Author Topic: How to Encourage Interest in Finance  (Read 1883 times)

TheFrenchCat

  • Bristles
  • ***
  • Posts: 445
How to Encourage Interest in Finance
« on: January 23, 2025, 10:29:54 AM »
So DD (9) has gotten really into the YouTube channel Two Cents by PBS.  It's a bit more geared towards adults, but not inappropriately so and she loves it!  She's been using most, if not all, of her screen time to watch it for the past couple of weeks.  And now she's wanting to buy stocks!  She's even been looking up stock prices with DH. 

We already talk pretty openly about money and how it works with her, and have for quite a while.  But I was wondering if people had any resources for kids who are interested in money as maybe more of a hobby?

We're also thinking of getting her into CD's, since she's got about $1200 of her own money she's saved (pretty much every present ever, she doesn't spend much).  I though that would be more fun that just sticking it into her 529.  If we did this, we'd probably also do a "bank of mom and dad" so that she could "borrow" money from us and pay us back from the CD once it matures.  Though we'd probably put any  money she paid us back into her 529.  I just also want her to have opportunities to learn how to spend responsibly.  Any thoughts on what to do with her savings?

reeshau

  • Magnum Stache
  • ******
  • Posts: 3500
  • Location: Houston, TX Former locations: Detroit, Indianapolis, Dublin
  • FIRE'd Jan 2020
Re: How to Encourage Interest in Finance
« Reply #1 on: January 23, 2025, 01:39:59 PM »
I think I got this link from here.  Lots of different topics on money, definitely targeted to kids.

https://www.bluetreesavings.com/

If you have a chronic saver, you've probably solved or avoided the biggest issues of that age.  DS is a good saver, but constantly talks a "good game" about spending everything he has.  Thank God something has stuck, and despite his talk, he spends only some of the time.  I would suggest that your DD may benefit from some targeted spending--savings with goals in mind.  Of course, not the whole thing, but perhaps something that she talks a lot about; to add to the endorphin rush of achieving a goal.  DS, for instance, saved for his Nintendo Switch.  With grandparent money, it took a little under a year, but he (with no internal monologue) would talk himself through spending temptations, knowing he was x% toward the Switch.

Here are some parameters of how I have taught savings:

Distance is good.  We used a 3-part spend / save / share bank since he was counting and identifying coins.  When out shopping, if he didn't bring some spend money, he doesn't have money to spend that time.  (Older kid option: we have offered to "loan" him money for a purchase, with a 10% charge.  The item is not his until he pays it.  Intended as credit card training)

Even better distance, he has a savings account.  He enjoys the formality of "adult business," filling in deposit and withdrawal slips, talking directly to the cashier, etc.  With no debit card, hours are limited, so we most often go on Saturday mornings.

Rather than worry about actual interest, the "bank of Dad" pays all savings (save bank and savings account only) 10% a month, to accelerate compounding and achievement of goals.  He delights / cackles / taunts me when he adds to savings, knowing that interest is coming.  At some point, this will have to tone down; I don't have my exit strategy thought through yet, but it will probably be a reduction in frequency, to draw out those endorphin moments toward real life experience.

As an example, this year grandma and grandpa gave him a $500 check for Christmas, to be put toward summer camp.  He asked me if he could put the check in savings while he researched camps.  I said yes, with a couple caveats: he couldn't leave the money in his account for long (summer camp books up) and he could only spend his summer camp interest on summer camp--it's our way of giving him spending money.  Only, he has "earned it."  He already has the camp picked out, so it will just be a month or two.  But as something he is being led too (he loves travel, but is not outdoorsy) the savings aspect has added to the anticipation.

DS has also expressed interest in stocks, and even done some cursory research.  But he has not mustered the attention span to get to an actual purchase, even just though my established taxable account.  He knows I am very interested in stocks, and that interest has provided some significant luxuries / experiences for our family, including FIRE. (I have said this explicitly to him)

Hope these details help inspire!

TheFrenchCat

  • Bristles
  • ***
  • Posts: 445
Re: How to Encourage Interest in Finance
« Reply #2 on: January 24, 2025, 01:05:24 PM »
That website looks great, I'll need to check it out more.

And having the "Bank of Mom and Dad" pay the interest seems like a good idea.  It's at least easier than fussing with CDs for 1k.

Thanks for sharing so much.  I'll need to digest a bit, but you've given me a lot of good advice.  Thanks!


LD_TAndK

  • Bristles
  • ***
  • Posts: 430
Re: How to Encourage Interest in Finance
« Reply #3 on: January 27, 2025, 04:33:02 AM »
You could open a new brokerage account, under your name and control, but use it to invest your kids money. Like they give you $20 of their allowance or whatever and you transfer $20 into the account and let them decide what index funds they'd like you to purchase for them. If they need the money out you can sell and pay the probably minor tax hit yourself.

Researching funds and learning about the ups and downs of investing might be instructive. Maybe they'll catch the investing bug. Though with so many "investments" loudly touted today blurring the line between gambling and investing hopefully they don't catch the wrong bug.

reeshau

  • Magnum Stache
  • ******
  • Posts: 3500
  • Location: Houston, TX Former locations: Detroit, Indianapolis, Dublin
  • FIRE'd Jan 2020
Re: How to Encourage Interest in Finance
« Reply #4 on: January 27, 2025, 05:38:23 AM »
Researching funds and learning about the ups and downs of investing might be instructive. Maybe they'll catch the investing bug. Though with so many "investments" loudly touted today blurring the line between gambling and investing hopefully they don't catch the wrong bug.

