I am the person who manages the money in my family. My wife has very little interest in it, other than knowing how we are doing and where (i.e what accounts we have and how to access them should something happen to me). My kids, who are still very young do not have much understanding of what investing is and why you do it. My wife and I want to start changing this by getting them more involved in the investing process. This post is about how to get your family more involved in investing. Lets start with spouses.
Let’s face it, some spouses (husbands or wives) just have no interest in investing and the process around it. My wife is in that boat. However, that does not mean she is not involved in our investment portfolios. We both think that there is too much risk involved for her to not have any understanding of what we have and where we have it. The process we instituted is quite simple. I have prepared a binder that includes a bank / brokerage statement for each and every one of our accounts. This way, should something happen to me she can refer to this binder and know the contact details, phone number, and values for each of these accounts.
We have also had some discussion on what is in each of these accounts and what her options are for each asset. She has learned how stocks, bonds, and mutual funds work so if and when she needs to make some decisions she some knowledge of what to do. For example, if she needs to see a stock then she knows how that works. Although this bores her to death, she realizes the importance and has made the effort. I love her for this!
Let’s turn our attention now to getting kids involved in investing.
Sons and Daughters
Kids are like sponges and love soaking information up. My kids, who are 6 and 4, have started thier investing career earlier this year and seem quite excited about it. Here is our approach.
Each week, my kids receive an allowance for doing certain chores. For example, they are not to go to bed without tidying their room. Each child receives $5 per week and it gets split up as follows:
1. $3 goes into a savings jar. This can be saved for anything from toys to gifts. It is completely up to them, but they know to buy what they want they need to save up cash to buy it. It is sort of their spending money.
2. $1 goes into a charity jar. Money accumulates in this jar and periodically gets distributed to charities each child chooses. Of course, my wife and I provide ideas but the kids get the final decision. We have done Unicef, SPCA, and homeless shelters in the past.
3. $1 goes to the investing jar. This is the jar they are using to invest in the stock market. Let’s talk about how this money will get invested.
Each child has an account in their names with the CSA. When we have enough money in their jar (which takes awhile at $1 per week), we are going to sit down and talk about companies. Being kids, we will speak about companies such as Disney or McDonald’s, or other companies they are familiar with such as Home Depot or Wal-Mart. At a high level, I want to speak about how much money the companies make in revenue and what products they sell. I intend to show them some graphs showing revenue and earnings trends. Remember, they are young kids so they may not get too much of this but I want to start their learning process. They then will need to pick a company that they want to put their money into. I will then make the trades in their accounts and they will become stock owners.
Our intention for doing this is to ingrain some sort of understanding of how to make money grow in value and get more later down the line. I also hope to show them that they can lose money by not being patient or making good decisions. By the time they are 12 or so, I hope they are doing research on their own to buy companies!
How do you incorporate invesing into your families if you are the one that manages it all? Please use the comments to let me know.