Ridiculously young dreamers: can ER skills be taught to the next generation?

[Nords]

Chinaco's post sparked this question:

It also seems that every generation of parent tries to provide a bit more for their children. It seems that we are at a point where the current generation that is entering the workforce has mighty high expectations for immediate gratification in spending. The middle class in the US is turning themselves into financial wrecks... they want it all right now. They have become spoiled. Forget financial independence... most are not even financially stable.

Anyone else tried to teach their kids how to FIRE?

Spouse and I are doing our darnedest to equip our kid with financial & career skills, but the ER bar seems pretty high. It's hard to see the benefits of slogans like "Kids, stay in school" when your parents (who actually did stay in school) drop you off there enroute working on the rental property. It's also hard for a teen to be motivated to pedal uphill to high school when they suspect that one of their ER parents will be loading a longboard into the car later that morning.

Spouse and I weren't raised to think about financial independence, let alone ER. Budgeting was taught, but not saving for retirement-- it was just too far in the future to even be discussed. Our parents' ERs happened relatively suddenly, not until spouse and I were in our 30s, and neither of their examples really seemed to apply to our situation. Veterans are strongly encouraged to start a post-military career so the ER concept didn't really catch on with us until about two years before I ER'd. And despite the military retiree's ER advantages, I certainly wouldn't encourage a teen to join the military for ER benefits.

Despite [-]all our free time to get into our teen's business[/-] our ER lifestyle our kid is blissfully oblivious, perhaps even dismissive, of the benefits of ER. She just can't see how ER would matter to her. It seems better to encourage her to find a career that she can love as an avocation, not merely as a treadmill to FIRE. (She can learn all about overload & burnout later.) Her part-time job fills her with happiness & enthusiasm so at this stage of her life we certainly don't want to stomp on the putative joys of working.

I guess the most an ER parent can do for their kids is to demonstrate by example. Someday their adult children can fall back on those memories when their own interests begin to turn to FIRE. As Jarhead has pointed out before, teens are so busy dealing with their own lives that they can hardly be expected to notice what's going on with their parents.

Any other ideas?

 

[virginia]

Nords, I'm sure that as you said, the best thing that you can do is to live as an example. Look at everyone around you, especially younger people, and they mostly live and look at themselves according to how they were brought up - it's almost inevitable.
The other best thing that you can do is to not spoil her financially. I think that's the #1 problem with younger people today is that they expect someone to bail them out when times get tough. With the combination of the above paragraph and this one - your daughter is set for success. I know that my Dad would bail me out if I really needed him, but I would never ask unless I were REALLY drowning, because that's the way I was brought up - to take care of myself, and ask for help from my family - and not take from them - unless I truly needed help. And it always works in the reverse as well.
Who knows, ER isn't for everyone. I think it would be great if a person could achieve a work/life balance that they enjoyed, and wouldn't even considered RE as an option. Unfortunately, our culture's attitude is that you should put your job above everything else, and that is where the problems come in....

 

[growing_older]

I don't think my kids are ready for the idea of ER, so no point in starting any discussion about that. But they are ready for LBYM and can understand why our family can choose if we want something or not - because we didn't use all our means but saved some. They can be as judgmental as anyone about whether an experience or a new electronic toy is "worth" what is being asked for it, and make an intelligent choice to spend or save the money as appropriate. I like to think this is a good first step and will give them a framework in which to make FIRE decisions later in life when they are ready for those concepts. It's not always perfect (piano lessons were required even though they argued against them on economic terms, but eventually dropped when they argued against them based on other activity commitments) but they do seem to be comfortable with the lifestyle, so I hope that's good for their future.

 

[aworkingrachel]

Nords, I'm nowhere near FIREing myself, but I think you're right that encouraging your kids to find careers that they love is more important than specifically encouraging ER. With any luck they'll know enough from your example to save up "eff-you" money if/when they find themselves in a job they don't like or when they want to change directions, but won't need to focus as much on ER because they've started out doing something they love.

