Keep it simple, stupid. Keep it short too.
I was reminded of the famous KISS principle while reading Ron Lieber’s recent New York Times Your Money column about distilling your financial to-do list to a set of bullet points that fit on a 4 by 6 index card.
The examples in Ron’s article inspired me to produce this variant: a “Money Mentor Index Card” listing the key things I want to teach my kids about money. Here’s the list.
I want to teach my kids about:
- Spending within their means using their OWN money and budget. (Note: the budget includes saving and donating too!)
- Everyday living expenses by sharing in the cost of the family cell phone plan.
- The power of compound interest by paying them an aggressive parent rate on savings.
- The cost and pain of debt via a parent-issued loan for a big ticket item, like a laptop or a phone.
- Patient, low cost, diversified investing via index funds held in a Roth IRA as teens.
It’s so short, I could KISS it!
What would you put on a Money Mentor Index Card for your kids?
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5 comments:
Your card is a good start Bill. I'd include the power of having a plan for your money and an emergency fund.
Yes, those are two great additions Brian. I had to chop it back a bit for "artistic reasons" :-) I've actually started making all 5 of my kids maintain a separate emergency fund bucket within the last year, separate from my high interest Bank-Of-Dad savings account. It's a terrific habit to start early - even little kids have "emergencies" (like lacrosse balls shot through neighboring windows...)
Love it! Hadn't thought of #4 before, but that totally makes sense. Thanks!
Thanks for stopping by, Robert. Yes, many parents abide by the rule: "never lend money to your kids" for fear that it will teach them to spend money recklessly before they have it. I think that's a good rule for everyday purchases, but paying off a BIG loan occasionally is actually a great learning opportunity and experience. With some prior experience, they won't be caught off guard by (or be complacent with) their first big loan (car/home/student) as an adult.
The earlier the better, its awesome that you are teaching them all this. They will be prepared for the real world and ready to take it on!
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