Educating Kids About Money

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor. Seeking advice on your portfolio?
Flaccidsteele
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Re: Educating Kids About Money

Post by Flaccidsteele »

Descartes wrote:Even if one should be a seller of ideas or products (the perspective with which the article writer is attempting to blinker his son),
any idea or product is generated through the expenditure of time; i.e. there is always a trade of time for money.
Obviously nothing happens "instantaneously" so when I say that I want to avoid teaching my child to "trade time for money", what I meant is that I want to avoid teaching them to earn an hourly wage and/or salary. I want to avoid paying an allowance since, at best, this teaches a child to trade their time for an hourly wage and/or salary. At worst it teaches them that money comes from a money-tree benefactor.

The vast majority of parents appear to teach their children directly/indirectly to "trade time for money" only because that's how they were "taught". That is, to work for an hourly wage and/or salary. Most parents don't really know any other way. (Some parents don't care to know any other way. To each their own)

Speaking for myself, money is just an idea that can be made in whatever amount an individual desires/has ability, outside the bounds of an hourly wage and/or salary.

One simple example would be the most recent US housing collapse where money was basically "free" and could have been made in whatever quantity an individual wanted based on their desires and ability. The same can be said of any price distress concerning any asset in which the individual has some knowledge.
Descartes wrote:Although the manipulation of his son makes me a little uneasy, the article's premise is a different and more valid one.
From my perspective, all adults who have raised/are raising children, manipulate them. All individuals who look after children inflict their own beliefs/behaviours upon them.
Last edited by Flaccidsteele on 25 Aug 2014 16:20, edited 1 time in total.
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kcowan
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Re: Educating Kids About Money

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Flaccidsteele wrote:All individuals who look after children inflict their own beliefs/behaviours upon them.
I think inflict is too negative. I would model the desired behaviours. Lead by example. :lol:
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Re: Educating Kids About Money

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Flaccidsteele wrote: when I say that I want to avoid teaching my child to "trade time for money", what I meant is ..
You have a confused way of expressing yourself ..but I am also not sure your thoughts are organized correctly either.

Teaching an aversion to an hourly rate or an annual salary is not the same as teaching someone to be a generator of ideas or products.

Denying your child things ("if you want something you have to find some money somehow and buy it yourself")
or penalizing the child ("those cleaning supplies you are using in your car wash business don't belong to you")
is manipulation not teaching.
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Re: Educating Kids About Money

Post by eezee »

Flaccidsteele wrote:
Descartes wrote:Even if one should be a seller of ideas or products (the perspective with which the article writer is attempting to blinker his son),
any idea or product is generated through the expenditure of time; i.e. there is always a trade of time for money.
Obviously nothing happens "instantaneously" so when I say that I want to avoid teaching my child to "trade time for money", what I meant is that I want to avoid teaching them to earn an hourly wage and/or salary. I want to avoid paying an allowance since, at best, this teaches a child to trade their time for an hourly wage and/or salary. At worst it teaches them that money comes from a money-tree benefactor.

The vast majority of parents appear to teach their children directly/indirectly to "trade time for money" only because that's how they were "taught". That is, to work for an hourly wage and/or salary. Most parents don't really know any other way. (Some parents don't care to know any other way. To each their own)

Speaking for myself, money is just an idea that can be made in whatever amount an individual desires/has ability, outside the bounds of an hourly wage and/or salary.

One simple example would be the most recent US housing collapse where money was basically "free" and could have been made in whatever quantity an individual wanted based on their desires and ability. The same can be said of any price distress concerning any asset in which the individual has some knowledge.
Descartes wrote:Although the manipulation of his son makes me a little uneasy, the article's premise is a different and more valid one.
From my perspective, all adults who have raised/are raising children, manipulate them. All individuals who look after children inflict their own beliefs/behaviours upon them.
So that eliminates babysitting, dog-walking, paper routes, etc. What do you propose they do that brings them in some money and does not involve time ? even lemonade stands, or selling bibles door to door requires time.
I must be missing something.

