I have recently had a daughter. Obviously she is much too young to learn about investing now. But I definately want to teach her in the future.
Does anyone with kids have experience teaching their kids how to invest. If so I would love to hear your story. What worked for you? What are your kids investing in now?miikeParticipant@miikeJoin Date: 2008Post Count: 111
I'm only 26 and no kids of my own, but I can tell you a few things that my father did to help me with this and has really set the tone for how I will pursue a strategy to teach my own child some day about investment.
In cases a child wants something, give them a positive and negative option which they must chose with consequences on both:
i.e. You can but the toy now and you don't get any money to spend on something else for the next month or you can save the money and buy the toy in a months time and still have a small amount of money left over to buy something else.
When a bit older, they will have a sense of value of money due to the above, so really push the idea of money management and total loss, you need to show them a form of gambling, in which they can lose everything, or manage the risk so that if they do lose, they are not hurt with the option they have made.
Hope these tips come at some use, personally it did the trick on me…
MiikeBuilderbhaiParticipant@builderbhaiJoin Date: 2009Post Count: 18
I've got a 4.5 year old son.
To get him started on his investment education, we've started playing "Monopoly". I let him play the way he wants it, but in the process he becomes aware of the role of bank, holding properties to get rent, auctioning the property to get cash etc.
Its just a beginning…Will definately incorporate Mike's suggestion as he grows older.
All the best.
I do enjoy playing Monopoly and that would be a great fun way to teach kids about investing. Also I own Robert Kiyosaki’s game CashFlow 101 which teaches you about becoming financially free. There is a CashFlow for kids which I am definately going to invest in to teach my kids.
They say the best way to learn is by doing, and the second best way to learn is by playing games. So games are a great idea. Thanks BuilderbhaiGeraldineMMember@geraldinemJoin Date: 2010Post Count: 81
I am a former teacher and mother of four, from twenties down to twelve. All advice so far is great, but I know you'll find that each child is VERY different! Hence, role model, play monopoly and teach delayed gratification with each one, and I am pretty sure you'll still get a different result!! One possibility is that they may react against what they see their parents doing, whatever it is. While my oldest is great with money and already investing, the next one sees money as a way of acquiring clothes and travel. On a cheerier note, I realized she had absorbed a lot of useful knowledge when a boyfriend's mother was about to enter into a poor investment – she thoughtfully recognized the pros and cons.
The most interesting thing I can share are findings from research by W. Danko (I think, The Millionaire Next Door fame, someone will correct me I am sure) that discovered that (almost) no matter what occupation a person had, they ended up less financial if they had received 'economic outpatient care' (money help) from their parents along the way!!! So I think the message there is to teach children to expect less, and to work for what they want. It is very hard in this consumer society.
I am sure you will do well as you are already aware and interested.
GsonyasalMember@sonyasalJoin Date: 2008Post Count: 421
My three children play the cashflow for kids game with me and my youngest, aged 5 when we started playing, now aged 7 always beats me.
I have taught my chidlren to compare the prices of things when we go shopping, whether its bread or milk or yoghurt. They also ahve learnt about ebay!! If they are given money for their birthdays or bgift cards, they know to look for items that are on special and to compare prices on ebay to see where they can get the best value for money.
They also know the difference between a house and a home, as they often find me looking at property on RE.com and ask whether it is a new home for us or a house for someone else to live in.
I agree with not giving everything to chidlren. My siblings and I all bought our own first cars and appreciated them more than the people who had cars given to them by their parents. My niece is aged 17 and has just left for a school excursion to China that cost over $3.5k and she has paid for the trip herself. her parents told her that they were happy for her tog o, but she had to pay for it herself, which she has done by working part time.
Lead by example, educate children about the value of money and investing
SonyafWordParticipant@fwordJoin Date: 2009Post Count: 471
While I don't have kids of my own, and appreciate that every kid will react differently to the same experiences and teachings, I could at least share my experience when younger.
As a kid, 'Rich Dad, Poor Dad' and the Cashflow game were probably the most influential things for me, both of which were introduced by my Dad. But before that I already had some early experience. I got a little pocket money each time for daily expenses, an exam well done etc. In essence I learned to 'earn' money off my parents, but I also had to spend my own money on the toys and luxuries I desired.
It didn't take me long to realize that money could be easily spent in greater sums than it could be earned and my parents weren't going to give me anymore unless I absolutely earned it, so I had to save and learn delayed gratification, but I needed some other ways to make money quicker, otherwise it'd be years before I could buy a desired toy.
My Mum quit her job and spent much time at home to ensure my brother and I were studying. And during that time I would frequently see her watching the stock market. I was curious about all the numbers and my Mum taught me how to interpret that, which got me started with a fairly small amount of money. My parents also taught me that while saving money, that the bank would pay me interest, or shares would pay dividends. In essence this appeared to me that money makes more money. If I saved or invested more, I would earn more even when I wasn't physically working for it, whereas that toy I just bought wouldn't earn me any money and I couldn't sell it either.
