When we had our son I found out about a little thing called podcasts. I was most interested in finding out about proper investing to ensure we set this new little dream come true up financially. I decided the best way to get this information would be from a financial podcast. I tuned into Dave Ramsey hoping I could learn to play the stock market. We were dropping our income in half and I
desperately wanted to find a way to lessen the blow our bank account was about to take. And THAT was exactly what I found, just not by playing the stock market. We understood a little about 401Ks… “GET THE MATCH” and we participated. But we didn’t REALLY understand them. We thought we understood finances, but we realized that we actually had a LOT to learn. We enrolled in Financial Peace University and went to work.
We thought we had it all figured out, but soon realized some of our decisions weren’t the BEST ones to make. We had to change life insurance policies, (buy term, not whole life) we had to change retirement accounts(we learned the difference in ROTH and traditional 401Ks). I continued listening to Dave and began to get excited about our son’s financial future. When he was three we purchased Financial Peace Junior. It was one of the best gifts we could have ever given him. The principals we planned to teach him would follow him into adulthood and allow him to be ahead of where we were as young adults.
One of the most important things with FPJ was that kids work for a commission. NOT get an allowance. We started him young and it has been all he has known. When he decides he wants something and it isn’t close to his birthday or Christmas he understands he will need to save up for it.
LEARNING TO SPEND WISELY
When he was four we were moving into an apartment so we needed to sell a lot of his yard toys. Before we told him this we sat him down and found a toy he really liked on Amazon. So telling him that he could sell his toys and earn the money for it was like a dream for him. He was so excited. It was a cool morning so we also set him up with an apple cider stand and doughnuts. He made more money at the yard sale than my husband and I did (probably mostly from generous family tipping him). After the yard sale we sat down with his money and let him help us count it. We divided it up between his three envelopes: give, spend, save. Even after dividing his money he still had plenty of money to purchase this new toy he wanted. He was able to spend, but not until he had the right amount of money.
GIVING TO OTHER CHILDREN
Just a few months later we saw an angel tree set up and I was telling him about it. I asked him if he would like to use his give money to make a special Christmas for another child. We picked a card and it was a little girl that was paralyzed and in foster care. He was happy spending his money on this little girl he never met. He couldn’t quite understand that we couldn’t just take it to her house and give it to her, but he understood that he was helping another kid. There in the line at WalMart I stood taller than anyone else in the store and had tears rolling down my face as he so easily pulled the money out to pay for his purchase. I told the cashier what he was doing and she also had to wipe back the tears. We took his gift for this little girl to the drop off spot… poor fella wanted so desperately to take it home and wrap it before she got it. The young lady at the drop-off point was telling everyone in there what he was doing and even called her manager up to look and the sweet boy. There were more tears cried at the innocence and generosity of such a young lad. Giving comes naturally for him. This was not a lesson I had to teach.
SAVING FOR THE FUTURE
My son saves and loves to hear how much interest he has earned and gets almost excited about compound interest as I do. To really make it a visual thing I will pull out money and show him how much money he earned just from having his money saved. (I have also attempted to discourage credit card debt by showing him how much he would pay if he was borrowing the same amount of money… I think he is seeing why Dave Ramsey has such strong feelings about credit cards.) He had almost the same reaction to compound interest as I do! (“they are going to pay me for money they paid me?”) Also, he and his sister bank with a different bank from my husband and myself; they love getting to call it “my bank”.
Financial Peace Junior helped us to show our son (and now our daughter) that money is a huge responsibility. My son will see a toy he wants to purchase in Wal-Mart. He never asks if he can have it and instead asks how much it is and how much he has. He also checked the Amazon reviews on a product one day before making a purchase in Wal-Mart thankfully he did as it turned out this $30 toy breaks easily. If mom or dad were making this purchase I’m not so sure he could care that he could be spending $30 on a toy that won’t last. Having to spend his own money that he earns has turned him into a much more savvy shopper.
My 7 year old is not yet willing to talk about 401Ks, but he has such a strong understanding on the value of a dollar that I have a feeling he will master that before he is even old enough to have a retirement account.
As you may have been able to tell we are huge Dave Ramsey fans! Whether you are living paycheck to paycheck, wanting to learn how to properly invest in your retirement, are wanting to leave a legacy for your family, wanting to learn to love your life instead of the Instagram photos you see, wanting to raise money smart kids, or are a woman starting a business and not sure how to give it a boost…. there is someone on the Dave team that can help you out.
The education you are giving him will last a lifetime. I love the fact that you are teaching him to give to those less fortunate as well.
Thank you! The giving part was the easiest for him! That saving part was a bit harder.