P.S. how many kids do you have ?
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Re: Educating Kids About Money

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My kids did the babysitting, paper routes and other more adult jobs such as security at sporting events,waitressing, finishing basements etc. as they got older.

I am sorry that according to Flacidsteele I failed to provide the necessary guidance to them.

My son is VP Engineering and Applications Development at a very successful small IT company while my daughter trades her time (heavens!) and skill flying for a major airline.
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Re: Educating Kids About Money

Post by kcowan »

Nearly everyone starts out by trading their time for money. Then they discover that they can make more by supervising (cashing out for a fast food franchise, for example.) So they learn the value of sticking to a vocation and gaining trust. In the case of my oldest granddaughter, she even got a job for her sister at the franchise.
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Re: Educating Kids About Money

Post by Flaccidsteele »

Descartes wrote:You have a confused way of expressing yourself ..but I am also not sure your thoughts are organized correctly either.
It's possible. This is why discussion is a great way to clarify things.
Descartes wrote:Teaching an aversion to an hourly rate or an annual salary is not the same as teaching someone to be a generator of ideas or products.
Perhaps. I don't consider any benefit to teaching my child about earning $ through an hourly rate and/or salary. In my opinion, any child who has failed at earning $ outside of an hourly rate and/or salary can always fall back on the hourly rate/salary option at any time.
Descartes wrote:Denying your child things ("if you want something you have to find some money somehow and buy it yourself")
or penalizing the child ("those cleaning supplies you are using in your car wash business don't belong to you")
is manipulation not teaching.
That is your perspective. Some consider teaching a child to earn $ through an hourly rate and/or salary to be financially harmful indoctrination. Every parent has their own perspective. That's what makes things interesting.

In the case of "if you want something you have to find some money somehow and buy it yourself" is answered by most parents through an hourly rate and/or salary (e.g. "get a job"). For others it is the money-tree benefactor of free money ("save your $ gifts") or allowance.

In the case of "those cleaning supplies you are using in your car wash business don't belong to you" is true and is an important lesson.

Again, as you can see, different parents have different perspectives.
eezee wrote:So that eliminates babysitting, dog-walking, paper routes, etc.
Correct.
eezee wrote:What do you propose they do that brings them in some money and does not involve time ? even lemonade stands, or selling bibles door to door requires time.
Again, I recognize that nothing is instantaneous. And that technically, every materialistic endeavour requires some amount of time. I am speaking about guiding my child away from earning $ from an hourly wage and/or salary as is the conventional teaching of society.
eezee wrote:I must be missing something.
It's possible. For better or worse, if you were taught to tie $ to an hourly rate/salary then it is probably likely that this idea, to the exclusion of any other way to generate $, will be passed down.
CROCKD wrote:My kids did the babysitting, paper routes and other more adult jobs such as security at sporting events,waitressing, finishing basements etc. as they got older.

I am sorry that according to Flacidsteele I failed to provide the necessary guidance to them.
There is no need to be sorry as I never claimed that teaching a child to make $ by earning an hourly wage and/or salary is a failure.

I simply claimed that I do not wish my child to learn to make $ by earning an hourly wage and/or salary.
CROCKD wrote:My son is VP Engineering and Applications Development at a very successful small IT company while my daughter trades her time (heavens!) and skill flying for a major airline.
You should be proud if that is what you have taught them to do. Just as I would be proud if my child did what I taught them to do. All parents indoctrinate their children differently.
kcowan wrote:Nearly everyone starts out by trading their time for money. Then they discover that they can make more by supervising (cashing out for a fast food franchise, for example.) So they learn the value of sticking to a vocation and gaining trust. In the case of my oldest granddaughter, she even got a job for her sister at the franchise.
Again, just to make my position clear, I recognize that nothing is instantaneous. And that technically, every materialistic endeavour requires some amount of time. I am speaking about guiding my child away from earning $ from an hourly wage and/or salary as is the conventional teaching of society.
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Re: Educating Kids About Money

Post by SQRT »

I think Keith has it right. Lead by example. Trying to guide or "manipulate" your kids often is futile. I certainly didn't listen to my parents. Most turn out just fine.
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Re: Educating Kids About Money

Post by Flaccidsteele »

SQRT wrote:I think Keith has it right. Lead by example. Trying to guide or "manipulate" your kids often is futile. I certainly didn't listen to my parents. Most turn out just fine.
It is comforting to know that most turn out just fine.

