The fact that $100 per week from age 12 to 30 equals $150,000 (at 5% compounding) caught my wife’s eye. She asked me to explain how one of our kids could save $100 per week.
- Colorado minimum wage is $8 per hour
- The habit I want to support is investing 50% of net earnings
- 15 hours a week gets us to $120 gross
Now, 15 hours a week is a lot. Most kids would learn that they need to start a much lower, say 3-7 hours. That’s OK with me – it’s the habit, not the quantum that matters.
What would they do?
Right now we spend significant money/time on childcare, cleaning and yard work. All of these are up for grabs, if there’s interest.
In my wife’s case, she spent her childhood swimming – there wasn’t surplus time, or energy, for much work. Her payoff was an out-of-state athletic scholarship, a biology degree and a life-long habit of healthy choices.
Up in Canada, I started working early and continued through university. I paid local tuition, had an academic scholarship and graduated in four years. My family’s payoff was reduced financial support and a financially secure adult (with an advanced finance degree). My healthy habits came a lot later!
The offer I’d make to my kids is dollar-for-dollar matching with their saved earnings. I’d start them with the second-grader portfolio (90% equity). Here’s the Second Grader Book link – highly recommend it to adults!
Creating an early habit of working, and investing, will have a far greater return than ANY alternative uses of funds.
In effect, I’m setting up a program by which my children earn financial support and learn the skills to manage money when I’m gone.
As the kids gain experience, I can teach them about investing, personal taxation, compound interest, financial accounting and asset allocation – with their own assets.
By allowing my family (and my family council), to follow along, everyone learns the skills required when I’m gone.
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