Personally, I don't plan on emphasizing education to my kids. Heresy, I know, but I think a big part of successfully finding a career that you love is having time in your formative years to explore your interests. I don't regret going to college, but it did get in the way of a lot of other things I would have rather been doing from 18-22 (productive things, not just drinking and partying!). It might have been better if I'd decided to go to college a little later rather than going when I was 17 mainly because my parents wanted me to.

 

[FIREd]

I think it is probably more important to teach kids how to LBYM than to teach them how to FIRE. First, if they LBYM, they will be able to reach financial freedom even if they don't make it a goal from the get go. But I also think that for some kids, the idea of FIRE can, ironically, kill their ambitions. Unless they really understand that they will have to work hard themselves for years before they can FIRE and that they will have to build they own nest egg to make it happen, they might me tempted to take it easy and wait for mommy and daddy to kick the bucket so that they can get their own FIRE stash.

 

[MooreBonds]

Part of the problem is that, while two parents' personality traits may be more common in the family tree than other dispositions, there is only so much someone can do to override their natural disposition.

Regardless of whether the parents are megarich or ultrapoor, people who are true spendthrifts will almost always be so. Likewise, people who are truly frugal and live simply would likely remain regardless of how much their parents have.

Being motivated to FIRE involves additional rare qualities of planning ahead and either working one's butt and/or living (sometimes extremely) simply to reach goals. And, with varying levels of examples, many of the people in the middle of the spectrum can be taught at least the concepts of FIRE (but have different levels of attachment to "living the good life today" that will influence how soon they ultimately retire)

Although a parent can only do so much of the above, I would say the single greatest aid in teaching your offspring about financial independence is having them getting a job as early as possible (I started mowing lawns at 10, and started caddying at 11), and making them responsible for their money and (some) expenditures as early as possible. This naturally forces them to have to pay more attention on their expenditures. By seeing how they make choices, you know instantly if it will just take a few hours of talking over the years to introduce them to the FIRE concept....or whether they spend all of their earnings before they even get their paycheck.

Of course, all of this is the conjecture of a 31 year old childless single man. If I find myself married with children of my own one day, I might have to edit this post.

 

[tpcooper]

As a pretty young person, 24, I think it is probably one of those things you have to learn for yourself, not that parents shouldn't try. I mean I know nothing about parenting...I honestly think LBYM takes a certain type of personality. I can LBYM because I don't like expensive things. I really just don't. I like to run and I like to go have a bagel afterwards...thats my perfect day

 

[Linney]

Anyone else tried to teach their kids how to FIRE?

Spouse and I are doing our darnedest to equip our kid with financial & career skills, but the ER bar seems pretty high. ....<snip>

I guess the most an ER parent can do for their kids is to demonstrate by example. Someday their adult children can fall back on those memories when their own interests begin to turn to FIRE. As Jarhead has pointed out before, teens are so busy dealing with their own lives that they can hardly be expected to notice what's going on with their parents.

Any other ideas?

I think you've hit the key points here. I got the idea about retiring early from my own family members -- 2 uncles plus my mom and dad all retired early. I watched this happen when I was in my thirties and watched how their lives changed for the better as they had time to partake in hobbies and do the things they loved. I had always been a saver and these early retirements gave real purpose to that habit.

For our son, we'll do the same thing. When we start cutting back from work a couple years from now, we won't bother talking about FIRE itself but rather let the results speak for themselves. What we have explicitly taught him is how to manage his finances. His (enforced) savings account shows him how his money can earn money. He has learned about online banking and how to use credit as well as debit cards. We speak openly about financial matters at the family dinner table and discuss how and if we will purchase something, so he sees how we think it through and not just buy things when the urge hits us. I just received a flyer about identify theft and will pass it on to him to read next. I believe that these things, as well as career advice, are the best way we can prepare our children for FIRE.... if this is what they want for themselves.

