I have an outline of plan for my soon to be 7 year old, but thought I would solicit the rest of the board's advice and critiques of this plan and also love to hear what has worked for your family.

Objective: Teach age appropriate lessons about budgeting and responsible financial choices, learn about gross pay vs net pay, understand how to use the bank

Plan:

• At age 7, open bank account held in her name. I will put out enough petty cash for a year to do the following:
• Her allowance will be $7 dollars per week counted out as pay for meeting family responsibilities like chores.
• $2 will be automatically deducted for "family taxes" which will be saved and donated to a charity of her choice at the end of the year.
• With her net pay, she is free to spend it however she'd like (within reason) for extras that little girls like. Dangly earrings, that POS toy that is going to break in 30s flat right after we get home, impulse candy purchase, go for it! Wanna save it and get that really cool Barbie with a mermaid tail that swims? Well, let's see how much that costs and figure out how long its gonna take. Oh you, don't have enough? That's too bad, welcome to life, kid. The only rule is that you have to be able to afford it (no loans or payday advances), and deal with the consequences of bad money choices and the rewards of good choices.
• Raises and tax increases will happen annually.
• Venture capital funding available for lemonade stands, raking neighbors leaves, or other promising ideas.

Great start. I would add that you should teach her to invest the money she saves instead of just holding USD. Even if its just a "savings account" that you pay her something ridiculous like ~10% a month in so she can see the numbers grow enough to stay interested.

Or offer to match anything she invests in the market 1:1, I did this and it was great. Talk to her about her favorite things and put some money in the companies that make them. My son put ~$100 in Christmas money into Apple, Abercrombie, BTC, and Tesla a few years ago and has done really well. And its been a fun thing for us to do together.

7 ?? Whoa that's a lot. I agree with starting young but that's a lot. Getting kids to learn some high level core values about money, work, saving, is most important at this age. Remember that kids watch you and can learn from your actions and how you talk about money.

I'm old and I'm sure my thoughts are out of date and will be disregarded but opening the savings account is a great idea. I would have them physically always go to a bank and have them interact with a teller to make a deposit, ask for their balance etc. look the teller in the eye and say thank you. I would not do any matching funds or teaching about investing yet just associate money with work. Have them use cash so they get a feel for money and that it's not a number on a phone screen and that's it's tangible.

My mantra with my kids is save some spend some, but the save some always comes first. They can recite that to this day lol !!

I read The Opposite of Spoiled on a friend's recommendation and while there was a lot I don't agree with and there are a lot of really involved suggestions/ case studies, I did get a couple tidbits from it.

At 7 my only financial goal for my kids was to start achieving some literacy, and it's really tough to learn about money unless you have some, so as my kids have shown interest I started them an allowance of their age in dollars. It's not tied to tasks/chores which I was on the fence about because it's kinda like ubi, but my rationale is that it's also like a salary and I want to work into budgeting and it's tough to budget if you don't know how much money you're going to have each week, also you don't get your pay docked at work if it wasn't your best week ever. Their job is to do well at school and be respectful. They get opportunities to earn money from time to time. The main thing is just them having money and making decisions with it.

As my oldest has started to get it I've been working toward the "3 jars" system where you save 1/3 (savings acct where they bring cash to the bank and deposit it), donate 1/3 to charities of their choice, and they can blow 1/3 as they see fit.

Finally we talk a lot about how much things cost, from houses to hunting licenses to college, plane tickets, vacations and tanks of gas. We don't tell them how much we make but we will tell them about how much we made when we got out of college or when we bought our first houses, etc, and how much various careers pay. We talk about decisions we've made over the years that allow us to do some of the things we do and emphasize how fortunate they/we are and a lot of people don't have the opportunities we have and that can be due to forces within and beyond their control. Talking about money was pretty much taboo when I was growing up and I was basically financially illiterate until I was like 25 so I'm trying to do it a little different

I created a powerpoint presentation on investing for beginners

and did video calls with my 18 and 19 year old cousins. and I am helping the 15 year old brother with his stock picks.

