Raising Economically Savvy Kids in Today's World

This article is about financial literacy, in particular, raising money-wise children. Money-wise children, you may just say or think, “well, they're just kids, let them grow up naturally and delay grownup matters.” As kids, that's when I believe the learning experience is even more pronounced and more energetic and more wanted. Okay, kids are very curious. And so, I believe, in order to have good adult stewards over financial resources sooner versus later, it starts nearly in the womb. That's right, you heard me. Why not talk and teach about financial things, money, when they're younger?

I will share my own experience with my parents that I personally had as a child and then I will reveal my own experiences with my children. Honestly my parents didn't necessarily discuss money all the time in earshot of our young ears, but we were allowed to listen in on many conversations. Miraculously, we weren't excused from the room, but served as the proverbial fly on the wall, listen but do not speak.

Now, certain conversations were obviously age appropriate. But whenever they were talking about, the children needing a shirt or a pair of pants or parental approval for field trips that's when it would usually come up, and that was more or less every month or two. The costs involved were not humongous. Let’s say $20 to $30 on the high side as low as $10. Moreover, we did special chores to earn some dollars for fun and entertainment purposes. In reflection, I always had money in my pocket. Boy, do I miss those days.

My parents raised their children to avoid lack and not take unnecessary risks with their money. They sowed a money seed in us where we knew the concept of money and its value. It wasn't called a tool, but something that should be accumulated for a greater good to enjoy some of the fruits today and also later. That said, even then we wanted money like any other kid, we understood that it did not grow on trees, at least our trees.

I was a true die-hard saver. I saved my money for things I wanted. It didn’t matter how long it took to save. I developed extreme patience progressively as a child growing up, and so if it took six months, I was right there watching the money multiply. How did I obtain my cash? I mowed the lawn, I did extra chores, and worked part-time in the summer.

When I was growing up, we were able to buy things from all over the country delivered to our home. The good old telephone, the landline was my instrument of choice back then. There was no internet, email, there was no cell phones, no pagers, nothing. We only had two choices, the telephone or snail mail. The method I used was called C.O.D., short for Cash on delivery via telephone. Even as a kid of 10 or 12 years old, I was allowed to order stuff on the phone.

True, letters were a viable option as well, but the phone was faster. You pick up the phone and call the store. I would say, “I want to order the magic kit product number, x, y and z”. The price was confirmed, and I provided my address. That was it. Two weeks later the doorbell rings or I’d get a knock on the door. My 40-piece magic kit arrived. Of course, I bought other toys or products from my savings as well. The products were safe. The magic kit didn't have any flammables or anything that could set the house on fire. You know, like fireworks we wouldn't be able to buy that. There were two caveats, I had to have exact cash or change on hand, and my parents’ permission.

Back then as a kid I periodically experienced financial power because I had money. $5-$10 gave me adequate fun. $20 or $ 30 dollars of money gave me a world of options. Can you imagine a world with no credit cards, just cash? The mantra was cash is king panned out many times. I knew the value of cash even then. It absolutely gave me options to purchase things, to save for a rainy day, to even treat friends, or my parents.

The major takeaway, I didn't have a credit card. I had cold hard cash, cash that I saved over a several months to buy what I wanted. Back then, there was no proliferation of credit cards or even debit cards, only cash, checks or equivalents. Although, there was installment credit, store loans and lay aways to buy products or services over some measure of time.

The million-dollar question, what are you teaching your children? Right, think about it. Are you teaching them the fundamentals of stewardship of money, what money is, what money can buy, what money can do? But I did tell you two things. I was going to tell you my story and the story of my children. Now my story is finished. On with the kids.

As my children grew and developed, I took my personal understanding of money and wealth building and started to drizzle that wisdom onto them. We watched Suzy Orman, Jonathan Pond and other financial experts. My children were in the range of 2 and 6 years old when they first heard about saving and investing money.

I know what you’re thinking, did my children fully understand everything they heard or watched? Okay, let's challenge this position. In short, no, probably not. Nevertheless, my ultimate goal was to stir the outdated and antiquated pot and nurture them at the DNA level. In my day, children were seen but not heard, not expected to guide their own fate or have a say so in self-determination. In any case, despite my children’s ages my thoughts were if they could absorb the information consciously or subconsciously then they will be automatically programmed to build their financial future sooner versus later.

I learned that a child’s environment can help or hinder their development in significant ways. If the environment is encouraging and insightful then success is more than likely. Although success is not guaranteed. The odds of making it are still tilted in the child’s favor if there are role models at the home, school or nearby.

My playbook originated in the prevailing wisdom that pregnant women talking to their unborn babies somehow benefits the preborn at infancy and so forth. The belief was common that the nurturing, the comforting and affirmations somehow seeps through to the womb. Not unlike talking to someone that is in a coma who may hear and understand things around them. Moreover, infants, toddlers and Kids in general absorb that energy around them. They absorb the atmosphere around them, which is hopefully, peaceful, pleasant, and nurturing.

My belief is you should do all you can do to teach your children about money when they are young. That said, by the time they are 18, they're already on their financial way. Not to give financial advice, just stating options. As minors you can open a custodial brokerage account such as Vanguard, Fidelity or your company of choice. At that point, you must fund the account by purchasing a mutual fund, index fund or ETF etc.

Think about it for a moment. Let's say your children are 12 years old and start investing $25 every month, even $10 a month. Over decades they can have hundreds of thousands of dollars. By 65, that number could be in the millions.

Many people say they don’t have any money to save or invest. Let alone help a child to invest. I want to challenge that position. In many cases it depends on what you spend your money on and the values directing your saving or investing habit or lack thereof.

I wanted to instill a positive fire in my children to make sure they prosper later in life. I don't want them needing my help. I really don't. I want to be able to borrow money from them. Joking aside, setting our children up for success is important. You don't have to be financial experts or economists. Take them shopping with you and make a point they understand your choices between this product or that product.

As they grow older, you're going to talk about their career path, which will influence their wealth path. Your career path has a direct connection with their wealth path. It's the same road.

I am certain we all want our children to be self-sufficient. We want them to be able to pay their own bills. Take care of themselves. That's the big point, to enjoy this life. We want them to avoid making stupid decisions with their money. Growing up to and through adulthood, I made stupid decisions, mistakes. The point is to acknowledge it and move on. Prosperity is even more possible when we have time on our side. Why we preach to start as early in life as possible. The power of compounding is on your side the greater your time horizon.

Know where your money is going. Name every dollar you have. This dollar is for savings, this one's the investing dollar, this is the real estate buying dollar. This is the emergency fund dollar. Everything dollar has a name. Don't go nameless because guess what, when it doesn't have a name, guess where it goes? Into a black hole, a void, it disappears. Teach your children to have a dollar naming habit.

At any rate, it's important that we raise money-wise children so they become money-wise adults who will give you money-wise grandchildren. I highly encourage you to learn about investments. This newsletter is a good place to start. Start small. I would encourage ETFs or index funds especially. Most people don't have a lot of time to research individual stocks.

In closing, educate yourself first about money and, in turn, educate your kids, whatever age they may be at the moment. You can never be too young or too old. You can't go back in the past; you can only move forward. If you didn't start, you can start today.

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