“But Dad, I don’t care about money. I just don’t want to think about it.”
Your kids need to understand: if they ignore money, they’ll eventually be thinking about it constantly.
Do I have enough money for rent?
Do I have enough for dinner?
Do I have enough for this?
Do I have enough for that?
No, you simply can’t ignore money in the real world. But there is a way to rarely think about it.
How? Kristin Wong states it succinctly: “If you don’t like to think about money, the best way to make sure you don’t have to is to set up a system for properly managing it.”
What’s a system? It’s a set of rules that reliably translate an input (like income) into a desired output (like savings).
The neat thing about having a system is, once it’s in place, you don’t have to think about it much any more. You feed something appropriate into the top of your system, and the right thing magically pops out the bottom. Again and again. It’s like a gumball machine: drop a coin in the top and a gumball reliably shoots out the bottom.
Start your kids off with a very simple savings system. Whenever income drops into your kid’s system — whether from allowance, chores, odd jobs, a summer job, or a birthday check from grandma — automatically peel 10% off and plunk it into a separate savings bucket. Sweeten the pot with a matching contribution or parent-paid interest if you can.
Simple rules. Simple system. Rinse and repeat. Eventually, your child will have a nice little pile of savings set aside — without even thinking.
Roll the clock forward. Your kids will recognize a very similar system when they get their first jobs: The 401(k). Thanks to you, they’ll know a good savings system when they see it. They’ll opt in. Without thinking twice.
Get tomorrow’s tip here.