--Linney

 

[laurence]

Well, what I do know is the force is strong in my family. It's at least three generations of LBYM. But I don't think it's genetics. Like anything, as long as you talk with your kids about the issue they have a leg up. Financial literacy is just as important (if not more) than any of the subjects taught in school. Your kids may not want to FIRE, but that's o.k., so long as their credit is good and they know to not live paycheck to paycheck, they'll be a lot happier than the typical American.

Something my parents did that really helped my siblings and I is back to school budgets. We would get a large sum of money, but it would have to buy clothes, school supplies, shoes, etc. for the year. Once you see that the Nike Air Jordan's are going to cut you down to three outfits for a whole semester, you start thinking the Vans look pretty good.

I am not a big fan of having kids work in grade school. Consequences and the value of money can be taught without them taking away from study and play with friends. They have 50 years to work, let them enjoy the little time they have. I would go so far as to say it's better for many kids to take on student loan debt in college vs. working through college and half paying attention to barely get C+ averages. If a child is driven and motivated, don't let the need for responsibility via the part time job at Burger King get in the way of acceptance to Med school. In a way it's employment with deferred but significant compensation!

 

[myself]

We would like our kids to be able to set up for FIRE from the start (i.e. when they leave the nest).
However we also want them to realize drive/dedication towards personal goals.
It's a fine line between the 2, but if they live below their means (saving 15%-30% of what they earn), and investing that in different ways, we'll be quite happy with that.
Of course, we've got 4 of the ankle-biters, so we'll see how things progress as time goes on.

Heck, the oldest 2 were just asking the other day why they needed to practice timed tests for addition/subtraction. I could only respond with the old famaliar "practice makes perfect". Something I thought I'd never say to my kids.
Although I did add to that another thought. Where do you think the money came to get your new laptop? That got 'em thinking a little.

 

[Marquette]

I'm 7-8 years older than my brother and sister. My wife and I helped them out a bit with college when they first started but, in exchange for the tuition assistance, I gave them homework. All of the homework was centered around the value of investing early and delayed gratification.

Since my sister is on her way to a career as an accountant and my brother loves math, it wasn't too much work for them to come up with spreadsheets that showed a portfolio's value if they started young and quit versus starting late.

I'm not sure if it'll help; only time will tell. However, I figure the best that I can do is plant seeds and hope they stick. I realize they're not in range for your super-young dreamer, but I think the same general idea applies.

In my case, my wife and I both grew up without much and that resulted in a bit of an issue when we started our DINK life. We weren't very good at saying 'no, I shouldn't get this right now' when we felt entitled since we grew up with very little and could afford (practically) anything we wanted. Even though I was surrounded by LBYM living, it didn't sink in until I was in my 20's.

 

[CCdaCE]

Other ideas would be to match Roth IRA contributions (they put in $2,500 and so do you)... maybe you already do that, I can't recall.

Personally, I was always a saver, but I just didn't "get it" until I had my own job, apartment, payments, etc. Didn't really have any examples (family members) to follow though, either. Grandpa was the influence, but the details were always fuzzy because I didn't "get it" when he was doling out advice.

Just more information and discussion is helpful. For instance, I had no idea how credit cards worked, loans, etc. What I needed was always "filling in the details".

Also, give the kid the option to FIRE, the information, not make the choice for them.

-CC

 

[Pavo]

While I wouldn't say FIRE, but my parents did teach us the value of hard work, saving, and investing from about the time we are able to run as kids.

For myself, it didn't really stick too well as a teenager as I kept getting wrapped up in the popular crowd which requires wasting money on stupid stuff, but I got out of it by the end of college. By two years out of college I purchased my first home, picked up side jobs, went back to school part time, and tallied a net worth up to about $100k. I'm shooting to have a net worth of ~$500k by 30.

My brothers are very similar. One is an undergrad who is about to purchase his first home, and the other is a grad student looking to purchase commerical property. The money being used for the down payment and mortgage payments is NOT our parents; they taught us how to treat money from a young age and how much value dollar bills have.

