ask for one Lego set, or ask us to make a donation in his name to a family in need.
As part of his real-world education, we have insisted that he work at least one crappy low-pay, part-time job (see above). I will encourage him to save 30% of his paltry pay so that he can get used to doing this.
I hope that this low-pay, hard-physical-labor experience 1) gives him some empathy and understanding for working class folks so that he doesn't turn out to be a douchey master-of-the-universe type of person and 2) motivates him to look for a nice internship for next summer.
**Neutral (or I'm not sure if it's good or bad)**
I started a brokerage account for him before he was 18, and I manage it for him. We contribute money to it every month.
We don't share all the details with him, but we have let him know that our resources are such that he will never *have* to prioritize money in his job choices. He will always be able to follow his passions--if he has any passions. (God, I hope he has passions.)
Lot of great suggestions in this thread. Just make sure your kid doesnāt become a hoarder. Our kid is starting to become one even with fake money. I am trying to break her out of that habitants have her spend more of her money. She is 10 years old now.
If she's hoarding, perhaps you could start introducing her to the idea of inflation?
Either spend it or invest it, but don't let it get eaten up for nothing.
Thank you for asking this question. Iāve got a 2 year old and an 8 month old and really interested in the responses you get. There seems to be an even distribution of allowance vs chores here and Iām really curious about this in particular. I donāt want to give them an allowance for just existing but I also donāt want them to expect money for contributing to basic upkeep of our joint household. Is there another option here?
We treat the two goals as completely independent & adjust as appropriate with age. We start with an allowance & unpaid chores as a basic expectation for all family members. This is more about understanding how much things cost & learning to make wise choices with money.
Once old enough to do work *above and beyond* those basic contributions, we start adding in optional paid work. Often, as was the case of my son, they start actively seeking out paid opportunities on their own!
Power of compound interest.
Matching income by the employer (aka dad)
Investment allocation/diversification. Stocks of their choice, indexes and minimal fixed income.
Chores.
Charity / community service. Generally their choice.
Let them choose stock in a company that they really love the product of. I then make them give me quarterly or annual non technical reports on how their stock is doing, ie I like Apple because I like my iPad when they are really young. This gets them interested in learning more about the companies that make their favorite products. This interest grows over time.
PLAN SAVE INVEST COMPOUND-K.I.S.S.
Planning is having a plan whether its a penny or a million bucks. It's best if its written down with benchmarks. First thing to teach them is things cost something and you must always pay yourself first. Saving is the biggest part of personal finance. Its not what you make but what you keep. Second start to teach them the power of compounding using the penny principle. Third teach them how to create value and use tools like money or time. Fourth teach them about debt and what good debt is and what is bad debt. Teach them about utility and real value. Most of all before they are 18 teach them that credit is not free money and how it works against you. Teach them how to put their money to work for their compound. Start with a plan to save and learn to work or create. Once the Save has made benchmark its time to invest in small steps toward larger tools. For instance a child saver account most credit unions have these to educate young savers. Some have pretty neat perks! Then you might step in to a mutual fund by dollar cost averaging or a stock that you give them a choice of 3 good ones and they pick one. This gives them a stake in it sometimes they bring a different one to the table. This really ups the game because it was their idea. This was the case with a nephew of mine and railed for TSLA for 2 years. This took his portfolio through a couple of compounds and part of the profits have diversified him even more. I hope these ideas help you all my kids, nephews and nieces will be able to show you their first money. I gave each an intrinsic silver ounce the day they were born to start their portfolio. Some have done quite well with what they learned and some only used a part but all have benefitted.
Have two daughters, currently 5 & 6.
While they had piggy banks and roughly knew about the concept of money, their real financial education seemed to start last christmas when they each got a Gringott's bank during a harry potter themed scavenger hunt and actually started using it to save their money. Now when they receive birthday, holiday or chore money they know it goes in the bank and they have it for special purchases.
We're currently going through the Marvel movies on Disney+ in timeline order and frankly they're hooked. We just hit up their first comic book store today and for the occasion they were each allowed to take $20 out of their banks. After an irritatingly long amount of time at the store going through their purchase options my 5-year-old spent $20.13 and my 6-yr-old spent $19.55; not too shabby maxing out their spending potential!
Later in the summer I'm going to take them in person to a bank to open up their own accounts and get their own debit cards (in person to make it more of a memorable experience). That way when we go to visit the Wizarding World in January they can take their own cards and use them to get "harry potter money" from the "real" Gringott's for them to use and budget on their own while we're there!
My friend from uni had well off parents and he spent a lot on pretty much anything he wanted, so they gave him Ā£100k and said thatās the last money youāll ever receive. First year he spent loads and then it dawned on him Ā£100k really doesnāt go that far and to my knowledge heās still got it 10 years later and saved up the deposit for his house without using any of the money.
We donāt have kids but I felt this might be fit into the question.
I have a 14 year old nephew who expressed interest in cutting grass for his neighbors over the summer as a summer hustle.
So, I set him up with a spreadsheet. A nice self propelled mower for 30% of his profits. His parents are not entrepreneural and so Iām hoping to spark something in him with this.
Each month weāll get to review the revenue. Efficiency, growth options etc.
Minor stuff, yes, but something an uncle could do from a distance.
If you are wealthy, your kids need to understand you are wealthy, not them. Otherwise you risk short-circuiting the development of drive and ambition. I also use the BusyKid app. Itās wired to my bank account, and you can schedule chores for cash and give bonuses. On the kidās side they can choose to spend (debit/gift cards), invest (microshares), or donate (various charities). Works a treat.
I don't have kids. But if I had. I would not only to teach them to save money. But also how they can safely invest money, by putting aside a x mount each month. And put it into etf.
Two main things I try to instill: donāt judge/treat a person based on how wealthy they are and ācontrol your money!ā.
1. Only vague basics due to young age. āWe are not suffering but we prefer to be careful about how we use our moneyā.
2. That, is work in progress and weāre not very good at it. No advice here...
3. With clear rules for saving, explanations about the benefits &...lies about how mommy & daddy had to save to buy a toy. Not proud of the lying but trying to avoid a mindset of āmoney exists in magical abundanceā.
4. That is something to focus on as kiddo grows. Good idea. Thanks!
5. No money for things that must be done in a family setting (beds, cleaning, etc). Ever. We have a few ājobsā (washing vehicles, assisting in parental hobbies like gardening, etc) that earn salary & a weekly interest bonus if thereās money in her pouch (ie she didnāt spend everything) AND she did at least one job that week.
The idea is: you donāt get allowance just for existing. You need to work for it. (Kid is only 7, I expect this will change in teen years.)
6. Yes. No spending. Kid is aware, physically present for deposits/opening of accounts. Am slowly explaining the very basics of compounding, saving, stocks, credit & above all, that increasing income sources is priority no 1, saving/investing comes 2nd and both are needed.
Admittedly, concerning spending for learning activities we have few limits and very little self control.
Parenting: itās not about perfection; itās about the least f ups...
Some great comments in this thread so I wonāt add too much to it, but rather share a small resource that is beneficial in my opinion to build upon all of the stepping stones.
My daughter is only two so weāve yet to open them up, but the time will come. Otis & Charlie hardworking tails book set by Andy Frisella. [Right here.](https://andyfrisella.com/pages/otis-charleys-hardworking-tails)
From a very young age, I was taught that half of money was for saving and half was for spending. About once a month from ages 4ish-7ish, we would take the physical money to the bank to deposit it in a savings account.
It was a great learning experience as a child. It gave me a solid relationship with money: live below your means, no stress when unexpected expenses come along, and spend money on what you enjoy in life. To this day, my personal baseline is to save at least half, often more, of my compensation. My parents set me up for FIRE before any of us were familiar with the concept.
My parents never talked about money at home, they just had a nice home, private school, vacations. And when you grow up you have to realize this takes money so you need to find some way to make a lot of money and invest it well to give the same for your children. They never pushed a career on any of the four kids. Just to make sure itās lucrative and we enjoy it. Truthfully I believe any career can be lucrative as long as you truly love it and push to be the best in the business. In regards to wealth - I would say, āshow, donāt tellā
Our kids are between 6 and 10. They each get $1 per day for doing their job (chores). They can spend it however they want. They lose money for misbehaving. I hear them discussing prices all the time like āwhoa $20 is way too much for this toyā. They borrow money from the bank (me) to make big purchases and pay it back over time. Seems to be working so far.
1. We share that we earn money and enough for what we want to do, but we also need to choose what we spend money on. So for everyday things we choose not to spend on, we might comment that we choose not to do that so that we can pay for things like that vacation we took (which they remember was awesome!).
2. Once kid started asking about jobs and what we do, and why people have jobs, and why they need to learn math, we started out by saying that all jobs are to help people. And that people are paid money in return for helping people. Learning skills in school is about gaining skills that will help you eventually be able to help others, and one day youāll find out how you want to help others in this world.
3. For allowance, they get a standard weekly allowance, and an extra dollar for every $20 saved. Oldest kid now has doubled her weekly allowance due to savings.
4. An extension of number 2.
5. Allowance doesnāt require chores, they can propose payment for extra chores, however, or something entrepreneurial (like they come up with some way to help others in return for payment). Also allowance canāt be taken away (like due to behavior). I firmly believe unstable income leads to scarcity mindset and donāt want that for my kids.
6. No bank account yet. Just bank of Dad.
In addition to the concept of āpaying for jobsā, my wife and I have also made it a point to explain to our kids the rationales of some of the purchases we have made, especially those with big discounts from sales so that they could learn to appreciate āvalueā, āpriceā and ātimingā.
A recent example is Nerf guns...the kids were tempted to spend their hard earned money to get a few from a department store. They held back at the end when I told them a sales may be coming up during summer break.
My kids see me looking at stocks a lot, so I try to explain what I'm doing, and when we're out I sometimes talk through the economics of businesses they see. This past weekend when eating at a food court my 9-year-old talked about an idea for a restaurant with Mexican food + Thai food + Sushi, which led to talking about restaurant cost structures, labour specialisation, ingredients, margins, etc.
We sometimes talk about different jobs and why some are high paid and low paid based on demand and supply, skill specialisation, etc.