However, whether you want to call it 'lead by example' or 'guide' or 'manipulate' it's all the same thing. Different perspectives simply use different words. It's all ways to influence the child.

I also didn't listen to my parents.

Although they did many things right and I am grateful for the life they gave me, even they attempted to indoctrinate me with the idea that it was a goal to earn an hourly wage and/or salary, but for whatever reason my mind rebelled against that idea as illogical. "If everybody's goal is to earn an hourly wage and/or salary, then why isn't everybody financially free? Why are they still working?" and "Basic arithmetic shows that there aren't enough hours to make millions of dollars before one becomes terribly old. Somebody isn't telling me something."

And thankfully, my parents didn't instill me with the fear of looking outside of earning money with an hourly wage and/or salary. I'm grateful for that.
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Re: Educating Kids About Money

Post by eezee »

I find your posts interesting but I am confused.
I see you are retired, could you give me a hint what you did to earn a living to get you to this point in life.
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Re: Educating Kids About Money

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What I mean by example is simply to make a success of your own life. However one might define success. Your kids will be impressed and will naturally try to emulate you.
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Re: Educating Kids About Money

Post by Flaccidsteele »

eezee wrote:I find your posts interesting but I am confused.
I see you are retired, could you give me a hint what you did to earn a living to get you to this point in life.
I actually tried earning an hourly wage/salary. Just to make sure that it was as unsatisfactory as I thought it would be. I spent some time working in uninteresting jobs. For awhile I earned a slightly-above average salary doing fairly uninspiring work. I did it long enough to know that I didn't like it. However, I did see how people got caught up in it; the idea of 'security' and a regular paycheque. It was an interesting emotional feeling. A kind of intoxication. The more I started to understand this attachment that people had to being an employee, the more that I hated it.

(As a long-winded, semi-related aside, this intoxication with "security" extends not only to finding a "good job with good benefits" but to the entire idea that individuals seek to "minimize volatility" in their investment portfolios. All these behaviours are different symptoms that stem from the same psychological root. The same need for "security".

Which is ironic to me since this security is completely illusory. It is an illusion that security is related to a "good job with good benefits" or minimizing portfolio volatility. In fact, I find that it does the opposite. It decreases an individual's ability to withstand financial/change-in-life disruptions. In my uneducated opinion only.)

As you can see, although I rebelled against the teaching of earning an hourly wage/salary, even I wasn't able to completely escape parental/societal indoctrination. I will attempt to spare my child from this idea since I can only control myself. But I fully accept that indoctrination re:hourly wage/salary will be imposed by influences outside of the home (i.e. society).

What I did do, however, was learn about how money was made outside of the conventional hourly wage/salary idea and employed those techniques until I didn't need to earn a conventional hourly wage/salary.

With regards to earning a living, at the moment, all my income is from my 'success' at investing. I recognize now that money is just an idea. It isn't bound by an hourly rate or salary (e.g. annual rate). It can be any amount that an individual wants it to be based on their ability and passion.

It wouldn't make sense if money was bound by an hourly rate or salary anyway. That is, bound by time. Because there are individuals who have made more money than can logically be explained by the amount of time that has passed. And although there are common themes on how these individuals made this money, many have made money in vastly different ways.

PS: I just don't like the flawed logic of obtaining money through an hourly wage/salary. Not only is it an inefficient way to make money, but if it's an individual's one and only way to make money, then it offers no "security" whatsoever. What if I lost my job? What if I became injured and unable to work? What if I get old and infirm? If my only way to make money is to "find a well paying job", then I might be screwed.

