My son is 13 and seems to be learning valuable lessons about finance – mostly self taught – almost every day of the week.
Here’s what we do: we pay our kids their age in pocket money every month (common wisdom is to pay up to twice their age … if my kids read this post, I’m toast). Our kids then have to split their monthly pocket money into two equal piles: Savings and Spendings.
Savings is for retirement … period. That should be before age 40 or so, if they follow ‘The Plan’ that starts now …
Spendings is for anything we don’t buy them, including: charity donations (over and above what we give as a family), toys (over and above what they get through the normal course of holidays, birthdays, etc.), and cars.
If my kids are smart (they are), they will save much of their spendings for their first car (they know that we will only contribute a maximum of 50% for their first car, they will need to come up with the rest).
It won’t be for college … we will pay for their education (first degree only) and student loans (that they can pay back) can supplement any shortfall.
More on this later … for now, you can imagine the discussions that we are having with our son about his desire to upgrade his perfectly servicable laptop to a Mac.
He is have to learn how to make fairly sophisticated financial trade-off decisions at a fairly young age, as well as learning how to use equally sophisticated financial logic to argue back …
… for example, he has already shown us that just 2 hours of work each night stacking shelves at the local Walgreen’s on minimum wage of $6.50 an hour will buy him an excellent car in just 12 months … now, can I have my Mac, please?
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