Bogleheads® Chapter Series – Setting Your Children Up for Financial Success
00:00:00.000 | Welcome to the Bogleheads Chapter Series.
00:00:05.540 | This episode was hosted by the Pre and Early Retirement Life Stage Chapter and recorded
00:00:10.180 | May 18th, 2022.
00:00:12.380 | The presentation and discussion topic was "Setting Your Children Up for Financial Success."
00:00:19.500 | Bogleheads are investors who follow John Bogle's philosophy for attaining financial independence.
00:00:24.460 | This recording is for informational purposes only and should not be construed as personalized
00:00:28.860 | investment advice.
00:00:31.260 | Okay, I think we're ready, so I'm going to end the poll and I'm going to share results.
00:00:45.460 | So we have a pretty good distribution.
00:00:47.340 | We don't have very many 19 to 22-year-olds, but other than that, we have between two and
00:00:52.660 | five of each of the age groups, so we have a really good representation of all different
00:00:57.900 | ages of children or no children, so that's great.
00:01:03.180 | Okay, can y'all see those results?
00:01:09.940 | Okay, let's go ahead and go on.
00:01:15.460 | Okay, so the first slide is, of course, we're going to just go in chronological order.
00:01:23.620 | There we go.
00:01:24.620 | Okay, so the topic of allowances, you've probably all been to the store where at the checkout
00:01:31.340 | you hear a poor parent kind of, you know, with a child that's either whining or crying.
00:01:37.420 | They want the parent to buy something, oh, and the poor parent says, no, I'm sorry, we
00:01:41.300 | can't buy that today.
00:01:42.860 | So what's a good way to eliminate that problem, because right now you're putting the choice
00:01:47.980 | on the parent, but if you give the child an allowance, then in this kind of scenario,
00:01:53.540 | the parent can say, sure, you can buy that.
00:01:55.780 | If you have enough money saved up, go right ahead, you know, so it's putting the choice
00:02:00.540 | on the child to save up, they really want this item, so that kind of eliminates a lot
00:02:05.460 | of hopefully stress when you go to the store, but before you do that, you have to explain
00:02:10.060 | to the child, you know, in most cases, the parent's going to pay for the need, which
00:02:14.700 | includes, you know, basic clothing, of course, foods, you know, school supplies, that kind
00:02:20.540 | of thing.
00:02:21.540 | What they want, of course, would be toys, you know, as they get older, in the old days,
00:02:26.540 | it would have been a record, now it's, I guess, Apple Music, however they get the songs nowadays,
00:02:34.100 | or even like fancier clothes, like a name brand, an expensive sneaker, whereas you might
00:02:39.180 | say, okay, I'll pay, I'll pay $40 for your basic, you know, decent sneaker, but if you
00:02:45.580 | want to pay 75, you're going to have to pay the difference.
00:02:49.220 | So basically, it's a good thing to just lay out ahead of time, these are, these are your
00:02:53.300 | needs versus wants, we're going to cover your needs, you're going to save up for your wants
00:02:58.420 | with your allowance, your birthday money, or extra money that you earn.
00:03:05.640 | So there's kind of a debate whether or not to tie allowance to chores.
00:03:09.580 | And a lot of parents say, you know, do you want to tie it to the chores?
00:03:13.340 | Some don't.
00:03:14.340 | And I did read several books and listen to some podcasts to prepare for this.
00:03:18.180 | And what most people, the kind of experts are saying, you know, a good method is a hybrid
00:03:23.280 | method where the allowance is not tied to basic chores, you have to do your basic chores,
00:03:27.860 | keep your room clean, whatever else is assigned, take the garbage out, and so those are expected
00:03:33.300 | to be done, you know, that's not tied to the allowance, so you're going to get your allowance
00:03:36.980 | either way.
00:03:37.980 | But the allowance is kind of a basic amount where you know, we get a few things, but it's
00:03:40.740 | not overly generous.
00:03:42.680 | And then you can allow your child to earn extra money by doing kind of extra seasonal
00:03:46.740 | chores above and beyond the normal chores, raking leaves, you know, that kind of thing.
00:03:53.980 | So that's what a lot of people recommend is like a hybrid method.
00:03:58.140 | But basically, you know, you can choose however you want to do it.
00:04:01.780 | And then there's the debate over whether you should pay the allowance in cash, or some
00:04:05.860 | kind of electronic ledger.
00:04:07.180 | I remember when my children were little, we started out with cash, but then we had a problem
00:04:11.500 | where if I would go to the store and buy him a toy, then they reimburse me for me, we got
00:04:16.340 | we got home.
00:04:17.340 | But then later on, we were like, we can't remember if they got reimbursed.
00:04:19.780 | And my child was like, Oh, I know I had $30.
00:04:21.900 | Where did it go?
00:04:22.900 | And I'm like, I don't know.
00:04:24.460 | So it.
00:04:25.460 | So then we switched to more of it at the time was just a paper ledger where we keep a running
00:04:29.260 | balance.
00:04:30.260 | And then every time they bought something, I would subtract or every week when they got
00:04:33.020 | allowance, I would add so they could go back and see if they couldn't remember, you know,
00:04:36.780 | because sometimes you can't remember what all you spent on.
00:04:41.780 | But nowadays, of course, you can do a spreadsheet, but that might be kind of cumbersome to open
00:04:46.380 | the spreadsheet every time you do a vote.
00:04:49.500 | So there's kind of pros and cons of each method.
00:04:54.100 | One thing you want to do is encourage your child to plan purchases ahead of time, you
00:04:58.700 | know, don't buy an impulse and encourage them to eventually, the goal is to learn to save
00:05:04.500 | up for something bigger to delay gratification and save up.
00:05:08.660 | And some parents help by doing like a little thermometer chart where they show the progress
00:05:15.180 | towards the goal if they want to, you know, buy something that's $100 that's going to
00:05:18.740 | take them a while to save up.
00:05:23.220 | Very rare use of what I will call a bribe, I guess you could call it a reward.
00:05:27.420 | The only things I did for my kids was every year we'd have their portrait taken.
00:05:32.540 | And you can't really force a child, you know, you have to smile or else, like, what are
00:05:37.300 | you going to do?
00:05:38.300 | You can't make them smile for the picture.
00:05:40.500 | So what I would do is once a year when they had their portraits taken, you know, we're
00:05:44.060 | going to go get your portraits taken.
00:05:45.420 | And then I'm going to, you know, you can buy a toy up to $10 or whatever, whatever it is.
00:05:50.460 | And then the only other thing I kind of, I guess you could call it a bribe or a reward.
00:05:53.980 | The only other thing I kind of bribed them with was when they were out of their crib
00:05:57.780 | to their, you know, the big, big bed.
00:06:00.540 | That's a very scary thing for them.
00:06:02.700 | And so they really needed like an incentive.
00:06:04.700 | If you, the first night you stayed in your big bed all night, you know, you can pick
00:06:09.020 | out a toy.
00:06:11.940 | And then there's the issue of holiday birthday gifts.
00:06:16.700 | What we did was we kind of set a dollar amount and, you know, every once in a while, some
00:06:20.340 | years we were just, I'm feeling really generous this year, I'm going to buy them a PlayStation
00:06:25.060 | or whatever.
00:06:26.060 | But usually they knew they were only getting a certain amount and we didn't go overboard
00:06:30.060 | with the gifts, but you know, that's up to you.
00:06:34.100 | There are some board games to make it fun for the child, you know, young children love
00:06:39.380 | to play board.
00:06:40.380 | I know my kids love to play board games.
00:06:42.180 | So some of the ones I've heard of, we, we personally had life and monopoly, but I've
00:06:47.660 | also heard of payday and there's one called the allowance game.
00:06:51.460 | Now this is something I do not have personal experience with, but there's something I've
00:06:54.860 | heard mentioned several times called fam zoo, family finance app.
00:06:58.940 | And I did kind of look into a little bit.
00:07:01.040 | It does have a fee.
00:07:02.980 | I think it was maybe if you paid for a whole year, it was like 30 or $40 for the whole
00:07:07.380 | year or $6 a month, which isn't super cheap, but it might be worth it.
00:07:11.980 | And you can order debit cards for each child.
00:07:15.100 | You can even, even order them for a young child, but if the younger than 13, it had
00:07:18.780 | to have the parent's name.
00:07:19.780 | And the parent is supposed to be with the child that they make an online purchase.
00:07:25.700 | And then it also has all these you know, you could look up, what did you spend on what's
00:07:31.380 | the balance for each child and easily transfer from the parents account to the child's account
00:07:36.460 | and that kind of thing.
00:07:38.220 | So does anybody have any tips or what worked for them as far as allowances for their young,
00:07:45.140 | young children or anything like that?
00:07:46.660 | We'd love to hear from you guys.
00:07:48.540 | Just use your, if you do just use your raised hand icon and zoom to raise your hand.
00:07:57.220 | Keith.
00:07:58.740 | Yes.
00:08:00.220 | You know, a couple of things from here that, that we did that I'll, I'll share.
00:08:05.820 | The first thing is the holiday and birthday gifts.
00:08:10.140 | We lack of better term mandated that half of what they got from grandmas and grandpas
00:08:18.780 | and aunts and uncles and everybody for birthdays and holidays went into a savings account.
00:08:26.000 | And then the other half, they, they got to keep that money.
00:08:30.660 | And then when they were around 12 or so years old we bought a, like a little plastic container,
00:08:38.740 | you know, big enough that you could put papers and a checkbook and things in and they would
00:08:43.700 | put the money in there.
00:08:44.700 | And I had them make a basically a checkbook leg ledger with a piece of paper.
00:08:50.660 | And if they wanted to go buy something, they had to pay me and then they would mark it
00:08:55.980 | off of their balance that was in this container that had their money and other papers and
00:09:02.860 | things that they had.
00:09:05.080 | So the objective was to, to a kind of teach them how a checkbook works, but without actually
00:09:12.560 | having a checking account because they were just around 12 years old or so.
00:09:17.060 | And also the lesson that you should always save when you get something and not just spend
00:09:22.060 | it all on something.
00:09:24.620 | And I think over time that message kind of came through.
00:09:31.060 | And the other thing we did with, with the gifts is if there's something they wanted
00:09:35.360 | to buy with the money that they had left, I would have them pay me and then I would
00:09:40.840 | buy it.
00:09:42.880 | And I actually put that into my own little container.
00:09:47.360 | And then when they were getting ready to go to college, I handed them all that money back
00:09:52.240 | that I had been sitting on that they had paid over the years.
00:09:56.960 | And I don't know, it amounted to somewhere between I think $800 and $1,000 for, for each
00:10:01.680 | of my three kids.
00:10:03.720 | So number one, they were very surprised that they got that money back because they never
00:10:07.120 | knew that that was going on, but to them, they were spending their money.
00:10:11.240 | They had to account for it, but since they were 12 or 13 years old, I didn't expect them
00:10:17.800 | to pay for it.
00:10:18.800 | I just sat on the money and then handed it back to them.
00:10:21.120 | So the lesson was you need to, you know, be responsible with your money and need to keep
00:10:26.320 | track of it.
00:10:27.320 | You need to make sure that you put it in a safe place that you can find it.
00:10:31.400 | Otherwise you just find money all over the place, all over their rooms.
00:10:36.320 | And it hopefully taught them to be kind of responsible and organized with their money.
00:10:42.240 | Seems like, it seems like it worked.
00:10:44.480 | All three of my kids are in their twenties now, and it, it seemed like it taught them,
00:10:48.680 | you know, for the most part, that lesson.
00:10:50.800 | Great.
00:10:51.800 | Thank you so much, Keith, for sharing your experiences.
00:10:55.680 | Yes, we, we did a similar thing with the bank accounts.
00:11:02.680 | Our kids opened their first bank accounts at Chase Bank at maybe they were five or six
00:11:08.680 | years old and the bank had a cute account for the kids and it was a savings account
00:11:14.720 | and they would walk in, you know, they would be like really small and they'd walk in and
00:11:19.160 | they'd stand in line with everybody and put their deposit, their birthday money there.
00:11:25.480 | And it was nice.
00:11:26.480 | And they had their little passbook.
00:11:29.840 | Not that they really made a lot of money, but it was the, the idea of getting them used
00:11:34.200 | to banks, getting used to going into banks, and that this is what we do.
00:11:38.320 | This is what our family does.
00:11:39.960 | We use banks and we save money in banks and we deposit our money in banks.
00:11:44.800 | And then when they got a little older, actually when they, they, all my kids were at Vanguard,
00:11:52.640 | I believe at 16 years of age, as soon as they could have their own accounts, and these were
00:11:56.880 | taxable accounts, they opened them there.
00:12:01.000 | They were joint accounts with me.
00:12:04.760 | And as soon as they started working, they had a Roth IRA and they would deposit, I would
00:12:10.480 | show them how to deposit the money into the Roth IRA.
00:12:13.840 | At the end of the year, they would find out how much, when they got their W-2, they had
00:12:18.840 | earned that year and then deposit that in the IRA.
00:12:24.600 | Actually my husband and I decided early on that what we would do to help our children
00:12:30.400 | is to do the depositing.
00:12:32.680 | We would put the money in the IRA for them, especially if they put the rest of that money
00:12:37.840 | into their taxable account.
