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How Young do you start them?
Old 07-13-2004, 02:44 PM   #1
 
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How Young do you start them?

My son is 10 years old. He wants a new bicycle.

Here's the situation. I believe in saving. I also believe in raising children to be self reliant financially; in other words, I don't think that they should count on me for their college educations or any other financial freebees other than being loved, clothed and fed through their impressionable years.

My son has accumulated enough fund through his hard work (lawn mowing, errands etc.) to buy an 'awesome' performance-oriented bicycle. He already has a functional one that's barely 2 years old but does not have any of the 'features' of THE ONE.

I would rather that he put his saving into various saving options other than spending it. However, I recalled that my parents' puritan spending habits also kicked off a rebellious streak in me. I indulged in a 'lived for today because there maybe no tomorrow' lifestyle that luckily burned itself out by either necessity, common sense, or maturity. I'm not prepared to reach a conclusion on that as yet, sufficed to say that the end result saved the day.

So I'm debating the options of 'he earned it, let's him spend it anyway he wants to' and 'you need to teach him the value of saving'. Comments and perspectives are welcomed.


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Re: How Young do you start them?
Old 07-13-2004, 02:54 PM   #2
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Re: How Young do you start them?

Chr*st Vale, the kid's 10 years old. Don't screw him up like your old man did to you. It's his money and he earned it. If he wants a bike let him go for it. He's in what........grade5? Go back to when you were 10. Give your head a shake!
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Re: How Young do you start them?
Old 07-13-2004, 03:24 PM   #3
 
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Re: How Young do you start them?

I'm with Zipper here! - If he saved the money, he should get to spend it.

The more you intrude into your children's decisions, the less they will learn. He may eventually learn all about buyers remorse. The sooner the better!
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Re: How Young do you start them?
Old 07-13-2004, 03:26 PM   #4
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Re: How Young do you start them?

Try a compromise. Let him spend half, match his half and have him put the rest in his savings.

You should be very proud that he saved money that he earned.

I matched my kids first years earnings as lifeguards, putting the money in a Roth IRA. In the second year, my oldest s chosing to add to his IRA with his own money. I call that success.
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Re: How Young do you start them?
Old 07-13-2004, 03:49 PM   #5
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Re: How Young do you start them?

I was at least 21 and possibly 28 before I started really financially projecting years into the future. I doubt any 10 year old will really get the lesson except that saving sucks because he can't spend the money he earned. He may even be less inclined to work.

I am reminded of when I was in my late teens and my brother was 6-8, and I thought my mom spoiled him by getting him little things (candy, small toys) here and there. Then I realized I treat myself to small joys all the time (eating out, new 'toy', etc.). I suspect if a young kid is denied the chance to spend his earned money yet sees the adult spending money periodically he will get a feeling of unfairness because he doesn't understand how much goes towards the house, car, his clothes, taxes and everything else until he starts paying for it himself.

Whether I'm right or wrong, I was never forced into savings or even pushed hard to get a job until after high school, yet I learned fairly quickly what I wanted and didn't want for my future and started working to improve my situation. (Speaking in terms of job duties, experience and education; the financial revelations came later.)

Disclaimer: I've been a child, an older brother and older cousin but haven't been a dad.
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Re: How Young do you start them?
Old 07-13-2004, 05:35 PM   #6
 
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Re: How Young do you start them?

Hi BigMoney Jim! Re. "haven't been a dad".............. man, for me nothing else is even close. Not remotely!

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Drive him to the store, Vale.
Old 07-13-2004, 07:14 PM   #7
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Drive him to the store, Vale.

Sounds like he's worked hard to enjoy the fruits of his labors. I hope he has enough $$ left over to buy a strong bike lock and a good helmet.

Perhaps he could sell the used bike and save/invest that money. After all, in another six years he's going to need a radical babe-magnet ride-- or a motorcycle!

Our kid has been raised on Goodwill & garage sales. It's amazing what ends up at Goodwill if you browse it twice a month. (If they ran an Internet video feed of their donations going out on the floor, I'd be glued to the monitor all day.) Our kid keeps a "Gimme list" and checks there regularly whenever something is due for replacement.

