When you have children the fun seems to never stop.
I’m being facetious. My two daughters are well on their way to adulthood, both recently crossing the 20-year-old mark.
The last thing on their minds is investing or saving—especially for retirement. It takes a yeoman’s effort to get them to do anything that would remotely make their futures better. But it’s worth every ounce of effort and frustration.
It’s doubly frustrating when your business is business. Imagine how many eyerolls I’ve received after trying to teach some elementary finance to my kids. My favorite line is, “People pay me for advice… You’re getting it free.” Maybe I should make them pay so they take me more seriously.
However, last week was a breakthrough of sorts. I managed to do the impossible… I got them to set up a retirement account and fund it.
Here at Wealthy Retirement, we’ve been writing about the power of compounding and the benefits of investing early for years. But have you done anything about it?
The chart above provides irrefutable evidence that the sooner you start, the better off you’ll be. It’s also logical.
You know this, and I know it… but do our kids?
It wasn’t easy to get them both to open an account. I had been trying for more than a year. Ultimately, I had to get creative.
It cost me some cash, but it’s worth every cent if I can get them on the road to serious investing and saving. Once they see their balances start to grow, they will have even more incentive to sock more money away.
At the end of the day, I want them to be able to enjoy their later years, knowing full well that there will be no pension, no Social Security and few – if any – safety nets 40 years from now. If there are, then that’s just gravy.
Here’s what I did. I sent them both texts (that’s how we communicate these days), telling them about an opportunity where they could invest $100 and triple their money in 15 minutes. Being my daughters, they were extremely skeptical…
But I convinced them that I stood behind my word. My goal was just to get them to the brokerage firm and set up an account. It would cost me a total of $400 (I added $200 to each of their $100 accounts), but it was money well spent.
We met up and set up the accounts. It took all of 15 minutes, but now it’s done. As an added incentive, I offered to match their contributions up to 20% for the first year. This pump-priming will pay off in the long run.
You may be one of the lucky parents who has kids who are self-starters when it comes to saving and investing. I was one of those kids. But judging by the sad state of savings across the American public, I bet that there are way more kids who don’t have a clue or just haven’t been taught. Or their parents just gave up.
In my opinion, it’s not how much you save (initially) but the actual act of beginning to save that really counts.
I would love to hear your comments on how you got your kids down the right path. Please leave them in the comments section so that all of us can benefit.
And do yourself a favor: Get your kids started today. It may take a trick or two… but better that than endure the future phone calls (or texts) asking for money when they’re older.