00:12:40.760 | And we have done that to this, to this very day.
00:12:43.520 | Actually we, we, we finance, fund the IRAs for each of our, all of our children.
00:12:54.040 | I don't know how long that will go on, but for right now we do that.
00:12:57.760 | In terms of the working, when they were young, I had a family work day and this was maybe
00:13:02.960 | once or twice a year, three times a year, where I decided it was time that everybody
00:13:08.920 | in the family pulled together.
00:13:10.280 | We are part of a family and this is what we do.
00:13:13.340 | We take care of the house.
00:13:15.040 | We do things around the house.
00:13:17.540 | We do things around the yard.
00:13:19.440 | You know, we clean the hamster cages, we, you know, the bunny cages, we, we, we pitch
00:13:25.520 | in and help for the family.
00:13:28.080 | And so I would set the family work day, it would be posted on the kitchen counters.
00:13:33.520 | They were to be here at nine o'clock in the morning.
00:13:35.560 | This is before they had moved out of the house and there was no pay.
00:13:40.840 | This is part of being a family, this is what we do.
00:13:43.900 | And then at the end of the work day, we all went out to a restaurant for a very special
00:13:48.200 | dinner and they could have all the dessert they wanted.
00:13:51.700 | So it was a nice family time, even though they grumbled and moaned and groaned and the
00:13:56.460 | neighbors would think they were really cute working out there with their wheelbarrows
00:14:01.500 | and everything.
00:14:02.940 | But it, they still talk about it to this day.
00:14:05.620 | Oh, that was the worst thing you did, mom, was the family work days, but they remember
00:14:09.220 | it and they really liked it.
00:14:12.100 | Also on the, what Keith mentioned about saving the money, I have read, no, we did not do
00:14:17.420 | it so much.
00:14:18.420 | We did not, was the three buckets or the three jars.
00:14:23.580 | You may have read about it.
00:14:24.580 | One of the editors, maybe in the Wall Street Journal or the New York Times wrote about
00:14:30.620 | this many times, where when his children got money, received money, there were three ways,
00:14:36.980 | three places to put it.
00:14:40.000 | One was for charity.
00:14:41.000 | They, if you had a birthday money, a little bit, some of it would go to charity in the
00:14:46.780 | charity bucket.
00:14:48.580 | The second would be for savings.
00:14:51.580 | That's what you put in the bank.
00:14:53.420 | And the third bucket was you could use for whatever you wanted.
00:14:56.740 | I can guarantee you my older son saved every bit of that money.
00:15:00.620 | He saved all his money growing up.
00:15:03.700 | My daughter, my daughter was a spend, liked to shop.
00:15:09.580 | My younger son would save all his money except for computers.
00:15:14.620 | And then he would like to spend it.
00:15:16.540 | So each child was different.
00:15:18.020 | We raised them all the same.
00:15:19.540 | And yet each child was by nature different.
00:15:23.940 | And to this very day, it's the same, they are different.
00:15:28.180 | Very good.
00:15:30.500 | Thank you, Miriam.
00:15:31.500 | Beverly and Tim, you can go ahead and start.
00:15:36.940 | Hi, I'm here.
00:15:38.780 | I just wanted to mention, we do something similar to Miriam in that my kids are in their
00:15:43.180 | mid to late 20s now.
00:15:45.140 | And we started maybe five years ago doing an IRA match at Christmas.
00:15:49.940 | So Santa would match whatever they put into their IRA account.
00:15:53.260 | And they're very fond of that.
00:15:55.340 | But thinking back to our kids having bank accounts when they were younger, we banked
00:16:02.300 | at a local bank in Princeton area.
00:16:04.860 | And the kids would always go in there and make their deposits.
00:16:07.660 | And one day, the manager, who knew us pretty well since it was local, asked how the kids
00:16:12.940 | were doing.
00:16:13.940 | And I casually mentioned that my daughter was looking for a summer job before college.
00:16:17.700 | And I wasn't even fishing, but she said, oh, well, we need a teller.
00:16:21.380 | So here's an application, have her fill that out.
00:16:23.900 | So it wound up being a great thing, because every summer, she filled in for other tellers
00:16:29.260 | that were vacationing.
00:16:30.260 | And she got a work history out of it.
00:16:32.580 | It was a minimum wage job, but it was an added bonus of being known at the local institution.
00:16:40.660 | It also became her college job.
00:16:42.140 | Well, it became her college summer job also.
00:16:44.980 | So she got years worth of that.
00:16:48.100 | Very good.
00:16:49.780 | Thank you.
00:16:51.260 | There's a question in the chat, what age should allowance start?
00:16:55.580 | I'll give you my opinion on these two questions, then somebody else can chime in if they want.
00:16:59.220 | And then the other question was, do you give a reward for good grades?
00:17:02.660 | So as far as the age, personally, I think as soon as the child understands the concept
00:17:08.260 | of money, how much different things cost different amounts, and then they have a desire to buy
00:17:13.380 | certain toys, they're ready to have an allowance.
00:17:16.140 | And personally, I think this is around the age, could be as young as four, maybe five.
00:17:21.700 | That's kind of when my kids were ready.
00:17:23.660 | And as far as paying for grades, it's really highly dependent on the child.
00:17:28.540 | Some children would really respond well to that.
00:17:31.460 | But some other children are just completely internally motivated, and they don't need
00:17:36.580 | that at all.
00:17:37.580 | So it's really highly dependent on the child.
00:17:39.420 | Does anybody have any input on those two questions, the age to start the allowance and whether
00:17:43.820 | or not you should pay for grades?
00:17:45.140 | Oh, Beverly and Tim, go ahead.
00:17:47.060 | Do you still have your hand up?
00:17:50.260 | Does anybody have any?
00:17:51.980 | I forgot to take it down.
00:17:53.780 | I'll do it.
00:17:54.780 | Okay.
00:17:55.780 | I think.
00:17:56.780 | Okay.
00:17:57.780 | And then somebody had had a question from the RSVP forums, how to teach kids about money
00:18:04.340 | by age.
00:18:05.340 | And at the end of this presentation, there is a list of books that are pertinent to this
00:18:12.140 | discussion.
00:18:13.580 | And some of them, there's one called Beyond, and you don't have to write these down because
00:18:17.180 | you'll see them at the end, Beyond Piggy Banks and Lemonade Stands by Liz Frazier.
00:18:22.660 | And this was geared towards younger children, pre-K through fifth grade.
00:18:25.940 | It's very, you know, so it has a lot of information on this slide, like allowances for young children.
00:18:33.020 | And then there's two that cover more of an age range.
00:18:36.060 | One's called Raising Your Money Savvy Family for Next Generation Financial Independence
00:18:41.740 | by Carol Pitner and Doug Nordum.
00:18:44.220 | And this has a chapter, chapters, one for toddlers, one for grade school, one for tweens,
00:18:48.540 | one for teens and adults.
00:18:50.540 | So it kind of covers the whole gamut of ages.
00:18:53.500 | And the same thing, there's another book called Kids and Money by Jane A. Pearl.
00:18:57.380 | It covers toddlers through young adults.
00:19:00.380 | And this was, the last book I want to mention is called Launching Financial Grownups by
00:19:04.820 | Bobby Rebell or Rebel, and this is geared more towards college age and young adult children.
00:19:12.740 | So there's several books that kind of covers the whole range of how you, you know, different
00:19:17.460 | topics for different age of children.
00:19:20.700 | The second, we had another question from the RCP for this slide, and it's the best simple
00:19:25.140 | way to deal with nominal amounts of birthday money, but then they say under $2,500 for
00:19:30.580 | age eight.
00:19:31.580 | And Keith, you kind of answered that as far as the buckets, but for an amount like $2,500,
00:19:38.060 | you know, you might even want to consider putting part of it in a $529.
00:19:43.340 | If there's already one open for the child, they can contribute to their own $529.
00:19:47.140 | But definitely you'd want to kind of split that up, you know, charity, savings, $529
00:19:52.660 | and spending for that kind of thing.
00:19:55.300 | Okay, we're going to move on to the next slide.
00:19:58.140 | Let's see here.
00:20:01.460 | Oh, I skipped one.
00:20:03.020 | Okay, the next slide is teens.
00:20:06.340 | The only topics I want to bring up for this is you may want to consider for a teen giving
00:20:11.140 | your child either a quarterly or an annual lump sum for some categories, such as clothing,
00:20:16.340 | just say, I'm going to give you X amount for clothing for the whole year, and you can spend
00:20:21.860 | it however you want.
00:20:22.980 | And then hopefully, that will teach them how to manage a lump sum over a longer period
00:20:28.260 | of time.
00:20:29.260 | And they'll realize, oh, if I buy everything I want right away, all the expensive brands,
00:20:32.580 | you know, when I grow two inches at the end of the year, I'm not going to have enough
00:20:36.420 | to buy some more jeans, you know, they're going to kind of learn that they need to kind
00:20:40.180 | of plan ahead and anticipate their needs for the whole year.
00:20:47.420 | And then some of the books I read, there was a lot of talk about helicopter parenting versus
00:20:51.280 | letting children learn from their mistakes.
00:20:53.020 | And I know I do kind of err on the side of the helicopter parenting.
00:20:58.700 | You know, you should well, let them make some mistakes when the cost is low.
00:21:05.500 | But I think you should enter personally, I intervene when I think the price of the lesson
00:21:09.620 | is too high.
00:21:10.700 | Some parents like just, you know, they will learn natural consequences of their actions.
00:21:15.260 | But to me, it's like if they're going to oversleep on the day of their final for high school,
00:21:18.940 | like I'm not going to wake them up, I'm not going to let them learn the natural consequences
00:21:23.080 | of something like that.
00:21:24.080 | That's, that's too high, in my opinion.
00:21:25.760 | But if it's something like, you know, they're going to have, they didn't return, I know
00:21:28.640 | people don't even do red box DVDs anymore.
00:21:30.840 | But there was one time when my daughter, you know, I almost I saw it sitting out on the
00:21:35.600 | desk.
00:21:36.600 | I'm like, I'm going to remind her to return and then I like, I had to zip my mouth and
00:21:39.640 | you know, I'm not going to remind her because the worst thing that can happen is she's going
00:21:42.440 | to pay a little bit of a fine.
00:21:43.960 | It's not that big a deal.
00:21:44.960 | But so in that case, when the price is a little bit lower.
00:21:48.160 | So only you can really draw that line where you think, you know, you need to intervene.
00:21:54.140 | But you should definitely look to make a few mistakes, you know, when the cost is low.
00:22:00.120 | This when I had my kids, we really didn't have to worry about debit cards for teens
00:22:04.360 | because you weren't buying anything online when my kids were little.
00:22:08.800 | But nowadays, a lot of kids want to be able to buy things online.
00:22:14.360 | And I don't have personal any experience with these cards.
00:22:16.880 | But I know there's I looked at this one called Fam Zoo, Greenlight, Go Henry, Copper.
00:22:21.600 | So if anybody at the end of the slide, if you have any experience with any of those,
00:22:24.520 | let us know.
00:22:25.840 | And then also someone mentioned Fidelity Youth Account, which is for teens 13 to 17.
00:22:30.480 | And that does have a free debit card.
00:22:33.000 | Another dilemma is should you work or encourage your child to work during high school.
00:22:39.120 | And personally, I know a lot of kids do and that's great personally, like my kids were
00:22:43.560 | in marching band, and they you know, marching band, you get up and you go at 630 every morning,
00:22:49.600 | you go to band practice, and then you Friday nights, and sometimes you stay late.
00:22:53.100 | And to me, that's almost like a job in itself, even though first, they're not getting paid.
00:22:56.520 | But it's teaching them the same things, I guess, teaching them to get up and go somewhere
00:23:00.720 | where even they don't feel like it, teaching them to work hard, teaching them to learn
00:23:04.380 | things, teaching them to get along with others.
00:23:08.540 | So to me, that was kind of teaching the same values as a job and, and it was taking up
00:23:12.640 | as much time as a job.
00:23:13.800 | So you know, you kind of have to just depend on your child, do they have if they have a
00:23:18.280 | lot of extra time on their hands, and you might want to encourage them to get a job.
00:23:22.800 | Does anybody have any comments on any of these topics for teens?
00:23:28.160 | Let me see if there were any Keith, go ahead.
00:23:32.600 | I would just say, and this really came in at the very end with with just our daughter,
00:23:37.380 | you have all these electronic things going on, like Venmo and that type of thing.
00:23:44.520 | You know, my boys were a little bit older by then, but my daughter was kind of just
00:23:49.040 | at that, that age where she was learning about money and Venmo and those kind of transfer
00:23:56.120 | companies.
00:23:58.220 | So my comment would be if you're if your kids are young, you probably want to have a strategy
00:24:02.960 | for those types of things, because right now, they're used a lot, you know, if my one of
00:24:10.120 | my kids goes out to eat with his or her friends, somebody pays and then everybody else has
00:24:15.520 | the Venmo money to cover their, their cost of their meal.
00:24:20.240 | I don't have a, I don't have an answer or an opinion.
00:24:23.400 | It's just that it's out there.
00:24:26.200 | And you know, if you have a 14 or 15 year old that's learning about money, that's probably
00:24:31.040 | going to be something you're going to have to deal with.