I think that everyone in their life, sooner or later, will spend every penny they have and truly experience the meaning of the word "broke". It's probably much better to learn that lesson at age 10 than at 23. Or 43. Or 83.
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Re: How Young do you start them?
Old 07-13-2004, 07:25 PM   #8
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Re: How Young do you start them?

I can offer the ten year olds perspective on this.

I was ten. Had a functional bike. Wanted the "Screamer". A very cool looking bike. I had to "save" to earn it.

So I saved for a year. Finally got the bike. Dont think I gained any learning about the saving or the earning. Once I got the bike I discovered that while it was a nice looking bike and very cool, it was no better as a bike than my old one and I was disappointed. A few months later the moron neighbor got tired of me "leaving my bike out" on the sidewalk and while intoxicated, drove over it and destroyed it.

Not sure what lessons are drawn from this, other than ten year olds might not get lessons, and cool bikes arent any better than old bikes. Come to think of it, those are good takeaways!
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Re: How Young do you start them?
Old 07-13-2004, 09:05 PM   #9
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Re: How Young do you start them?

Let him get the great bike and congratulate him on working hard to save up for it! Come on, it's a great purchase. A bike gets him out in the fresh air getting exercise, and with luck he can get in the habit of transporting himself rather than being driven around everywhere. And trust me as a cyclist myself, there IS a difference between just "any old bike" and a performance-oriented one as you say. One is an OK way to get around, the other is a pleasure to ride. He's a lot more likely to actually USE the better bike, and will have a motivation to take care of it.

You want him to learn about saving money? Well, he already has started - he saved money for the bike, didn't he? It's not fair to expect a 10-year-old to have the same savings goals (retirement, house, college) as an adult. He has his age-appropriate goal, and he saved up to reach it. Sounds good to me. As his goals change, he can save to meet those new goals. It's more important that he learn to set his own goals and meet them, than meet some arbitrary savings goal that doesn't mean anything to him. (With that said, the "match half his contribution" is a great way to encourage him to put some money aside for what you think is important too.)

There are many more lessons than "saving money" to be learned here, anyway. He can learn about responsibility - making sure his awesome bike gets cared for and maintained properly. He can learn bike mechanics - it's a great way to start learning how things work and how he can fix things. (Many bike shops have classes on bike repair. At the least, he should learn how to fix a flat tire). He can be encouraged to get involved with group rides if there's a club with youth riders - maybe he'll be interested in racing. Lots of sportsmanship lessons there. Or if not, just spending hours out riding a bike is a welcome change from the hectic pace of school-sponsored clubs and sports.
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Re: How Young do you start them?
Old 07-14-2004, 06:38 AM   #10
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Re: How Young do you start them?

Hey all, new poster, been lurking for a few weeks. How early you ask....I say EARLY. Maybe I'm just a freak but my mother says I tought myself to count money when I was 4 and bought my first Mutual Fund at 12. Borrowed the money from my dad and worked it off on his hobby farm. I've had adult goals, even retirement, in mind since that age. I've always been a comparison shopper and a unit pricer too. I guess you could say I'm destined for ER. 29 now, but headed toward ER in a hurry. The way things are headed, I should be ready to hang it up in 10 years tops withdrawing 2-2.5% annually (which should allow for some nice growth) with that draw being in the neighborhood of 100K. I will need it though as we are just now trying to have our first child. I would say we save 75-80% of our net after taxes. Savings off the gross, probably 35%......our taxes are a real killer.

We're making great $$ owning 2 businesses, working our asses off and made great life choices all the way through, and even though I've made some really bad investing mistakes, still I give the most credit to starting early.

The real question is not how young, but HOW. Find a way to make it what they WANT. Then success will be a given simply because of the amount of time they have to work with.
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Re: How Young do you start them?
Old 07-14-2004, 07:32 AM   #11
 
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Re: How Young do you start them?