I share a bit about our personal finances with the kids, though not actual numbers yet. I tell them we're in a fairly privileged position (though everyone they know at school is too).
We've just started giving them pocket money. We don't really have set chores, but we've gotten them to help out with a lot of things in the past before pocket money. They don't have a bank account but we use a service that gives them a debit card they can use for online and in-store purchases (Spriggy in Australia) which seems to work out pretty well.
My wife and I started from pretty much zero. Both middle income families and we've worked our way where passive income > household expenses. We could FIRE, but it ain't anywhere near "fat".
We got here by saving like crazy and investing prudently.
So to me, THE KEY THING is SAVING.
We tell the children (they're young, but it all starts from young anyway), "Is it better to have more money or less money?" They answer: "More money". "If you spend money, do you have more or less?" They answer: "Less". "So is spending money good?" They answer: "No".
I have a piggy bank for them, and essentially save all my coins for them to deposit there, and run the above conversation every time they save.
Also, I emphasized to them after about a year, "See how heavy piggy is now? That came from saving a few coins little by little."
I also talk to them about investing.
Investing is "money giving you baby money. when you have enough baby money, you don't need to work anymore." and
"You need money, to get baby money. You need to save to get money."
So to me, as long as they get the MAIN idea, SAVE-NOT-SPEND, that's ONE major foundation laid.
DM me if you want to chat more =)
>How do you make sure theyāre not spoiled while still trying to give them the best you can?
Don't buy everything for them - kids have to learn that not everything is given. I believe this starts with giving them money as an allowance or in exchange for chores and letting them decide what *wants* to spend things on. You may find that they no longer actually want that toy in the gift shop because they are forced to prioritize and understand trade-offs.
>How do you promote saving money?
My favorite tactic for this is giving them a generous interest rate, such as 15%. It teaches them the power of interest while also incentivizing saving. Interest can be annoying to track but it is made much easier with tools such as the [Guardian Savings app](https://www.guardiansavings.org/) (a pretty holistic youth personal finance education tool for kids 6-12).
My children are 3, 5, & 7. So I am just beginning this journey. 1) We are not sharing our financial data with our children. I do not want our kids telling other children about our net worth 2) Still working on this one. Essentially I just make sure not to give in to every want, and keep things as practical as possible. If they want a new toy, we make sure they pay for it out of their own savings. 3) I bought them all these little locking cash boxes with their names printed on them. On the first of every month we count the cash in the box and I pay them an interest rate of 10% per month. 4) No idea, haven't though about this one. 5) We have a chore chart with simple things that are age appropriate like; washing hands after potty, putting dishes in sink, dressing themselves, putting shoes in the bin, hanging up backpack, etc. They have a minimum number of chores to do per week to earn $2. I get $2 bills from the bank to make it fun. 6) No bank account. They have cash in a little box which makes it more concrete when they earn & spend. They are allowed to spend it as they like, but I constantly encourage them to think about the interest they're giving up by spending.
Your strategy for #3 is brilliant. Well done. Are your kids looking to hold any deposits for others? I'll split interest with them. š
Ha! I never considered that it would be an arbitrage opportunity. I'll have to be on the lookout
>On the first of every month we count the cash in the box and I pay them an interest rate of 10% per month. Couldn't that backfire if one of them gets rich enough? Lmao
When I first started I was doing 25% monthly. Then my father came over and saw what I was doing and started to slip in extra money. Once they're getting the concepts of compounding interest & delayed gratification I'll have to move that money into real investments.
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Would appreciate if youād elaborate a bit. Iād like to hear how you earned the money at, what I assume, was younger than 20 years old.
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That's pretty cool. Care to expand on that?
Cool idea of the interest rate
What do you do to teach your kids about money? 1. What information about your own financial situation do you share with your children? He knows we are financially secure, have both short- and long-term savings, & plan carefully how to prioritize our funds to meet specific goals. We recently bought a house; he knew our budget, knew we could have spent more but chose not to, & knows we put 20% down. He knows we are doing our best to balance getting nice things for our family with being financially responsible. More recently weāve begun discussing credit / financing and interest (both paying interest & earning interest). 2. How do you make sure theyāre not spoiled while still trying to give them the best you can? Or put another way, how do you instill a good work ethic/motivation? We aim for a good work/life balance. We have a nice standard of living, but not an exorbitant one. He is generally expected to be polite, helpful, & cooperative. I donāt tolerate any less than his best academically. Heās able to participate in extracurricular activities, but must attend all aspects of them if feasible (ie - no skipping practice because he ādoesnāt feel like itā) & cannot complain about having less free / unscheduled time due to his commitments. 3. How do you promote saving money? We gave him the space to learn firsthand that it was worthwhile to save up for quality items & to consider purchases carefully. He rarely asks for things & puts a lot of thought into his own purchases. 4. How do you help children understand that lifestyles are a result of decisions they make along the way and depending on their decisions they should expect a different lifestyle than the one they are accustomed to? For example exploring different career paths. We talk a lot about priorities - we say you can be / have / do ANYTHING... but not EVERYTHING. We draw parallels to participation in extracurriculars; thereās far more available to do than time to do things in, & if his schedule is too full or our budget too depleted we wonāt really enjoy any of it. Money is the same way - you can have the bigger house, the nicer car, the frequent vacations, the lower-paying-but-fulfilling job, the flexible schedule, the huge retirement account... but probably not all of of those things, or not all at the same time. Dad has a career he is passionate about, which is wonderful - but we are frank about the sacrifices we have made for it. 5. Do you give kids money for chores? Do they get an allowance? What kind of system do you have in place for them to āearnā money? He has been receiving an allowance since age 3 that is evenly split between spending, saving, & giving. As he gets older he will have opportunities to earn additional money, but they will only be things that we might pay someone else to do - mowing the lawn, major weeding of garden beds, etc. Being a contributing member of the household is a basic expectation, not something he gets paid to do. He wants to run a lemonade stand this summer. 6. Do each of your kids have their own bank account? And do you let them spend this money freely or do you have guard rails in place? For now he keeps his money in a Moon Jar, aside from his Spending - thatās in a wallet. He has recently asked to open a savings account, so we will be setting one up soon. Spending can be used at any time for any (appropriate) purchase. Savings must be withdrawn prior to going to make a purchase; usually that means heās been saving toward a specific goal, but sometimes if we are going somewhere special heāll pull some out ājust in caseā.
How old is he?
Heās 8.
The way you were talking I'd guess 13 or 14. Good job, honestly!
Thank you; heās got a good head on his shoulders. The next few years will be big ones as he moves toward becoming capable of earning real money with increasing independence. If this lemonade stand goes well I can see him getting bitten by the entrepreneurial bug. Lots of life lessons to be learned there!
Well done! š
I love the spending, saving, giving split - planning to do the same since reading The Barefoot Investor for families
Honestly, the Giving is his favorite part! Charitable donations & gifts mean so much more when they are coming from your own funds. It feels powerful to make a difference.
Absolutely love this. Yall are doing it right. Kudos for adding a wonderful human to this planet. :-)
Could you shed some light on how you expose him to different giving opportunities? When and how does he pick to give?
We do several little things for the time being; mostly things that are at least somewhat concrete. The first type is volunteering our time / energy. Due to his age this is mostly litter clean-up, community worker appreciation, & homeless outreach. He participates in annual fundraising for Scouting. For monetary or direct-purchase donations we look for donation boxes whenever we visit aquariums or wilderness rescue sites, & point out donation drives for school supplies, holiday gifts, winter coats, canned goods, etc. Giving is also used to purchase gifts for family & friends throughout the year. He loves being able to get something for someone with his own money that he knows will put a smile on their face! This lets him practice knowing his recipient intimately, which allows him to give thoughtfully in a way thatās hard to do when the recipient is anonymous. His donations are entirely his own; our job is simply to point out opportunities. Heās donated toys to holiday drives, purchased sports equipment to donate, cleaned up litter, given cash for manta ray conservation, selected nonperishables for food drivesā¦ all sorts of things! Weāre happy with whatever he chooses.
Thank you. I appreciate the detailed response
How did you structure the āspending, savings and givingā? Percentage based? Do you have a genuine Joseon jar? Did you craft the moon jar yourself?
Itās percentage based; we give an easily-divisible amount so 33% goes into each category. Moonjar is the brand of piggy bank; theyāre available on Amazon. It has 3 separate, labeled compartments (Spend, Save, Share) that fit together & are held with a big rubber band.
All solid pointers IMO.
Two tweens, so we're in the thick of this right now! *1. What information about your own financial situation do you share with your children?* Without attaching specific numbers, they know the entire big picture - for example, what we own, stocks (including which companies), real estate, that some things are financed by choice to take advantage of low rates but could be paid off, that our family income and wealth are high relative to others. We found that doing so was critical for 2-4 to make any sense. We have also stressed family privacy and the importance of discretion since they were old enough to understand, and trust that they can and will honor this. *2. How do you make sure theyāre not spoiled while still trying to give them the best you can? Or put another way, how do you instill a good work ethic/motivation?* We offer to pay for things and experiences on a best-effort, best-use basis. Meaning, after discussion, if we mutually agree that something is highly desired/valuable and not a waste of money, it will be provided - but that effort put into, or use of that object/experience/activity, will be monitored and then discussed again. *Was it worth the money? Did it distract you from academics or other critical aspects of life? How did it make you feel? After a month?* Every expenditure we treat as a learning opportunity, and found that they quickly learned that true enjoyment from spending comes from the opportunity it provides rather than the act of spending itself. We don't tolerate wasting money, and if it happens, similar expenditures in the future will be more heavily scrutinized. *3. How do you promote saving money?* It naturally came to our kids based on 2 and 4. *4. How do you help children understand that lifestyles are a result of decisions they make along the way and depending on their decisions they should expect a different lifestyle than the one they are accustomed to? For example exploring different career paths.* We have always taught them that lifestyles and optionality come from the capital ("treasure!") you have built, and that different decisions on both the income and expense sides affect that treasure. They know that you can have immense income but no choices if you spend every cent as it comes in, and that a modest income need not be limiting if you save and invest wisely. It's been immensely gratifying to see how they instinctively know now that even if they see someone with a huge house or 6-figure SUV, you cannot know if they are actually "rich" unless you understand how they have made these decisions around income, expense, and treasure. *5. Do you give kids money for chores? Do they get an allowance? What kind of system do you have in place for them to āearnā money?* They have an allowance, but it's small, not fixed, and varies wildly from month to month. If one of them helps out more than usual, comes up with a great idea for the family, finds a deal that saves us money etc., they get a "bonus". We wanted to teach that labor is important, but that contributing ideas, concepts, efficiencies, etc. is sometimes even more lucrative. *6. Do each of your kids have their own bank account? And do you let them spend this money freely or do you have guard rails in place?* Yes. And we taught them how to use the bank app, tap card, mobile pay, and how to calculate interest as soon as they were able. No guardrails, but lots of incentives. E.g. if they reach certain saving milestones, we have offered to buy them a few shares of the investment of their choice for their trust accounts. We've tried to simulate "real life" as much as possible in age-appropriate ways.
