Author: Abby Crimmins
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Morgan Housel just wrote THE book you need to read, and our pick for the November Book Club. In this episode, the esteemed financial writer joins Matt Hall and shares insights into his own investing strategies, an event that shaped his outlook on risk, a story about a janitor who left behind millions of dollars to charity, and why behavior is the most important factor in mastering your financial life.
One question we hear often is, how do I teach my kids about money?
We’ve shared our conversation with Marilyn Wechter about subtle ways to set our kids up for success with money and talked about how not to be a snowplow parent, but what about the nuts-and-bolts? How can we teach our kids the basics of saving, the power of compound interest, and how capital markets work? In other words, how do we make finance fun?
Recently, John and I had a crash course in teaching a trio of teenagers. We thought we’d share some valuable takeaways you can incorporate into your own “money talk” with your kids.
The meeting’s highlight was “Roll with the Market”, a dice game that aimed to replicate the stock market. We also introduced them to our version of Finance 101: budgeting, savings, goals, credit cards, and Rick Hill’s favorite Rule of 72.
In “Roll with the Market”, the kids decided if their money was “in” or “out” through 10 rounds of dice rolls. The game gave the kids a taste of what it’s like to be invested in the stock market, simulating a rising or falling market’s emotional effects and changes to their investments. To our surprise and satisfaction, the three kids stayed in the market all 10 rounds, never once deciding to sit out (equivalent to going to all cash). Even at this young age, they were able to intuitively understand and take the long view!
Here are a couple of tips for keeping children engaged as they learn:
- Use cold hard cash – Once we threw some cash on the table and got them involved in helping manage it, they were hooked.
- Gameify the essential topics – Making the lesson a game reframed their idea of money from obscure to practical and made it fun! They were also able to practice and absorb the lessons without just listening to us drone on.
- Make it relevant – We believe the real power of wealth lies in creating freedom and options to lead the life you choose. By asking a couple of pointed questions, we were able to help them understand that money can power their dreams, even now. The key was showing them money matters today – not just in the future. Each member of the family was totally engaged, asking great questions, participating in thoughtful conversation.
If the idea expressed here sounds good to you, let us take “the money talk” off your hands. Contact us about scheduling a family meeting. You never know what small spark will set off your child’s long-term success with money.