I see nothing wrong with teaching children about money. All of your ideas are quite good. Instilling a strong work ethic is absolutely critical. A lot of lazy children these days sit around staring at social media or the latest trending stupidity on tik tok.

For fun, throw in a 40% silver Ike dollar for birthdays and Christmas. Make a small treasure chest in the woodshop for her, then have her throw those types of coins and collectibles in there. Make sure to explain these coins are valuable, collectible, and not to be spent at the store. Take her to a coin shop to browse.

Also for fun, buy a couple of metal detectors and hit a nearby park, lake, or beach. My kids loved that sort of stuff. Their eyes would light up at finding pocket change or lost jewelry. We found someone's old class ring, near that cold ass pool at Abilene State Park. We found the person and gave the ring back to them. They had lost it in the early 80's.

Lot's of different ways to teach children about money. My most eye-opening experience was at age 15. I sat down with my dad at the kitchen table as he wrote checks for monthly expenses. He showed me what was left of his check. I never blithely asked him for another dollar afterwards.

LMCane said:

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I created a powerpoint presentation on investing for beginners

and did video calls with my 18 and 19 year old cousins. and I am helping the 15 year old brother with his stock picks.

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Nice but you are late to the game, shoulda done that at 9.
-Texags

Charismatic Megafauna said:

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At 7 my only financial goal for my kids was to start achieving some literacy, and it's really tough to learn about money unless you have some, so as my kids have shown interest I started them an allowance of their age in dollars. It's not tied to tasks/chores which I was on the fence about because it's kinda like ubi, but my rationale is that it's also like a salary and I want to work into budgeting and it's tough to budget if you don't know how much money you're going to have each week, also you don't get your pay docked at work if it wasn't your best week ever. Their job is to do well at school and be respectful. They get opportunities to earn money from time to time. The main thing is just them having money and making decisions with it.

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You can never fully emulate the money real world for a 7 year old when all of their basic needs and more are just provided for.

I don't think they need financial literacy at that age. Budgeting is just a big exercise in evaluating trade-offs and evaluation of costs and benefits. I don't think you actually need money to teach this but it makes it easier. That's why I believe an allowance is sort of silly if it isn't tied to tasks at a young age.

Can't be bothered to make your bed one morning? Fine… that's $1 less you get to save that week.

You'd rather play some video games than learn how to load the dishwasher - then you can continue making $7 a week and not have an opportunity to start earning $10 a week.

Like I said, I was on the fence about allowance being just given vs tied to tasks, the book I mentioned argues both sides. This is just the way we decided to do it.

Malibu said:

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I have an outline of plan for my soon to be 7 year old, but thought I would solicit the rest of the board's advice and critiques of this plan and also love to hear what has worked for your family.

Objective: Teach age appropriate lessons about budgeting and responsible financial choices, learn about gross pay vs net pay, understand how to use the bank

Plan:

• At age 7, open bank account held in her name. I will put out enough petty cash for a year to do the following:
• Her allowance will be $7 dollars per week counted out as pay for meeting family responsibilities like chores, after a lengthy no-pay internship since she has no experience.
• $2 will be automatically deducted for "family taxes" which will be taken by Dad to buy something for himself which cost $10 adding $8 to a deficit she will need to pay off down the road.
• With her net pay, she is free to spend it however she'd like (within reason) for extras that little girls like. rent, food, clothing and medical costs $6 per week. She can borrow at credit card rates of 28%. After a certain point, her toys start getting repo'd and sold.
• Raises and tax increases will happen annually.
• Venture capital funding available for lemonade stands, raking neighbors leaves, or other promising ideas. But later venture capital comes in and takes over her business and sells all the assets, leaving her with next to nothing.

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FIFY

I'm somewhat on the fence about the right balance between money for chores vs. chores are just a basic family expectation of what we collectively do to live in a tidy environment. I think I've landed at so long as you're meeting the expectations, you get your UBI allowance.

