Author Topic: Taught my 5yo about investments and FI today.  (Read 1468 times)

Meesh

  • 5 O'Clock Shadow
  • *
  • Posts: 91
Taught my 5yo about investments and FI today.
« on: January 17, 2018, 12:04:55 PM »
My 5yo got play money for Christmas from my parents. He was asking about debit cards and banks and stuff today and I mentioned the real secret is we don't spend everything in the bank.

Then I pulled out the play money and said if we make $100 a year, we split it into 2 $50s, spend one on our life and save the other. For each $50 in the bank we get another $1 a year. So 1st year you get 1$ but year 2 you get $2 etc, did this for a few "years" to show how it grew.

Then I said lets say we can live off $4 a year, if we have 4 $50's we will make $4 every year forever so we don't need to work anymore.

What's crazy is he totally got it. My DH came home and LO went on and on about it to him, and why its important to save or else DH would have to work for the rest of his life etc. Then when DH mentioned getting a backup pair of glasses, he totally shut him down and said we don't need 2 pairs of glasses and that we should save it! lol

Just sharing because it felt like a win but I'm curious...

When do you guys start these conversations with your kiddos? Do they know your FI goals? How did you guys get your children on board?

FireHiker

  • Pencil Stache
  • ****
  • Posts: 820
  • Location: So Cal
Re: Taught my 5yo about investments and FI today.
« Reply #1 on: January 17, 2018, 12:14:00 PM »
That's awesome! Mine are 6, 8, and 17. I only "found" the concept of FIRE in mid 2015 and really didn't get on board in earnest until about mid 2016 when I got my husband interested in the idea. Until then we did live below our means because we are both high wage earners, but there was a lot of room for improvement. My oldest has a very good understanding on what we do with our money and why, but sometimes he's a teenager who spends irresponsibly. The younger two understand that we spend a lot less than we earn so that we can travel and retire early. We talk about it a LOT so they are constantly exposed to the idea, and the thought processes behind the decision to spend money (or, more often, to NOT spend money). I like the way you explained with the play money.

Meesh

  • 5 O'Clock Shadow
  • *
  • Posts: 91
Re: Taught my 5yo about investments and FI today.
« Reply #2 on: January 17, 2018, 04:46:50 PM »
That's awesome! Mine are 6, 8, and 17. I only "found" the concept of FIRE in mid 2015 and really didn't get on board in earnest until about mid 2016 when I got my husband interested in the idea. Until then we did live below our means because we are both high wage earners, but there was a lot of room for improvement. My oldest has a very good understanding on what we do with our money and why, but sometimes he's a teenager who spends irresponsibly. The younger two understand that we spend a lot less than we earn so that we can travel and retire early. We talk about it a LOT so they are constantly exposed to the idea, and the thought processes behind the decision to spend money (or, more often, to NOT spend money). I like the way you explained with the play money.

That's really interesting. Do you feel like your oldest is supportive with you trying to FIRE but makes normal teen choices for himself?

I think I'm going to be more open with my son like you are with yours from now on. It's probably healthy to see parents striving for an important goal. Not to mention have a healthier understand of personal finance than most people.

Does anyone have children interested in following in their parents footsteps and are interested in becoming FI too? I guess I want to encourage mine to be FI but ultimately know it is up to him.

Aelias

  • Stubble
  • **
  • Posts: 192
Re: Taught my 5yo about investments and FI today.
« Reply #3 on: January 19, 2018, 08:29:48 AM »
Honestly, I think you did it right.  You saw a teachable moment, and you jumped on it in an age appropriate way.  Nicely done!

With our 5yo, we're currently focusing on spending awareness.  For example, he brought home one of those scholastic book club flyers from kindergarten the other day.  It had 4 books that, if bought separately, would cost $13.  If you bought them as a set, it would cost $10.  But, we established that buying just 1 book instead of 4 is cheaper still.  And just going to the library or reading the books we already have is free!

We haven't really discussed saving for retirement yet, but if he asks about it, I'll probably try to do it the way you did.  We've covered the basic concept of interest, so that may help.  We also explained what a mortgage was and how much, in real dollars, we paid for ours.  When he heard how much our relatively modest mortgage payment was a month, he did an actual spit-take. "That's a lot of money!"  Yup--and that's why we work and don't spend our money on random stuff!

