My Kids Just Bought Shares!

As I start my journey into financial independence, I sometimes feel that I am a little late to the party. This becomes more apparent when I read blogs such as Mr Free at 33 who just happened to retire at the exact age I am at now!

The Best Time to plant a tree was 20 years ago, The second best time is now!

Chinese proverb

The earlier you are start to invest, the more money you will have when it is time to retire. When I was growing up, the general advice in finance in Ireland was:

1. Go to college
2. get a good job
3. Save hard.

Investing was never really a concept that was taught back then. And even if it was, it was always for people who were already wealthy. Well, I can’t turn back the clock and start investing earlier. What I can do is pass on what I learn in finance to my kids.

What if I can teach them about the magic of compound interest.? Or what if I can teach them how to better manage their money . How to only buy what they need to buy. What if they understand the foundations of finance and realise how to build wealth before they even go to college? These are not lessons they will be taught in school so I feel it is my responsibility as a parent to teach.

Set a good example

I read something before that kids do what they see and not what they are told. This was a mind-blowing statement to me, because I realised that it is completely true. Have your kids ever done something that makes you sit back a think that you are looking in the mirror. This is because they take in alot of information in the early stages of their life. By just watching you they soon pick up your habits and will mimic what they see.. For this reason I think it is a good Idea to set a good example from a very young age.

Baby steps

Both of my Kids are under 10, so there is no point in overloading them with tons of information because it will more than likely go in one ear and out the other. That is especially true when they were really young. The first steps we took was to have an open dialog about saving regularly. How much we are saving and what we are saving for.

We did not directly involve the kids at the beginning. Just being around us while we were talking soon peaked their interest. When they were ready they soon start asking questions. Do people need to save? Why are some people rich? why are some people poor? are we rich or poor? How do you save? etc. In fact, if your kids are like mine, they will ask you every question under the sun.

Teach them to save

To encourage our kids to save ,we told them that we were planning to go to New York to see their Aunt and Uncle. To do so we would all have to save as family. We bought one of the big Money Boxes and set up a whats app group where we kept track of who was saving what. Every month we would than empty the money box together and go to the credit union to save the money.

This exercise was really to help them understand how to save and gave them a good habit of going to the credit union each week. Our oldest son at the time, took to this very well and literally saved every penny he had while our youngest preferred to buy chocolate or sweets. We put no pressure on them, We simply gave them a choice of what they wanted to do each week. Save the money we gave them or Spend it.

By the time New York came, our oldest son had twice as much money as our youngest who thought it wasn’t fair. But we sat down and explained that he got the same amount of money and he chose to spend it on sweets. We than asked him if he had anything to show for his money and if we go on another holiday what would he do different. He of course said he would save more!

Teach them the value of money

Teaching them to save is great! But there is one thing being able to save but the time will come when they will want to spend it and this is the perfect time to teach them about the value of money. We did this by accident. On the first day in NEW YORK we went the M &M store and i am not joking, they spent all of there money in one shop in under an hour. I wont tell you how much it was, but it was alot of money and we just left them buy it.

We explained to them that when there money is gone it is gone and that while we would pay for attractions and food, we would not be buying souvenirs, toys or sweets. The next shop we went to was the lego store and they really wanted to buy some toys but they had no money! Back at my sisters house we examined the receipts and they were both shocked at how much stuff actually cost.|They paid more attention to the prices after that. To help them along to earn some cash we gave them chores in my sisters house to spend on the holiday.

For the rest of the Holiday, When they were given the option to spend their money they thought of how hard they worked for the money and more often than not decided that something they didn’t need for $20 was not worth it. We definitely feel that they appreciate how much stuff costs now and they give more thought when given the choice to buy something.

Teach them to give something back

Money is important, but not quite as important as your health or happiness. That is why we are conscious that their world does not revolve solely around money. This Idea actually came from my wife’s sister. We give the Kids two money boxes and a wallet. At the end of the week they get their pocket money and it is up to them where they allocate their money.

1. One money box is for their savings.
2. One money box is for charity
3. their wallet is for spending on whatever they choose(or can afford)
4. Usually if they choose to split their pocket money between saving and charity, we would double their portion in each box as an incentive.

I taught the money box for charity was an excellent idea as it made them feel like they were helping people who really need it. It also inspired them to help at food banks and give toys and clothes that they don’t need. It gives them a real sense of achievement at a young age and makes them appreciate how fortunate we are.

Teach them that money can work for you

While my kids are not quite ready to start thinking about investing for their retirement. They are ready to begin investing. This started last year when I sat down and told them that if you own shares in companies than some companies will pay you every couple of months.

As a result we bought them 2 shares in Disney last year. Surprisingly they actually loved the process of sitting down and looking at companies to buy. I remember telling them that they now own part of a business which makes them both businessmen.

That was the start of their investing career and even at a young age, my eldest sat down with me to tell me that he is looking at what toys other kids like the most because those companies might be good to invest in. He also asked if he had any money to invest in another company. So today we took enough of of their savings to buy 2 shares in AT&T.

This was a rather long winded way of declaring that we bought 2 shares for my kids. However I am excited to see their journey to hopeful one day be financially free.

REMEMBER LITTLE SEEDS GROW INTO BIG TREES!

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