And many years later both my parents encouraged me to buy a house, rent it out and move back with them, which I did, and now I'm looking to acquire a second one…the rest will depend on what happens in the future.
There's no 'best way' to teach kids I suppose, but even from the responses in this thread thus far it appears there are some similarities. The key things appear to be early experience, stimulating and easy to understand games/ books on the concepts of money, and support from parents. Naturally, a little ambition helps. If someone wants something badly enough and is willing to earn it morally, they will surely get it eventually.
The comments from everyone have been really helpful. As a new Dad I am trying to get my head wrapped around this concept. I have always loved investing and I think it has put me in a great position for life. I want my kids also to be in that great position also (no matter what they decide to do vocationally).
There seems to be a fine line you need to tread between helping teach them and being overbearing. I fear that if I go too far then they will rebel against the idea of investing and end up not having enough money later in life. With so many drugs and other problems in society I guess this is the least of my worries.
From what everyone has said I think it is important to keep it fun and easy…that way they stay interested. Also we need to respond to each child differently because everyone will learn differently and we need to accommodate for that.
I like what fWord said about just watching his mum and wanting to learn because of that. I think leading by example is one of the best things we can do. I want to take my kids to help me inspect properties and make it an interactive learning experience for them as. I have found I learned so much by actually doing property investing…way more than I have learned by reading a book. So if I can get my kids to do property investing, then they will learn. Whether they use that in the future will be up to them.ouchiemamaMember@ouchiemamaJoin Date: 2010Post Count: 27
Hi Ryan, first up congratulations on becoming a new dad. Its great that you're positive about teaching her about financial freedom and investment. I believe its one of the reasons why so many people don't achieve it … we're not taught basic budgetting skills as children (or in school) … and its so important.
I have two daughters. We've taught the girls' about putting money into their bank accounts and they've really enjoyed seeing their savings grow. I put their pocket money into the account every pay day and give them a balance every now and then. If they want to buy something they know it has to come out of their pocket and that means the balance will be less. I don't believe in giving them everything so I think its important that they learn a work ethic and that's what pocket money is all about. Just recently (as they're getting older), I've started offering money for other jobs, ie. wash my car (works for me! LOL) and I'll pay you $5. My youngest usually takes up the offer and puts the money into her 'piggy bank'.
As for investing, the girls' have watched my husband and I buy our first and then build our second investment properties. They can see first hand how the process works in the buy/sell and how the tenant/landlord relationships. My girls' came through properties with us when we were buying, they watched the whole building process happen, they were with us when we reviewed tenants and celebrated with us. We took it on as a whole family project and explained that it was for their future as much as ours. We outline the steps as we go.
Basically, they live it with us so the message is passed on … your daughter will do the same. Look at the children of the wealthy who take over the businesses because they've been raised on it … Lachlan Murdoch, James Packer, etc.
As a paramedic, I see lots of the low end of life. My general observation on this is (please excuse my crassness) that stupid breeds stupid. The children I attend are very often from families who probably haven't been taught the basic skills (or encouraged, or simply don't want to know) so they have nothing to pass on to the children and it becomes a perpetuating cycle. My heart breaks for these children because they're an open canvas with no direction and its such a waste. We can do better!!!
When the time comes, we'll be encouraging our girls' to be financially savvy and to invest but all we can do for now is instill messages and lead by example. Create a good work ethic, teach them about the value of money, basic budgetting and the importance of financial security … the rest will be up to them. You'll do fine … you're switched on, motivated and smart … I'm sure she'll be a chip of the old block!fWordParticipant@fwordJoin Date: 2009Post Count: 471ryan mclean wrote:There seems to be a fine line you need to tread between helping teach them and being overbearing. I fear that if I go too far then they will rebel against the idea of investing and end up not having enough money later in life. With so many drugs and other problems in society I guess this is the least of my worries.
This would indeed be a genuine concern. I'm not a parent yet and only 27 this year, but my assumption is that in general, parents want the best for their kids and have their best intentions at heart. But as you say there's a fine line between 'trying to help them' and 'trying too hard'. I used to despise all the extra tuition and homework my parents put on me when younger, but I gradually accepted it was for my own good, even if it ultimately did no good (ie. my results never improved despite tuition), if you get what I mean.
Some time ago I read a book/ article that described the feelings people generally had towards their parents and how it changed throughout their life, and I'm just roughly putting it down as follows:
Stage 1- "I love my Mum and Dad very much and they are the best in the world!"
Stage 2- "My parents sometimes disallow me from doing things as I please."
Stage 3- "I hate my parents. They don't understand and they never listen."
Stage 4- "It appears my parents have lots of experience and what they say and did makes sense."
Stage 5- "I miss my parents. I wish I had spent more time with them."