I'll be doing the same with my kids one day as well.

 

[WM]

Two things my parents did stand out:

1 - Make choices about how to spend limited income. They didn't talk about it as openly as they could have, but I remember a kid in my grade school class thinking it was really cool that we had a boat. I was old enough to realize that we were able to have the boat in part because we didn't spend money on other things.

2 - We took a month-long vacation every summer on said boat, meandering among small lakefront towns. Plenty of sitting around, not caring what day it was, reading, or walking into town to window shop. My parents were both teachers, so they had summers off. It made me value unstructured time and aspire to build that into my adult life.

That said, I have a sister who is not nearly as serious about FIREing as I am. So I think it also depends on personality, etc.

For Nords, I think the important thing is you're giving your daughter the tools she needs to be responsible with her finances. Does she understand what it took for you both to FIRE? When you started saving, etc.? When DH and I started saving, we really never thought FI would be possible - it just seemed impossible to accumulate enough assets. 11 years later, I can't believe how far we've come. Hearing it from someone other than her parents might be useful, too, if you've got ER friends.

 

[CCdaCE]

<snip>

For Nords, I think the important thing is you're giving your daughter the tools she needs to be responsible with her finances. Does she understand what it took for you both to FIRE? When you started saving, etc.? When DH and I started saving, we really never thought FI would be possible - it just seemed impossible to accumulate enough assets. 11 years later, I can't believe how far we've come. Hearing it from someone other than her parents might be useful, too, if you've got ER friends.

Yeah, those are the kind of details I was talking about. Specifics about what, when, why, how much, etc. that you started saving.

"We have a credit card, but we only put day-to-day purchases on it, and pay it off every month because if you don't, you pay XX% on the total balance...". Show 'em how that daily interest is calculated.

"We have $N amount of life insurance, or house insurance, or car insurance or ____ (fill in the blank) for reasons X,Y,Z."

Maybe kids gotta leave the nest and see how smart their parents were/are. That's what it took in my case. But, I think if you pound it into 'em when they're still impressionable, it's alot easier to convince 'em.

-CC

 

[podey]

Other ideas would be to match Roth IRA contributions (they put in $2,500 and so do you)... maybe you already do that, I can't recall.

-CC

This is what my parents did when I was in college, and it was a great motivater

 

[kaudrey]

Hi Nords,

Well, I don't have kids, but I can tell you what it was like in my house growing up. My parents bought mid-level cars with cash and kept them until they died. We weren't allowed to beg for the latest designer clothes or gadgets or whatever, didn't have our own phones or TVs. My parents didn't buy "stuff". They never took out any loans. Dad let us help pay the bills (when we were 8 or 10, that was fun, somehow), and taught us young how to balance a checkbook.

My parents bought land they planned to retire on 15 years before they retired, so we, as kids, knew they were going to do it. We knew they were planning it from very early on. It was always kind of there - Mom and Dad get to quit when the kids get out of college.

Fast forward - the day I started working my dad made sure I was going to sign up for my 401(k) and max it out. 15 years after THAT, I am planning to RE around age 52 (they were 57 when they did it). My sister is probably even more frugal than I am, so hopefully the trait will get passed on to her kids too.

It's in our genes...

 

[armor99]