00:24:33.880 | Okay, thank you, Keith.
00:24:37.960 | Let's see if we had any.
00:24:41.520 | Okay, we did have two questions from the RSVP questions.
00:24:46.560 | Okay, strategies to increase children's interest in personal finance and investing.
00:24:51.960 | So I guess what they're asking is, what if the child you're trying to sit the child down
00:24:56.040 | and teach them something and they're just not interested, they just don't care about
00:24:59.160 | hearing about that.
00:25:00.160 | So does anybody have any tips on how to get your children interested in discussing personal
00:25:06.960 | finance and investing?
00:25:11.920 | And this may be one of those things where I know with my my daughter, sometimes it's
00:25:18.760 | best to teach a lesson when they're they need to know, sometimes they don't care until they
00:25:24.600 | need to know like they don't they don't know what a, you know, IRAs, but oh, now all of
00:25:29.120 | a sudden, they have a job now they kind of need to know, you know, that kind of thing,
00:25:32.280 | or they, or they get their first real job with the 401k.
00:25:35.720 | And they don't understand, you know, what's this bond index fund?
00:25:39.600 | What's this?
00:25:40.600 | You know, mid cap?
00:25:41.600 | I don't know, you know, then they might be more receptive to you explaining and so sometimes
00:25:47.800 | it's best to introduce topics when they you know, they need to know, they're definitely
00:25:51.960 | gonna be more interested.
00:25:52.960 | And the other thing I want to say is a lot we're we're gonna this is on another slide,
00:25:56.600 | but oftentimes, you have to explain things, they're not going to get it the first time
00:26:02.160 | you have to explain things several times before they it sinks in there.
00:26:07.860 | These concepts can be very difficult, you know, you know, my, my daughter, like, what's
00:26:11.320 | the difference?
00:26:12.320 | Like, what is a stock?
00:26:13.320 | What is this?
00:26:14.320 | I don't understand?
00:26:15.320 | What is a stock?
00:26:16.320 | What is a bond?
00:26:17.320 | What's the difference?
00:26:18.320 | That kind of thing.
00:26:19.320 | You have to explain it several times.
00:26:20.320 | Okay, go ahead.
00:26:22.880 | Yes, I, um, what I noticed also is that they the kids, when you mentioned that it takes
00:26:32.160 | a while for it to sink in it, one thing that happens is when my son, my oldest son, put
00:26:40.760 | all his money into Vanguard into a stock fund, when he was young, when he had his first accounts.
00:26:49.000 | And it was a actually it was not, I'm sorry, it was not Vanguard, it was another company
00:26:54.160 | that had a stock fund called the young investors fund.
00:26:57.860 | Stay away from those you every so often, you'll see them.
00:27:00.680 | These are mutual funds that are stock funds.
00:27:03.360 | And the manager wants to teach the children how to buy and sell stocks and well, or put
00:27:09.080 | it into your mutual fund.
00:27:11.440 | And they sounded neat, it had this really neat little article that they would send out
00:27:16.640 | to the kids every month, why I bought Microsoft, why the manager would say this is why I bought
00:27:25.000 | Microsoft and he would explain why.
00:27:27.600 | And then you could write in a question, why don't you buy Macy's?
00:27:31.080 | Well, I didn't buy Macy's because of this.
00:27:34.980 | I thought it was a good education system for my son that he would read it, he would like
00:27:38.920 | it and they had cute little bugs running around on the on the papers and stuff like that for
00:27:44.720 | the Disney movies.
00:27:46.840 | But what happened was, when the 2000.com bubble came, and his money was in this stock fund,
00:27:55.520 | he lost 40% of his money.
00:27:58.240 | And I will say right out loud, he had $6,000 in that account, and he lost 40%.
00:28:03.920 | His account was worth about $3,500 $3,800.
00:28:09.200 | And actually, he had a good friend who did the same thing.
00:28:13.120 | He put his money into his, his father was with Merrill Lynch, into a Merrill Lynch stock
00:28:17.520 | fund, he lost 50%.
00:28:20.520 | The only good thing was, I would hear these two kids talking in the bedroom about how
00:28:23.760 | awful their parents were encouraging them to go into a stock fund, they lost all their
00:28:28.760 | money.
00:28:30.640 | And trying to explain to my son, no, this is a, a bear market.
00:28:35.960 | This is a the tech bubble and trying to explain it to him, that you will recoup your money
00:28:42.640 | down the road when the market goes back up.
00:28:45.480 | I could tell the horror, the how upset he was at losing his money was worse than any
00:28:53.120 | education that it gave him to lose the money.
00:28:57.960 | So what I did was I then, when he turned 16, and he opened his Vanguard taxable account,
00:29:08.040 | the money that was left in that young investors fund, it had recouped up to about $5,000.
00:29:13.200 | We immediately sold that.
00:29:15.360 | And I sat with him, we sold it, we moved it over to Vanguard, and we put it in Vanguard
00:29:20.080 | Wellington, which is a 6040 mutual fund.
00:29:24.160 | It's not the best for a taxable account.
00:29:26.500 | But at that point, it served its purpose.
00:29:29.160 | He saw that money going up, up, up, up, up.
00:29:32.680 | Every time he looked at his statements, he could see he had earned more money.
00:29:37.660 | At that age, it seems that that is what they want from their investments, from their savings.
00:29:42.880 | They just want to see that it goes up.
00:29:44.840 | They don't care if it goes up a little or a lot, they don't know the percentage.
00:29:50.500 | All they want to know is that each month they made more money, they didn't lose the money.
00:29:56.040 | And it worked.
00:29:57.400 | And to this day, he's a professional, and he still has that same Vanguard fund, a Vanguard
00:30:03.760 | in this taxable account.
00:30:05.560 | It is now worth so much money, he almost can't move it and incur the tax consequences.
00:30:11.760 | So he doesn't contribute to it, it just builds up on his own by reinvesting dividends and
00:30:16.140 | capital gains.
00:30:17.780 | But it did work.
00:30:19.180 | He then knows a little bit about asset allocation.
00:30:23.540 | So that's one thing I would mention about young kids.
00:30:26.940 | They don't, they're not going to get the stocks and bonds, they're not going to get what a
00:30:30.060 | bear market is, or, or inflation, a taxable account versus an IRA, they're not going to
00:30:38.480 | get it until they're a little older.
00:30:40.520 | Thank you, Miriam.
00:30:42.840 | Yeah, the last thing we want to do is scare our kids off at the get go, just they lose
00:30:48.880 | a bunch of money.
00:30:49.880 | So I'm glad your son kind of after he did the well, it wasn't Wellington and started
00:30:53.520 | going up because what we want to do is scare them off of investing for the rest of their
00:30:59.080 | lives.
00:31:00.080 | So that's exactly right.
00:31:01.080 | Yeah.
00:31:02.080 | Veronica, I see in the chat, you had a question, we're actually going to somebody else, it
00:31:05.320 | might have been you had a question from the RSVP.
00:31:07.840 | So I'm going to cover that later on, like in slide number nine, I actually did a little
00:31:11.520 | bit of research and about kids IRA.
00:31:13.780 | So we're going to cover that later a little bit later.
00:31:16.520 | Okay, and somebody else had a question on how to handle big spenders.
00:31:22.760 | Does anybody have advice other than just if they don't have, you know, they can only spend
00:31:28.200 | what they have.
00:31:29.200 | Right.
00:31:30.200 | I know, I'll tell a little story about my son, I think we started him at allowance,
00:31:35.480 | like he was like four, he was young, and we gave him $1 a week at that time.
00:31:39.720 | Every week, I he wanted me to take him to Walmart and buy a little matchbox car every
00:31:43.600 | single week, because they were $1.
00:31:46.320 | And we let that go on for a good six months, maybe a year.
00:31:50.600 | And then we kind of said to him, hey, you know what, if you if you don't buy a matchbox
00:31:55.560 | car every week, after a while, you'll save up some good amount of money.
00:31:59.360 | And he actually took that to heart, and he didn't spend any money for like, I don't know,
00:32:04.240 | until he was like 12.
00:32:05.240 | And then he bought an Xbox.
00:32:06.240 | So it was kind of crazy.
00:32:07.240 | But sometimes you kind of, you know, let them make a mistake.
00:32:11.640 | And then maybe just explain, hey, you know, if you constantly spend all the money you
00:32:15.720 | have, you're never going to be able to save up for anything bigger that you want.
00:32:18.920 | So if they have something bigger that they want, maybe you could say, hey, you know,
00:32:22.200 | if you didn't spend money, or if you only spent half your money for this many weeks
00:32:25.640 | or months, you could actually save up for this, whatever item is that they want.
00:32:29.000 | That's the only suggestion I have about that.
00:32:30.920 | But anyway, if they have money, you can't stop them, you know, from spending their own
00:32:35.880 | money, basically, as long as the item is appropriate, you know, for their age.
00:32:39.480 | So okay, we're going to move on to
00:32:44.160 | Okay, we Oh, sorry, banking, building credit, and some of this has already been discussed
00:32:52.160 | a little bit.
00:32:53.160 | One way to build your child's by credit, I mean, like your credit score, adding your
00:32:58.280 | child as an authorized user on your card, and you don't even really even have this bank
00:33:03.360 | will send them their own card, but you don't even really have to give it to them.
00:33:08.920 | And now not all banks will report an authorized user on a credit report, but a lot of them
00:33:14.120 | do.
00:33:15.120 | So you either have to research beforehand, or just do it.
00:33:17.680 | And then a few months down the road, check their credit report and see if it's on there.
00:33:22.360 | But if it does, if it does get on there, it will help them build a credit history.
00:33:27.960 | And then at some point, either high school or college, I know my kids, I think it was
00:33:31.240 | right before college, we opened a cup, it was a chase college checking account.
00:33:36.720 | And it waived all the fees, and they don't have to have a minimum amount in there.
00:33:40.680 | And I believe it was actually joint with the parents.
00:33:44.000 | And at the time you open the account, make sure they understand any fees that it may
00:33:47.700 | have.
00:33:48.700 | And also, whether or not you should sign up for overdraft protection, which you may not
00:33:54.880 | want to because that can be kind of dangerous if you're not watching your account.
00:33:59.080 | And a lot of banks charge like a $34 fee.
00:34:02.840 | And some of them even go to the trouble of arranging the transactions where the smallest
00:34:08.240 | ones go first of that each that, you know, the smaller ones will do a $34 fee, and then
00:34:12.880 | everyone else will do, they can be really ruthless that way.
00:34:16.440 | So make sure that you don't have, you probably don't want overdraft protection.
00:34:20.880 | In most cases.
00:34:21.880 | The other thing is, you know, back in our day, I still balance my check with the old
00:34:26.760 | fashioned way.
00:34:27.760 | But realistically, I don't think most teenagers are going to be sitting down with a little
00:34:31.680 | budget, some, some may, some may, which is great.
00:34:34.660 | But if they don't balance a checkbook, make sure they at least log on frequently, or more
00:34:38.600 | likely, it's going to be on their phone or, you know, check the transaction, make sure
00:34:43.200 | nobody got their debit card information or whatever, and make sure they recognize all
00:34:48.080 | the transactions and make sure the balance is about what they expect.
00:34:51.480 | And then also, they should be downloading their bank statements every month and, you
00:34:56.560 | know, saving them or printing them out, save them on the computer.
00:35:00.240 | And when it's time for them to get their first credit card, you know, make sure they understand
00:35:05.360 | about in the high interest rate, you know, try to encourage them to pay it off every
00:35:08.760 | month, you definitely don't want them to build up a larger balance or really any kind of
00:35:13.240 | a balance.
00:35:15.600 | You know, let them know they do have a credit limit, but which does help build their credit
00:35:19.600 | and their credit score.
00:35:21.800 | But that doesn't necessarily mean they should, you know, charge up to the credit limit.
00:35:25.760 | And then if your teen doesn't qualify for a secure, you know, an unsecured card, there
00:35:29.480 | are secured card, which I got this information from Clark Howard, I listened to him, and
00:35:35.280 | he has a lot of information about secured cards like Petal Chime, what's one called
00:35:41.240 | Discover it Secured.
00:35:43.760 | And then when it's time, show them how to check their credit report through and make
00:35:48.000 | sure they only go to the annualcreditreport.com and not one time I accidentally somehow went
00:35:53.160 | to one of them that wasn't the right one and nothing really bad happened.
00:35:56.720 | I realized that, oh, I shouldn't have gone to that one.
00:35:59.240 | So I'm trying to be real careful to go to the right one.
00:36:02.920 | It'll say like, this is the official, this is the only official website for the government,
00:36:07.040 | you know, it'll be a thing on there.
00:36:10.120 | And then to protect their credit, make sure they understand, warn them about scam emails,
00:36:14.520 | because that's a lot of times that's how people get your information or get a little virus
00:36:20.520 | on your computer, you know, never, unless you're expecting a very specific email that
00:36:25.160 | you just did something you're expecting an email, don't ever click on, or click on things
00:36:30.440 | in emails or call numbers back from phone if you're, if your bank calls and says, you
00:36:36.160 | know, we think you had a fraudulent transaction, you know, is this right?
