How to help your kids learn about money
A financial adviser on why it’s never too early to teach kids about debt, income, saving, and investing.
Young people send me personal notes. They also e-mail me and call my wealth management office. They pop up from all over the country and say almost the same thing: “Help. I’m not sure of my future in any direction. I don’t really have a career path. I don’t know if I’ll ever get married or have children or be able to buy an apartment or a house. How can I plan for the future when my friends and I seem to be looking uphill at everything?”
Young people have been let down by the schools, which seem to teach no practical life lessons, and by their parents, who want to be their children’s buddies and avoid teaching them about the tough things we all face as adults.
This lack of “street smart” wisdom extends to financial literacy. Maybe a student’s mother or father in financial services visits a classroom for half an hour of show and tell on stocks, bonds, and the financial markets. Nothing is retained because the lessons are not presented in an appealing way. The only course I ever dropped in college was Economics 1, after two weeks. I couldn’t stay awake.
In my junior year of high school. I was allowed to take art instead of second-year algebra. Why tell you this? Because I was terrible at math. Yet I run a global wealth management business and write books about money. I figured out years ago that it’s human nature more than anything else that moves stock markets. Fear and greed. That’s the number one lesson in understanding how financial markets react.
I tell young people to be counterintuitive about their money. This means that when your belly aches with fear and anxiety, whether it involves real estate or the stock market, that’s the time to look for bargains. Not to make a quick gain and get out, but to hold them for real long-term growth, and perhaps sell at higher prices.
How did I learn the “emotional side” of markets and money? I had mentors, both professional and amateur, who taught me. Mentors seem to be another dinosaur, replaced by Google searches. Bloodless facts don’t really stick with us; stories that teach us lessons do.
I had my money mentors in a brokerage office boardroom when I was a rookie stockbroker. Stock prices flashed on a screen at the front of the room. Ticker tapes fed us news, to be clipped to a board and read. Customers sat in chairs and watched the tapes rolling and chatted with us. And there were business people in to visit, or retired folks, many with long experience as traders. They regaled us with tales of their business, personal, and stock market adventures. The older brokers shared their wisdom, priceless nuggets that were like graduate-school seminars for us.
The days of these boardrooms are over. But you can adapt to new ways of learning.
If you’re a young person with a job, I suggest you seek out the oldest employees and offer to take them to lunch. During those lunches, they can teach you some of the lessons they learned over the years. No matter what their lessons are, almost all of them will affect your decisions about money and careers.
If you’re a parent, I recommend that you run contests with your children. Tell your sons and daughters, “We’re going to have a game that will teach you about money and business and your own powers of observation.” Then you tell them a bit about the stock market, how companies allow money to grow and prosper, and how they can benefit if they buy shares in the right areas. Then you say, “Almost every product you use or consume has a company behind it that you can buy a piece of. If the company prospers, so can you.” A parent picks a company and pretends to buy it at tomorrow’s closing price. The child picks a company based on what he or she loves — Disney, Lexus, or Apple. Then you track those stocks for a year, and the person who holds the company with the biggest gain by percentage wins the contest. The loser makes the bed of the winner for two weeks. Or you pick a prize.
If you play this game and get annual reports from the company, both sides will be engaged in discussions about what leads to debt and mortgages, savings and retirement income, and other areas you never thought you’d discuss. It’s a simple idea — stories that might teach you both a lot about money and life.
John D. Spooner is a managing director of wealth management at a leading investment firm and author of “No One Ever Told Us That: Money and Life Lessons for Young Adults” and other books. Send comments to email@example.com.
THE WEIGHT OF CREDIT CARD DEBT
$7,813 — Predicted average credit card balance for indebted US households by the end of 2015
21% — Percentage of 18- to 29-year-olds surveyed who have more credit card debt than savings
$35,051 — Average college student loan debt for each member of the class of 2015