Teaching Kids About Investing. How do you do it?

6 Replies

Right now my wife home schools our 3 oldest kids.  Earlier this week, I had the opportunity to teach the math lesson.  My kids learned the term Cash on Cash Return and then worked out the CoC Return for each property in the game of Monopoly.  It was awesome!  

The take away lesson learned was the higher priced properties do not provide the highest COC Return.  Rather the second to cheapest monopoly provides the best COC Returns.  

Robert Kiyosaki talks about having learned a lot about investing from playing the game of monopoly as a kid. How do you teach your kids about money?

Great question and I think that's a good way of doing it. My oldest is only 2 so I haven't gotten to that point yet. 

I think understanding Interest rates is very important. Especially interest rates on consumer debt such as non crucial items put on credit cards for 20% interest. 

Our son has been going to look at houses, show flats and collect rent since he was a few months old.  When he was two, we could not pass a for sale sign on a lawn without him campaigning to go "walk the property".

At three we gave him a piggy-bank ... or, rather, a cow-bank called "Moolah the Money Savvy Cow" {NFI} which has four compartments: Save, Spend, Donate, & Invest and started teaching him about  these different ways he can use his money.   Initially, almost everything went into the Donate and Invest compartments - he decided he wanted to buy a house by the time he was 10 and he was deeply interested in the food-bank and clothing donation boxes at the local supermarket.  As he's gotten older, the portion destined for Save and Spend have increased - though Spend is still the skinniest part of the cow.

When we retrofit a building, he receives all the scrape metal (wiring, plumbing, doors/windows/siding), and in the past five years has done surprisingly well (the Cow has had to make a few trips to the bank to "poop" {as the boy likes to say}).  Now that he is in-school and has basic arithmetic skills, he periodically checks how much more he needs to make a down-payment on his first {rental} house  {being a minor, he cannot borrow on his own and definitely is not eligible for a high-ratio, insured mortgage, so he will need a 20% down-payment and the bank of Mom & Dad if he still wants to purchase a house when he has the funds}.

We also use routine activities such as grocery shopping or fuelling the car/truck to discuss budgeting and how much it costs to run a household - at an age appropriate level.

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@Roy N.  thanks for the comment. I have heard of the three boxes of saving, spending, and giving, but I have never thought of adding that fourth box of investing. I have no idea why I have never thought of that! It’s brilliant! I love it! 

@Shiloh Lundahl ,

I have three kids and they can each repeat the three options for money: Spend, Save, Invest.  I won't pretend they don't like to spend, but they all know it's important to Save, and more importantly to Invest.

I think it important to present a consistent overall approach but that drilling daily/weekly about the importance of specifics might be overkill.  The example we set as parents as we live our lives is the best aid we can impart.  On their own, my children will bring up examples they see of people wasting their resources or taking advantage of their resources.  I think the Financial Knowledge & Empowerment Plan is working so far.

I'll find out in a few years if my approach worked as my oldest is in high school now and should be making his own way in the world in 7 or 8 years.

@Shiloh Lundahl I did not get the pig, but did the same concept. Mine is only 9 now, but for a few years we talk about assets and liabilities whenever the opportunity pops up. I told her I wanted a new truck to tow a bigger camper for camping and she would point one out, "Hey Daddy, look at that one! I bet it could pull more than the pop-up!" Then I could ask if it was an asset or liability and begin a good discussion. She helps with the rentals (when we lived in one unit) by cleaning up the yard, clearing out gutters (she just sat on the roof), etc. Those were perfect times to just have conversations. We also play children's monopoly and Cash Flow for Kids so she can see more lessons in action.

I think the next big step is to really get a good understanding of opportunity cost, and the power of compounding.

Best of luck and it seems like you are doing great!

Originally posted by @Roy N. :

Our son has been going to look at houses, show flats and collect rent since he was a few months old.  When he was two, we could not pass a for sale sign on a lawn without him campaigning to go "walk the property".

At three we gave him a piggy-bank ... or, rather, a cow-bank called "Moolah the Money Savvy Cow" {NFI} which has four compartments: Save, Spend, Donate, & Invest and started teaching him about  these different ways he can use his money.   Initially, almost everything went into the Donate and Invest compartments - he decided he wanted to buy a house by the time he was 10 and he was deeply interested in the food-bank and clothing donation boxes at the local supermarket.  As he's gotten older, the portion destined for Save and Spend have increased - though Spend is still the skinniest part of the cow.

When we retrofit a building, he receives all the scrape metal (wiring, plumbing, doors/windows/siding), and in the past five years has done surprisingly well (the Cow has had to make a few trips to the bank to "poop" {as the boy likes to say}).  Now that he is in-school and has basic arithmetic skills, he periodically checks how much more he needs to make a down-payment on his first {rental} house  {being a minor, he cannot borrow on his own and definitely is not eligible for a high-ratio, insured mortgage, so he will need a 20% down-payment and the bank of Mom & Dad if he still wants to purchase a house when he has the funds}.

We also use routine activities such as grocery shopping or fuelling the car/truck to discuss budgeting and how much it costs to run a household - at an age appropriate level.

 This is FABULOUS!  I love it.

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