Tuesday Tip Jar: Get Your Kids Excited About Investing

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Welcome to another “Tuesday Tip Jar” where I will share awesome savings and financial tips as I find them. I might not have something for you every Tuesday, but when I do, you’ll find it here!

If you’ve got a financial tip you think others would benefit from, please send it to me via my contact page at the top of the blog!

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My Dad spent every penny he earned.  If he earned 10 bucks, he spent 10 bucks. If he earned 1,000, he spent 1,000. If he earned 10,000…

You get the idea.

My in-laws are similar. They didn’t put any money into savings for most of their adult life, and struggled to make ends meet for many years.

So my wife and I were raised with that mindset, and thus spent many years ignoring savings, living for the moment, and in general being pretty silly with our income. The result is a mountain of debt, this blog, and a promise to ourselves that we will break this cycle with our kids.

My kids don’t get allowance. We’ve always been of the mindset that their allowance comes in the form of friends staying over and eating our food, them going to movies, us renting movies at home, vacations, and all of that sort of stuff. They do chores, but we explain to them that it’s all just part of being in this family, and working alongside mom and dad to keep things in order.

What we have done extensively however is helped them to hustle. They sell things in yard sales, on Facebook, or via side ventures, and they make a fair amount of money that way. My son just recently self-funded the purchase of a iPhone (a generation or two old), and some AirPods. Hell even I don’t have AirPods!

The agreement we have made with them however is when it comes to saving and investing. Our formula for them works like this:

  • For every $1.00 they earn, .25 cents goes to savings.
  • For every $75.00 they accumulate in savings, they are allowed to invest $50.00 in index funds or stocks.
  • With their investment money, they choose one stock (or stock portion) for $25.00, and we choose the other.

Once we get our finances in order, we plan to incorporate a simple matching system for them, so that they can learn the importance of a 401k.

For now it’s a simple equation for them to follow, and it also teaches them 2 very important lessons:

  1. Put away a portion of every penny you earn, and try to put in a minimum of 25%
  2. Diversify!

For the investment service we used Stockpile because it allows for custodial apps where the parents control the investments, but the kids can still track their earnings via an app. The best part is that the app is brightly colored and has an easy-to-read interface, so it’s appealing to their age group.

I don’t want to turn this into another (unpaid) plug for Stockpile though, since I already went into deep detail about it in a previous post.

The point of this post is not which app you use. The point is to get your kids thinking about finances EARLY. My son is now talking to his friends about Tesla’s upcoming electric pickup because he owns $25 in Tesla stock. Whether you agree with his choice to purchase Tesla or not, the simple fact is that an 11 year-old is sharing stock tips with his friends. That’s amazing!

My 8 year-old daughter has invested in Microsoft and Mattel to start with, and she checks her app once a day to see how her portfolio is performing. If you had asked me how my portfolio was doing at the age of 8, I probably would have stared at you blankly while putting a Cheeto up my nose and demanding that you get out of my way so that I could finish my episode of “Hee Haw.”

Our equation above was total finger in the air. The math is frankly not super important for us at this stage. As I said, it’s just important for us to get our kids thinking about this kind of stuff, and growing on their financial journey as we do.

I also don’t buy Cheetos, thus keeping their nostrils clog-free.

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Do you have any tips for either getting kids interested in investing or keeping them interested? Share them in the comments below! I’m always looking for future Tuesday Tool Tips, so let me know whatcha’ got!

 

 

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