A little while ago I posted an article about my views on the gap between the rich and the poor. This article began as just a thought I’d had, which I intended to post as a short sentence on Facebook, but which expanded far beyond the status update length you normally see. But I still posted it there. A conversation unfolded, and I found myself expanding upon the idea, including in it the thought that we should be teaching our children finance in school, especially an introduction to stocks, and handling their personal finances. I truly believe these courses should be a requirement to graduate.
Then I posted the status, and subsequent comments, and the conversation ended, and what did I do? I went on with my life. Did I make any changes? No, not at that time. But I keep going back to it, and thinking of a quote that just refuses to let me go:
Be the change you wish to see in the world. – (Often attributed to Mahatma Gandhi, though this has been disputed)
Spoken by Gandhi or not, the quote stands on it’s own. If I wish to see a world where finance is taught to the younger generation, it’s up to me to be the one to begin that movement. It’s for that reason that I’ve begun a plan for my son.
There are plenty of articles that discuss if you should give your children an allowance. I’ve always been of the belief that it’s something you should do, but you should make them earn it. My son has a bedroom, he will have to keep it clean. He won’t receive money for this. Why? Because I have a home. No one pays me to keep it clean. What he will earn money for is the extras. He’s 4 years old right now, so it’s very limited, but as he gets older, he’ll start earning more.
For now I’m starting him out with a bag. He will wander around the house–and the town, as it warms up outside–and collect returnable bottles. Once he has a full bag, we will take the bottles in. He will get to put half of this money into his piggie bank, and the other half will go into a special stock portfolio. Once that portfolio has reached a level, say $50, I will find 3 to 5 dividend paying stocks that I believe are good investments, and I will calmly explain them to him. At 4 he will probably not understand me, but as we make it a routine, he will learn. It will be his job to choose which stock to actually purchase, and then the money he has earned will be used to make that investment.
I haven’t decided if I’m going to match contributions to his stock account yet. I can see benefits to doing so, especially at a young age, to get things going.
I guess we’ll see.
Have you done anything like this with your children? What were the results? Any tips on how me and my wife can fine-tune the plan? Post them in the comments!