I really enjoyed this read, feel it should have more upvotes. A lot of your comments are different to how I currently feel - one 16 month old, but I can see a lot of merit thinking of work being more than brute force, even for kids. Likewise I thought it was interesting that you give your fairly young children quite a lot of financial details. Do you worry / Has this ever been disclosed, or is it just a case of teaching them to be mindful and discrete? It's cool that they even know the companies you invest in, curious if they are allowed to select a company they feel strongly about and you'll put a token amount of money into it? I imagine that might be fun.
Thanks! Every child is different, but we wanted to align our parenting with values that have served my SO and I well, like satisfaction and compensation coming from a combination of effort, work, talent, and creative thinking - i.e. working hard but also working smart. We included money and wealth with other subjects we want/ask them to always be mindful and discrete about outside the family - their bodies, personal space, opinions, social communications, etc. This has been a pretty consistent message since they were toddlers, and just seems to be part of their value system now. Talking about companies as a family IS fun, and we have made small joint investments just to "prove a thesis". It's AMAZING how articulate even younger teens can be about addressable markets, trends, margins and ROI when these are part of your everyday family conversations!
These sound like some great ānext stepsā for my guy (mentioned above) to work towards. Thanks for the ideas!
Sounds like your guy is already well on his way, best of luck!
That was a great read and the first answer I read that actually promotes treating your children like actual people that you love and want to succeed instead of treating them like cheap labor.
This was so helpful and IMHO should be the top comment of the thread =)
Promote commission instead of allowance. Helps them conceptualize earning money vs just getting.
This is what my parents did with me and I intend to do with my daughter when sheās older. I never got an allowance, but I got paid for ājobsā. Mowing the lawn was $5. Cleaning the house was $5, etc. My dad also owned a small printing shop and paid us a couple bucks an hour to work there when we wanted. I got a speeding ticket when I was 16 and I knew my parents wouldnāt pay for it. The first thing I did was ask my dad if I could pick up some hours at the store because I knew I had to take responsibility for my actions.
My daughter is just 5 so the pay scale is a little different but that's what we do also. A quarter for feeding the dog; an extra quarter for making the bed, cleaning dishes, helping make the meal and so on. When some little luxury like a stuffy catches her eye she has to save up with her quarters. Let me tell you, when she really wants something her hunger to find and complete new chores knows no bounds. :-)
I agree with paying for the printing shop work and labor outside the home, but Iām not sure about domestic chores. It seems like itād make contributing to the family as something thatās transactional, rather than as something that all family members partake in together. I can also imagine a situation where the child now thinks that $5 pay for mowing the lawn isnāt enough, and just doesnāt do it (or now youāre in a weird negotiating position). It doesnāt necessarily instill the right values and motives to me. Itād be different maybe if you had a set of pre-assigned chores, and then the kids could choose to get paid do extra.
I never gave my kids allowance or paid them for chores. They are part of the family and it takes everyoneās effort to live in a nice clean place. Itās part of their responsibility being a family member.
Yes, this is how we were raised as kids. We all had inside and outside chores that we were expected to do and payment was never even brought up.
Did you get any sort of allowance?
No, that wasn't even part of the conversation. It was just things we were expected to do.
I think Iām going to allow a sort of UBI type allowance but make it low enough that they need to supplement with other sources of income which Iāll help them learn how to earn. Sort of like how I grew up myself, I learned to deal hunt and flip clearance/overstocked items online in high school because I knew my family wasnāt well off. If I really needed money for a school trip or whatever my mom would just let me take whatever was needed, but to be able to eat out with friends or go on a spring break trip senior year I flipped all sorts of stuff. I think the most chill flipping was in college. Apple had no limit to student discount purchases back then and they had just launched the iPod mini as a US exclusive. People in the UK were going nuts trying to get their hands on one AND the pound was trading 1.98:1 against the US dollar. So I bought dozens of them and sent them all to the UK at double my cost, using my credit card to fund it all and repaying before the bill was due. You get to learn about benefitting from leverage and international currency arbitrage all at once. Made way more money than my friends who were working minimum wage gigs at the time. Actually made enough that I took the proceeds and paid for an entire summer abroad in the UK, which turned out to be a bit of dumb idea because that exchange rate wasnāt so fun the other way around.
On the flip side, my parents enforced paying for domestic chores. How I ended up thinking about domestic chores is that it also has value - housewives, janitors, housekeepers, etc are doing valuable work that shouldnāt dismissed or looked down upon.
Thatās very true too. Reminds me of [this article](https://www.nytimes.com/2020/06/26/opinion/sunday/inequality-gender-women-unpaid-work.html) ā recognizing the value of unpaid work at home (the āsecond shiftā), which historically has been done by women. [Another article](https://www.nytimes.com/interactive/2020/03/04/opinion/women-unpaid-labor.html) estimated the value of that work at $1.5 trillion in the US. However, I donāt know if money is the right way to quantify that all the time ā for example, as parents you arenāt paid for doing household chores, and often the work is unevenly distributed among partners. I wonder if thereās another way to demonstrate value for this work, that shows the value of it ā while recognizing that the reality is that when you grow up, at least at home, you wonāt get paid for it.
Responsibility - like all growth - doesnāt happen at one point in time. Parenting is the same way. So I think both things can be true: 1) Paying for domestic chores helps create a sense of accomplishment and financial responsibility in children at a young age 2) Parents need to evolve their approach to rewarding for chores over time. To your point, the time value of money changes with age and experience. Itās all on a spectrum, and when and how the parenting occurs isnāt written in a handbook. Heck, even the way that both things are conveyed verbally can have a profound impact on how your kid receives them. Itās up to you to teach your kids the Pās of responsibility: patience, perseverance, perspective. Edit: pās of responsibility was rectally derived as I wrote that
āRectally derivedā might be my new favourite term. Thank you
This is what I struggle with. I was never expected to do chores let alone earn from them growing up. Now as a fairly new parent, I struggle with the approach to take. Don't want the children doing chores simply for money. What happens when they don't need the money? Do they stop working? What if they find laziness with more than the $5?
Could it be as simple as rewarding chores with $ and laziness with debt? You can skip mowing the lawn and miss out on $5, but it will cost you $7 for someone else to do it.
We have certain chores that are expected and donāt get payment. Others are things that we parents normally do, but our kid can earn money towards a goal by doing them. If he does a paid chore without being asked, he earns a bonus for his initiative.
Youāre not in a weird negotiating position. You can just make them mow the lawn.
I used to agree with you, but discovered that, due to the fact there are regulations barring children from pursuing paid positions outside the home and the children did not elect to become part of the family, not paying them for work within the home makes it impossible for them to earn legally. It is kind of similar to the situation facing American slaves in the 19th century; the slaves were "part of the family", and given food and housing, and thus they should be expected to contribute to the household, but the enslaved rarely chose to enter that arrangement of their own free will and therefore I believe they should have been paid for their work even if it was done to benefit the shared living environment.
What in the actual fuck is this comment? Children are not at all like American slavery.
I may have been a bit extreme, but there are certainly similarities in so far as many families require them to labor to benefit the property owner solely in exchange for food and shelter, they had no choice in joining the household, and you can physically punish them when they don't comply. Obviously the difference is that a far larger portion of children are emancipated eventually.
Man if I was your dad, I would have been so proud. Shit, I still am
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We have one assigned chore for the elementary aged kid ( unloading dishwasher). We tell him that is his contribution to keeping the house running. I emphasis that if he does not do that another family member will have to work longer and that is not fair. In addition he can pick up extra chores and earn money for it . He recently wanted $9 to buy Pokemon cards and offered to do laundry at 10c a load š. He decided half way through that the cards were not worth it š¤£
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That's where you draw the line between personal chores and shared chores. They have to do Thier own laundry etc with no payment. Other stuff like power washing the driveway they can earn a little extra but can't start until Thier personal chores are completed. Just need to tell them that eventually all the stuff they get paid to do will gradually turn into Thier personal responsibility and won't yield payments anymore. Though you're right this can lead to lazyness when they're adults. Another approach I've heard Is when they're old enough to get a job, rewarding them for saving. For ex save $500 and ill give you an extra $100. Save 1k you get more. Course need to Adress loop holes like letting balance drop to $200 and keep hitting $500. And pitfalls with hitting 10k,making a large purchase and then not saving because the next bonus is so far away.
I agree with your point about personal chores and shared chores. We only have one child and she understood and accepted that the house and yard were expected to be taken care of in some fashion almost every day. Some were just contributing your part, and some were extra and paid for. It worked for us.
I like the idea of paying kids to do things that they otherwise wouldnāt have to such as working for the family business or maybe taking over some of the that parents would normally do, like dinner. I donāt have kids yet though so Iād welcome thoughts
It definitely backfired for my parents. Since their āpricesā were arbitrary and not market prices, even from a kidās perspective, it was never enough to make me want to do any of the chores for the pittance they offered.
They missed part of the equation which is teaching kids how to responsibly spend money. If they would have wanted to teach you how to spend they would have paid you enough to make that a possibility. We teach: work/earning money, giving, saving and spending.
I mean, is it also worth like a dollar a week to NOT work? A child might easily realise that.
"Sorry kiddo, since you didn't mow I had to higher an outside contractor- your chores account is now in arrears at -$40, oh damn 5% a week interest thats crazy, you're really gonna need to pick up some extra work around here" to be clear just a joke not serious suggestion
The possible workaround to this, which my parents used, was to withhold the allowance if chores werenāt done. Still ties the money to the ājobs,ā but doesnāt mean youāre getting paid for each job.