True.  DS was very amped to own some shares of Roblox.  But, despite all the cash they manage to drain from him, they are posting significant losses.  Even as a bit of fun, it's a no-go stock for me.  That was hard to get him to reconcile: a good product being n3cessary, but not sufficient, to being a good investment.

ChpBstrd

  • Walrus Stache
  • *******
  • Posts: 7867
  • Location: A poor and backward Southern state known as minimum wage country
Re: How to Encourage Interest in Finance
« Reply #5 on: January 27, 2025, 06:37:21 AM »
Researching funds and learning about the ups and downs of investing might be instructive. Maybe they'll catch the investing bug. Though with so many "investments" loudly touted today blurring the line between gambling and investing hopefully they don't catch the wrong bug.

True.  DS was very amped to own some shares of Roblox.  But, despite all the cash they manage to drain from him, they are posting significant losses.  Even as a bit of fun, it's a no-go stock for me.  That was hard to get him to reconcile: a good product being n3cessary, but not sufficient, to being a good investment.
1) It might not necessarily be a bad stock. How many of the "big" tech companies went a decade or more losing money? Also, have you noticed Robux are about the only thing this age group wants to buy? I call Roblox a buy.

2) Granting autonomy means granting autonomy. If kiddo is more interested in the stocks of companies they use and pay their money to, why not let the educational experience happen? Is the fear is that Roblox will lose value and the kid will swear off investing in anything but bank CDs? If so, understand that index funds can do the same.

reeshau

  • Magnum Stache
  • ******
  • Posts: 3500
  • Location: Houston, TX Former locations: Detroit, Indianapolis, Dublin
  • FIRE'd Jan 2020
Re: How to Encourage Interest in Finance
« Reply #6 on: January 27, 2025, 07:18:11 AM »
Researching funds and learning about the ups and downs of investing might be instructive. Maybe they'll catch the investing bug. Though with so many "investments" loudly touted today blurring the line between gambling and investing hopefully they don't catch the wrong bug.

True.  DS was very amped to own some shares of Roblox.  But, despite all the cash they manage to drain from him, they are posting significant losses.  Even as a bit of fun, it's a no-go stock for me.  That was hard to get him to reconcile: a good product being n3cessary, but not sufficient, to being a good investment.
1) It might not necessarily be a bad stock. How many of the "big" tech companies went a decade or more losing money? Also, have you noticed Robux are about the only thing this age group wants to buy? I call Roblox a buy.

2) Granting autonomy means granting autonomy. If kiddo is more interested in the stocks of companies they use and pay their money to, why not let the educational experience happen? Is the fear is that Roblox will lose value and the kid will swear off investing in anything but bank CDs? If so, understand that index funds can do the same.

Fair comments, given the sparse detail I provided.  I have a particular stock investing process that I practice, and that DS knows I teach it.  So, it would be hypocritical of me to allow / recommend it, because it's definitely not my thing.  On the other hand, I have no problem talking him through and index fund, if he wished.

Going through the learning of a loss is definitely something every individual stock investor should do.  But DS is 9, and still in the emotional space where every loss is devastating.  (I may have spoiled him on Catan forever, because I accidentally won our first game)  Someday, but not now.  And definitely not the first time around.

On other matters, I am a big advocate of autonomy.  As I mentioned above, he gets accelerates interest.  What I didn't mention is, this is in lieu of allowance.  I'm not against allowance, but he has all the money he wants this way, for now.  And when he spends down his capital, he feels the reduction in interest the following month.  So far, this is a balance that has been productive in teaching him responsibility.  It will probably change when he is mature enough to really take on traditional household tasks like mowing the lawn.

mustachian816

  • 5 O'Clock Shadow
  • *
  • Posts: 27
Re: How to Encourage Interest in Finance
« Reply #7 on: January 28, 2025, 11:10:23 AM »
Mine don't have $1000+ saved yet, but I've been giving them 1% interest per MONTH on everything they save in their home piggy bank. IMO its more tangible incentive to get them to save and learn about compound interest compared to them moving it to a bank account that they can't see.  They can still spend freely but they really feel the opportunity cost when they know they'll miss out on interest at the end of the month if they spend it now. My only requirement is they have to keep track of it and let me know how much they earn in interest each month (they've forgotten about a quarter of the months and missed out). Its easy for even younger kids to calculate the interest earned each month with $1 = 1 penny in interest a month.

I'm waiting until they're mature enough to look up investments online to start investing, but I was thinking of coming up with some kind of dice game to simulate stock market returns.  For example, each month roll a dice and if it comes up 1=lose 1%, 2-nothing, 3-6 gain 1% or whatever.

LD_TAndK

  • Bristles
  • ***
  • Posts: 430
Re: How to Encourage Interest in Finance
« Reply #8 on: February 12, 2025, 01:15:52 PM »
Mine don't have $1000+ saved yet, but I've been giving them 1% interest per MONTH on everything they save in their home piggy bank. IMO its more tangible incentive to get them to save and learn about compound interest compared to them moving it to a bank account that they can't see.
...

I like this idea, help get the compounding interest idea across despite shorter attention spans.

Although I fear when they turn into super-savers and I have to shell out over 12% APR!