One of the greatest blessings my parents ever bestowed upon me was their teaching on how to manage finances. I have continued to do the same for my kids. So far, my kids have learned:
-the concept of the financial floor (click here to learn about it)
-the value of paying cash
-how to be patient and not make impulse buys
This past week I added another one. They started a business.
Yes. My kids started a business. We decided to call it Kiblercorp.
From the time my kids were born, we have always made them save. Whenever they got money for birthday or Christmas or anything else, the standing rule was they had to save at least half of it. Yes- mean ogre parents made their children take half of what they received and save it. (My kids don't have bills to pay, they don't have a mortgage to pay; there is absolutely NOTHING they need, and therefore to let them frivolously spend it on passing whims would be the dumbest thing in the world).
Because of this mean, ogreish tendency that my wife and I impose on our children- making them save half of all their money- my children have accumulated quite sizeable amounts of cash. We originally had savings accounts at the bank for them, but with the interest rates these days, they are pretty much worthless. So what should we do?
Well, looking at research showing the amount of debt that college students incur, paying it off well into their thirties, coupled with the need for at least 20% of the price of the home in a down payment to avoid mortgage insurance, coupled with the fact that car insurance, baby needs, and all those things are hitting young people, we decided that we needed to put that money to work now so that when my children are ready to buy their first home (or whatever) they will have it covered.
So, I got my kids together and told them that I was going to teach them about investing and business. I asked each of my children how much money they had in savings. Then, they pooled all of their money together and gave it to me, and I took it down to my investment person and bought a mutual fund.
My oldest daughter, because of the amount she "bought in" to the business, is 39% owner. My son and other daughter own the other 61%. Therefore, when the fund makes money, they will divide the profits by the percent of ownership they have in Kiblercorp.
My only stipulation is that, while the money is totally theirs, I have to approve all withdrawals. I am hoping they leave it alone for many, many years and that they will use it for their first homes.
I recommend that parents do something similar with their childrens' finances. Get them saving now. If they get money for birthday or Christmas or even for a job they earn, make them save at least half if not 75%. Set up a mutual fund or stock for them and put that money to work. Believe me, one of the best gifts you can give your children is financial independence.
I also believe that financial responsibility is a spiritual issue. How we manage God's money is incredibly important. We are not to waste it or use it frivolously. We are to use it wisely, soberly, and with good judgment, not indulging every whim and impulse we happen to have at the moment. Teaching our children this lesson will set them up for success later on in life. Failure to do so will set them up for crippling failure and a lifetime of slavery to debt.
If any of you have done creative things to teach your children about finances, I would love to hear about them.
-the concept of the financial floor (click here to learn about it)
-the value of paying cash
-how to be patient and not make impulse buys
This past week I added another one. They started a business.
Yes. My kids started a business. We decided to call it Kiblercorp.
From the time my kids were born, we have always made them save. Whenever they got money for birthday or Christmas or anything else, the standing rule was they had to save at least half of it. Yes- mean ogre parents made their children take half of what they received and save it. (My kids don't have bills to pay, they don't have a mortgage to pay; there is absolutely NOTHING they need, and therefore to let them frivolously spend it on passing whims would be the dumbest thing in the world).
Because of this mean, ogreish tendency that my wife and I impose on our children- making them save half of all their money- my children have accumulated quite sizeable amounts of cash. We originally had savings accounts at the bank for them, but with the interest rates these days, they are pretty much worthless. So what should we do?
Well, looking at research showing the amount of debt that college students incur, paying it off well into their thirties, coupled with the need for at least 20% of the price of the home in a down payment to avoid mortgage insurance, coupled with the fact that car insurance, baby needs, and all those things are hitting young people, we decided that we needed to put that money to work now so that when my children are ready to buy their first home (or whatever) they will have it covered.
So, I got my kids together and told them that I was going to teach them about investing and business. I asked each of my children how much money they had in savings. Then, they pooled all of their money together and gave it to me, and I took it down to my investment person and bought a mutual fund.
My oldest daughter, because of the amount she "bought in" to the business, is 39% owner. My son and other daughter own the other 61%. Therefore, when the fund makes money, they will divide the profits by the percent of ownership they have in Kiblercorp.
My only stipulation is that, while the money is totally theirs, I have to approve all withdrawals. I am hoping they leave it alone for many, many years and that they will use it for their first homes.
I recommend that parents do something similar with their childrens' finances. Get them saving now. If they get money for birthday or Christmas or even for a job they earn, make them save at least half if not 75%. Set up a mutual fund or stock for them and put that money to work. Believe me, one of the best gifts you can give your children is financial independence.
I also believe that financial responsibility is a spiritual issue. How we manage God's money is incredibly important. We are not to waste it or use it frivolously. We are to use it wisely, soberly, and with good judgment, not indulging every whim and impulse we happen to have at the moment. Teaching our children this lesson will set them up for success later on in life. Failure to do so will set them up for crippling failure and a lifetime of slavery to debt.
If any of you have done creative things to teach your children about finances, I would love to hear about them.
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