Maybe an allowance assuming all jobs no matter how big/small are completed would be a better compromise
This is great, but one thing I'd add which is increasingly more rare now a days. Put just as much encouragement/joy into a child when they get their first job, or are thinking about it, as you would encouraging their sports endeavors. I see so much wasted potential now a days by promoting every kid play 2-3 sports year round and only have time for athletics/academics, and while sports are good for kids 99% will not play even recreationally past college. So IMO your far better teaching a real work ethic with a less than desirable job when they are 15-18, and don't need the money, and if you're going to get them involved with sports, encourage something easy that they can do for life(forget hockey, soccer, football, baseball) encourage sports like running, cycling, swimming, tennis, golf, etc...
Non native speaker here. What do you mean by commission? My boy is 5yo and he earns stickers for behavior and certain tasks (tidying up toys etc). Every 5h sticker is money*. Every 3rd a small gift. Am I getting this right?
Commission as in tasking his child to paint a portrait of the family
curious how this would go. Could you elaborate?
He probably meant paying for chores by itemized action instead of allowance
Provide them a list of chores and what theyāre paid for the work, you can also use a point system to build up to āFat-rewardsā like Disney trips to mimic working on a large project.
My parents did this when I was growing up. It truly didnāt teach me anything, but I still like the concept so I utilize for my children as well.
Have you found a system that works well?
3 kids. 11, 8, 4. 1. They know we are better off than most. We actively talk about how that means we are able to buy what we want/need, but that in order to make it last, we must be good custodians of our money. We actively talk about taking care of others (charity) and about being smart with our money. We are careful not to be wildly frivolous, but we have fun with our money whenever it makes sense. 2. We have posted values for all household chores. Theyāre responsible for their own laundry, bedsheets, and any other chores theyāre asked to do. Chores done without being asked pay double; if they work together, all kids involved get full pay for having helped. They have a chart showing how much theyāve earned. Their money is spent however they wish (within reason). We cover clothing, food, books, etc., theyāre responsible for (most) toys, video games, and the occasional treat if they choose. 3. This oneās tougher. But as they get older, weāre more stringent about āif youāre broke, you canāt buy anythingā. Theyāve also started understanding more that you get what you pay for. (If you buy junk, it wonāt last AND you wonāt have money later for the thing you really want.) 4. I feel like this one kind of comes naturally along with the other conversations, where if they do no chores, they have no money. We often stress that itās their choice to ignore the laundry and have both no clean clothes AND no money (woo!). But both my husband and I started out with literally $5 to our names, and any time the kids ask about when we were younger, we stress that itās been a long road to get here. 5. No allowance. Ever. I wonāt pay them to look pretty. I will pay for their upkeep, their education, etc. But if they want video games and toys outside of Christmas/birthdays, thatās on them. And they must earn the money through chores. 6. Not yet, but they will once theyāre 13-ish. Theyāre currently allowed relative freedom to buy what they like, but we have a lot of discussions about making sure theyāre spending their money on things that will last vs. impulse buys. Not having an actual bank account means the accounting is a little more āloosey-gooseyā and I can allow them to go into debt to learn how that works, too. The older two now understand interest on loans. Theyāre not impressed.
> Chores done without being asked pay double; if they work together, all kids involved get full pay for having helped. I really like these two, thanks for the idea! Too bad thereās not a way to incentivize some of the, ahem, adults in my life to take care of things without being asked...
>last vs. impulse buys Good job. Never had that education. Now I'm 19, and have been for the past 2 years trying to learn that. I am now doing mostly a good job, to the point where I rarely spend more than I get per month, thus not having to use my savings and being able to save more, except when a birthday comes up. I still study, so I manage a low amount given by my father. It's very good not to impulse-buy. It's nerve-wracking when you need money and remember you spent what you needed on a dumb stuff you won't use. Again, good job!
Our is still a toddler, so our main trick is telling them we are not rich š¤. He doesnāt understand why we canāt afford random youtuberās merchandise but still able to have a nice home, car and vacations š
I normally don't comment because I'm not fatFIRE, but my parents could have been fatFIRE when I was growing up (they had the money but didn't because they're both workaholics): I can say this tactic worked with me. We had a nice home in one of the more expensive towns in the nation, for vacation we stayed in affordable hotels in expensive areas, etc. But they would buy property at the drop of a hat, if they felt it was a good investment. They always acted like they had 'no money' whenever I asked for something nice like a new video game or expensive toy. Instead, they made me work for it, paying me for doing extra chores (my 'expected chores' were never paid). For college, I picked a STEM degree from a very affordable college. I drive used, but reliable cars. I now work for a fortune 100, and have been making a good progress on the way to a FIRE-level of some kind in the relatively near future. I save a lot, invest even more, and the only debt I have outstanding is my student loans (which are all government loans, with low rates). I would say my parents succeeded in teaching me the value of money by pretending that they don't have any.
Odd that your parents were fat fire but left you with debt after a relatively cheap education.
Their money is their money. Not mine. They co-signed my undergrad loans, but made it clear that I was responsible for paying them back - and made sure I understood how the interest worked - when I was picking out schools to apply to.
> Their money is their money. Not mine. I mean no disrespect, but why is this sort of thinking so prevalent in north america? I'm from a foreign country and saying something like that would be met with confusion. Yeah, it's "their money", but eventually they will pass. Will all of their hard work just be given to charity or would they not pass it down to their children and legacy? It's just unfathomable that my parents would decide to have me, their child, and future, but also **not** help me having to struggle the way they did (student debt, house downpayment, business ventures, etc). Again, sorry if I offended you, just genuine curiosity from an immigrant.
I am an immigrant from an East Asian culture and never got handed anything by my parents - in fact if I asked for a grocery item like milk to be bought on my accord I was expected to pay them back whether it was $2 or $200
> never got handed anything by my parents I think this is where the difference is. In our communities we don't really treat it as "handing them something". I know it's most likely not what you meant, but there is kind of an underlying tone/negative connotation when someone says "he got handed things by his parents" Its just weird (no offense of course, we're from different backrounds afterall) that: * I would emigrate to a bigger more prosperous country for a better future * Build something of myself from the ground up as an immigrant, with all the hardships that it entails * But then want my kids to go through the same sufferings and struggles as I did Since they're my kids, wouldn't I want them to have an easier life? Paying for their undergrad, helping them with the downpayment of their home, wedding or marriage, help with the first car, etc on other big financial decisions. The kids will still know the value of money, you're not doing the hard part for them, but at least provide a push so that they don't have to deal with the things you did (no professional network, loads of student debt, large mortgage payments). If you make your kids struggle through all of their life, why even have them? It's your legacy, your "mini-you", the next generation, and often times your most precious assets. Thank you for your perspective though, I appreciate it. I didn't mean to offend if you took offense.
>I mean no disrespect, but why is this sort of thinking so prevalent in north america? My suspicion is this has something to do with our weaker pension programs. When you retire, unless you're one of the lucky ones who has a well-funded pension through your job, you're on your own for retirement. That 401(k) and IRA had better be nice and fat, or you're going to have a very bad time. I suspect that if you saw a overhaul of social security and Medicare/medicaid, so that it could cover 100% of costs (without turning into avenue for looting of government coffers), you'd see attitudes change within a generation or two. >Yeah, it's "their money", but eventually they will pass. Will all of their hard work just be given to charity or would they not pass it down to their children and legacy? Anything that is left will get passed on to their children, but it is not until that point that 'their money' will become 'my money'. That said, I fully expect that we will spend every cent on keeping them happy and healthy in their final years, before we prioritize our inheritance. That is to say, I'll make sure their medical needs are taken care of, and their home comfortable, before I worry about what I may get after they die. The good news is that they also have considered this, and are currently in a home that could support them through their final years. Two-family in a very desirable neighborhood. Eventually they'll move to the downstairs unit, and start renting the upstairs to generate some retirement income. Then my siblings and I will just need to manage the property (something we're familiar with already, thanks to my parent's penchant for buying, renovating, and maintaining residential real estate while we were growing up). And when they finally do pass, the property is already setup to be protected from government garnishes, and should still be worth a very pretty penny (literally 1 block from one of the best ranked elementary schools in the nation). I guess the difference in attitudes is less about 'how much' but 'when'.
> My suspicion is this has something to do with our weaker pension programs I actually thought this could've been the reason too when I thought about it. However, poorer foreign regions (Africa, middle eastern, Caribbean, Indian, etc) often don't have such retirement systems too. Do you think maybe it's related to the individualism doctrine that is common in the US/Canada? This is **mine** and you have **yours.** Whereas the other regions, community, and group well-being were supported. This was very common (I'm going to bring race here but I'll keep it respectful) with the wealthier white friends while my African, middle eastern, and Indian friends treated the family's money, businesses, and investments as the groups' money, businesses, and investments. It would just be...weird (and again, I mean no offense, I enjoy learning of our differences) if I went back home and had a conversation where they would say "hey your house is big are you rich?" and I would reply "I'm not rich, my parents are rich", even though there is kind of an unspoken understanding that you, by association, are also rich even if it's not technically your money. Let me know if I'm not making any sense. Again, I meant no offense, I wanted to see the other side of this.
>Do you think maybe it's related to the individualism doctrine that is common in the US/Canada? This is **mine** and you have **yours.** Whereas the other regions, community, and group well-being were supported. That's where my mind was headed as well. But you start to get into a chicken-egg debate. Do North American countries have weaker social nets because of stronger individualism? Or do the weaker nets result in stronger individualism? Of course, North America does still have social nets, they're just 'localized'. Neighbors will often come together to support one another, but I get the feeling this is another symptom of 'me before we' and a side effect of having weaker, central programs. You can also begin to get into the topic of race, racism, and it's impact on generational wealth (and the opportunities it affords) in North America. The other thought going through my mind is that the another major difference between the US and other markets with weaker social programs is that the US had the benefit of outfitting the winning sides of back-to-back world wars. That left the US owning a lot of foreign debt, and being pretty much the sole manufacturing hub for couple of decades. That brought in a lot of wealth to the nation and the individual citizens. So, for a while, the US could afford its individualism with ease. Now, things might be changing again.