As for 7 year old being too young, I am confident that my kid is at least old enough to do basic math and understand tradeoffs. Between candy at the cash register, tchotchkes, wanting to load up the game card at Kids World beyond mom and dad's contribution, or replacing lost swim goggles, $5 net x 13 weeks = $65 feels pretty spot on for 3 months of extras I currently fund. Now if she wants it, its up to her. To me I think the system is working if there's something my kid wants but can't afford because they blew it on nonsense. That's a life lesson for how to save and delay gratification.

What my parents did for us really worked for me:

At the end of the school year they would take our your report cards - ours was divided into six week terms. Count all the As ad +1, Bs as 0 and Cs as -1. If there is a behavior section of the report card, include that as well.

So if you had 7 classes, and a grade each 6 weeks (3), and then semester final grade (1), you would have 7 x 4 x 2 = 56 as the max score. They would take that number and multiply it by our age, and take us out to dinner with an envelope of cash and pay us what we earned. We had to save a certain percentage of it, and could spend the rest as we wanted. In the years we took significant standardized tests, that was factored in as well (like the SATs etc)

This motivated me to both ensure I got good grades, and learned about saving money.

Then as we got a little older, our big Christmas present was a "company match" type scheme where our parents would basically pay us back for maxing out our Roth IRAs. This also taught me a lot and gave me a huge leg up.

My 3rd grader can earn $5 a week if she does her choirs. We put $5 on the table each week and take away a dollar if she doesnt clean up after herself...etc. if she wants to buy a toy or video game etc she has to be able to pay for it, other than bday and Christmas presents.

Eventually all the choirs will just be an expectation and she'll earn money thru grades. Math will pay double or tripple

We expect toys and video games to eventually transition more to makeup, hair color, nails...etc as she gets older.


Ive talked to her about investing. Plan to 'borrow' money soon and pay her back 5% interest, and have that talk. Ive already talked to about some od this stuff, stock market...etc. Will get more into that in Jr High

jamey said:

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Ive talked to her about investing. Plan to 'borrow' money soon and pay her back 5% interest, and have that talk. Ive already talked to about some od this stuff, stock market...etc. Will get more into that in Jr High

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At least pay her the market rate in interest my dude.

ATM9000 said:

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jamey said:

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Ive talked to her about investing. Plan to 'borrow' money soon and pay her back 5% interest, and have that talk. Ive already talked to about some od this stuff, stock market...etc. Will get more into that in Jr High

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At least pay her the market rate in interest my dude.

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Gonna do simple math numbers, 5%, 10%...etc.

Don't forget…

1. Take money out for taxes
2. Take money out to pay rent/bills.

Will teach them expectations.

PDEMDHC said:

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Don't forget…

1. Take money out for taxes
2. Take money out to pay rent/bills.

Will teach them expectations.

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Everything should be required simulation classes that cover everything from grades that open doors to college, what degree, what car you buy, and everything already mentioned from the stock market, taxes, insurance...all encompassing

Make it something like 3 required semester courses in Jr High and HS

Start woth the importance of education whether its trade school or college and how HS grades limit options

She might save enough for the therapy she will need by age 18.


Just go to Greenlight.com and setup everything. Stock account, debit card, savings account, allowance, chores, etc. Put half of every gift or payment she gets into the stock account and half into her personal spending debit card. Pay her for chores, pay her an allowance, I think you can even set up a 529 on there although I think that would be stupid. 529 plans are just plain dumb, no reason to lock up an heir's money like that.

I started this for my kid around 11 and now at 14 he has 15k or so in his investment account, knows all about funds, bitcoin etfs, and he makes good/smart stock picks. This year I will make him a company employee and he will earn 12k there plus we are opening his own business. By the time he graduates high school he will have a few hundred thousand in his accounts.

Dave Ramsey has some good resources.

https://www.ramseysolutions.com/relationships/teaching-your-kids-about-money

EFR said:

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What? Your kid has 15k, is going to make 12k/year for the next four years and then is going to have "a few hundred thousand"? Weird attempts at humble brags really get annoying on this board.

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He is also starting a business. It says so right in the post.

