Question on teaching kids

[streamjp]

Hi,

I'm another new guy; great board and learned alot in the last fews months here.
My situation is 47, DW 40, 3 kids, about $1.7M in net worth mainly by all the basics that you read here - a NJ shore property bounght in 1986 didn't hurt either.

I don't think our children get enough education on all financial issues so I'm putting together some training slides and literatured learned here and in other places and plan to start the education process with them - at least with my two oldest - 15 and 13.

My question is - is it a mistake to let them know our exact financial picture to the dollar in order make an impression on what the LBYM mindset and other basics learned here can do for person's financial health.

In other words, should we be telling our kids that we are the "millionaire next door" to have a positive impact on them or is there some downside to doing this??

[REWahoo]

Quote:

Originally Posted by streamjp In other words, should we be telling our kids that we are the "millionaire next door" to have a positive impact on them or is there some downside to doing this??

Stream, welcome to the board.

Great idea to give your kids some training on financial matters. I opened a checking account for each of my children when they were in their early teens and deposited their allowance into it. Required them to balance their account monthly and only then would I deposit the next months allowance. They soon learned not to blow everything the first week. Hated me for it until they got into college when they began to understand they were significantly ahead of their peers in money management.

I recommend not telling your kids the details of your financial situation until they are adults. I don't think most kids that age have enough frame of reference to really understand or appreciate what you have done. Nothing wrong with letting them know you are doing OK financially, but don't see anything positive about giving them the details.

Just my opinion.

REW

[Nords]

Quote:

Originally Posted by streamjp My question is - is it a mistake to let them know our exact financial picture to the dollar in order make an impression on what the LBYM mindset and other basics learned here can do for person's financial health. In other words, should we be telling our kids that we are the "millionaire next door" to have a positive impact on them or is there some downside to doing this??

Welcome to the board, Stream.

Paraphrasing Bill Cosby, you & spouse are the millionaires next door. Your kids are broke. You don't have to share anything with them, and you can educate them without using your own personal numbers.

You gotta know your kids and make your own decision on this one. But if you open the books, then someday you might get that phone call that says "Pleeeeeeeease can we borrow the money for the down payment? We know you have $45,000 sitting in your money market and we'll pay you back before you need it!!!!"

Perhaps you could start by showing them how much they have in their college-savings account, how much it'll grow into by the time they finish high school, and let them figure out how much they're gonna need.

[streamjp]

Wahoo and Nords,

Thanks for your input, I really appreciate it. I think you are both right on holding off, I was thinking all the normal financial stuff would come off as boring to teens and thought this angle may make a bigger impression in their thinking.

- Stream

[REWahoo]

Stream, on the subject of teaching your kids about financial matters, you might want to see if you can get your hands on some of the teaching materials the Junior Achievement program uses in their "Personal Finance" program. A few years back I taught this block of instruction as a volunteer at a middle school (7th grade). It is reasonably basic (budgeting, savings, investments, loans, credit), but it is packaged in a entertaining format that held the kids attention.

REW

[goodguy1_64]

streamjp,

Hello from the other new guy ! Here's my 2 cents..

I've only recently read the "Millionaire Next Door", but a lot of the stories in that book resonated with me and the things I've seen and experienced. If you haven't read it, I highly recommend it.

I don't think you can pigeon-hole everyone, but the largest percentage of the people that I know that have done well financially over their lifetimes either came from lower middle class to middle class backgrounds or did not know that their parents were "very well off".

Only 1 of the kids that I grew up with that had wealthy parents did very well. There were 5-6 others that were always getting "handouts" and later in life seemed to be waiting for their parents to distribute additional wealth to them.

Of course, a big difference obetween the 2 groups was that the families of the kids that did well did not flaunt their wealth ( buy lots of frivolous stuff ) and the families of those that didn't do well always had the toys..

These are my observations from a small group of people that I know..

cheers,
goodguy1_64

[Jarhead*]

Nords: Whether you open books or not if you live in a high property value area, (California, Hawaii, etc.,) that phone call, or a face time visit
is almost guarenteed

I tried my damndest to talk my daughters into moving to Iowa, but no such luck.

[wabmester]

Quote:

Originally Posted by streamjp My question is - is it a mistake to let them know our exact financial picture to the dollar in order make an impression on what the LBYM mindset and other basics learned here can do for person's financial health.

At 15, I doubt a kid is going to have any appreciation for the meaning of large numbers. Frame it in a way they can appreciate. I've been considering creating an account for our kid (now 2) that will fund her entire annual budget as well as a separate savings account. I'll let her make some purchase decisions with the understanding that whatever budget surplus there is at the end of the year will go to her savings account. And we'll plan for some long-term purchases she'll have to save for (like a car). I plan to bring her into the loop pretty early (like age 3 for preschool supplies).