00:36:41.240 | You should look at the number on the back of your credit card and call that number instead
00:36:44.960 | don't ever call the number that they tell you to, because they could even be spoofing
00:36:48.360 | the number and it might look like it's the bank on the phone, but it's really not.
00:36:52.000 | Same thing with emails or text, you should never click on a link, always go directly
00:36:57.120 | to the bank's website.
00:37:01.760 | And I never do banking on my phone, but I think I don't know if that's realistic to
00:37:05.120 | tell teenagers never to do anything on their phone, because they do seem to do almost everything
00:37:10.000 | on their phone.
00:37:11.320 | Does anybody have any input on suggestions on maybe good credit cards for teams how to
00:37:20.760 | build their credit, that kind of thing, what kind of, what to warn them about when getting
00:37:24.560 | a credit card?
00:37:26.240 | Let's see if anybody's, go ahead Miriam.
00:37:34.560 | One way to build good credit is to buy your own car.
00:37:38.920 | And what my husband and I did we, we decided that we would purchase each of our children,
00:37:44.840 | we would purchase their first car for them.
00:37:47.320 | And then from that point on, they were on their own.
00:37:51.200 | So we then learned that if they purchase it in their name, even though we fund it for
00:37:59.680 | them, they do get a good credit, you know, the credit report, they get the credit for
00:38:04.760 | it and paying off a large sum of money, like a car loan over the years, you know, month
00:38:11.520 | by month by month, even though you would put like maybe 50% down payment and then just
00:38:16.800 | have maybe one or two years of payments, they can build their credit that way.
00:38:22.400 | Now, they are paying interest on that.
00:38:25.760 | But you know, then you decide what to do, maybe pay enough so that they only have a
00:38:30.440 | year's payments for their Toyota or their Camry, whatever it is, and paying it off monthly.
00:38:37.720 | Then on the credit report, it looks like a very, very good loan that was paid off, it
00:38:42.400 | was a car loan, and it was paid off on time, you know, over the course of a year.
00:38:47.680 | Thank you, Miriam.
00:38:50.720 | Beverly and Tim, go ahead.
00:38:54.840 | Two things.
00:38:55.840 | When our kids were in college, I suggested that they each get one or two credit cards
00:39:01.840 | before they graduated, because the day after graduation, you're significantly less appealing
00:39:08.640 | to all of the credit cards.
00:39:11.160 | So they listened and they did that, and NerdWallet is a place where you can find not only our
00:39:16.480 | criteria are not only free credit cards, but credit cards that have some kind of cash back
00:39:21.840 | reward.
00:39:23.840 | And the other thing that we asked our daughters to do was to get a loan during college, and
00:39:30.000 | they didn't want to do that.
00:39:32.760 | And now they regret it, because when it came to get mortgages, they wish they had a better
00:39:36.760 | credit history.
00:39:37.760 | They do have an excellent outstanding credit score, despite all that, but, you know, one
00:39:43.360 | of them has a specific number in mind, and she's like, I could have gotten over that,
00:39:47.800 | you know, that five-point thing if I'd only gotten that college loan, like you said, Mom.
00:39:52.600 | She never came as, you know, she never said you were right, Mom, but she came really close.
00:39:59.720 | Thank you, thank you.
00:40:02.400 | Okay, let's move on.
00:40:03.960 | The next slide is, I think it's the one Miriam was, oh, just the one you were talking about,
00:40:09.960 | Miriam.
00:40:10.960 | So Miriam, you said, if I remember correctly, you bought your kids the first car, and then
00:40:16.920 | they were on their own after that, right?
00:40:19.520 | I think that's a great way, because then when they have the car, they, you know, one thing
00:40:24.320 | they might want to consider doing is after they get the first car, immediately start
00:40:27.480 | putting aside money every month, and then in 10 years, they'll have plenty enough to
00:40:32.040 | pay cash for the second car, so that's one way to do it, but there's several different
00:40:35.800 | ways to do it, and I kind of changed my mind, my first, my thought was, oh, I'm not going
00:40:40.200 | to buy my kids a car, but then we ended up, I changed my mind, so, but there's a couple
00:40:45.000 | things you can do.
00:40:46.000 | You can give or sell them your old car instead of trading it in, but then you have to kind
00:40:49.720 | of balance, well, it's an older car, it may not have as many of the safety features of
00:40:53.800 | the newer car, like the, our cars have those little blind spot, the little tiny mirror
00:41:00.280 | within the mirror, the blind spot mirror, some of them have the backup cameras and things
00:41:03.920 | like that, that make, make it safe for more airbags and things like that, or if you have
00:41:08.420 | enough cars within your family, you could just share, share maybe a family car with
00:41:11.960 | them.
00:41:12.960 | If they do buy it, you want to make sure they understand, like I had, my daughter, she hasn't
00:41:18.160 | bought a car yet, but she was talking about it, I'm like, do you understand about, well,
00:41:22.480 | now, all bets are off right now in this environment, but, you know, two years ago, before this,
00:41:28.680 | all the supply chain problems, you would look up the MSRP on the internet and you might
00:41:32.880 | pay your dealer a hundred dollars over the, you know, you never paid sticker price, cars,
00:41:38.260 | you never paid sticker price, but, you know, you wouldn't, if you've never been shopping
00:41:40.640 | for a car before, you might not necessarily know that, so, and these days it's great,
00:41:44.240 | there's so much things you can do on the internet to price things out and order directly, or
00:41:49.800 | there's different things you can do, and then if they do get a car loan, you know, don't
00:41:54.040 | necessarily get one from the dealer, you might want to shop around for a credit union, you
00:42:00.600 | could also consider them either lending money with interest or without interest, and then
00:42:06.520 | you definitely want to make it clear who pays for maintenance, insurance, and gas, and that's
00:42:12.360 | kind of up to each family as to whether or not you just want to put them on your insurance
00:42:17.000 | and pay for it, you know, that's up to each family, but just make it clear ahead of time
00:42:23.580 | who's paying for what, and also who's paying for the deductible if they have an accident,
00:42:28.080 | and it's, a lot of cases, it's a good idea to have them pay for it so that it really,
00:42:34.660 | you know, you want them to be extra careful when they drive, and of course it's not always
00:42:39.600 | their fault if they have an accident, but you do, you know, you want them to, that you
00:42:42.680 | want that to be kind of painful to have to pay that deductible. Does anybody have any
00:42:48.880 | tips, and Miriam, you gave some great tips on buying the first car, does anybody, Keith,
00:42:53.680 | go ahead. Yeah, so like Miriam, you know, we helped
00:42:58.320 | our kids buy their first car, we put some money in, and then they actually used some
00:43:03.120 | money that they had saved up from, you know, holidays and birthdays and various things
00:43:09.000 | like that. One of the things I would mention, having been in the automobile business, is
00:43:15.400 | if your child is getting ready to graduate college, a lot of times there'll be additional
00:43:21.500 | rebates or incentives available for "recent college graduates." There's also, do you want
00:43:30.140 | to co-sign a loan to help your child or not, you know, do you want to have that liability
00:43:35.720 | of being on the loan, that's something you want to think about. As far as insurance,
00:43:41.080 | when we did this for our kids, what I found is that up until the age of 25, if they insure
00:43:48.200 | the car under their name only, it's very expensive, and it usually helps a lot with the cost of
00:43:57.080 | insurance if they're kind of part of your family. But obviously, if something were to
00:44:03.480 | happen, it affects your rates also, so that's something else to consider. But there are
00:44:09.840 | a lot of ways that you can help them, like I say, with, you know, various incentives
00:44:15.920 | that car manufacturers have and special loans for recent college graduates, etc. Same thing
00:44:22.320 | if you're in the military. So look for some of those special deals that can apply to your
00:44:27.520 | kids that might help them if they are shopping around for a new car or a, you know, relatively
00:44:34.240 | late model used car that they have to finance. Those are great tips, Keith. Thank you. Okay,
00:44:43.120 | the next slide is basically college funding, and this could be an entire topic for meeting
00:44:52.000 | on its own, so we're not going to go into any detail. But one thing I was reading is
00:44:56.400 | it's important to prepare your kids well in advance. Some said, you know, middle school,
00:45:02.040 | we're talking about it, how much you're going to help, you know, you might want to say,
00:45:05.800 | oh, you know, we've saved up enough for you to attend a state school, or we've saved up
00:45:11.680 | for you to attend a two-year community college, and then you're on for the rest, or whatever
00:45:15.620 | it is that you've decided you can cover, just let them know so that they don't pick out
00:45:20.720 | the most, you know, expensive private school, and then it's only after they've got accepted
00:45:25.480 | then you let them know that, you know, you're not going to cover that. So just, you know,
00:45:28.760 | set their expectations. 529s can also be used, not everybody wants to go to college or is
00:45:36.640 | right for college, so 529s can also be used for accredited trade and vocational school.
00:45:41.280 | That's always a good, sometimes a good option for kids. One tip I've heard for saving money
00:45:46.960 | is consider a community college for the first two years, preferably with living at home,
00:45:51.720 | but just make sure that the credits will transfer because they don't always. And the child should
00:45:57.200 | research and apply for scholarships. I remember when I was in college, of course, this was
00:46:00.320 | a long time ago, but somehow I saw this very small, you know, it was a kind of very modest
00:46:05.280 | scholarship, and I think, oh, you had to write an essay. I'm thinking, oh, I'll never get
00:46:08.440 | that, but I did, and for some reason, like, I'm sure there's multiple ones, but I was
00:46:12.160 | surprised that I actually got the modest scholarship, but every little bit, you know, helps. So
00:46:18.160 | in similar to high school, there's, you know, whether the child should work in college,
00:46:22.440 | and to me, it's the same as in high school, where it's highly dependent on your course
00:46:26.960 | load, your extracurricular activities, and then the necessities. Sometimes it's necessary.
00:46:33.120 | Sometimes the course load isn't that tough, and, you know, 20 hours a week is easy to
00:46:37.360 | fit in. So some parents really feel that the child will take college more seriously if
00:46:42.800 | they're paying for part of it, which could be true for a lot of children, but on the
00:46:47.360 | other hand, some children are very internally motivated to do well regardless, and if they
00:46:52.280 | have a really heavy load, you know, it may not be right for them to have a job, so it's
00:46:57.000 | very highly dependent on the child and the situation. College loans, if your child does
00:47:04.360 | get one, just make sure that they really understand how much it is. Some children just don't,
00:47:10.560 | even if a 20, 19-year-old, they might not have an idea, like, what is 100,000? What
00:47:15.320 | is 150,000? They might not really comprehend what that is. Kind of maybe have them research
00:47:20.720 | what their, the career that they're wanting to go in, how much it pays, and then say,
00:47:25.400 | well, you know, you don't get that whole amount. You got to pay taxes and FICA taxes, and then
00:47:30.000 | you probably want to put some away to your 401(k), so after it's all said and done, your
00:47:34.560 | take-home pay is going to be this much. Kind of calculate how long it's going to take them
00:47:38.720 | to pay off the college loan, and then, you know, you may end up paying three times, twice
00:47:44.580 | as much as the loan amount in interest, and make sure they understand all that, so they're
00:47:48.720 | kind of going, if they do get a loan, they're going into it kind of with their eyes open.
00:47:54.160 | One tip I do have is don't put 100% of needed money into 529. There's still, and I did research
00:48:01.040 | in it, I do believe it's been made permanent, but it is still in effect the American Opportunity
00:48:05.600 | Tax Credit, which is, it's not even a deduction, it's an actual credit of up to $2,500, but
00:48:12.440 | if you're covering the entire amount under the 529 plan, you don't qualify for that tax
00:48:17.880 | credit because that money has that, to qualify for the tax credit, you have to pay part of
00:48:24.080 | the college expenses with money that's not, what is it called, qualified or is not coming
00:48:30.200 | from a qualified plan. It has to be outside the plan, so, you know, try to hold back a
00:48:34.520 | little bit. If you're planning to fully fund, you know, don't necessarily put 100% into
00:48:39.400 | the 529, maybe hold back a little bit in one of your taxable accounts. And I think I did
00:48:44.000 | mention, yeah, have the child research salaries, when deciding on a career, and don't necessarily
00:48:49.080 | rule out, you know, don't necessarily discourage them from becoming one of the lower paid careers,
00:48:54.280 | but just, you know, make sure they go in with an understanding. You may need to adjust your,
00:48:58.600 | you know, your lifestyle, you may not be jet setting to Europe every year, and you may
00:49:02.320 | not have a big fancy house, but just make sure they understand that, you know, the salary
00:49:06.160 | versus the lifestyle. And then this is always a tough one. What if you have one child that
00:49:12.120 | becomes a teacher, when another child goes to medical school and law school, if you fund
00:49:17.000 | both of them 100%, you know, you have to figure out for yourself, is that is that really fair?
00:49:22.760 | Because the, you know, one child may go on to make a higher salary. And, you know, it's
00:49:27.000 | very tricky, it's a very tricky situation. And I definitely don't have any answers. But
00:49:30.880 | it's just something to consider. Kind of before you, you know, help the first child, you kind
00:49:37.240 | of want to maybe have a plan for all the children to make sure everything is, is fair. Does
00:49:42.520 | anybody have any? I do have a couple comments from the RSVP. But does anybody have any comments
00:49:47.440 | on this slide? Go ahead, Keith.