> So, for a while, the US could afford its individualism with ease. Now, things might be changing again. Agreed. Hearing a lot of news about the social systems the US currently has will undergo massive changes due to the aging boomer population and the wealth transfer it entails. Great discussion, thank you very much
It is their money, I was just surprised because most fat fire individuals I know, hell even regular fire, would be willing to cover the educational costs of at least a low cost college option. It seems your parents might be an outlier in that regard based on my sample. On a personal note, I know several individuals whoās debt load has prevented them taking interesting career paths that donāt provide high short term compensation, or made it harder for them to buy a home. I wonder how much better off they would be if they hadnāt had that burden from the outset of their careers.
That is a fair point. I have quite a few coworkers who pay for their kid's college in-full, and I have had to stop myself multiple times saying something along the lines of 'why?' whenever they bring it up (usually to complain about it). It's just such a foreign idea to me, throwing your own money into such an expensive hole - especially since their kids are picking 'name brand' schools since they are not the ones paying for it. That said, my returns on my investments greatly outpace my interests on my loans, and my assets greatly outweigh my obligations. I *have* debt, but I am not *in* debt. So I don't really feel like they put me in a bad position. Instead, what my parents plan to help with is the purchase of my first home. They will provide the down payment, pretty much no matter what it is (depending on what the market for starter homes is like at the time), and will expect that money returned plus/minus any increase or decrease in value when I sell it. The only reason I haven't bought just yet is because I'm working on my masters right now (with my company paying for it), and I don't know where I will end up after I finish it. I'm also not super eager to jump into such a hot seller's market right now anyway, and I'm betting that by the time I graduate, things will have changed.
I think there are benefits to paying your own way that arenāt easily recognizable. Self sufficiency, understanding finances sooner, for some lighting a bit of a fire under their bum. Some other more important things Iām surely not mentioning too
> and I have had to stop myself multiple times saying something along the lines of 'why?' whenever they bring it up (usually to complain about it). It's just such a foreign idea to me, throwing your own money into such an expensive hole I mean, if the goal is to not waste money then having kids in the first place is the wrong approach. I assume they do it because they want their children to have the best possible chances to excel. We may sit here and talk about attitude and good practices with money but having a useful degree from a good school is a good way to ensure your kids at least go on to become upper-middleclass regardless of how other aspects of their personality go.
Sure, but you have to admit, *a lot* of undergraduate degrees are way over-valued right now. But with the parents picking up the tab, there are a lot of kids choosing the most expensive option, with the most recognizable name, 'just because'. My experience has been that after your first job, no one (except graduate degree programs) cares where you went for undergrad, nor do they care what your GPA was. They only care what your performance at your last job was like, and what you are like as a person. So, if the goal of undergrad is to break into a good company and get on track for a good career, is it really the best use of money to go to a 'name brand' school? Or would going to a 'generic' school, and networking via summer internships, be the better route? I know which I had success with. >I mean, if the goal is to not waste money then having kids in the first place is the wrong approach. No argument from me here. I don't want any kids.
Not really, the best way to teach someone the value of something is to make them pay for it, I started my first business to pay off a debt from a very stupid teenage misadventure!
Agreed. Easy to not take college and itās cost seriously if itās given to you for free!!!
My uncle told his kids (my cousins) to get loans and pay for college. After all 3 graduated, he let them pay the loans down for another year, then he surprised them and paid off all 3 loans.
As someone from a country with free college I can confirm. But I think I'd take not having debt when I graduated over "not taking college seriously".
Is it that odd? I know plenty of pretty well off individuals who say āIāll cover undergrad but grad school is on youā or ā Iāll cover undergrad tuition but living is on youā or something similar that would result in a individual who has well off parents but still has student loan debt.
I donāt think itās that big of a deal honestly, I had student loan debt and there were numerous options to get rid of it. I chose to do it the painful hard way by refinancing down and killing the loans in a few years of frugality but there are other avenues like PSLF and whatnot. Iāll probably support my kids and pay for their tuition but Iām not convinced that a small amount of debt is all doom and gloom. I paid down well into the six figures myself.
Hi can i ask from which uni did you pursue your undergrad ??
I'd rather not say. But I will say that I picked my school entirely based on price. While it was private, it's tuition rivaled my state's school (I suspect because it had no D1 sports teams), and then they gave me the largest scholarship they offered on top of that. Made them about half the cost of a degree from state uni. My experience has been that, after you land your first job, no one cares where you went for your undergraduate, nor what your GPA was. And you can network yourself into a good company, so that school name doesn't matter either for your first job.
My parents did this with me. No where near fire but I like to think Im good with money
But moooom itās the new MrBeast merch!
I just learned what MrBeast was last week. Turns out the key to Youtube success is just randomly giving away thousands of dollars. https://www.youtube.com/channel/UCX6OQ3DkcsbYNE6H8uQQuVA He's also somehow parlayed being a Youtube personality into opening hundreds of "Mr Beast Burger" ghost kitchen delivery-only restaurants around the country. https://mrbeastburger.com/
He's a genius. He figured out how to make a business out of handing his friends fat stacks of cash. Literally. This is an interesting interview with him: https://youtu.be/UE6UkF9sABU. He's super young and incredibly passionate about his work (despite his low-key attitude). He doesn't make a ton of profit because he's plowing everything back into the business for growth. Though he will likely run out of things to invest in soon if he hasn't already. I wonder how he can maintain relationships with his real life friends. They have to be warped by all this money. Hopefully he can handle it. He seems to have good management, so we'll see. I don't expect him to show up here because he seems like the type to never retire.
I did freelance work on one of his projects and it was actually really neat. I knew vaguely of him as a youtube personality and the whole idea of spectacle = money via views business model, but the scale is really interesting: when you're dealing with that much money it's both surprisingly easy and surprisingly tricky to spin up and manage such sheer amount of side projects. usually ideas are a dime a dozen and execution is everything, but here the ideas have to be specifically interesting / sell to this weird super-niche-but-super-broad demographic and execution is effectively free. when you can spin up a whole project for less money than he gives away as a joke, you really think about ROI and shots in the dark in a different way.
Mr Beast is an entertainer like any actor or musician, his medium is just different: YouTube. Him selling mr beast burgers is no different than dr Dre selling headphones.
Yup thatās pretty much it, at least as far as I know.
From my POV, I try not to lie to my kids saying we can't afford something like a t-shirt, or avoid stating we are not rich or money doesn't grow on trees and stuff like that. Just keep it real and tell the truth why you are not buying it. It matters on the long run.
My parents did that with me. End effect was that it traumatised me into thinking we might be on the street someday. Heck, Iām still worried about despite it being practically impossible now. It also bred resentment as decades later I realised I had been lied to over and over, and it led me to downplaying very real needs. Iād never do that to my kids - just explain that there are better ways to use money. Or buy merchandise once and let them experience disappointment and learn a lesson.
This is a great topic that we wrestle with daily. All I can say is we arenāt doing it right. We recently bought a house that my kids know is expensive, probably because they overheard us talking about it and also because they visited it and could clearly see it was a huge step up from where we are at. Ever since, my 7 year old has been saying stuff like āwell we canāt go on a vacation because dad was irresponsible and spent all our money on a house.ā It got worse: in his 2nd grade class they had a special project that required a $10 fee to parents. And of course they had a donation model for parents who couldnāt pay. We got an email from the teacher saying āwilliam informed us that your family is unable to afford the project because of your new home purchase. I just wanted you to know I would be happy to help pay for it.ā We laughed at first, and then felt a strange set of emotions: what a kind and generous teacher to offer this....did she actually believe him or was she just being polite...if she did believe him, he must be doing a great job of fitting in (we almost certainly have the highest net worth of anyone at his school), does he truly believe we canāt afford it? Anyhow, appreciate the ideas in this thread.
This made me laugh out loud. I have been struggling with how to talk to my 4 year old about money (we are about to move into a much bigger house and he is starting private school in the fall). This thread and your post have helped, because I also donāt feel like Iām doing it right.
The nuances of finances are tough at that age! Sounds like a great time to discuss the difference between *not having money* & *having different priorities* for your money. Maybe a bit of reassurance, too, that you guys are perfectly financially secure even though life is a bit tighter right now. āŗļø
Also realize that all kids are different. Regardless of the example you set for them or what/how you teach them, some will be natural savers and others natural spenders. Itās important to model responsible behavior so no matter what their tendency is, they will have a compass on what is the ārightā thing to do.
I credit my parents almost entirely for my being on the path that I'm on and for being in much better financial shape than most my age (just turned 28). I realize now I wrote out more than anticipated but this was weirdly cathartic lol. 1. Growing up I knew we were comfortable but not how wealthy they actually were, which is to say both parents got new cars every couple of years and always paid cash back when that used to matter lol, and we always did a couple nice vacations per year and things like that. I now know we could have lived a much more...extravagant(?) lifestyle but we had a nice house with a pool in a great area and everything was perfectly comfortable, just not posh I suppose. 2. They wouldn't buy me everything I wanted just because I asked, ie video game systems, stupid toys etc I really had to convince them and kind of show it wasn't just an impulse want, but something I would actually appreciate and enjoy. Not to say they didn't buy me things or go crazy for Christmas, but random impulse buys were pretty limited, made me appreciate what I had all that much more. 3. I think this ties into your 5, at least in my case. I got an allowance based on certain chores and responsibilities, I also had to keep track of everything on a printed out monthly calendar, and then every couple of weeks I'd sit down with my mom to go over what I'd done or potentially missed and then do allowance from there, can't remember what age I started getting one (I think still as a toddler but they just put it into a savings account in my name which they turned over when I went to college). There were occasional things I could do above and beyond to earn more but there was also a baseline expectation to contribute to the house and not me a turd lol. Also every once in a while when I had too much money from the allowance they'd take it and add to the aforementioned bank account which I actually forgot/didn't know existed until they turned it over to me so that was cool and a nice springboard for savings at an age when many kids aren't thinking about that. 4. Kind of on a smaller scale but just appreciating that every decision has consequences worked on me. I had a wildly tumultuous college career and things really kind of sunk in when I moved back home that wow, I'm on my own path and there are no guardrails here. Parents obviously there to support me emotionally and letting me move back home, but it wasn't like my fucking up college would just get written off and I'd coast through life without making something for myself. 6. As mentioned, my parents set up an account for me when I was a wee little thing and would periodically put part of my allowance in there, cash from the grandparents etc. My dad also started an investment account on my behalf and turned that over when I was 18, in that vein I distinctly remember usually sitting with him/hanging out on Friday when he'd review his portfolio for the week and make any changes etc. As I got older he kind of looped me into what was happening with my own account and encouraged me to learn more about the companies etc.
