How to catch my 22 y.o.'s attention about ER???

[jacob]

I had a bunch of inspirations. Until I was 24 I was pretty clueless about money and figured that all I needed was to go to work like everyone else. What changed my outlook was

1) Realizing how the credit based money system works. I thought it was outrageous that not all money is earned, but that some money is credit that banks create at no cost to themselves. This was from reading the essay "I want the world + 5%".
2) Reading the Cashflow Quadrant by Kiyosaki. I know many people love to hate him. As with everything, it depends on where you're coming from and what you take away. For me, I learned that "You can make a living by making money with your money instead of your time". Prior to this, money was only for spending. To others, this insight is probably trivial, but I used to work for my money and everybody I knew worked for their money. Other options were unknown.
3) Joe Dominguez (Your Money or Your Life) who increased the efficiency of his life-energy expenses enough to become FI at 30.

Following this, most of the money I earned was saved rather than spent. In retrospect, I wish I had learned of this when I got my first job at 12 so I wouldn't have wasted so much of my life buying stuff---mostly electronic toys and gadgets---in pursuit of temporary consumer highs. At least I found out before I dedicated my life to owning the largest house I could afford. That would have been a tragedy for sure.

Can you catch someone's attention? I'm not so sure. I think you can reach someone if they're ready to listen. Keep in mind that most 20something are bombarded with messages about using their credit cards to travel and taking on student loans so they can earn tons of money. Within a decade they will be bombarded with messages about how they should spend all the money they make on mortgage and car payments. Retirement beyond taking the company match will enter their minds much much later. ER will likely only be incidental.

The best I can suggest is "show, don't tell". Most people here should be in a position to do this. One problem about our culture is that finances are taboo. It's perfectly okay to show off your $35,000 sportscar. However, it is not acceptable to talk about your six or seven figure bank account.

Anyway, it's a really interesting problem ...

[lrak]

Quote:

Originally Posted by infoseeker He currently has no debt, no dependents, and does not spend much of his income, so, until his financial/life/career situation changes, would it be wise to advise him to contribute the max allowed to his TSA (Is that $16500/year for him?)

If he does not spend much of his income, I don't see the problem either way. Life is not all about retirement. When I was 22, I bought a house. I only contributed to a Roth IRA and just enough to get the 401k match in my early 20s. However, having a 4br house paid off before having kids has allowed my wife to stay home with them and still save for retirement. If I hadn't spent that money on a house in my 20s, we wouldn't be able to max out two Roth IRAs, one Roth 401k, and put some aside in 529 plans on one income through our 30s.

[haha]

Quote:

Originally Posted by jacob The best I can suggest is "show, don't tell". Most people here should be in a position to do this.

I think that is easier to do if your kids need money, or if they see you as being exceptionally successful. In my case at least, an early but frugal retirement does not light up many lights for them. I think they believe that my concentration on an early but frugal out was a mistake.

Their models are people who through their own efforts become very wealthy, not some guy with 1.x to 5.x million and no current economic or social power.

"I used to be a contendah" is a sad and perhaps pitiful emotion to many young men and women. It wasn't to me. I remember an old man who had a run down farm, with a good sized pond surrounded by wheat fields. We used to go there and shoot doves in the late summer, then chat and share a nip from a bottle we brought for the guy, while we dressed the birds. I though his life was about perfect, though now I see that it was likely lonesome. I can't remember if he was married, or perhaps his wife had died. We always sat outside on the cistern slab.

Ha

[popowich]

Quote:

Originally Posted by infoseeker Wow, what an ER opportunity for all you young pups out there if you start saving now!

2 years ago, but still... Yes, I've been working on my younger brother and got him to make one Roth IRA contribution. Same deal for my sig other, she is making her first this year. Better late than never. Why not show them what you have saved and how much more money invested money generates?

[Jay_Gatsby]

Quote:

Originally Posted by haha Their models are people who through their own efforts become very wealthy, not some guy with 1.x to 5.x million and no current economic or social power.