The tricky bit I'm guessing, is catching a kid in Stage 1-2 and spending enough time with them and teaching them as they go along. The reasoning is that if you get a kid that hits Stage 3 they could be a little less receptive, and if you catch them only in Stage 4 it might be a little late. Naturally it's better late than never. The difficulty of course, is that parents do need to make a living, which keeps them away from their kids. The trend towards working longer hours and increasing competition amongst co-workers is a grave concern. But hey, we can only do what we can do.
Anyway, I'm no psychologist. Just penning down some thoughts. It's real hard being a parent, thank goodness I'm not in that position yet.KoozMember@koozJoin Date: 2006Post Count: 39
I started my 6 year old off with $2 worth of coins. She then had to divide into 4 equal piles. Then place 50c into the 'Big Girl' box – for deposit into her bank account at a later stage (to access when she is 18), 50c into her 'Help' box – to donate to RSPCA or anything else of her choosing, and $1 into her 'spending' box. She then saves her money to buy a toy of her liking (which does take a few weeks).
It gives her a sense of what I think is important – saving for the future, helping others and receiving goods when she has enough money. Its working a treat!siraitkenParticipant@siraitkenJoin Date: 2006Post Count: 41
I do not have kids but have grown up to be financially literate and I believe it is due to a few factors:
– Encourage and promote learning maths from early primary school to year 12.
– Promote business studies (accounting/economics/etc)
– Encourage them to get a part time job when they hit 15
– Do not give them everything they want. Make them decide what is more important (opportunity cost – economics)
– Explain how you make your financial decisions without dissolving to much information and overwhelming them.
– Support them to reduce their financial decision making fear.
My sisters and I have been spoilt financially over the past few years by our parents but there is a big difference between how we deal with money.
DavedblissMember@dblissJoin Date: 2010Post Count: 13
I have two young children and agree with what has been posted so far. You will know your kids better than anyone else and really are in the best position to teach them what type of person you want them to be (much easier said than done!!). Our eldest is 4 and we encourage her to pay for things when at the shops…this gives her an appreciation that things cost money and once the money is gone there is no more spending. She is also encouraged to save (she has a piggy bank) and we get her to put money in tins for charity when we see them. What you do with yours will depend on your own values and whatever you choose will need to be right for you and your family. We are also very open and talk about money and our situation (my parents never did this with us and I think it was a mistake). You do you need to be very careful, you don't want to stress them out with problems…that isn't their job to worry about, but I think that it is important for them to understand that there is only a certain amount of money and things that have to be paid before you get to spend on whatever you want. We also involve them as much as they want with our property investment. I don't want to put them off by forcing it (I know they are only little, but I am practising for when they are older), so I answer any questions and let her look at whatever she wants and I try to explain what I am doing and why I am doing it. Kids learn (I think) much more by seeing what we do, rather than us telling them what to do. All you can do is your best and then hope for a good outcome!
Good luck with everything and enjoy being a parent…it certainly is a fun experience!
dblissgj-la-djMember@gj-la-djJoin Date: 2010Post Count: 2
Ryan, I say you are on the right track to teaching your kids about money. When I was thirteen going onto fourteen, my parents had bought their first property investments to see where it would take us and it turns out, buying your first property investment does make you start thinking differently about how, where and what you want to do with your life. I mean, what my parents learned, I learned. I told my Mum & Dad that when I turn sixteen I wanted to buy myself a convetible car — as long as it's flash, brand-new etc. They said I can get that kind of car of my dreams, but I have to work towards it very wisely before spending over AU$30K on a BMW convertible! I agreed, but new at once that it's not going to be easy.
So, I started off small by helping around the house, the property we bought, cleaned up and everything, but it didn't seem like as if I was going anywhere, you know? I was kind of hoping my parents explained to me at how rennovation really works when you bought an investment. My mother painted all the walls in the house to a totally different colour and it was looking OK, but the lesson I was getting taught from my parents was harder than I thought. I had to skip a month of school and used to think investing was a silly idea, but now older, 19, I soon realized that buying your first property investment is a really big deal. The whole idea about me writing this to you? I started learning about investing at the age of thirteen! At a young age, able to adapt to anything new that I get given/taught from my parents & friends! Although, my friends never had any interest in investing in real estate, I knew they were missing out on a great opportunity here, while they got school work stuck in their faces — even if they attended uni it will only get bigger!
OK, I hope my letter here will help. I mean, investing in property has made me think twice about what I'm really going to do with my life as I get older. My friends will slave hours of work, deny that is how life is supposed to be, but I stayed strong and know that slaving away hours of work, making somebody else rich, isn't the kind of life I want to live, Thanks to my parents who taught me the beauty of investing in real estate during my first year of high school, I managed to open up my mind to the bigger opportunities that are out there!
My advice — start teaching your kid(s) about investing at a young age…I say 10-13yrs is plenty! My youngest brother got started investing when he was six but didn't know much about it…now he is turning 13 this year, he knows A LOT about investing in real estate!