As another semi-related aside, I don't consider the accumulation of money/assets to be part of my definition of success. I simply recognize that, in a materialistic world, money is needed for food shelter and a few other things. I just didn't want to have to spend my most precious resource (i.e. my time), making it. My (long-shot) hope is that my child will learn this skill as well, so they will spend the time raising their own children (as I am right now), or spending time with their friends and family or helping the less fortunate in society, etc. instead of (ugh) worrying about spending their most precious commodity of time, to "make a living". I think we all want our children to do better than we did. And I don't want my child to make that trade if it can be prevented.
SQRT wrote:What I mean by example is simply to make a success of your own life. However one might define success. Your kids will be impressed and will naturally try to emulate you.
I actually agree with you.

However, I still feel that it's all the same thing. It's all influence. And how the influence is labelled (e.g. "lead by example", "indoctrination", "manipulation", etc.) is a matter of perspective and whether or not the observing individual agrees/disagrees with the influence.
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Re: Educating Kids About Money

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Flaccidsteele wrote:However, I still feel that it's all the same thing. It's all influence. And how the influence is labelled (e.g. "lead by example", "indoctrination", "manipulation", etc.) is a matter of perspective and whether or not the observing individual agrees/disagrees with the influence.
I hope you can afford to send your children to UTS/UCC. There, in spite of the influence of the teachers, they might get exposure to some good-thinking of other students.
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Re: Educating Kids About Money

Post by mcbar »

I've skimmed rather than read the entire thread in detail, and this may be slightly off topic, but has anyone mentioned teaching children:

1) The importance of gratitude
2) Deriving happiness from non-material things

My desires for my children in no particular order have always been happy, healthy, and safe. I can try to teach good decision making, healthy eating, physical activity, etc, but happiness is a difficult thing to teach. I do not believe that "mega money = mega happiness." I do believe that teaching relentless acquisition is a good way to ensure dissatisfaction with life (not accusing anyone here of doing that, of course). It seems to me that the happiest people I know are those who express gratitude, and recognize when they have "enough." My experience has taught me that the less I "need" the happier I am.

I do want to teach my children to be responsible with money and their time, to spend less than they earn, to save and invest diligently. I will leave it up to them to decide how much is "enough" to meet their needs. Just my 2 cents.
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Re: Educating Kids About Money

Post by DavidR »

:thumbsup: great post, mcbar. It's never too late to practice gratitude
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Re: Educating Kids About Money

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mcbar wrote:1) The importance of gratitude
2) Deriving happiness from non-material things
:thumbsup:
We would take the kids camping to enjoy the natural things. Other than reading by battery light, it was all natural. Skiing was a little more "stuff" oriented. Especially the lift tickets...

Later on when they were in organized sports, every game we would ask "What did you learn? What will you do differently?"
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Re: Educating Kids About Money

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I have eliminated all real drips for the three of us and now only have a few share certificates left in my daughters name. I was going to throw them into her account but instead I'm just going to let the dividend checks come to her and let her spend it. Hopefully she will start asking questions :? I am hoping she will be eventually able to help her mom if need be and have let her know this.
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Re: Educating Kids About Money

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This thread is interesting and has really evolved a bit as a bigger picture thread on what values we teach in our kids around money. I like mbar and kcwon's comments about deriving happiness from non-material things.

When I started the thread, I just wanted some practical tips that other posters used to teach kids about how money works, because it doesn't seem to be taught well in school and it seems that consumerism is all around us. What I really wanted to do was to ensure that when my daughter makes a decision about what she wants to do with her life and how she will be financially rewarded, that she will be prudent with saving and spending. I want to ensure that she knows what she can afford to avoid a financial disconnect between what she earns and what she spends.