Fin Drill Instructor

  • 5 O'Clock Shadow
  • *
  • Posts: 3
Re: Taught my 5yo about investments and FI today.
« Reply #4 on: January 19, 2018, 10:23:03 PM »
We started playing CASHFLOW for KIDS Board Game (Robert Kiyosaki) with our then 5 year old. He now understands concepts of assets and liabilities and why it's bad to have a lot of payments and it's good to have cashflow. Also, when he asks for something in a store, we don't say that we don't have money for it, but we say that it would not be a good financial decision. 

simonkkkkk

  • 5 O'Clock Shadow
  • *
  • Posts: 26
Re: Taught my 5yo about investments and FI today.
« Reply #5 on: January 20, 2018, 03:45:06 AM »
you are lucky!

former player

  • Magnum Stache
  • ******
  • Posts: 3565
  • Location: Avalon
Re: Taught my 5yo about investments and FI today.
« Reply #6 on: January 20, 2018, 04:23:45 AM »
A word of caution: kids talk and the messages they send out into the world of their friends and their friends' parents may come back in strange ways.

Meesh

  • 5 O'Clock Shadow
  • *
  • Posts: 91
Re: Taught my 5yo about investments and FI today.
« Reply #7 on: January 20, 2018, 01:35:28 PM »
That's true. I think a talk about finances being private is probably something good to do.

I think the only thing personal I mentioned to him was that we save half of what we make, and while I certainly would never go around telling ppl that lol, I'm not embarrassed by it. We ended up gravitating to mostly frugal families so while they may be surprised if he blurts it out, I can always explain why. My parents will think we are nuts but they already think that so whatever lol.

Chashflow for kids sounds awesome. My son loves board games; I'll have to check that one out.

FireHiker

  • Pencil Stache
  • ****
  • Posts: 820
  • Location: So Cal
Re: Taught my 5yo about investments and FI today.
« Reply #8 on: January 22, 2018, 04:15:01 PM »
That's awesome! Mine are 6, 8, and 17. I only "found" the concept of FIRE in mid 2015 and really didn't get on board in earnest until about mid 2016 when I got my husband interested in the idea. Until then we did live below our means because we are both high wage earners, but there was a lot of room for improvement. My oldest has a very good understanding on what we do with our money and why, but sometimes he's a teenager who spends irresponsibly. The younger two understand that we spend a lot less than we earn so that we can travel and retire early. We talk about it a LOT so they are constantly exposed to the idea, and the thought processes behind the decision to spend money (or, more often, to NOT spend money). I like the way you explained with the play money.

That's really interesting. Do you feel like your oldest is supportive with you trying to FIRE but makes normal teen choices for himself?

I think I'm going to be more open with my son like you are with yours from now on. It's probably healthy to see parents striving for an important goal. Not to mention have a healthier understand of personal finance than most people.

Does anyone have children interested in following in their parents footsteps and are interested in becoming FI too? I guess I want to encourage mine to be FI but ultimately know it is up to him.

I think my oldest is very supportive of our FIRE goals but, more importantly, he sees how we manage money in general compared to other adults in his life (his dad and stepmom, two of my husband's sisters and their husbands, my mother, etc) and he sees the importance of saving and living below one's means, etc. The others listed above do NOT and he's seen firsthand the consequences. My mother is a financial trainwreck and a constant source of stress for me. I think he really appreciates how important it is to me to NOT subject him to the same. He knows what our savings rate is and is generally pretty responsible.

That said, he does eat out much more than I would like and drives all over the place, but compared to many of his peers he does live fairly frugally. It's a little funny actually because we live in a pretty affluent area and he sees a LOT of wealth at his school. He actually has a lot of contempt for the entitled rich kids (his words) and largely hangs with friends whose parents are not as well off, where the parents are the first generation to live in the US. He likes to go to thrift stores instead of the mall. He has an iphone 5S and a Nissan Sentra (we pitched in with grandparents and his dad and stepmom, so our part was a reasonable $4k for a pristine 2015 purchased late 2016), both much more reasonable than most of his peers, and he takes some pride in not being flashy. He has a lovely girlfriend whose parents are recently divorced and money is something of an issue so he is not being pressured to go out and spend; they tend to try to find free/cheap things to do instead.