How do I set my kids up for success?
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Anonymous
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How do you/would you set your kids up for success? Not a 529 -
We have that- but with their own money from their first summer job? Roth IRA? Brokerage? Showing them graphs of savings? I want to make sure we’re making the most of this opportunity and putting them in control of their money for their lifetime in the right terms. Any thoughts?? |
Anonymous
| Teach them to pay themselves first. Don’t give them everything for nothing. |
Anonymous
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I’ve drilled into my kid’s head that 20% of all income is to be saved. I told her if she learns two things from me before adulthood, they are to save 20% of all income regardless of source and write thank you notes for gifts received.
I am matching her summer stipend this year into a Roth as a gift and she will use her summer earnings as pocket money in college. |
Anonymous
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If you have the money gift them the max amount the IRS allows without having to declare the gift. Put it in a brokerage account and add to it every year. The limit is $18k for 2024. If they’re working you can max their Roth IRA with some of the gift money.
Sit down with them and show them a compound interest calculator. Show them how much money will be in that account when they’re 40, 50 and 60 if they let it compound. Also if you can swing it fully fund college, help them with a down payment on their first home. For my recent college graduate I’m gifting him his rent for the rest of the year ($1000 a month) so he can get used to his paycheck and save for a small emergency fund. |
Anonymous
| If you confiscate all their summer earnings for this you generate resentment and revenge spending as a lifelong trait. |
Anonymous
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Started Roth IRA as early as possible.
They earn $ for doing chores & tasks that contribute to the family cause overall. Try not to spoil them. Instill work ethics. |
Anonymous
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Success in investing is a mental state.
I would first teach them the power of compounding returns. It's simple and powerful, which is something kids uninterested in investing can easily grasp. They need to learn that successful investing is about sacrifice and patience Not sure how to accomplish this one, but they need to become emotionally detached from their investments or they will fold when things become too volatile. Investing is about freedom and not about accumulating a bunch of worthless material goods. Good luck teaching that one! |
Anonymous
| According to Charlie Munger, financial responsibility is basically genetic - people immediately grasp and adopt the correct behaviors the first time they are taught to them, or they never do regardless of the extent and quality of training. |
Anonymous
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He is on my credit right now, but will get his own cards after he turns 18. I already know the perfect cards.
He should be getting a W2 job this summer so he can open a Roth. Roth and a brokerage account will be with Robinhood. I already know what I'm making him buy in both of them. Brokerage account is not a big deal once he has long term capital gains. His taxes should be fairly low for years as he attends college. He barely spends any money so not really worried about him going on spending spree. I will be his financial planner as I love it and he has no interest in it. I will explain what were are doing and why, and will ask for his input. I told him not to lend out money or sign anything before talking to me. I will make sure his credit cards are set to pay at least minimum before due date. All else we will deal with as things come up. 401k up the match only and I will explain why no 529 for his kids if they ever come. |
Anonymous
| Just curious why you are going with Robinhood and not a more trusted company like Vanguard? Is the app more appealing? I know Vanguards interface is muy blah. |
Anonymous
I think there’s some truth to this. My college aged DC is (so far) good with money, and I’d love to take credit for it, but my parents were terrible with saving and investing and somehow I turned out well in that respect. I do think you need to open to learning, but it does need to “click” with you once you are taught. |
Anonymous
| Don’t be a poor immigrant that asks their kid for money to pay bills and food. Voila. You set them up for success. |
Anonymous
I have a bridge to sell you? Or would you prefer waterfront property? |
Anonymous
| Make sure that they major I’m something that will lead to a job. Help them write a resume. Make sure that they are prepared for on campus recruiting events. My kids got internships and job offers (engineering and accounting). In addition, don’t let them take out student loans, buy then a car. Help them fund a Roth IRA with matching their earnings as a gift |
Anonymous
| Do nothing. MYOB |