A very interesting thread so far. It is enlightening to see the many roads that have led so many to the dream of early retirement. For me, it was almost a rebellion against my folks. Not to say that my folks are not frugal, they certainly are. But they choose to "wish and hope" for things, rather then to make plans for how they are going to achieve them. I can remember just recently my mother complaining about the fact that they cannot currently afford to get the new flooring that she has been wanting for their house. So I mentioned she could either, get a part time job for a few months, sell some old jewlery that she has, or find ways of cutting back on other things to pay for it. All I got back, was a blank confused stare. Sadly, there are way too many people right now, who fall into this category. People that want things, but have no desire to do what it would actually take to achieve them.
I live under no such self delusion. I fully understand that if I want things....(and oh yes.... lots of things that I want), that I will have to find a way to pay for it all. I also know that more than likely I WILL make it to old age, and there will be no inhertance to fall back on. So rather than "wish and hope" for some utopian retirement one day, I set myself on the path of actually making that happen. Why rent when I can own my own home? So now I live in a house of my own. Why have a savings account at .5% interest when I can get 4.1% at HSBC? So now I have most of my cash there. Slowly over time one thing building upon the next, taking advantage of a good financial situation where I can find one.
I am not currently married, but if I do marry and have children, I plan on making this sort of critical thinking, a big part in their upbringing. I think teaching children that there can be negative consequences to their actions is extremely important. Rather than say... "I want this".... there should always be appended to the end.... "and this is what I am going to do to get it." Ultimately I will retire early.... or I will not. No one can plan a future so perfectly, as to know what will come to pass in 20 years. But I do know with absolute certainty, that the more money you accumulate during your working years, the more options that you have available to you, when you are not working any more. More options is almost never a negative thing. Thanks to everyone here for their knowlege and insight into helping me to one day reach that goal....

 

[retiringby50]

I like to run and I like to go have a bagel afterwards...thats my perfect day

If I could one day truly say this, that would be a perfect day! Eating a bagel sure, but "I like to run" will need more practice!

How to FIRE? No. DD is almost 11. The things we do right now are to talk about LBYM through examples of stuff we do and of (wrong) stuff other people do. I know it's making a difference especially in the past year. She wanted a DS Lite (it's a handheld video game system), and asked us constantly for a year for permission to have one. Finally, I said she could if she saved enough money. She saved up enough Target giftcards last year and bought it. Before buying, I asked if she wanted to wait (of course not!). About a month later, there was a better deal (her comment said with shock, "Bummer, I got ripped off.") - so she learned the lesson of waiting. Games went on sale, so she took her saved money and bought two. She went to a sleepover and lost one - it's her own bummer, but she got over it. The other day, she declared she wanted to get a car charger for the system. She didn't ask us to buy it for her. Sometimes when we buy something special, I'll remind her that it's because we've been saving up money daily that we can suddenly spring for something (this can be a $5 impulse item, not something very expensive).

FIRE will take a long time. I remember being 22 at my first job and not knowing what to do w/401(k)... yet I studied retirement plans as part of my curriculum! It took another co-worker to explain the compounding of money before I actually took action.

 

[freebird5825]

how i was raised...if i wanted something cool or frivolous, i needed to babysit, shovel snow, houseclean, whatever to pay for it. AFTER my HOMEWORK was done, that is <direct Mom quote>

i had small amounts of money in my hands in my very early teens. i learned how to earn it, save it up, spend it, and maybe even put a little leftover in the bank.

no matter how you slice it or dice it, money management on a small scale is a life lesson that can never come too early.

no kids myself, BTW. just had a darn good teacher (my mom). i FIREd at age 48.

 

[WM]

One other thought I had about this recently - talking to people who are very young about FIRE is hard because even if you're diligent it usually takes a long time!

My experience was that DH and I saved on blind faith for a while even though ER seemed impossible. We pretended we were saving for a temporary work time-out instead because that was more tangible and believable. When things came together for us a few years ago and I figured out that our ideal FIRE scenario might be possible, it was a whole new ball game.

The same thing just happened with my sister this weekend - we were working on a revised savings plan for her, and because of some new circumstances, FIRE is suddenly in the realm of the possible. She was saving anyway, but it really renewed her motivation and let her see the (still distant) light at the end of the tunnel.

So my thought is to maybe not focus on FIRE so much as the fact that saving up any substantial amount of money will give you some choices - take a year off, work part time for a while, whatever.

 

[TickTock]

Good point, WM!

Step 1: Having money saved gives you choices.

Step 2: You can then make the choice most appealing to you.