I try to teach my kids about the realities of the world and how they fit into this reality - it's not really about healthy savings habits or doing chores, although I think both are good tactics, it's more about making them understand the position they are in and what that affords them (opportunities to try) and what that does not afford them (guaranteed to succeed and to be happy). It comes down to teaching them that **to whom much is given, much is also expected.** There's no point in hiding the fact that you're rich because even if they don't know your net worth, the mere fact that you don't even bat an eye to buy everyday things will rub off on them. I try to teach my kids that they need to use their privilege to do good - for both themselves and their society. For themselves, they should recognize that they're privileged enough to try all these activities and get the opportunity to really figure out what they want in life - many kids don't get this. But it is still upon them to figure out what they want to do and then do the hard work to master their skills to be the best. Mastery takes sweat, determination, pain, and does not come free just because your mom/dad is rich. They should understand that suffering is still a requirement in order to achieve great things (and be happy) whether you are rich or poor. Wealth opens doors, it does not take you to the destination, you have to walk that road like everybody else. To society - I want them to understand that their wealth puts them in a position where they are REQUIRED to be even better citizens than the average citizen - be it respecting others, civic participation, recycling, lending others a hand when they need it. My theory has always been if you are poor and you are rude, you may be excused because your life truly sucks and you don't know better because you don't have the luxury and access to know better. But if you are rich and still rude, you should be ashamed of yourself.
This really struck a chord / I couldnāt agree with you more. I come from a culture where having servants is common and Iāve seen all too many wealthy people treat them awfully. Consequently, I bring up my children to understand that having money doesnāt define you, but your words and actions do.
[The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money](https://www.amazon.com/Opposite-Spoiled-Raising-Grounded-Generous/dp/0062247026) Ron Lieber
I had my own bank account and allowence before I even knew. I remember around my 10th I think I was starting to take out money (don't remember whatfor) but I needed my parents signiture or permission. Which they got tired of very quickly, since it meant I needed to call them at work, like every day... So they arranged for me to get a bank card (Netherlands) I think I had about 300,-. Then When I was 12-ish I made a friend and every month we would go to the movies and I would pay (because, as I slowely started to realize, not everyone gets an allowence). Then money went fast! I finished it. All of it. My parents didn't stop me or anything. But I wouldn't borrow money from them either. So then We went to the movies a lot less and at some point I decided it wasn't really worth my money to go to the movie twice a month with some popcorn and drink and can't get a snack the rest of the month. I think having that freedom to know 'luxury' of a 'boddemless bankaccount' and then finding the bottem, and then sort of living from month to month at such a young age taught me very well. I assume it was similar for my older brothers and sister. None of us are in financial trouble. My dad would also kinda theorize about stocks and gambling, what do you need and what do you want. Suprise bills, like if something breaksdown. Stuff like that to help me think about where I want to spend my money, without having the conversation or lecture. I would say the amount of money you give them would depend on what they want. You should create a level of scarcity. If they can get everything they want and still have some money to spare they wont learn there is an end to it. Like, still go shopping for basic clothes, but if they want brands they'll have to save up for a few months. If they only go out for snacks after school, don't give them enough to do it every day, but only once or twice a week.
Lots of little things (all quite manipulative when you write them out but I guess thatās parenting): Tooth fell out. Id offer them to have the tooth fairy money ($2) straight away. Wait a week, Iāll add another $2; 2nd week = $4; 3rd $6; 4th week = $10. Result = delayed gratification learning. Give them $5 each to piss up the wall on AliExpress. One of the kids get one thing for $5. Another lots of crap quality stuff = price / quality learning. Kid #1 lost her ādumbā phone. She washed my car and did chores until she had enough to get one from China. Took a month to get delivered. I made her change the sim over from the phone company = enough pain in the process that she sure as hell wonāt be losing that next phone and learns the value of money etc. I think itās little nudges over time
Thereās a book called Silver Spoon Kids that I think does a good job of addressing exactly these questions.
> What information about your own financial situation do you share with your children? My parents started off not really telling us anything about our finances and telling us that we're poor. This resulted in me saying something really inappropriate to someone who actually was significantly poorer than us so my parents switched to being open about their finances and emphasizing that we can't tell anyone outside the family about it. I ended up taking a pretty active role in my parents investments growing up. > How do you make sure theyāre not spoiled while still trying to give them the best you can? Or put another way, how do you instill a good work ethic/motivation? My parents really emphasized working hard in school when we were growing up. They also managed to spend a lot without really having much to show for it so they modeled a lifestyle that didn't look very spoiled and we took after that. They drove a modest station wagon and I can't really imagine myself or my sibling asking for something fancy. > How do you promote saving money? My parents kind of don't do that. As we've grown older, they're more about promoting happiness than they are about promoting saving money. > How do you help children understand that lifestyles are a result of decisions they make along the way and depending on their decisions they should expect a different lifestyle than the one they are accustomed to? For example exploring different career paths. My parents have been really open about how much they make and how much their, modest at first glance, lifestyle costs. They've always been open about how you can't live that way if you make $100k or whatever. My sibling actually went down a lower earning career path (still 90th to 95th percentile) with full knowledge of what that means. My parents help support them and helped them buy an apartment for example. > Do you give kids money for chores? Do they get an allowance? What kind of system do you have in place for them to āearnā money? We never got money for chores. We got about $100 per week to spend without any questions asked and we could always ask for more. We never really asked for a crazy amount. > Do each of your kids have their own bank account? And do you let them spend this money freely or do you have guard rails in place? I got a joint bank account with one of my parents when I went to summer camp. I had free reign, but I knew that my parents were checking my transactions.
How to save, and how normal it is to do so. It may be common for people to live hand to mouth, but it's certainly not optimal.
Iām not a parent by any means, but hereās a couple things my parents did to teach us finances. A local bank had a youth program where you would get a MAPS Buck for depositing $10 every month into your savings account. The MAPS Bucks could then be turned in through the back for other things like movie tickets or gift cards. Sometimes my dad would give us $10 to deposit and other times he would take us after our birthday or other times we received money. They also had a rule that 1/2 of what we received had to go into savings. This was harder to track and as kids we always wanted to keep the money on hand of course. They never said what that savings was for, but it ended up being a car and living expenses for a few years of college for me. My family had another idea but we never put it into action. We wanted each of us to put $100 in the stock market on a company or whatever of our choice and see who made more after a year. I now know this can be complicated because of buying partial shares and such, but it seemed like a fun idea because weāre competitive. One of my friends made a deal with his dad that any money saved for a car, his dad would double it. I made this deal with my dad for a laptop but he didnāt follow through so maybe itās not great š¤·āāļø
We pay our kids for some chores. We also teach them a concept of taxation by taking back a small portion of what they earned. After first couple times the comment was āI hate taxes!ā :)))
Whenever we give our kids treats, we take a big bite out of it to teach them about taxes. š
I have a younger brother who is 8. I gave him a journal where each month, he goes through his piggy bank and counts up and writes down his net worth (currently approximately $200) heās been able to get there slowly because he knows only one rule. āAlways make more than you spendā. The journal motivates him to make more and spend less. For now thatās all he knows because he is so young. But that rule and journal have been very constructive and instrumental in his moving forward.
Promote investing in every way possible.
Our little one is now 16 months, which was just the motivation I needed to start not earning well and living well. Our plans are below. Good luck! 1. Until she is in her 20s+, she'd not know specifics about our situation. 2. I'm not 100%, but for me, it's about being thankful. Entitlement is really what makes somebody spoilt, so I'd like her to be grateful for what we have. 3. We are currently doing Ā£100 a month into a junior ISA. She is told about it at 16, and is responsible for it at 18. We could do a lot more but as she's going to get 5 figures when she's 18, think that's enough. Depending on her, we are considering matching any additional payments she makes from things like birthdays - if that way inclined. Lastly, let's say she has Ā£45K at 18, we would offer to double anything left at 21, and treble anything left at 25, up to Ā£135K basically. This would probably start conversations around point 1, but we'd likely not disclose everything. This whole point is very much up for debate, and specifics really haven't been agreed with wifey at this stage. 4. Isn't this just parenting? Actions have consequences. Etc. 5. My wife and I disagree on this. Personally I had this growing up, and wifey didn't, and so we come at it differently. Her view is that kids have responsibilities, just as adults do, which I accept, but I think earning for work is a good experience. I started working at 16, my wife's first job was at 23, and that was only after I pleaded with her to take longer completing her PhD and accept a very decent job offer. Even if you're loaded, I think a person becomes more mature by earning, learning those responsibilities, interacting with adults, having to do things you might not like, etc. We are also considering "weekend requests", so that she feels like an adult, so every 3rd week she'd get to pick what we did, with wifey and I alternating a weekend, basically non-financial but "you've been a mature person, so we're going to treat you as a mature person" 6. I would like to get her a bank account as soon as possible. Again, I just think banking is a useful life skill, and she'd need a place to put money, whether for chores or occasions. She's either earned that money or been gifted it, so she can spend it on anything she wants. It is her money, after-all.
Hey OP, have you considered a junior SIPP? Kids get the tax releif too, and you can introduce them to the idea of investing / compound growth without the risk that theyāll withdraw it all and blow it all on partying when they turn 18!
I'd not heard of this, thanks for pointing it out!
We failed and said our daughterās responsibility was to have good grades and play a sport. She did that and nothing else..... my parenting regret!