00:49:48.960 | Yeah, I'll just just really quickly mention on the scholarships, I've had three kids that
00:49:53.560 | have gone through this process, my youngest is currently in college now. And there's something
00:49:59.260 | called a merit scholarship, but not every college offers it. So if you have kids that
00:50:04.760 | are going to be future college, college students, and you're going to be starting that process,
00:50:09.640 | I told my kids that you had to go to a college that offered a merit scholarship, it's usually
00:50:15.080 | based on your GPA in high school. And there's a dollar amount that is essentially discounted
00:50:23.520 | from the price of tuition, based on that GPA. Each of the three schools that my kids went
00:50:30.520 | to had different amounts that they received. But they were all in the 1000s or 10s of 1000s
00:50:37.240 | of dollars per year. So over the course of four years, it was a substantial discount,
00:50:46.160 | so to speak, off of the, you know, the stated price. So always look for merit scholarships
00:50:54.040 | if it's available at the colleges that your your your children are going to be looking
00:50:59.120 | at. And then of course, if you had, you know, any any local for the town or where you work
00:51:06.000 | at the company that I work for had one you could apply for, it was only a few $1,000,
00:51:11.580 | but it was worth applying for. So always look for that, but especially the merit scholarships,
00:51:16.480 | because you'd be surprised. There are quite a few schools that do not offer that. And
00:51:21.560 | there are and then the rest of them do, but the amounts vary pretty significantly. But
00:51:27.320 | it's worth looking into because it could save you 20 30 $40,000 over the course of four
00:51:33.400 | years.
00:51:34.400 | Very good. Thank you, Keith. Yeah, speaking of the merit scholarships, the college my
00:51:42.460 | son went to gave, they had this tier level based purely on your SAT score, the higher
00:51:49.460 | they gave a merit scholarship, and the higher it was, the more the more they covered. And
00:51:54.100 | then also, I've heard that if your child is lucky enough, not, you know, lucky enough,
00:51:59.460 | you're working enough to be a national merit scholar. There are some colleges that will
00:52:06.080 | give you 100% tuition or sometimes tuition on board room and board merit scholarship
00:52:12.280 | just based on that. We have a couple of questions from the RCPs. I think we kind of covered
00:52:21.520 | my one wanted to know private versus public school, my kids both went to public schools.
00:52:27.720 | So I don't know a whole lot about private schools. I know they do tend to give out a
00:52:31.540 | lot more. I think they give a lot of scholarships. But of course, that doesn't guarantee scholarship.
00:52:37.220 | But does anybody have any comments on private versus public schools? Okay, the other question
00:52:46.980 | from RCP was, I'd like to start investing for kids retirement, but I don't want to mess
00:52:51.020 | up college financial aid or any best practices. And I did find an article, how students IRA
00:52:57.460 | is counted for financial aid, it's a Kip Winter article. And I'm just going to read read the
00:53:02.160 | this one couple sentences. Assets in an IRA, whether held by the parent or the student
00:53:07.300 | are excluded from financial aid calculations. IRA withdrawals, on the other hand, are included
00:53:15.460 | in the income calculation on the federal financial aid forms. Money withdrawn from a child's
00:53:22.260 | IRA is considered to be the student's income and is hit hard by the financial aid calculation.
00:53:27.740 | So in other words, having money in an IRA is fine, as long as you don't take it out
00:53:33.500 | the year that it's going to show up on the FAFSA. That's what I get from that. So it's
00:53:39.180 | not a problem that they have. It won't even be counted at all if they just have an IRA
00:53:43.060 | money in an IRA and keep it there. Okay, let's go to the next slide. Okay, so now they've
00:53:53.620 | graduated and their job interviewing. And this is something if they've never been to
00:54:01.860 | I mean, I guess I call this a real job. I mean, not that working at McDonald's isn't
00:54:07.540 | a real job. But I think it's a slightly different kind of an interview if you're going to go
00:54:10.500 | to a big corporate job versus going to McDonald's. But you may want to encourage your child to
00:54:16.340 | do a little bit of research. Because there's a I'm sure you just research, you know, what
00:54:21.700 | are some common interview questions? You know, one of the most common is what are your weaknesses?
00:54:25.620 | And if the child's never really thought about that, and then, of course, you got a word
00:54:29.620 | in such a way that it's, here's a weakness, but here's how I overcome it. So that doesn't
00:54:33.660 | look like it's a bad thing. What made you want to interview with this company, but there's
00:54:38.140 | going to be a whole list of very common interview questions that they should be prepared to
00:54:41.980 | answer. And I've also read, they should always do a little bit of research on the company
00:54:46.140 | to have questions to ask the interview about the company and also to explain how they can
00:54:51.340 | contribute to the specific company. And then, you know, help them shop for appropriate interview
00:54:57.140 | attire. And there's a lot of articles out there on job interviewing and also tips on
00:55:03.700 | salary negotiation, which is a very tough thing if you've never done it before, and
00:55:08.580 | I'm really bad at it. So that's why you probably want to encourage child to just read up some
00:55:14.380 | tips. I'm sure there's plenty of articles out there with tips on that kind of thing.
00:55:18.900 | And then also, if you have any contacts as far as friends, neighbors, co-workers that
00:55:23.940 | are even that are working for that company that they're interviewing or just in that
00:55:27.980 | field or the position that your child's going to be interviewing for, you could maybe have
00:55:32.380 | them go out to lunch with them or just have a phone conversation, just get some tips on,
00:55:38.660 | you know, whether or not they want that kind of position, whether or not they want to work
00:55:41.320 | for that company, some kind of tips on interviewing, that kind of thing. Anybody have any tips?
00:55:48.660 | Miriam, go ahead. Yes, there are counselors and tutors who help people learn how to interview.
00:55:59.300 | And I think especially when they come out of college, when they come out of high school
00:56:03.180 | for kids, it might be useful to pay for some sessions to help them learn the interview
00:56:10.220 | process, what is appropriate, what is not appropriate, how to answer certain kinds of
00:56:15.460 | questions, how to read when they're in the interview, how to read how it's going, how
00:56:22.900 | to learn ahead of time about the company that you're interviewing for or the job or the
00:56:26.860 | position so that the employer, prospective employer thinks you're excited about the job.
00:56:33.980 | I think that's a useful way of approaching it. Great tip. I don't know if I thought I
00:56:40.380 | would have thought of that. So that's a great tip. And it's probably well worth any small
00:56:43.700 | amount that you would spend on that for, like you said, one or two sessions. It may not
00:56:48.420 | have mattered so much, but nowadays it's so competitive. I think it's a useful, a useful
00:56:54.580 | thing to do. Definitely. OK, so great. Now they have the first job, like the real first
00:57:02.740 | job. And I know I think it was Miriam you talked about this, but or other people talking
00:57:09.940 | about this, but consider matching or because most children aren't going to be positioned
00:57:16.500 | when they get their first job to contribute to the 401(k) and also a Roth outside of it.
00:57:21.460 | They may be, but if you were able to, it'd be and you want to, it would be a good thing
00:57:27.300 | to match their earned income into a Roth. And this applies to even high school jobs
00:57:33.620 | that they have, any job that they have, because most children, if they're working at McDonald's
00:57:38.900 | in high school, they're not going to want to put all their earned income into a Roth.
00:57:42.460 | What fun is that? They want to be able to have some spending money. So but you really
00:57:47.120 | don't want to pass up. You only get so much, so much, so many opportunities in your life
00:57:53.460 | to contribute to a Roth. There's only so much per year. So you want to start that as it's
00:57:57.740 | well worth it with the compounding, compounding nature of that kind of especially tax free.
00:58:04.900 | So if you're able, it's a great thing to match earned income into a Roth. And I kind of keep
00:58:11.740 | track of my kids because I want anything that would give them to kind of be, you don't want
00:58:17.460 | it to be fair and equal. So over the years, I keep track, you know, this child, I put
00:58:21.620 | this much into the Roth or whatever. And then, of course, you make sure once they get a real
00:58:26.500 | job that there's enough. If if they put all their money, not that they could, if they
00:58:33.140 | put all their money into a 401(k), they couldn't, you couldn't contribute to a Roth. There has
00:58:37.060 | to be basically, what is it, six thousand, seven thousand, is it six thousand or seven
00:58:42.300 | thousand dollars on their W-2 that shows up as income for you to be able to contribute
00:58:48.140 | to the Roth. And it's kind of funny, I had to explain to my daughter, it doesn't have
00:58:52.300 | to be the same six. Like she's like, well, that's not my money. Like I can't you know,
00:58:57.580 | it doesn't have to be the same six thousand dollars. It can be a different six thousand
00:59:00.380 | dollars, but it can't be more than that. Now, when they sign up for their job, they're usually
00:59:05.580 | going to have a lot of choices to make as far as choosing if they're lucky enough to
00:59:10.480 | get benefits, choosing health plans, there's going to be all these, you know, high deductible,
00:59:15.580 | low deductible. There's going to be one that has a better prescription plan. It's going
00:59:19.620 | to be complicated. There's going to be one that has an FHA where it costs more, but the
00:59:25.300 | employer puts in five hundred dollars towards their HSA or the FSA. And if they don't have
00:59:34.220 | experience with health insurance, they may not even know what's a deductible, what's
00:59:37.940 | a copay, what's a coinsurance, what is the negotiated discount, what's an EOB. And you're
00:59:45.100 | probably going to have to explain all this. And this is probably one of those things that
00:59:50.180 | they're not going to be able to absorb the information until they need to know. And a
00:59:55.980 | good idea would be once they go to the doctor, show them, you know, you can log on your insurance,
01:00:01.180 | you can print out your EOB. Here's here's the full price of this lab test was I always
01:00:07.820 | get them. They're like three hundred dollars negotiated. But after the negotiated discount,
01:00:12.620 | it's only thirty dollars. And then just kind of explain all that, because that's very confusing
01:00:18.620 | and very confusing. And then they're going to have to decide how much to contribute to
01:00:23.460 | their 401k. They may have options as far as pre-tax Roth. They may not understand what
01:00:30.660 | the company match, how many years it takes to vest. If they're going to quit, you know,
01:00:34.700 | two years and eleven months in a job and it's best in three years. You want to know that
01:00:39.140 | because if you only have to stay an extra month to get investing, you might as well.
01:00:43.380 | So that's a good thing to know. When they get the first paycheck, you know, you're going
01:00:48.860 | to kind of want to go through their paycheck stuff with them and explain or, you know,
01:00:53.380 | better yet, even before they go to, you know, just because you're making fifty thousand
01:00:56.580 | a year, you're not getting fifty thousand a year. They may not understand what FICA
01:01:01.460 | is. They most most of them have an idea on federal income tax, but it all comes out of
01:01:06.740 | the paycheck. They're going to have health insurance. They have to usually pay a little
01:01:11.740 | bit of their health insurance. They're going to have 401k taken out, FICA, tax withholding,
01:01:18.940 | and then explain to them the tax withholding. That's not necessarily you kind of have to
01:01:22.780 | settle up with the government at the end of the year. You may get some back. You may have
01:01:25.460 | to pay more. So let them make their own choices after you explain everything. But as we stated
01:01:33.860 | earlier, kind of. If they're procrastinating, if they're not getting around to it and you
01:01:39.220 | really think, obviously, if they never, ever sign up for 401k, that price would be too
01:01:43.340 | high. You don't know, wait five or 10 years. Oh, did you ever sign up? Oh, no, I never
01:01:47.100 | got around to that kind of you're going to have to nag them if they don't do it, because
01:01:51.020 | that's definitely something that the price would be too high to to skip out on that if
01:01:54.900 | they don't ever get around to doing that. Does anybody have any tips on helping your
01:02:01.060 | child navigate, you know, getting set up for the first job and getting all their benefits
01:02:05.500 | signed up if they're lucky enough to have them? Any tips? Okay. Mary, go ahead. I have
01:02:14.300 | found that with my kids and with their friends, they do not realize that when they retire,
01:02:24.100 | they are not going to retire like my husband and I retire because we have pensions and
01:02:31.020 | also because we diligently saved in addition to the pensions. And nowadays, the employers
01:02:39.420 | do not you know, there are very few pensions out there. And the the goal is by from employers
01:02:46.980 | is to have the employees save for their own retirement to these different plans. And my
01:02:53.100 | kids always had the attitude of, well, don't worry, Mom, I will. I'll have plenty of money
01:02:58.940 | in retirement. Don't worry. I'm going to get a good job. I'll be fine. And they they obviously,
01:03:05.300 | you know, they do not get it. And our I simply would lay out anything I found any graphs
01:03:15.540 | any any spreadsheets that I found that were appropriate for teenagers and for college
01:03:24.940 | kids to show them what compounding does over time, you have to have that money in the account
01:03:32.140 | to compound. And then the more you have in that account to compound, the more you will
01:03:37.780 | make. Don't you want to make money? And don't you want to have that for your retirement?
01:03:44.220 | Because otherwise, you will be and that's when you give them Bill Bernstein's book.
01:03:48.860 | And it says on the first page or the second page, you will be living under a bridge eating
01:03:52.940 | cat food, you have to save a certain portion of your money over the longest period of time.
01:04:00.020 | And then that money works for you. And they will get it when they see this happening.