flaccidesteele, I have looked through your posts and they are very thought provoking. I think avoidance of teaching working for a wage is a bit extreme. I feel it is ok to have a job as a child and I would want my daughter to pursue a job temporarily so that she realizes that a lot of jobs are crummy, especially jobs with low entry requirements and that these don't pay well. Having a menial job teaches certain skills including how to deal with others when you are at the bottom of the heap, how to endure a crummy situation and makes one realize how to separate your job from your personal life. It also allows her some perspective on how a lot of people are getting by. Like you, I would want my child to know that quite often, this is not an efficient way of making money and that there are other ways of achieving wealth. However, as some other posters have mentioned, gaining more skills and trading time for money may end in a career that one finds personally and financially rewarding. You are different in completely separating making money from the things you do that you find personally rewarding. I think most people compromise on these aspects of life by doing work for a wage that they find rewarding. I think your success at investing has given you the freedom to not compromise, however, achieving that level of success may not be possible for everyone.
With regards to earning a living, at the moment, all my income is from my 'success' at investing. I recognize now that money is just an idea. It isn't bound by an hourly rate or salary (e.g. annual rate). It can be any amount that an individual wants it to be based on their ability and passion.
There may be some risk in depending on ability and passion as at some point in life, especially in highly competitive endeavours, one may see that the person next to them has more ability and passion and that one has either reached the personal limits of ability and passion or is unwilling to make the same sacrifice to achieve that next level of success or even an adequate level of success. Balancing ambition with perspective is a very tricky thing as a parent. An interesting question is what if your child is unable to achieve success at investing in spite of your best efforts at providing an entrepreneurial education? By guiding them away from exchanging time for money, are you putting your child at a disadvantage if they need to compromise and pursue this avenue as it does require certain skills to hold down a job that are different from being an entrepreneur?
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Re: Educating Kids About Money

Post by Flaccidsteele »

mcbar wrote: 1) The importance of gratitude
2) Deriving happiness from non-material things
:thumbsup:

This would be closer to my definition of 'success' for my child.
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Re: Educating Kids About Money

Post by Flaccidsteele »

Sleepy wrote:This thread is interesting and has really evolved a bit as a bigger picture thread on what values we teach in our kids around money. I like mbar and kcwon's comments about deriving happiness from non-material things.
I agree. What there is much that is known about creating happiness as I mentioned in this retirement thread. In general paying for 'experiences' results in happiness. And the link goes into very specific experiences with specific characteristics. But I digress.

My posts in this thread were focused on the title of this thread. Namely, "Educating Kids About Money". But happiness is also another topic in which I have an interest.
Sleepy wrote:Balancing ambition with perspective is a very tricky thing as a parent. An interesting question is what if your child is unable to achieve success at investing in spite of your best efforts at providing an entrepreneurial education?
I have no expectations on how my child will end up creating money. My child may take to my teaching, expand and surpass the teaching, or devolve back to knowing only a singular way to make money - namely, earning a wage/salary. And anything in between. It's all possible.

I feel that my child will always be able to fall back to earning a wage/salary. I don't feel that I need to indoctrinate my child about earning a wage/salary because society as a whole will do this for me.
Sleepy wrote:By guiding them away from exchanging time for money, are you putting your child at a disadvantage if they need to compromise and pursue this avenue as it does require certain skills to hold down a job that are different from being an entrepreneur?
I agree that it requires different skills to hold down a job as there are to other forms of making money. Only speaking for myself, I don't see any disadvantage for my child and I didn't find that the skills required to hold down a job to be particularly difficult to learn. I did some experimentation with regards to holding down a job. It only required me to be good at a small handful of things that were specific to the job, and then to excel at interpersonal observation and communication. That was a treadmill that could be set to run for as long as a person wants (I could only tolerate around 5 years at a time or thereabouts).

I even experimented in different ways to lose a job and how challenging it would be to find a new one. That was a fascinating series of experiments that taught me that many employee's identities are perversely tied to their work. It also taught me how deathly afraid employees are with losing their job (which to them, was like losing their identity).
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Re: Educating Kids About Money

Post by deaddog »

Flaccidsteele wrote: I even experimented in different ways to lose a job and how challenging it would be to find a new one.
I've never heard it put that way before. :thumbsup:
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