She already has a pretty good grasp on the concept of money, but I hope that having her help shop for her own supplies will give her a better feel for the value of a dollar. I think it was Brat who looped her kids into planning an education budget and shopping for colleges. That's my ultimate goal.

[Nords]

Quote:

Originally Posted by ex-Jarhead Nords:* Whether you open books or not if you live in a high property value area, (California, Hawaii, etc.,) that phone call, or a face time visit is almost guarenteed I tried my damndest to talk my daughters into moving to Iowa, but no such luck.

I'm resigned to that too.* Of course I failed when I tried it on my dad 20 years ago and it's unlikely to succeed with us either. Things seem to work out better that way...

When the Hawaii market implodes (again, in the next 10 years?) we're thinking of buying a 2BR investment condo.* The kid would be a good tenant-- or she could move in with her grandparents to help them avoid moving in with us!

Faced with these options I'm pretty sure she'd flee to Iowa.

[LiveWell]

I have also recently finished reading The Millionaire Next Door and like goodguy, somethings resonated with me.

On NPR last year there was a series where well known members of society related a christmas present they received and how it impacted their lives. That got me thinking if there was ever a present I received that changed me. Interestingly it was more a present I *didn't* receive that changed me. Back when I was in grade 2 there was a huge Cabbage Patch Kids craze (this shows my age a little ). I wanted a CPK so badly. All my friends were going to get one and if I didn't show up at school in January with one I'd be such a loser. Well, my parents were poor (I of course had no idea of this as a child.. only really realized how my family barely scraped by when I became an adult) and couldn't afford the doll... instead I got a barbie or something. I was totally devastated.

Sure enough, when I got back to school in January all my friends had dolls and I wasn't part of "the cool crowd". That lasted until about February when the fad was over, no one cared about their dolls anymore, and we all went back to playing together. Even at grade 2 it struck me how temporary the joy was from having a material thing. Ever since then I've been immune to fads because I know it is just an illusion.

-LiveWell

[TargaDave]

Hi Streamjp,

Do your kids work? babysitting, house sitting, cut grass, etc?

[streamjp]

Hello TDave,

Yes, they do some work, the older teen babysit's on our block about 15 hours/ week in the summer, the younger one does some yard work (lawn cutting) and is* active in community work through scouts. They could be doing more, still log alot of hours on xbox - in our suburban development there is a lot of money to be made on lawn service, mulching, general cleanup type stuff, seems like nobody wants to do their own yard work anymore.

They both have bank accounts set up, one of them is a saver, the other money burns a hole though his pocket - I'm just trying to educate them early and instill a LBYM mentality early, it a tough balance and I'm sure a lot of people think it is way to early to be dealing with these types issues with teens.

Thanks,
stream

[yakers]

The original question was about older kids; my younger is now 16 and seems to be pretty good with money. He seems to think we are poor which is not true; it’s just that he is in a school district with some seriously wealthy folks.
But what I want to post is how we dealt with money when he was younger. From about 5th grade he would get $6 a week allowance. Two were to spend, 2 for saving and 2 for charity. The saving was not long term but it had to be for something on "the list" it could be a skateboard, sports tickets music and the like. But it had to be on the list and planned. This was an introduction to delayed gratification and financial planning. I didn't want to burden the process with something abstract like saving for college. (Now that he is 16 we are working on that, he wants a car--why? to make money to save for college, clever boy.) And a couple times a year we would go to the local bulk food place and buy food with his charity money and take it to the local homeless shelter. Or he could pick his own donations as he did after 9/11 and the Tsunamis in the Pacific.
I’ll be paying more attention to teenage financial education but getting a good basic attitude towards money seems to be a good parental “investment”.

[TargaDave]

Stream,
That sounds great, especially for boys. My modest opinion is that age is great for instilling a work ethic along with a basic savings mindset without going overboard. I agree with Wab and Nords that teens don't relate much to total wealth or investing, and can validate it with our 14 yr old daughter. They see the nice house you live in but whether you own it or the bank owns it just doesn't mean much to them.

I think that working for outside employers is great for teaching responsibility compared to working Mom-Dad, Inc. Ours got a summer job on her own bussing tables (special work permit) to supplement the cushy babysitting jobs and between the sports camps. I thought she would quit after a week but she is still at it.

There is a book "The First National Bank of Dad" (by David Owens) that has been posted as a good money teaching aide for kids.

T-Dave

[NoloPress]

There's also a great kids and money column in Kiplinger's

http://www.kiplinger.com/personalfin.../archive.html?