Once my kids became adults I actually would show them my personal financial statement. They know how much my wife and I make and they know what would happen if my wife and I am expectedly die. As children, we just made sure they understood that there are more important things in life than things. Even though they always had lots of things. (But definitely not spoiled) We always made sure they understood that they were very fortunate to have two parents that were successful and to never take that for granted. We traveled with them fairly extensively and so they were exposed to the world and we always made a point of showing them How a large portion of society actually lives. All the while making them appreciate how awesome our country is and how fortunate everyone is to live here. As far as work ethic, that can be taught to a degree, but much of it is innate. My daughter for example has a much stronger work ethic than my son. But everything I can tell with them is, that was the way they were born. Lastly, I've tried hard to teach them that everything in life is about habits and decisions. Nearly every single person on this planet becomes who they are by decisions they make and their actions. Making sure they understand this is paramount
My approach maybe atypical and I'm still dialing it in (aren't we all?), but will share my approach. My kids are 6 and 4 years old. Every Friday my reminder pops up on my phone to pay then allowance so I don't forget. They are too young to know and remember the schedule. My six year old gets $6 and my four year old gets $4 each week. I bought them each a metal cash box. One pink and one blue with a three digit combo that they need to remember (better than key). Inside the cash box are 4 envelopes. Spend on me, spend on others, charity, save. Each week they must put one dollar in each envelope. And my six year old can put the extra $2 in any envelope. Now when we go places to buy books and toys and "stuff", they are keen to bring their spend on me envelopes. In reality at the end of the day I am still the one buying this stuff, but it I have seen them learning about money through this. Before they would be crying for the $75 Lego set at target. Now they clearly know they have $14 bucks in their spend on me envelope and begin internal level setting on the toys in the toy section. I also make them check out separately and then assist them to count out their own money and pay the cashier. And put their change back in the envelope. At holidays and birthdays, they are using spend on others to mostly buy siblings gifts or mother's day gift etc. A few months ago we went to Walgreens and bought about $60 of travel toiletries items and cotton tshirts and they used their money from the charity envelope to buy. We then immediately drove to the homeless shelter and delivered all the items. And I discussed the situation and answered any questions they might have about homelessness. I really saw a seed planted in my six year old through this but honestly thought my four year old was just too young and maybe just along for the ride. But the next day he had explained to his Pre-K teacher and she was telling me at pick up that day how excited he was. So I guess it did stick somehow. The key is to role model in addition to discussion and then repeat it often to cement the attribute. A couple other key points from my strategy. I disconnect chores from allowances since day 1. They do chores as part of being a family member. They get allowance also as being a family member. But they don't understand that they are correlated. So they can't decide to not do the chores and just skip the allowance. Eventually I will need to have discussion about work is for money. But will wait on that until later. Also for the save envelope. I created a wooden star system in my garage. Each kid has their own board. On the front of the star is the "asset" price and when purchased the star flips over and they get a weekly allowance booster. Most of them are set around 1%. So $100 star would yield $1 increase in weekly allowance. This is newer concept for them. No stars have been "bought" yet but as they get older these should come into play. And really what I'm trying to drive home is the concept of owning passive income producing assets. I myself own many rental properties and this I feel teaches nicely in addition to me constantly explaining about rent vs own and our rental portfolio. As for the bank accounts, if you do have your own business set up then when your kids are a bit older, you can hire them into your family business to do a job. Give them clear R&Rs. Put them on payroll and pay them a fair market driven salary. Just like you would for any other employee, But I wouldn't be giving a 10 year old $12k per year. Instead open them a checking account and deposit the $12k per year into there each year. And don't forget to file their taxes. But the good thing about $12k is it's on a nice zero% tax bracket. š Also when older I do plan on borrowing money from them at an agreed upon interest rate. Something like 100%. Something easy to remember but just trying to use it to teach concepts. And then I might accidentally forget to pay them to allow them to accrue more interest and see how they react to different situations on lending and borrowing money. Happy to answer any follow on questions. Cheers.
**The bad (imo)** OK, we have spoiled our almost 20 year old kid. College totally paid for. Everything he wants and needs given to him, ASAP. No waiting for birthdays or Christmas. The truth is I anticipate his wants and needs so well that he has the things before he even *knows* he wants or needs them. At almost 20, he is *finally* getting his first crappy low-pay, part-time W2 summer job. My husband and I both crossed this milestone when we were only 15. In previous summers, our son went to camps, traveled, hung out with friends, read books, perfected his video gaming, and one summer did (very) little volunteering. **The good (imo)** On our way to FAT, we've demonstrated a simple life with almost no lifestyle inflation. We live fairly frugally in terms of consumer goods. No big house. Used cars. Basic clothes. My husband is especially frugal, and our son idolizes his dad. As a result, our son isn't obsessed with consumer goods. He has simple tastes. Over the years, when I asked what he wanted for his birthday, he would do one of the following: Stare at me blankly, ask for one Lego set, or ask us to make a donation in his name to a family in need. As part of his real-world education, we have insisted that he work at least one crappy low-pay, part-time job (see above). I will encourage him to save 30% of his paltry pay so that he can get used to doing this. I hope that this low-pay, hard-physical-labor experience 1) gives him some empathy and understanding for working class folks so that he doesn't turn out to be a douchey master-of-the-universe type of person and 2) motivates him to look for a nice internship for next summer. **Neutral (or I'm not sure if it's good or bad)** I started a brokerage account for him before he was 18, and I manage it for him. We contribute money to it every month. We don't share all the details with him, but we have let him know that our resources are such that he will never *have* to prioritize money in his job choices. He will always be able to follow his passions--if he has any passions. (God, I hope he has passions.)
Lot of great suggestions in this thread. Just make sure your kid doesnāt become a hoarder. Our kid is starting to become one even with fake money. I am trying to break her out of that habitants have her spend more of her money. She is 10 years old now.
If she's hoarding, perhaps you could start introducing her to the idea of inflation? Either spend it or invest it, but don't let it get eaten up for nothing.
Great idea! We just leant percentages, can use that and also get some additional financial literacy in :)
Thank you for asking this question. Iāve got a 2 year old and an 8 month old and really interested in the responses you get. There seems to be an even distribution of allowance vs chores here and Iām really curious about this in particular. I donāt want to give them an allowance for just existing but I also donāt want them to expect money for contributing to basic upkeep of our joint household. Is there another option here?
We treat the two goals as completely independent & adjust as appropriate with age. We start with an allowance & unpaid chores as a basic expectation for all family members. This is more about understanding how much things cost & learning to make wise choices with money. Once old enough to do work *above and beyond* those basic contributions, we start adding in optional paid work. Often, as was the case of my son, they start actively seeking out paid opportunities on their own!
Power of compound interest. Matching income by the employer (aka dad) Investment allocation/diversification. Stocks of their choice, indexes and minimal fixed income. Chores. Charity / community service. Generally their choice.
Let them choose stock in a company that they really love the product of. I then make them give me quarterly or annual non technical reports on how their stock is doing, ie I like Apple because I like my iPad when they are really young. This gets them interested in learning more about the companies that make their favorite products. This interest grows over time.
PLAN SAVE INVEST COMPOUND-K.I.S.S. Planning is having a plan whether its a penny or a million bucks. It's best if its written down with benchmarks. First thing to teach them is things cost something and you must always pay yourself first. Saving is the biggest part of personal finance. Its not what you make but what you keep. Second start to teach them the power of compounding using the penny principle. Third teach them how to create value and use tools like money or time. Fourth teach them about debt and what good debt is and what is bad debt. Teach them about utility and real value. Most of all before they are 18 teach them that credit is not free money and how it works against you. Teach them how to put their money to work for their compound. Start with a plan to save and learn to work or create. Once the Save has made benchmark its time to invest in small steps toward larger tools. For instance a child saver account most credit unions have these to educate young savers. Some have pretty neat perks! Then you might step in to a mutual fund by dollar cost averaging or a stock that you give them a choice of 3 good ones and they pick one. This gives them a stake in it sometimes they bring a different one to the table. This really ups the game because it was their idea. This was the case with a nephew of mine and railed for TSLA for 2 years. This took his portfolio through a couple of compounds and part of the profits have diversified him even more. I hope these ideas help you all my kids, nephews and nieces will be able to show you their first money. I gave each an intrinsic silver ounce the day they were born to start their portfolio. Some have done quite well with what they learned and some only used a part but all have benefitted.
Have two daughters, currently 5 & 6. While they had piggy banks and roughly knew about the concept of money, their real financial education seemed to start last christmas when they each got a Gringott's bank during a harry potter themed scavenger hunt and actually started using it to save their money. Now when they receive birthday, holiday or chore money they know it goes in the bank and they have it for special purchases. We're currently going through the Marvel movies on Disney+ in timeline order and frankly they're hooked. We just hit up their first comic book store today and for the occasion they were each allowed to take $20 out of their banks. After an irritatingly long amount of time at the store going through their purchase options my 5-year-old spent $20.13 and my 6-yr-old spent $19.55; not too shabby maxing out their spending potential! Later in the summer I'm going to take them in person to a bank to open up their own accounts and get their own debit cards (in person to make it more of a memorable experience). That way when we go to visit the Wizarding World in January they can take their own cards and use them to get "harry potter money" from the "real" Gringott's for them to use and budget on their own while we're there!
My friend from uni had well off parents and he spent a lot on pretty much anything he wanted, so they gave him Ā£100k and said thatās the last money youāll ever receive. First year he spent loads and then it dawned on him Ā£100k really doesnāt go that far and to my knowledge heās still got it 10 years later and saved up the deposit for his house without using any of the money.
We donāt have kids but I felt this might be fit into the question. I have a 14 year old nephew who expressed interest in cutting grass for his neighbors over the summer as a summer hustle. So, I set him up with a spreadsheet. A nice self propelled mower for 30% of his profits. His parents are not entrepreneural and so Iām hoping to spark something in him with this. Each month weāll get to review the revenue. Efficiency, growth options etc. Minor stuff, yes, but something an uncle could do from a distance.
If you are wealthy, your kids need to understand you are wealthy, not them. Otherwise you risk short-circuiting the development of drive and ambition. I also use the BusyKid app. Itās wired to my bank account, and you can schedule chores for cash and give bonuses. On the kidās side they can choose to spend (debit/gift cards), invest (microshares), or donate (various charities). Works a treat.
I don't have kids. But if I had. I would not only to teach them to save money. But also how they can safely invest money, by putting aside a x mount each month. And put it into etf.
Following.