01:04:07.060 | And they only see it happening if they contribute to a 401k, or to a five or 457 B, or to a
01:04:16.340 | not even an IRA over time. And then you just lay out those statements, you lay out the
01:04:22.340 | graphs if you can print it out on Morningstar on Vanguard or fidelity, and you print it
01:04:26.940 | out and you show them how the contributions even though they may be small, every year
01:04:32.300 | add up. And even now this is a good time I show my kids on there. My especially my youngest
01:04:38.980 | son is a Schwab 401k. It's really, really interesting to show him the graph from when
01:04:45.560 | he started that job to today. If you look at you select that graph and you show him
01:04:52.900 | what it points out the one year your one year earnings, and it shows the graph of his contributions
01:05:00.640 | and his market value of his account is 401k. Well, most of it is in red, it's down below,
01:05:07.300 | he's lost money, he's lost 16% this year, his what is it called his whatever it's called
01:05:15.260 | his what he's earned this year is down 16%. But if you change that graph to the time he
01:05:21.880 | began his job there to today, which has been about three years, three and a half years,
01:05:27.860 | well, it looks very different. The graph looks beautiful. It shows him contributing and the
01:05:32.760 | market value going up, up, up, up, up, up, up, up, up to today goes down a little bit.
01:05:38.720 | So he can see that while it looks like the world is ending today, financially on Wall
01:05:43.740 | Street, in his account, it's not. And it's not because he's contributing regularly, little
01:05:50.620 | by little every month, it's he's contributing every paycheck, actually, he's contributing.
01:05:56.140 | And because it's invested in, well, he's in mostly stocks, so it's mostly going up. Now
01:06:02.700 | I can get into later on, if anybody wants, we did an experiment with bonds, two types
01:06:09.180 | of bonds. So try to teach him a little bit about that. And also, I'm learning from that
01:06:14.420 | too. But most is 80 to 90% stocks. So it goes up, and then his Vanguard account, anyway,
01:06:23.420 | you can make a huge amount of money. These kids can make a lot of money if they are consistent
01:06:29.700 | in contributing as much as they can early on. And Jonathan Clements had a wonderful
01:06:36.680 | article years ago about how if the kids could, if they do that now, they may then not buy
01:06:45.560 | the big TVs, buy a smaller TV, not buy a new phone every year, hold on to it, be more frugal
01:06:53.300 | be more careful in your spending when you're young. It's not as much fun, especially if
01:06:58.140 | you have a group of friends who like to go out and have fun and spend money. But when
01:07:04.460 | you are in your 40s and 50s, and you are really tired of working, especially if you are tired
01:07:10.500 | of working at the same job for 20 years, 25 years, you will not feel so it will not be
01:07:21.100 | such a terrible thing. If you step back and take a sabbatical, maybe change jobs in your
01:07:27.980 | 50s. If you're a techie, you may not have any choice, you may be your company may hire
01:07:35.260 | young techs just out of college, two of them for the price of you. So you may be you may
01:07:40.380 | be unwillingly downsized. At that point, when you're in your 50s, you won't be so you won't
01:07:48.340 | just panic that you haven't saved enough for retirement, you will look at your account
01:07:53.540 | and you will realize over the years, the account worked for you. It made money by compounding
01:07:59.160 | over time. And you can take a little breather, you can take a little break and not panic.
01:08:04.620 | Or you can continue on and cut back just a little. In other words, you have more options,
01:08:09.940 | you have more flexibility, rather than so you have to look ahead. These kids don't want
01:08:16.040 | to look ahead. But around the dinner table, my husband and I can talk about looking ahead
01:08:22.580 | and not suggesting that they do it just pointing out that it could be done. Among friends,
01:08:31.020 | you know, bring bring your kids in with your friends and talk about things, bring them
01:08:35.100 | to the bogo heads conference. There's a young kid in high school who used to come with his
01:08:38.680 | dad to the conferences. So that's what I see with my kids. And what I see with their accounts.
01:08:47.800 | Also, the 401ks are normally pre tax normally. And then the IRA we use are the Roth IRAs,
01:08:57.720 | which are after tax. The good thing about that is that when they get close to retirement,
01:09:02.700 | they will have both a good amount of pre tax a good amount of after tax. And then the net
01:09:10.920 | another good thing is that if they contribute as much as they can to 401k, that is taken
01:09:17.740 | out before taxes on their paycheck. That means if they have a little paycheck like this,
01:09:24.220 | but you have little taxes to your taxes are lower. So you have a more money available
01:09:31.780 | to you to spend right now from your paycheck, because you're not paying it for taxes. So
01:09:37.740 | you know, you can show them this and then, you know, help them with their 401k asset
01:09:42.100 | allocation, mostly stocks, maybe some bonds. And it will work if they stick with it, they
01:09:48.340 | will see don't make them open up that statement and show them how it works. It really does
01:09:52.860 | work.
01:09:53.860 | Thank you, Miriam. Just the only thing I want to add is, it's so hard when you're young
01:10:00.540 | to realize that you are actually gonna be old when they didn't, you know what I'm saying?
01:10:05.260 | Like, it's just, you know, that theoretically, when you're 20, you're going to be 70 when
01:10:10.100 | it but it's hard to you know what I mean? You know, it's just a hard concept to it seems
01:10:15.660 | so far away. So thank you so much for all that. All those tips, Miriam. Okay, so I guess
01:10:26.100 | the goal would be to eventually they would move out. If they do continue to live at home,
01:10:33.020 | you do want to set clear expectations as to a timeframe, who pays for what and does what
01:10:38.900 | towards and this is not necessary, you know, this could be a great thing, because it could
01:10:41.620 | allow them to save up a lot more money the first couple of years after college or after
01:10:47.060 | high school, by living at home. But just make sure that you have a timeframe that agreed
01:10:52.580 | upon by everybody. Well, I guess it doesn't even have to be agreed upon by a child. It's
01:10:56.260 | up to the, it's your house. So it's up to you to set the timeframe. And then also who
01:11:01.300 | pays for what does what chores, you know, if you want them to do a little bit of work
01:11:05.980 | around there, you know, whether or not most people don't make them break out everything
01:11:10.580 | you buy the grocery store, this is for you know, you drank a cup of milk, you know, you're
01:11:13.700 | probably not going to do that. But if they buy anything major, maybe, you know, at the
01:11:18.740 | store, you can want to reimburse have them reimburse that that kind of thing. Usually
01:11:24.620 | these days, a lot of kids you're going to be they're going to be on the car insurance,
01:11:27.940 | the cell phone plan, we have like the toll tag plan that my kids are actually still on
01:11:33.900 | our toll tag. You just kind of set forth rules about when they're going to kind of ideally
01:11:40.860 | they want to separate from all these plans. Well, like I think was keep that was saying,
01:11:45.220 | a lot of times it just makes sense to keep them on the country is gonna be cheaper overall.
01:11:49.860 | I think I have a thing later. But like with the cell phone, we got, you know, for grandfathered
01:11:53.700 | into a great plan. And that's a family plan. And it would cost them so much more to get
01:11:57.500 | their own just to get their own, you know, wine, just you know, and it's only $25 a month.
01:12:02.380 | It's just it's no big deal either way. So you can keep them on. It's no big deal. Some
01:12:07.620 | you're gonna have to explain to them if they don't have health insurance with their job.
01:12:12.380 | Why they need even Oh, I'm healthy. I don't need health insurance, they get explained
01:12:16.420 | why they need it. You know, even if they're healthy, they have a major accident or they
01:12:20.860 | could have a heart attack, it's gonna it's gonna bankrupt them and wipe out everything
01:12:24.320 | they have. So just explain to them, encourage them to get a plan through the ACA. They don't
01:12:29.940 | have one through work, even if it's of course, the highest deductible they can get. When
01:12:35.460 | they're moving out, they may need a little bit of they may not realize what all expenses
01:12:41.620 | are going to be involved. They may not realize they have to pay, you know, gas, water, sewer,
01:12:49.340 | garbage, electricity, you know, internet, they may just take it for granted that, you
01:12:55.100 | know, they been taking that for granted while living with you. If they're not already know
01:13:00.700 | how to use a spreadsheet, this is a great time to Oh, here's a little spreadsheet. Here's
01:13:04.620 | how I do my monthly budget. And then you can show them make maybe make a simple spreadsheet
01:13:08.740 | and show them how to do that. And they may not think ahead. But, you know, in addition
01:13:13.860 | to just your monthly expenses, you're going to want to kind of set aside month money for
01:13:18.640 | long term things like new cars, vacations, gifts, things like that. That's all part of
01:13:22.420 | your budget, even though you may not necessarily spend that every month. And now I don't use
01:13:27.660 | any of this. But I know there's a lot of budget software out there like YNAB, which is you
01:13:32.020 | need a budget. I've also heard of Monarch, Money Danceman, Every Dollar Spreadsheet.
01:13:37.220 | So if anybody has any experience with any of these, please raise your hand after the
01:13:41.240 | slide. And then make sure they have a method of remembering to pay the bills because of
01:13:46.900 | course, one of the worst things you can do for your credit score is to, you know, forget
01:13:51.540 | to pay your credit card bill on time. If they do buy a house, explain and make sure they
01:13:58.180 | understand all the there's so many expenses with buying and maintaining a house, you got
01:14:02.340 | mortgage, property tax, insurance, maintenance, HOA fees, utility, lawn care, there's just
01:14:06.940 | so much and then as far as closing for the house, there's going to be closing costs,
01:14:12.860 | PMI, escrow for mortgage, mortgage payments, insurance and property tax. And then also
01:14:19.860 | like with the other budget expenses, they should be setting aside money, you know, in
01:14:23.420 | 20 years, you're going to need a new air conditioner, a new roof, a new fence, new washer, dryer,
01:14:28.580 | there's just so much to save up for when you have a house. And then, you know, but I mean,
01:14:35.620 | a little bit of reminders, you might have some a lot of maintenance, you got to do,
01:14:39.900 | you know, we have our air conditioner service twice a year, you got to change your filters,
01:14:43.740 | that kind of thing, smoke detector batteries. If you're in a position to help with the down
01:14:48.340 | payment, that would be a good, a good thing to help them out with that just to give them
01:14:53.100 | a little boost. And we're going to talk about that later, you know, these little boosts
01:14:56.380 | we can give our children with without, you know, spoiling them or giving them subsidizing
01:15:02.500 | them too much. We're going to kind of talk about that later. Does anybody have any tips
01:15:07.100 | on helping your child when it comes time to move out? Oh, yeah, Miriam, you have information
01:15:13.660 | on that, don't you?
01:15:15.700 | Yes, yes. One thing is, we have to remember is that our children, most of our children,
01:15:22.780 | they grow up in a different environment, a different time than we did. When my husband
01:15:30.200 | and I got, you know, got married, and we were out of college, we lived, you know, our apartments
01:15:36.780 | were furnished with wood from Home Depot and bricks, you know, those were our shelves.
01:15:41.260 | Sometimes it was the pantry in the kitchen, too. And, you know, we would have to save
01:15:46.100 | up just to buy little things. And I remember we would make our coffee with instant coffee,
01:15:51.020 | boiling water on the stove, you know, making instant coffee until my mom said, you know,
01:15:54.580 | really, you guys really have to have a coffee maker. And she bought us a little Mr. Coffee.
01:16:00.420 | So our kids, when they move out, I've noticed, they want the TV, first of all, they want
01:16:07.100 | a big TV, not a little one, a big TV. Obviously, they have their computers and their cell phones.
01:16:13.100 | They want the kitchen already, you know, they want everything in the kitchen already, including
01:16:17.700 | a blender and this, they want the whole apartment set up as our nice suburban family home. But
01:16:28.660 | our nice suburban family home is the result of 40 years, 50 years of working and saving
01:16:35.220 | and cluttering up the house. And so there is a tendency for the kids to say, well, I'll
01:16:42.340 | just put it on the credit card, and then I'll pay it off. So then starts the cycle of credit,
01:16:49.500 | the cycle of not saving for something, the cycle of buying it now, and then putting it
01:16:56.140 | on credit. So that is very difficult for some kids. And I mentioned that my kids all they're
01:17:03.900 | all different. And some get it right away. And they would not put they're just really
01:17:10.420 | careful about their credit cards. And others, the other other ones are more, I'll just put
01:17:15.460 | it on the credit card, I can pay it off, I have a good job. But meanwhile, the 401k suffers.
01:17:23.900 | You know, they're not putting their money as we would prefer. They're not balancing
01:17:28.980 | out as we would prefer. They're not their priorities are different. My family, my parents
01:17:34.220 | and most of our parents grew up in the depression. And my mother told me that she, her mother
01:17:40.740 | would have to stuff her shoes with cardboard, because there was no money to put new soles
01:17:46.140 | on the shoes, let alone buy new shoes. Now you just put it on the credit card, go buy
01:17:51.980 | a new pair of shoes. So it is people have told me in on the bogleheads form, there are
01:18:00.300 | so many threads of how, how it is to let your children know that to realize that you're
01:18:08.620 | our children grow up in a different environment, and that they are just used to having all
01:18:13.340 | this good stuff, as if they are entitled to it. I don't know, I know, we try hard not
01:18:20.860 | to, to let them see that that's not the way it is. But it is hard, because that is the
01:18:25.540 | way they all grow up. That's the way their friends are. In terms of another way of that,
01:18:33.420 | what I would do with my kids, I realized in high school, they didn't have a clue how much
01:18:37.180 | a roof cost. They didn't have a clue how much a car really cost. I started putting our bills
01:18:45.560 | on the kitchen counter. If we had to have the roof cleaned, the bill went on the kitchen
01:18:49.660 | counter. And they would look and they would say $600 to clean the roof. Are you kidding?