This is part of the problem. The media has a tendency to show the 1 in 100,000 (or 1 in 1,000,000) person who made it big. It also shows that person's lifestyle as it is today, not how it was 10+ years earlier. If today's youth could see how the celebrities they worship started out (struggling waiter/waitress, bartender, bouncer, janitor, construction worker, etc...) they would be far less inclined to believe that they'll achieve the same remarkable success. There are far more "millionaires next door" than there are celebrity millionaires. The former just keep a lower profile because being famous isn't necessary for them to earn a living.

[Calgary_Girl]

I would say talk to your children about FIRE if they truly show an interest in it (without their eyes glazing over) .

As for myself, I was always interested in FIRE and I opened an RRSP (Canadian equivalent of a ROTH) when I was 17 .

[kombat]

Quote:

Originally Posted by Calgary_Girl I opened an RRSP (Canadian equivalent of a ROTH) when I was 17 .

Minor point of order: The Canadian equivalent of a Roth IRA is the TFSA. The closest equivalent to a 401(k) is the RRSP (although it doesn't need to be employer-sponsored).

I tend to agree with the old adage that you can lead a horse to water, but you can't make him drink. I think setting an example is the best approach, and if they express an interest, be ready with reading recommendations. Encourage questions, and focus on how much more relaxing and enjoyable life is, now that you're FI.

[Jay_Gatsby]

Quote:

Originally Posted by kombat Minor point of order: The Canadian equivalent of a Roth IRA is the TFSA. The closest equivalent to a 401(k) is the RRSP (although it doesn't need to be employer-sponsored). I tend to agree with the old adage that you can lead a horse to water, but you can't make him drink. I think setting an example is the best approach, and if they express an interest, be ready with reading recommendations. Encourage questions, and focus on how much more relaxing and enjoyable life is, now that you're FI.

To add to this wisdom. Keep an open line of communication regarding money. Most importantly, do not be judgmental about spending. If your son doesn't affirmatively ask for advice, you can occasionally offer some advice using the phrase "Do you mind if I make a suggestion?" Then follow up with your advice - being careful not to criticize the choice your son initially made - and closing with "but it's your money and I'm sure you'll do what's right for YOU." Essentially, a soft-sell that allows your son to come to the conclusion on his own.

[kaudrey]

As my dad did with me, you can talk about investing and saving for a rainy day without going right to an ER discussion. Starting the savings habit at soon as you are in the working world is something every 22 year old should be taught, IMO, even if there isn't a defined long-term goal. Also, since he asked you, he is obviously open to the conversation. Good for him, and you!

As soon as I graduated college, my dad told me I should invest as much as I can in the TSP, and save outside of it for emergencies. Of course, my parents lived their whole lives below their means, and it rubbed off on us kids, so it wasn't really an issue. I opened a Schwab account at 21, and I've been investing in that and the TSP for 20 years. At 21, I wasn't thinking about where I would be at 41, but I knew that saving consistently would give me a level of financial security that was important to me.

[Rustward]

Quote:

Originally Posted by Eager Beaver The great irony, of course, is that you have to be extremely diligent, disciplined and hard working to become a self-sustaining lazy person. I'm sure there is humor to be found in that statement, somehow... I'll let you know if I see it, 25 years from now. Maybe I'm weird, my GF tells me that my mind has aged twice as fast as the rest of me...

... and 25 years from now if she is still telling you that your mind has aged twice as fast as the rest of you . . . you will realize what a compliment that is.

[Jay_Gatsby]

Quote:

Originally Posted by Rustward ... and 25 years from now if she is still telling you that your mind has aged twice as fast as the rest of you . . . you will realize what a compliment that is.

Funny, but I take his gf's statement as a bit of a warning - don't focus so much on FIRE that you forget you're young and can pretty much do anything at age 25. While its wise to save, being spontaneous (e.g., whisk her off on a romantic trip, but don't tell her where she's going) will keep her far happier than knowing that you'll be able to retire early.

[SunGuy]

23 myself.

Been interested in finance as a lifestyle ever since I started working 5 years ago.

Had to stop school and work for a few years only, but will be able to start up at least part-time schooling again this fall.