Hi Spealum! Well, like you, I "worked my ass off" for years and years. Can't say I had that good a run of "great life choices" though. Mostly if I saw I had
a lemon, I tried to make lemonade. I was successful
just often enough. On the other hand, I am almost 60
and don't know anyone who hasn't made some bad choices in life. Other than people who don't really try
anything and are just occupying space rather than
living their lives. Take my fav. author, Hemingway for
example. Made some terrible choices in his 62 years,
but I doubt he could have squeezed much more into
those years. That's what's important, not how many
years you manage to hang around.

John Galt
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Re: How Young do you start them?
Old 07-14-2004, 08:19 AM   #12
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Re: How Young do you start them?

Hey Vale,

I don't have any sage wisdome regarding what age to start teaching them. I think the earlier the better. My mother told me I was comparison shopping at the grocery store, grabbing the cheaper stuff, by age 5. Can't say if its true or not, but I guess makes my behavior at age 28 not seem a stretch.

I think the majority of my fiscal philsophies came from my father. I was a spoiled kid, but I remember his constant communication regarding how one should responsibly save their money, live well within thier means, and don't overextend. I can't say how it will work for everyone, but I know the constant reinforcement has stuck with me all this time.

I also have heard of some folks giving their young children $$, but dictating that a portion goes to saving, charitable giving, and spending. The premise being reinforcement that all of our $$ should have goals, whether they be spending or otherwise.
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Re: How Young do you start them?
Old 07-14-2004, 08:46 AM   #13
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Re: How Young do you start them?

Quote:
I should be ready to hang it up in 10 years tops withdrawing 2-2.5% annually (which should allow for some nice growth) with that draw being in the neighborhood of 100K.
Wow, $4-5M by age 39 is something to shoot for, and owning your own business is definitely the way to get there.

A business gives you four obvious benefits:

- more control over your own destiny
- lots of tax benefits
- better tax-deferred savings options than you can get as an employee
- and you build equity as your business grows, giving you a nice bonus that can make all the difference when you decide to sell and retire
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Re: How Young do you start them?
Old 07-14-2004, 08:48 AM   #14
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Re: How Young do you start them?

Quote:
I think the majority of my fiscal philsophies came from my father. *I was a spoiled kid, but I remember his constant communication regarding how one should responsibly save their money, live well within thier means, and don't overextend. *I can't say how it will work for everyone, but I know the constant reinforcement has stuck with me all this time.
Wisdom Alert! Set an example for your kid with your own behavior, but let them make their own mistakes.
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Re: How Young do you start them?
Old 07-14-2004, 10:17 AM   #15
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Re: How Young do you start them?

Yeah, I'm moving along pretty well so far. I do realize that sum is likely more than I will need, but I am a worrier....so it's gotta be a no brainer that it's plenty, even if we hit an extended stretch of dreadful returns or runaway inflation. I think that in 10 years, a 100K draw is pretty reasonable, considering we'll hopefully have a couple young kids by then. And there will doubtless be some hefty taxes coming out of there. I would like to keep my withdrawls down in the 2% range, as a hedge and also to keep things growing since we would be awfully young at 39 or so.

The other thing is that considering the $$ we're making, I sure don't want to have any regrets after walking away. One thing that will likely help us to walk away when it is time is the threat of the parasite of our nation...Trial Lawyers. You see both of us have practices in the medical field. Last thing I need is some bozo wrongfully taking away everything I've worked for my whole life.

I don't hate my job. It is rather enjoyable. What is stressful is managing malcontent employees, and dealing with the occasional PITA patient.....and the ever present threat of litigation. I do think about retirement several times daily though. As much of a worrier as I am, I'm just as much if not more a planner and dreamer.
I am a value shopper....it's in my blood. I do have my vices (good beer, nice vacations) and moments of temptation (boat, Lincoln Navigator - used thank god). I do regret the Navigator ever since the first fillup......I'll never forget the spike in blood pressure I got when upon opening the fuel door I had the unpleasant occasion of encountering three words that have haunted me daily since then.....PREMIUM FUEL ONLY. For that pig, are you kidding? Well I've since discovered that while it does run like sh!t on regular, it seems to do fine on Mid Grade. So between that and the 5% gas rebate credit card, I'm coming out ok. Oh well, live and learn....no more outrageously priced/mega expensive to operate vehicles for me.....with one caveat: I fear I will succumb in the next few years to an insatiable urge for a used ($15k range) Boxster. I've got my wife wanting it also now so I guess I'm screwed.