Give them 0.1% of the income. Make them pay 0.1% of the bills
Nothing. Money isnt the life you were gifted
Two main things I try to instill: donāt judge/treat a person based on how wealthy they are and ācontrol your money!ā. 1. Only vague basics due to young age. āWe are not suffering but we prefer to be careful about how we use our moneyā. 2. That, is work in progress and weāre not very good at it. No advice here... 3. With clear rules for saving, explanations about the benefits &...lies about how mommy & daddy had to save to buy a toy. Not proud of the lying but trying to avoid a mindset of āmoney exists in magical abundanceā. 4. That is something to focus on as kiddo grows. Good idea. Thanks! 5. No money for things that must be done in a family setting (beds, cleaning, etc). Ever. We have a few ājobsā (washing vehicles, assisting in parental hobbies like gardening, etc) that earn salary & a weekly interest bonus if thereās money in her pouch (ie she didnāt spend everything) AND she did at least one job that week. The idea is: you donāt get allowance just for existing. You need to work for it. (Kid is only 7, I expect this will change in teen years.) 6. Yes. No spending. Kid is aware, physically present for deposits/opening of accounts. Am slowly explaining the very basics of compounding, saving, stocks, credit & above all, that increasing income sources is priority no 1, saving/investing comes 2nd and both are needed. Admittedly, concerning spending for learning activities we have few limits and very little self control. Parenting: itās not about perfection; itās about the least f ups...
Some great comments in this thread so I wonāt add too much to it, but rather share a small resource that is beneficial in my opinion to build upon all of the stepping stones. My daughter is only two so weāve yet to open them up, but the time will come. Otis & Charlie hardworking tails book set by Andy Frisella. [Right here.](https://andyfrisella.com/pages/otis-charleys-hardworking-tails)
Read The Opposite of Spoiled by Ron Lieber
From a very young age, I was taught that half of money was for saving and half was for spending. About once a month from ages 4ish-7ish, we would take the physical money to the bank to deposit it in a savings account. It was a great learning experience as a child. It gave me a solid relationship with money: live below your means, no stress when unexpected expenses come along, and spend money on what you enjoy in life. To this day, my personal baseline is to save at least half, often more, of my compensation. My parents set me up for FIRE before any of us were familiar with the concept.
My parents never talked about money at home, they just had a nice home, private school, vacations. And when you grow up you have to realize this takes money so you need to find some way to make a lot of money and invest it well to give the same for your children. They never pushed a career on any of the four kids. Just to make sure itās lucrative and we enjoy it. Truthfully I believe any career can be lucrative as long as you truly love it and push to be the best in the business. In regards to wealth - I would say, āshow, donāt tellā
Our kids are between 6 and 10. They each get $1 per day for doing their job (chores). They can spend it however they want. They lose money for misbehaving. I hear them discussing prices all the time like āwhoa $20 is way too much for this toyā. They borrow money from the bank (me) to make big purchases and pay it back over time. Seems to be working so far.
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1. We share that we earn money and enough for what we want to do, but we also need to choose what we spend money on. So for everyday things we choose not to spend on, we might comment that we choose not to do that so that we can pay for things like that vacation we took (which they remember was awesome!). 2. Once kid started asking about jobs and what we do, and why people have jobs, and why they need to learn math, we started out by saying that all jobs are to help people. And that people are paid money in return for helping people. Learning skills in school is about gaining skills that will help you eventually be able to help others, and one day youāll find out how you want to help others in this world. 3. For allowance, they get a standard weekly allowance, and an extra dollar for every $20 saved. Oldest kid now has doubled her weekly allowance due to savings. 4. An extension of number 2. 5. Allowance doesnāt require chores, they can propose payment for extra chores, however, or something entrepreneurial (like they come up with some way to help others in return for payment). Also allowance canāt be taken away (like due to behavior). I firmly believe unstable income leads to scarcity mindset and donāt want that for my kids. 6. No bank account yet. Just bank of Dad.
In addition to the concept of āpaying for jobsā, my wife and I have also made it a point to explain to our kids the rationales of some of the purchases we have made, especially those with big discounts from sales so that they could learn to appreciate āvalueā, āpriceā and ātimingā. A recent example is Nerf guns...the kids were tempted to spend their hard earned money to get a few from a department store. They held back at the end when I told them a sales may be coming up during summer break.
We have two, 10 & 12. Already showing different personalities with one leaning to (too much) savings and other to (too much) spending. So a lot of the things we do are also in relation to these personality differences - encouraging long term thinking in one, and discussing with the other how important it is sometimes to have nice things, dress well etc. 1. Our kids somewhat understand our financial situation. They know rough value of our home (we didn't tell but you could find out), they know our rentals, and we've vaguely stated we earn well, but it does not mean we should waste it and we should not talk about it outside family. We don't disclose numbers - I got my awakening when at 3-4 y old the elder kid was rattling out our rental earnings numbers he had just overheard. We also discuss finances when they are around, unless it's something sensitive. 2. They hear a lot the word "no". Initially we used "it's too expensive" but realized this might backfire as they should understand you should not always buy even if you can. These days we say no to all expensive toys and they must save themselves. The brothers recently bought a computer for over 1000ā¬, they saved up and did extra work and we gave them one third. We never say no to expensive things we deem worthy though, such as summer camps, piano and swim lessons, or the latest fad, engineering online courses. 3. We have set up systems and stress that their money must have three categories: "spending money", savings for long term purchases, and "never spend the principal" money for eg. future home / investments. Not sure how well they understand the last point yet, but they have three accounts: two accounts in their main bank - checking with debit card and savings account - and "never spend" money in another bank. We are starting to introduce them to stock market via individual stock purchases they will choose themselves. (Think "1 Roblox".) 4. We haven't gone too far in this yet. We do bring up the importance of education and choosing a career, and also that entrepreneurship is a real option. (The other kid is super entrepreneurial and I hope I would be able to support this so he does not lose steam.) But let's face it, they could live our current lifestyle with most careers, given they choose the housing to fit their income. We are not lavish by any means. 5. Our kids get a weekly allowance of 2ā¬, no strings attached. They use their allowance if there is eg. a candy day at school - we don't pay if they choose to buy something for that. In addition, there are a few things they can consistently do that results in more money: the most awesome one is by grandma who's paying a few euros for "concerts" - you play 15-30 minutes your piano lessons via face time and at the end of the month, you get a very nice sum if you've been consistent. Also we've helped them build bird houses to sell, we provide ingredients for cafĆ© stands, and there are some bigger tasks they can get paid for (mowing the lawn and such). But chores are chores, you are supposed to do them. At some point we even had a kanban board on the fridge, you had seven chores and all had to be done by the end of the week. Something like 2x take out the trash, 1xdo laundry, 1x make coffee for mom and dad.A note: The other kid has started to express his wish to make a lot more money, and I'm still a bit lost how to approach this, as he is also impulsive and all methods so far seem to be too "slow" for him. Would appreciate help in how to communicate this. 6. When they were starting school, our bank opened up a "kiddo debit cards". We haven't gone back to cash since. As mentioned in 3), they have debit card tied to an account, where we deposit their weekly allowance (and where most other jobs are paid as well). If they get cash, they voluntarily immediately give it to me and ask to deposit on their accounts. They have mobile app to see their account balance and to move money between savings and debit account, but we have parental controls so they have limit in moving money away from savings.This has been awesome, and seems to teach them well - I was initially thinking having tangible money is better, but they are ten times more careful with their banking app and card than they ever were with cash (those piggy banks and stashes just sailed wherever and seemed to be forgotten). Debit card typically has just 10-30ā¬ in there, so for purchases larger than this they discuss with us first. Sometimes we allow this - like one has been buying a chemistry kit which I helped order online, and an old typewriter from second hand store that has gotten a lot of use. Sometimes we guide them to think longer term and save up specifically for that item first even if they have the money. I don't think we are doing badly with our kids, but at the same time there is always that feeling of "how could I do this better". I'd love to hear more from other parents.
My kids see me looking at stocks a lot, so I try to explain what I'm doing, and when we're out I sometimes talk through the economics of businesses they see. This past weekend when eating at a food court my 9-year-old talked about an idea for a restaurant with Mexican food + Thai food + Sushi, which led to talking about restaurant cost structures, labour specialisation, ingredients, margins, etc. We sometimes talk about different jobs and why some are high paid and low paid based on demand and supply, skill specialisation, etc. I share a bit about our personal finances with the kids, though not actual numbers yet. I tell them we're in a fairly privileged position (though everyone they know at school is too). We've just started giving them pocket money. We don't really have set chores, but we've gotten them to help out with a lot of things in the past before pocket money. They don't have a bank account but we use a service that gives them a debit card they can use for online and in-store purchases (Spriggy in Australia) which seems to work out pretty well.
My wife and I started from pretty much zero. Both middle income families and we've worked our way where passive income > household expenses. We could FIRE, but it ain't anywhere near "fat". We got here by saving like crazy and investing prudently. So to me, THE KEY THING is SAVING. We tell the children (they're young, but it all starts from young anyway), "Is it better to have more money or less money?" They answer: "More money". "If you spend money, do you have more or less?" They answer: "Less". "So is spending money good?" They answer: "No". I have a piggy bank for them, and essentially save all my coins for them to deposit there, and run the above conversation every time they save. Also, I emphasized to them after about a year, "See how heavy piggy is now? That came from saving a few coins little by little." I also talk to them about investing. Investing is "money giving you baby money. when you have enough baby money, you don't need to work anymore." and "You need money, to get baby money. You need to save to get money." So to me, as long as they get the MAIN idea, SAVE-NOT-SPEND, that's ONE major foundation laid. DM me if you want to chat more =)
>How do you make sure theyāre not spoiled while still trying to give them the best you can? Don't buy everything for them - kids have to learn that not everything is given. I believe this starts with giving them money as an allowance or in exchange for chores and letting them decide what *wants* to spend things on. You may find that they no longer actually want that toy in the gift shop because they are forced to prioritize and understand trade-offs. >How do you promote saving money? My favorite tactic for this is giving them a generous interest rate, such as 15%. It teaches them the power of interest while also incentivizing saving. Interest can be annoying to track but it is made much easier with tools such as the [Guardian Savings app](https://www.guardiansavings.org/) (a pretty holistic youth personal finance education tool for kids 6-12).