Lack of reading skills on this board get really annoying

knoxtom said:

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She might save enough for the therapy she will need by age 18.


Just go to Greenlight.com and setup everything. Stock account, debit card, savings account, allowance, chores, etc. Put half of every gift or payment she gets into the stock account and half into her personal spending debit card. Pay her for chores, pay her an allowance, I think you can even set up a 529 on there although I think that would be stupid. 529 plans are just plain dumb, no reason to lock up an heir's money like that.

I started this for my kid around 11 and now at 14 he has 15k or so in his investment account, knows all about funds, bitcoin etfs, and he makes good/smart stock picks. This year I will make him a company employee and he will earn 12k there plus we are opening his own business. By the time he graduates high school he will have a few hundred thousand in his accounts.

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Guess he won't discover girls, beer, weed, a fast car or cool truck, sports, or anything else to blow his money on……

Not sure if you really live in Malibu, but, if so, I am just over the Santa Monica mountains from you in the Conejo Valley. The challenge especially in our area is raising kids in an environment where there can be a real entitlement mentality. That exists most places I am sure, but maybe there are unique challenges here.

I would suggest focusing on the character qualities you want to foster and encourage in your daughter.

It is going to matter most how you and your wife model these virtues in the home. And, it is critical to live counter to our culture. That is especially hard to do in Southern California. One thing my wife and I have observed: perhaps the biggest determining factor on how healthy one is with managing money/finances in their adult life is how well it was modeled in their home growing up. Obviously, that doesn't hold up perfectly. There are countless stories of successful people rising from a horrible examples in their childhood. I'm sure you could find thousands of such stories on this board alone. But, it sure tips the scales in your favor to model it well in your home.

Honestly , most all of the character qualities your daughter needs come directly from the Bible, specifically the book of Proverbs.

- Delayed gratification
- The danger of debt/ borrower slave to the lender
- Not presuming a prosperous future
- Building margin
- Listening more than you speak
- Value of humility. It is counterintuitive, but nothing has helped me more in business than when I leaned into humility
- The inability of money to bring lasting happiness

I don't know the specifics in your case of how you produce these character qualities. You have to be creative, but here is one idea for one of them. Take delayed gratification. Suppose you have a set day of giving your daughter an allowance or maybe a monetary Christmas gift. Maybe you make a deal with her that if she waits to receive it on a later date in the year, you will double the amount or increase the amount.

Another idea: take her on a mission trip to a poor country. Let her see how blessed she is to live where she does. And, ironically, she will also see poor people who are a great deal happier than her wealthy friends in the US.

I think the idea offered earlier of having your kids take the Dave Ramsey courses is also a great one!

I will throw this one in for free, and it is somewhat unrelated, but maybe not as much as it might look at first. One of the very best things you can do for your daughter is to fight our cultural norm and not give her a smartphone until she is late into high school. We have done this with our kids; they have hated it and been angry at us at time and even been teased by peers, but they will say today it has been one of the biggest blessings in their lives. Nick Saban would always liken the media hype to "rat poison". It's a good analogy here too. Kids having smartphones is rat poison to them is so many ways. If you can, fight the culture and delay that as long as possible.

I think all of this discussion should be paired with fostering a mind geared around entrepreneurship. They won't get rich working for someone else and saving a little money. I always wanted to do it but got a 6 figure job out of college at 25. It was too easy to be comfortable. We bought two brand new trucks, a farm with big house an hour away from work. Life was good. We had enough to pay all the bills, save enough for ourselves and open accounts for each kid.....BUT...it depended on someone ELSE to keep me employed, and it depended on someone else to throw me bones of opportunity to advance for more money, and everything I had depended on someone else. I knew that. Fortunately, oil hit the brakes and we all got laid off and the industry spit me out and I was free to do my own thing. Teach the kids that its infinitely harder to be self employed but the tradeoff is that you don't ask for raises. You make them. You don't beg for promotions. You are the boss. You don't beg to use your vacation days. You just take them when you want. But mostly, your future is in your own hands and there is no one responsible for your failure except you.