Hello! Want to teach kids the importance of financial planning

[TGL405]

Hello from PA where the leaves have turned, the deer are moving, and another winter is just around the corner. 56 married with 2 kids still at home, one finishing college. Discussing an early retirement (12-18 months) with DW but no decision yet. She's actually getting tired of discussing it! Govt. pension will exceed expenses and growing every quarter with enough savings to stay happy, so not concerned over having enough money to retire-just want to go out on my own terms and don't want to leave too much on the table. It grows a bit faster as you get closer to normal retirement age of 60. Co-workers who have retired always say that you will know when it's time, and I'm starting to feel that.
I have been browsing the site and am enjoying all the great comments and am impressed with the true concern I see expressed for helping others-that's what led me to join.
I've been trying to emphasize money management and ER planning to my kids but it's not going so well. They both initially started a Roth but the excitement of that has gone away recently. Any good advice on how to teach them the importance of and keep them interested in financial planning? I've tried discussing everything I can think of and their savings progress is slow but that may not be a bad thing considering the market right now.....

 

[RobbieB]

They're kids. If they always have some dough (don't spend all they have) they are on the right path. That's the most important lesson and the one that needs to come first.

Don't spend all you make.

Investing and buying houses can wait for later. If they start out knowing that it's better to buy stuff with savings rather than credit cards (and carry a balance) they will have learned the most important lesson there is.

 

[REWahoo]

Hello! Want to teach kids the impotance of financial planning

You think maybe they can take a little blue pill to gain financial independence?

 

[38Chevy454]

Three things to teach them:
1. The power of compounding
2. LBYM
3. Pay yourself first

If they can understand and implement these concepts, they will be fine.

 

[nwsteve]

To encourage our DD to build her Roth, we provided a full match for any money put in her Roth.
Nwsteve

 

[Sunset]

Does your Wife work ?
Have you considered simply enriching your last few years of work with better and more vacations or do you already do that ?
Have you considered (if available) to take an extra couple of weeks unpaid leave to make more/longer vacations.

 

[HillCountry]

I would encourage my kids to venture for new opportunities than focusing on financial planning. They are not at the age to count beans.

 

[Souschef]

Three things to teach them:
1. The power of compounding
2. LBYM
3. Pay yourself first

If they can understand and implement these concepts, they will be fine.

I agree, but would order them this way:
1. Pay yourself first
2. LBYM
3. The power of compounding
My rationale is that if you do not do 1 and 2, there will be nothing there to compound.

 

[Mdlerth]

I've been trying to emphasize money management and ER planning to my kids but it's not going so well. They both initially started a Roth but the excitement of that has gone away recently. Any good advice on how to teach them the importance of and keep them interested in financial planning? I've tried discussing everything I can think of and their savings progress is slow but that may not be a bad thing considering the market right now.....

A lesson I learned from raising five children is the overwhelming power of peer pressure. Even if you and your kids have a solid relationship based on love and trust, what you tell them may be less influential than what they observe happening to their friends and co-workers.

Consider engaging them in discussions about their peers' financial skills, eliciting both good and bad examples. FIRE in twenty or thirty years is abstract, but watching Joey Jones get evicted for being behind in the rent or Sally Smith having her car repossessed over a missed payment will be tangible.

 

[Calgary_Girl]

I would encourage my kids to venture for new opportunities than focusing on financial planning. They are not at the age to count beans.

I would say it depends on the personality of the kid. I opened my first RRSP (similar to a Roth) when I was 17 because I loved "counting beans" [emoji16].

 

[savory]

For what it is worth (and not an answer to your question) , I think most people start too late to teach the important of financial decisions to their children. We teach how to be polite, safety approaches, etc at the earliest ages. I think teaching how to reach financial independence needs to start at a very early age. In some ways, it might be among the most important lessons we can provide as parents.

Can't tell you why we do not focus on financial training when our children are young but we do not seem to.

 

[Bestwifeever]

Kids learn all the time, we just don't realize that we are teaching them all the time. They model us. If they see us in our ordinary life balancing our checkbook and discussing the budget and what things cost, then we are teaching them an awareness of fiscal responsibility. I can remember DD at three saying to me in the grocery store, "The grapes are too 'spensive" (I was extremely thrifty and must have kept a running commentary on prices)--I didn't try to teach her to be aware of prices but she learned it.

 

[NW-Bound]

No matter what you teach your children, they have to be on their own before they really appreciate that most people do not have an unlimited budget, and what money you spend on something will mean not being able to spend it on something else.

My adult son surprised us recently, when he called my wife and said "I am at the grocery store. Is $0.75 a lemon too high a price?"

Wow! He is making good money just a few years out of college (high 5 figures), and used to not care about "penny stuff". Of course when he was living with us and not having to pay for everything, he did not know about the total cost of living. Where do toilet paper and toothpaste come from? From a closet downstairs, of course. Where do food items come from? Where else but the fridge and the pantry.

Children or adults, they have to earn money to pay for "stuff" before they understand and appreciate it.

 

[Sue J]

Our sons are 29 and 32. They grew up knowing to spend less than you earn and to SAVE.

As soon as they were independent and self supporting they stared the habit of an automatic transfer of $100/mo to a Roth IRA. The older one has upped that recently because he has a lot of income that he doesn't need.


Sent from my iPad using Early Retirement Forum

 

[TGL405]

Thanks for all the good comments and feedback. You've given me some good ideas. We realize college age kids have many pressures on them these days coming from all directions and they have to be able to enjoy this time of their lives, but I just want to get them into some good habits as they start their careers. It's a way of thinking and once learned will hopefully stick with them as they approach many of life's financial challenges to come. I wish someone would have taught me to think about things this way when I was in college.

 

[NW-Bound]

Ah, I forgot to tell you the rest of the story regarding my son and the $0.75 lemon.

My wife: "$0.75 per lemon is ridiculous. The price is way better by the bag".

My son: "But I only need one lemon".

My wife: "Stop by and I will give you one".

Now, a couple of years ago, my son would have said "It's OK. I'll just pay $0.75".

I was surprised to hear that my son agreed to it. Now, he lives only 1 mile from us, so it is not like he burned a gallon of gasoline for that lemon. I was pleased to learn my son had learned that even little money counts, as it does add up.

Now, some will say that he still gains by driving a mile for the free lemon, but my son is not stingy. He is reasonably generous with his friends. He has bought me a bottle of single-malt, when he heard my comment that I wondered how single-malts were different than regular Scotch (I am a brandy drinker).

 

[Walt34]

Children or adults, they have to earn money to pay for "stuff" before they understand and appreciate it.

I suspect you're right. My parents grew up in the 1930's Depression so they knew how to "squeeze a nickel until the buffalo screamed" as they put it. And of course us kids picked up on that.

But it wasn't until I got the gas station job in high school that I actually had more than a couple of dollars at a time and sometimes had to make what were to me hard choices. I once spent $45 on a nice wristwatch (a lot to a 17-year-old in 1967) and smashed it when I had a motorcycle accident a week later. I took it to a shop and the guy said that when he took the back off the innards just fell out.

I don't think I've ever spent more than $10 on a watch since then.