01:18:54.140 | I can have my friends, we can walk down, we can just, well, it doesn't work like that.
01:18:58.500 | And $6,000 for a new roof catches their eye, after a while, when they're especially when
01:19:05.440 | they're in college. So I would put the bills on the kitchen counter, so they would realize
01:19:11.200 | how much it really costs to have a house. Also on moving out. Well, one thing I wanted
01:19:22.620 | to mention about going back to college. I learned that my kids, sad to say, but my son,
01:19:32.220 | he, he was, he, when he went to college, we paid for the dormitories, we paid for the
01:19:38.460 | fraternities, we paid for the sororities, we paid for wherever they lived. But when
01:19:43.460 | he graduated college, when he and his graduation, when they were done, he said, he sent me an
01:19:49.260 | email said, this stupid landlord is not returning our deposits, our security deposits. Now he
01:19:54.480 | lived in this big house with all these, you know, guys and, and sorority girls and whatever.
01:20:00.460 | And it was this huge house, the landlord had put together is to so that's the stupid landlord
01:20:05.640 | is not returning our security deposits. So I said, Well, why? He said, Well, I don't
01:20:10.940 | know why he said he says this, he says that. So I said, give me that. So I took the landlord's
01:20:15.880 | phone number, and I called and I asked the landlord, who was this nice guy. And I said,
01:20:20.700 | why, you know, why are the kids not getting their security deposits back? He said, Well,
01:20:25.900 | the bathrooms are full of mold there. It is mold from top to bottom, side to side. It
01:20:31.340 | has never been clean. My son said, Well, mom, it was mold when we moved in. And you know,
01:20:37.140 | we were studying, we didn't have time to clean. Then the landlord said to me, there was a
01:20:42.540 | burned out microwave in the kitchen, and it was attached somehow it was attached to the
01:20:46.580 | floor, I had to have workman in to take out the microwave. And my son said, Whitney, she
01:20:51.940 | burned the popcorn in the microwave. I don't know how it got on the floor. And then the
01:20:56.380 | landlord said there was all this mattresses, a mattress and a box spring and all this stuff
01:21:01.460 | in the backyard. And I had to hire a drunk remover to come remove that and to clean out
01:21:07.900 | the backyard. And my son's response was, Oh, that was Anthony, he got into the Naval Academy
01:21:13.860 | and he didn't know where to put his stuff. And I had images of Anthony, you know, piloting
01:21:19.180 | a Navy ship in the ocean, but he didn't know where to put his stuff. And I told my son,
01:21:25.180 | my son says, I'm going to sue him. And so I said, Okay, well, you know, but really,
01:21:31.740 | you should have taken the reins and brought that house together and said, to get our security
01:21:38.020 | deposits back, we have to do this, this and this. I mean, that's what you have, you should
01:21:42.220 | have done to get your security deposit back. Now mind you, it was my security deposit.
01:21:48.740 | I pay my husband, I first must rent last month and security deposit. From that point on,
01:21:55.380 | the security deposit was on the kids, no matter where they go. Even now, they're renting apartments,
01:22:01.460 | they're renting condos, they pay the security deposit. Well, now they're all paying their
01:22:05.320 | rent too. But in the beginning, you know, that's one thing you can know, they paid it,
01:22:12.900 | they don't have the like you say, the money in the game, if they don't, if they're not
01:22:17.140 | responsible for the money, even the best kids that you think are responsible, they don't
01:22:25.700 | get it. Interesting story, Miriam. Thank you so much for sharing that. Okay. Okay, investing
01:22:38.260 | basics. So this would be things like where to keep a taxable savings, or for that matter,
01:22:47.500 | IRAs, low cost brokerage. I know there's today there's a lot of different things like robo
01:22:52.060 | advisors, and I'm not really even familiar with those. Someone had mentioned a Fidelity
01:22:56.340 | youth account, which has parental oversight, and which can transition into a Fidelity brokerage
01:23:01.020 | account when the child turns 18. So if anybody has any experiences with any of those, we'll
01:23:06.620 | be happy to hear that. And then I did list the you want to teach your child these, of
01:23:12.220 | course, you want them to teach them the Bobo Heads philosophy. Live beneath your means
01:23:17.980 | develop a workable plan, never bear too much or too little risk. You know, that would be
01:23:22.300 | your asset allocation, invest early and often, like you were saying, Miriam early to get
01:23:26.540 | that compounding, diversify, invest with simplicity doesn't have to be complicated. Use the next
01:23:32.060 | funds to keep your costs down and to also track the index, minimize costs and taxes.
01:23:38.300 | Never try to time the market and stay the course, which is important for right now.
01:23:41.740 | In fact, I was calculating, we're almost I think we're down about 18% from the Heimdingen.
01:23:47.260 | I just really wish we could just do the 20%. So it'd be a bear market, get over with and
01:23:51.420 | then we can maybe because we all know that it's it's I mean, a bear market is past due.
01:23:57.500 | So just let's just get it over with. And then we can maybe start looking forward ahead.
01:24:02.260 | But you need to just stay the course through all that. OK, we were talking about this earlier.
01:24:09.660 | But for many topics, especially like investing things like difference in the stock and bond,
01:24:14.900 | what's the difference? I was trying to explain to my daughter the other day the difference
01:24:16.980 | between a mutual fund and ETF. And, you know, she kind of understood. But this is one of
01:24:21.620 | those things you have to explain multiple times before it really sinks in. Or sometimes
01:24:27.100 | they just won't understand until they see it actually applied to them. And they can
01:24:32.740 | only absorb some natural state. Mom, that's enough for today. My brain is hurting like
01:24:36.620 | you can only explain so much at a single sitting and then you have to let it sink in and you
01:24:42.180 | can do it again and then add on and on another day. They just can only absorb so much. And
01:24:48.940 | like like Miriam, you were saying, show them charts with compounded savings when they start
01:24:53.620 | young, that money that they put in when they're young is even, you know, when they're older,
01:24:57.540 | just gross compounds so much. I'm going to go ahead and there was a couple of questions
01:25:03.780 | from the RCPs. OK, so this someone asked, how are you hiring your kids and paying them
01:25:10.660 | so they can officially invest in their IRA? What is the youngest age they can do this?
01:25:14.300 | And has anyone done this? So what I looked up today was and someone did answer this in
01:25:20.860 | a chat, but I'm going to repeat it. Your child, regardless of age, can contribute to an IRA
01:25:25.220 | provided they have earned income. But minor children cannot establish IRAs on their own.
01:25:31.420 | The parent has to be set up an account with the child. It is the child's money and account.
01:25:36.820 | But since they're underage, the parent needs to sign the paperwork as long as they have
01:25:41.380 | earned income, they can contribute to an IRA. But for jobs that don't have a 1099 or a W-2,
01:25:47.340 | it is important to keep records of the type of work, when and where it was performed and
01:25:51.740 | who paid the work and what amounts. And this type of job that doesn't have a 1099 or W-2
01:25:58.500 | is often the first child. Child's first job examples can include doing yard chores for
01:26:02.900 | neighbors watching kids or a family friend or helping local organization with some temporary
01:26:07.060 | work. If you're going to want to use these earnings up as a basis to make a contribution
01:26:11.420 | to an IRA, you're going to need proof that this is really earned income. And then also
01:26:16.420 | you got to watch out for the tax implications. If a child or teen has earned income more
01:26:20.460 | than $400 in income, they must report the income on a Schedule C when filing taxes.
01:26:28.180 | If the child doesn't get a W-2 for babysitting, which they're probably not going to, it's
01:26:32.580 | up to the child or the parent to keep good records or logs. In other words, if you don't
01:26:36.660 | have a 1099 or W-2, keep as best records as you can of either the transactions or just
01:26:42.460 | hand write a log. And then just keep in mind that you may have to file, there may be some
01:26:47.780 | tax implications for the child. One of the other questions is what is the positives and
01:26:56.820 | negatives of a custodial brokerage account? Are there any good books on the topic of teaching
01:27:01.460 | kids about money and investing? I do have a list of books at the end, but it was more,
01:27:08.700 | it wasn't specifically too much about investing, but more about just teaching your kids like
01:27:12.420 | we've been talking about the basics of, you know, managing money and that kind of thing.
01:27:16.060 | So those will be listed at the end. And somebody asked, other than 529s, the kids, UTMA brokerage
01:27:24.620 | accounts and custodial Roth IRAs, is there anything else my kids can be doing? The kids
01:27:28.940 | are 5th and 8th graders. I would think if they have a 529 at that age and an UTMA and
01:27:34.660 | a custodial Roth, I think they're doing great for a 5th to 8th graders. So I'm not sure
01:27:39.540 | what else, you know, you could be doing at that age. That sounds great already. Does
01:27:44.820 | anybody have any tips on just teaching them investing basics, helping them get set up
01:27:51.260 | with a, I think Miriam, you already talked about the, they had at a young age, they had
01:27:56.900 | a brokerage account that they started with. And, you know, sometimes they have a lesson
01:28:04.100 | that's kind of hard to learn if it goes down right away. That's, that's kind of a hard
01:28:07.860 | lesson to learn, but it's a good lesson. Yeah. They also, many of them want to, now they
01:28:15.980 | want to go into Robin hood. They want to buy stocks, like they want to buy Elon Musk. What
01:28:24.060 | is it? Tesla. They want to buy Amazon. They want to buy Bitcoin. You know, many of them,
01:28:30.100 | they talk about it. My kids have not really paid much attention to that. So I think that
01:28:36.220 | maybe after years of listening to me, hammer it into them, that mutual funds are safe.
01:28:45.500 | They're safe. You don't have to research your stocks. You don't have to worry about stocks
01:28:49.580 | at night. You don't have to worry about having that awful feeling that you made a terrible
01:28:55.220 | decision and bought a company that is going to go under that mutual funds are safe. Maybe
01:29:03.660 | it did sink in. On the other hand, they will often come back and say, well, no, it's not
01:29:10.100 | going to go under, you know, Tesla will never go under. Microsoft will never go under. And
01:29:15.300 | then you can say, well, what about Eastman Kodak? And of course, what's that? Who's that?
01:29:21.620 | It's, you know, it takes a while. They'd only listen so much to their parents. They have
01:29:28.300 | to listen to other people. That's where the Vogelheads forum comes on that, you know,
01:29:33.460 | to try to introduce them to forums like that, you know, afraid to let the Vogelheads go
01:29:37.540 | to some other forum, financial forum and try to, you know, read that. Bill Bernstein's
01:29:44.900 | book, If You Can, is really, really wonderful for children, for kids, not children, I'm
01:29:51.740 | sorry. It's for high school, college, and it's called If You Can. It's a little tiny
01:29:58.140 | book like this. You can get it on Amazon with a little nest egg on front. It's really cute.
01:30:03.380 | I bought like a lot of them, and I would give them away at work as presents to the young
01:30:10.420 | people who would come into work. And I would, you know, I was like an old preacher walking
01:30:16.300 | around with my book. But it was helpful to the young people just starting out. For my
01:30:23.220 | kids, we went to a Vogelheads conference, I had Bill Bernstein, Dr. Bernstein, sign
01:30:27.380 | the books, autograph the books. So each of my kids has an autograph book from Bill Bernstein.
01:30:32.380 | So I looked at what he wrote, and he wrote, kids, read this book, there will be a pop
01:30:38.280 | quiz. And then he wrote his name. But it's a great book. And it lays it out pretty clearly
01:30:44.660 | that if they don't get their act together, and invest at least something regularly get
01:30:52.020 | into that habit, they are going to be in deep trouble as they get older, because they will
01:30:58.100 | have missed out on time, and they will have missed out on compounding. There are other
01:31:06.360 | writers, another writer who's coming to the Vogelheads conference is Michelle Singletary.
01:31:11.820 | She writes for the Washington Post, and she has a book out. I haven't read her book. But
01:31:15.980 | she is great. She just lays it out for kids. And for young people investing. There is a
01:31:28.140 | there are other Oh, I am going to say Bill Bernstein's book is free. Also, on his website,
01:31:35.020 | you can download it. It's a PDF in his website, I have there's a link to that at the patient
01:31:39.740 | frontier, I think. Yeah, right. So, um, you know, that's, that's what I do. And for presents,
01:31:48.300 | I give them books. I give them Jane Bryant Quinn, who has a wonderful book called making
01:31:56.140 | them not making, making your I don't remember the name of making the most of your money
01:32:02.420 | was the first one. And I Jane Bryant, Quint, Quint, Jane Bryant, Quinn, Quinn, q u i n
01:32:11.460 | n. And it's a thick books like this thick. It's like, yeah, it's like a it's not something
01:32:16.840 | you read from cover to cover. If you want to know about life insurance, you read that
01:32:20.900 | book on the sections on life insurance. She's very much a Vogelhead. And I've read about
01:32:25.820 | her, she's invested basically in Vanguard. And she she also like if you want to know
01:32:33.300 | about the difference between 401ks, whether to do a Roth 401k or a regular, you can just
01:32:39.420 | go to her chapter there and she will lay it out in very easy terms for people. I tried
01:32:45.380 | to get her to come on to speak. And I was unable to contact her directly because I believe
01:32:51.380 | she has retired now. But her books on the Vogelheads forum, they talk about her books
01:32:55.980 | as being very, very helpful compendium of all things investing that are easy to read
01:33:03.180 | as the kids start out and move into their own lives.