Have slow progress since I have to pay for classes myself.
But hopefully will be able to get into a job that will offer help to go school etc.


I want to be a financial advisor, and specifically in addition to other degrees receive the Registered Investment Advisor designation.

I am the only person IRL my age that I have ever met really that is interested in this type of stuff.

I enjoy talking with old people about this stuff, and I get a kick out of them being blown away by the fact that I like this stuff as a high school student(when I first started talking about this stuff).

Most of the middle-aged people I know besides my parents don't have much to speak of in terms of retirement accounts etc. But to their credit most of them do not have debt.

This subject is a very foreign thing to most Millennials (20-somethings)
but is something that they need to take very seriously.

I try to tell most of them to consider Social Security as something they will just talk about as a part of their kids history books, and to not count on any help.

I also try to help them understand the importance of using their youth and time they have as well as the vast resources within the Internet to aid them in learning what they need to do.

I have helped many start investment accounts/IRAs.

I tend to recommend Sharebuilder since it is the one I use, but most of it is just a way to show them the benefit of starting account and keeping up with the discipline of investing.

Even though most don't want to do much now, I have hope for them that they see the problems within the economy/political happenings and will seek more out as they get older and more established in jobs.

They have all expressed the desire to seek me out over the years to help them put their money to use and help them with where to go etc.

I don't really want to be the one personally handling their accounts, as I do not wish to jeopardize our friendship. But will help them get great help.

[Joshua]

I am not sure what you can tell someone that will have any solid outcome. When I was a teenager, I was already fired up about saving, investing, buying vs. renting, income streams, etc. And then... life happened, and bit by bit I drifted away from that until I was paying 1/4 of my pay every week just to extend the due date on pay-day loans until next week... when I'd pay another chunk of money to extend them again...

Then I got a better paying job, ditched the loans, and started it all over again with credit cards. Hundreds of dollars a week went down the drain paying interest and penalties on stuff I had bought months ago. I couldn't even remember what the debt was for, but I still had to cut a check to pay off just enough to get by until the next month. Anytime I made some headway on our debt, an "emergency" would come up, and we would promptly max out all of our credit again.

Why did it happen? It's not because I lost the desire to have money! It's not because I had a head injury and forgot how to do compound interest calculations or how to work out a savings plan on an Excel spreadsheet. It happened because, somewhere down the line, I decided that I was a worthless person who had to buy the affection of others or risk being alone for all my life.

Deep down, I always knew it was the wrong thing to do, but that just reinforced my negative outlook - after all, who but a REAL screwup keeps doing something wrong when he knows better? That HAS to be the sign of a loser... so I guess I better keep paying for all this stuff I can't afford to distract people from just how big a loser I am...

It was impossible to say "no" to people. What if they didn't like me? What if she left me? What if...? What if...?

Despite all my hard earned knowledge from my teenage years, gathered from reading investment books and making an almost fanatic study of internet sites like this one, I ultimately failed to put any of it to effective use.

So, knowledge doesn't always do much good, no matter how much of it you have or how early in your life it comes to you. You have to have the strength to use it, too, and not fall into the cycle of self-defeat that other people, who have no cares about the future, will do their best to drag you into.

[Luckygem]

Wow, great advise from everyone. It's good to see that you seem to be advising your kids on their finances at an early age. I'm sure they will thank you for it later.

[Eager Beaver]

Quote:

Originally Posted by Joshua So, knowledge doesn't always do much good, no matter how much of it you have or how early in your life it comes to you. You have to have the strength to use it, too, and not fall into the cycle of self-defeat that other people, who have no cares about the future, will do their best to drag you into.

Your statement really speaks to me. I tend to operate under the assumption that my knowledge will lead to resolve when times are tough, no matter what happens. Stories such as this, coupled with some of my own prior mistakes, make me less confident that this will be the case.

Indeed, I doubt my resolve without the support of those closest to me and without a potential support group for consultation when things don't go my way. To that end, I feel very grateful for this board. I trust many members here to know the right path.

I agree, knowledge itself is nothing without resolve and a backup plan. Parents can teach the first, life will eventually teach you the value of the second.