Am I the only one when it comes to 'stuff' the best part is the wanting of it? Once you get it, it's rather deflating 'now what' kind of feeling. I suppose realizing this is the first step. I guess if we're still saving 3/4 of our takehome we'll come out ok in the end either way.

I'm just so drawn to the minimal comittments of retirement. I literally cannot wait. More time for cooking great meals, self improvement, plenty of exercise, and being able to travel without being chained to the office.
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Re: How Young do you start them?
Old 07-14-2004, 11:03 AM   #16
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Re: How Young do you start them?

Hello Vale,

Interesting discussion you started. I think that there is a happy medium between 'it's his money and he should be able to do what he wants' and 'make him save it'. You are the parent and it's your job to raise him to the best of your ability and to teach him things along the way. It may be his money, but it's your house and your rules. Then again, if you knew he was saving for the rad new bike, I wouldn't recommend springing the "savings story" on him now.

My mother tried something with me after I got my first job at the fruit stand. I spent the first couple of checks outright and didn't think twice about spending and in retrospect my mother seemed worried about me blowing all of the earnings. For one particular purchase I wanted to make, she suggested that I wait a week. She told me I could spend the money then but not before. During that week I changed my mind several times about what I wanted to buy but never told my mother that I was thinking about the other purchases. Somewhere along that week, I realized that maybe I should hang onto this cash until I really knew what I wanted.

I didn't really save too much, but I think I got better value out of my purchases after this little exercise. Another thought is to prod him into learning to pay himself first by saving a certain percentage of his earnings for long term needs like a car fund, college savings, or retirement savings.

Good luck,

Chris
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Re: How Young do you start them?
Old 07-14-2004, 11:16 AM   #17
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Re: How Young do you start them?

Wendy's and Pepsi - last short temp job - helped a fellow engineer get his kids ? 10,12 ? started in DRIP stock plans.
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Re: How Young do you start them?
Old 07-14-2004, 01:02 PM   #18
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Re: How Young do you start them?

Quote:
I doubt any 10 year old will really get the lesson except that saving sucks because he can't spend the money he earned. He may even be less inclined to work.
I disagree here. Both my 8 and 10 year old are pretty good about saving up their allowances for whatever it is they want to buy. Young kids won't understand saving for retirement, they do understand saving for a few months.

In fact, my 8 year old is working on a business plan., She has an idea for a web based business that she plans to use to fund the pony I'm not ready to buy her yet
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Re: How Young do you start them?
Old 07-14-2004, 02:28 PM   #19
 
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Re: How Young do you start them?

Thanks for all your comments and shared experiences. I admit that one of my reservations was that I've written out an ending pretty much the same as the TH's experience (the kid's disappointment not the neighbor's revenge) but then the kid may turn out to be the next Lance Armstrong in which case I don't want to be excluded from his speech at the end of the Tour de France.

We're doing the 25% parent matching contribution (thanks for the suggestion, KB) putting the 25% that he earned in his college fund.

We're also doing comparison shopping instead of going straight to the local bike shop. Kid wants to put the difference, if any, into color coordinated water bottle instead of his college fund. Other than that, it's quiet and peaceful around here atlast! Since the kid's home for the summer and I'm ER, it truly is worth it.
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Re: How Young do you start them?
Old 07-14-2004, 04:11 PM   #20
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Re: How Young do you start them?

Hey, spealum, have you forgotten about *life? You are 29 and want to hang it up? Have you had a family and started raising productive citizens? You say you are trying for your first. Kids tend to add a new dimension. Let us know if it changes your outlook? ER isn't minimal contributions in a shortened career. It's taking responsibility and making a positive difference in society. All I can see in your posts is "I" and "me".
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