01:33:06.580 | Great, thank you so much, Miriam. Let's see what we got. Okay, a few things about taxes.
01:33:15.820 | If your child does have a brokerage account, make sure you're aware of the kitty tax and
01:33:19.820 | they're probably not going to be earning enough for that to kick in. But just kind of read
01:33:23.740 | up on that real quick. And I did, there's a link to a good article on kitty tax at the
01:33:27.660 | bottom of this, you know, when it applies. So when your child gets even their first job
01:33:35.060 | at McDonald's or whatever, they're going to kind of need to know just the basics of taxes,
01:33:40.900 | but the gross incomes, you know, taxable income, standard deduction, tax brackets, what's the
01:33:46.620 | capital gain? And then how does the 401k health insurance premiums, etc, affect their W-2
01:33:53.220 | and their taxes? Explain, you know, there's a, you can file on paper, you can file online,
01:33:59.260 | make sure they know the deadline, April 15, you know, that they can do an extension if
01:34:05.580 | they need to. And then when it comes time to do taxes, if you live nearby, what I do
01:34:09.460 | is I let, you know, I have triple tax, and then I let my daughter come over and do her
01:34:13.100 | taxes. And I kind of sit next to her, but I kind of make her sit in a seat and like,
01:34:17.540 | you know, actually do the typing and enter the data, but I'm sitting next to her and
01:34:21.420 | kind of helping her out. So that seems to work pretty well. Does anybody have any tips
01:34:31.180 | on kids and taxes? Yeah. Okay. I do the same thing. I make them sit next to me to do their
01:34:40.980 | taxes. And my older son got it. And he actually, he still does it. My daughter, well, I still
01:34:53.940 | do her taxes. And sometimes she comes over and helps me. My younger son, I do his taxes
01:34:59.940 | with him. And he's got it, because he's a he's a techie. And so the actually he uses
01:35:05.780 | TurboTax. Now I never used TurboTax until recently, because I'm older, and I'm used
01:35:11.340 | to doing it pencil and paper and calculator. But it's a very what is useful about doing
01:35:19.160 | your own taxes is that you then understand how the tax system works. You can figure it
01:35:24.500 | out after all after a while you just get it. Oh, there's income and there's different kinds
01:35:29.020 | of income. Oh, and then there's the standard deduction. Oh, it comes off. And then there
01:35:35.260 | is the you subtract what I paid in, and then the rest is mine. Oh, okay. I get it income.
01:35:44.460 | Eventually they get the income part of it. And they realize that what is in my 401k is
01:35:51.940 | not there in the income. Well, where is that? Where do I pay the taxes on that? When you're
01:35:57.540 | retired, and you're in a lower tax bracket, so you will pay lower taxes on it. Eventually,
01:36:03.320 | that kind of sinks in, especially if they can see it. I don't know if they're visually
01:36:08.420 | visual, especially they can see it on a 1040 form. They can see it working.
01:36:13.540 | Right, right. Like, yeah, that's one of those things. It just takes a while to sink in.
01:36:19.820 | Look at the chat and see. Okay, Carol, there was one thing they asked about the books,
01:36:26.880 | and I have it here. This is the one book. I don't know if people can see it.
01:36:31.140 | I have that book on my shelf, yeah. Yeah. Making the Most of Your Money Now.
01:36:35.060 | Like you said, that is a thick book. Oh, yeah. By Jane Bryant Quinn. And it's like a compendium
01:36:45.140 | of everything. And then everything financial for families and for young people starting
01:36:52.340 | out. And then this is Bill Bernstein's book, Dr. Bernstein's book. I don't know if people
01:36:58.740 | can see it. If you can. And this is a very, very thin book, as you can see, but it is
01:37:06.260 | packed, packed with, it's packed. It's absolutely packed with information, very succinctly.
01:37:17.980 | Kids, you got to get your act together, or you are going to be in big trouble when you
01:37:24.300 | get into retirement. Here's his signature, you know, he autographed it. So those are
01:37:35.820 | the books that I would recommend. Oh, there's another interesting book called The Richest
01:37:41.060 | Man in Babylon. I don't know if anybody's ever read that. I've heard about it for years,
01:37:48.620 | and I didn't read it until a couple of years ago. I loved it. I loved it. And I gave it
01:37:54.460 | to one of my, I gave it to my kids and someone was like, Oh, come on, this is ridiculous.
01:37:58.700 | And my one of my sons loved it. So if you're a kid, if your child likes it, it is lessons
01:38:06.780 | to financial lessons, set in ancient Babylon sounds, it sounds ridiculous, but it's not
01:38:14.300 | it works. You can see yourself in that you can in the stories that are presented there,
01:38:21.380 | you can see yourself today. And it was written, I think, in the 1930s, or the 1920s by a banker
01:38:29.780 | who saw that his customers didn't understand finance. And he would write out these little
01:38:34.500 | pamphlets and he put them on the in his bank, you put them there for people to pick up and
01:38:41.660 | read. It's a neat book. And also, of course, the Millionaire Next Door. Many people read
01:38:48.060 | that book, and they like that. Right? That's a great one. Okay, thanks, Miriam. Now I think
01:38:54.060 | this is our last slide. Other than there's resources, but yeah, okay. So we do have a
01:39:01.500 | slide on continuing helper gifts. And what I mean by that is, as everyone gets older,
01:39:10.260 | so there's two, there's two different sides to this. We'll do the positive side first.
01:39:15.100 | So once your kids get settled in, they have a job, you know, they're responsible, you
01:39:18.140 | know, they're not spoiled, you know, they're good with money. Then, you know, if you're
01:39:24.340 | able and you want to, you can start maybe you might want to think about giving some
01:39:28.180 | special gifts to them. And this is, I like this book from Launching Financial Growness
01:39:35.460 | by Bobbi Rebell. What she said was, my mom and dad were able to balance making sure I
01:39:40.140 | knew that they would be there in a true financial emergency with making sure I never wanted
01:39:44.980 | to be in a position to need their emergency support. So you want to be there for your
01:39:49.660 | kids if they really, really need you, but you don't want them to need you. Right? And
01:39:55.020 | what, what I've been reading is the experts say in general, don't subsidize a higher lifestyle
01:39:59.540 | for your child on a regular basis. Don't just say, I'm going to give you $1,000 a month
01:40:02.860 | for your, you know, help you with your rent or whatever you want them to be able to support
01:40:07.540 | their own basic needs. But what I like this term that Bobbi Rebell in her Launching Financial
01:40:13.340 | Growness book, she coined, I don't know if she coined this term, but she used the term
01:40:17.180 | strategic financial boost. And what this is, is a one time limited financial boost to basically
01:40:22.460 | get your child, get them started, get them to the next level. For example, you know,
01:40:27.460 | they, they have this great job or they could get this great job in New York city, but you
01:40:30.700 | know, they, they need a little bit of help to move, to get the first apartment or whatever,
01:40:36.700 | or they just got out of college. They have no money saved. They may need a little bit
01:40:39.780 | help, just a little bit help for a couple of months until they get the first couple
01:40:42.780 | of paychecks. They may want to take a training, you know, training course, help with house
01:40:46.740 | down payment, pay for them to stay on the family health plan until they get a job with
01:40:52.340 | health insurance or until they turn 26. But all these things are just, they're temporary.
01:40:56.300 | They have a limited time period there, or they're just one time things. And you want
01:41:00.580 | to kind of keep these items separate or specific for specific purposes. Like I said, the experts
01:41:06.860 | that I read say you don't want to supplement them on a regular basis to increase their,
01:41:12.060 | to a lifestyle that they can't afford on based on what they're earning. Cause you want the
01:41:15.780 | child to have pride and be able to provide in their own basic needs. There's page two
01:41:20.700 | to this slide. So, oops, there we go. And as I mentioned earlier, it's, to me, it's
01:41:27.380 | okay to continue to pay some small bills. That makes sense. If you have a grandfathered
01:41:30.820 | in their family cell phone plan, you know, that's no big deal. Here's a couple of ideas.
01:41:36.420 | If you do want to financially help your adult children later in life, you know, once you
01:41:39.940 | determine that they're financially responsible and if you're able, and if you want to, one
01:41:44.900 | idea is to pay for family vacations for the whole extended family, fund grandchildren's
01:41:49.020 | 529. And don't forget about possibly having to file IRS form 709, if your gifts succeed,
01:41:55.460 | the annual exclusion amount, which is $16,000. And one thing they mentioned on that is it
01:42:01.540 | is, it is capable, like one spouse can give 16, the other spouse can give 16 and you can
01:42:06.260 | give to the, your child spouse too, if you want to, to kind of multiply those gifts.
01:42:12.420 | One other idea that's been mentioned that not, of course, not everybody's going to be
01:42:16.940 | able to do this or want to do this, but to consider is if you're, you're set for your
01:42:22.820 | own retirement and you're, you know, your children could use a boost, you might, one
01:42:27.140 | thing you could do is disclaim and you're getting an inheritance from your parents,
01:42:31.140 | which is not always the case. You could consider disclaiming your own inheritance and letting
01:42:35.420 | it go to your children. If you do plan to do this, you want to make sure your parents'
01:42:39.460 | wills and IRAs and everything is set up to where it would go to your children as contingent
01:42:44.820 | beneficiaries if you disclaim them. Hopefully by this time, your children will be older
01:42:49.380 | and able to handle receiving the inheritance. And like I said, you may be already retired.
01:42:53.540 | You're already set. You don't need the extra money. Whereas your child may be just in the
01:42:58.700 | phase of life where they could definitely use that extra boost. Not that they need it,
01:43:02.340 | but they could use it to maybe get a little bit bigger house, maybe some remodeling, pay
01:43:06.100 | for their child's college. Maybe, maybe both parents don't have to work so hard and maybe
01:43:10.500 | have young kids at home. One of them could stay home, that kind of thing. So just something
01:43:13.700 | to consider and also watch out for, there's something called the generation skipping tax
01:43:18.620 | might come into play if you do the, do this strategy. Okay. There was, there was one question
01:43:26.100 | on the RSVP about this and it's, what are options for leaving inheritance now that the
01:43:31.660 | stretch IRA has been eliminated? And if you're not aware of what the stretch IRA was, it's
01:43:39.300 | if you left your, for example, your, your child in IRA, they used to be able to stretch
01:43:45.060 | it out. And I don't know the exact rules, but they basically over their own life expectancy
01:43:50.420 | and a few years back, they changed it where they have to take it out over 10 years. And
01:43:56.460 | this could be a big problem. If you leave a large taxable IRA to a, anybody or a child
01:44:03.620 | or anybody else, and they're working, they're already in a pretty high tax bracket. And
01:44:08.620 | they say you have a million, you know, $2 million IRA, they're going to have to take
01:44:13.500 | out. Now they could wait until the end of the 10 years. And well, there's other rules
01:44:17.740 | about RMDs, but I'm not going to get into that, but say they, they spread it out $200,000
01:44:22.980 | a year, $100,000 a year, that's going to put them in a real, could potentially put them
01:44:27.380 | in a much higher tax bracket. The only suggestion I have for that is to pop, you know, convert
01:44:34.540 | as much as you can to a Roth, because if it's in a Roth, then they still have to take out
01:44:40.100 | the money, but they don't have to pay tax on it. So I don't know if anybody else has
01:44:43.100 | any other ideas on what to do about the, they call it the death of the stretch IRA. Does
01:44:47.820 | anybody have any tips on that? I know Jim, I listen to a podcast, his name is Jim Lang.
01:44:55.420 | He has a lot of podcasts and articles on, they were actually anticipating the death
01:45:01.300 | of the stretch IRA for about five years before it happened. So they, they have a lot of podcasts
01:45:06.460 | and articles and things on that. So that's about all. Okay. And then we have like I said,
01:45:17.660 | we have a whole page of resources. There's a lot of there's a few, sorry, vocal heads
01:45:23.380 | discussion that I kind of bookmarked. There's articles from Clark Howard about credit cards,
01:45:33.020 | credit cards for kids, that kind of thing. What else do we have? Some articles I found
01:45:40.300 | seven ways to raise money savvy kids. There's JL Collins website on there. Oh, the last
01:45:49.260 | link is all about the kitty tax and when it applies, then there's books and most of which
01:45:56.340 | I have kind of skimmed through to prepare for this. Some of which I got from the library,
01:45:59.860 | some of which I actually purchased this, that's launching financial grownups by Bobby Rabel
01:46:05.260 | and it is really good, really good book. And then the last page is podcasts that are interest
01:46:13.260 | of interest about having to do with this discussion about teaching finance to children.