Welcome to the Bogleheads Chapter Series. This episode was hosted by the Pre and Early Retirement Life Stage Chapter and recorded May 18th, 2022. The presentation and discussion topic was "Setting Your Children Up for Financial Success." Bogleheads are investors who follow John Bogle's philosophy for attaining financial independence. This recording is for informational purposes only and should not be construed as personalized investment advice.

Okay, I think we're ready, so I'm going to end the poll and I'm going to share results. So we have a pretty good distribution. We don't have very many 19 to 22-year-olds, but other than that, we have between two and five of each of the age groups, so we have a really good representation of all different ages of children or no children, so that's great.

Okay, can y'all see those results? Okay, let's go ahead and go on. Okay, so the first slide is, of course, we're going to just go in chronological order. There we go. Okay, so the topic of allowances, you've probably all been to the store where at the checkout you hear a poor parent kind of, you know, with a child that's either whining or crying.

They want the parent to buy something, oh, and the poor parent says, no, I'm sorry, we can't buy that today. So what's a good way to eliminate that problem, because right now you're putting the choice on the parent, but if you give the child an allowance, then in this kind of scenario, the parent can say, sure, you can buy that.

If you have enough money saved up, go right ahead, you know, so it's putting the choice on the child to save up, they really want this item, so that kind of eliminates a lot of hopefully stress when you go to the store, but before you do that, you have to explain to the child, you know, in most cases, the parent's going to pay for the need, which includes, you know, basic clothing, of course, foods, you know, school supplies, that kind of thing.

What they want, of course, would be toys, you know, as they get older, in the old days, it would have been a record, now it's, I guess, Apple Music, however they get the songs nowadays, or even like fancier clothes, like a name brand, an expensive sneaker, whereas you might say, okay, I'll pay, I'll pay $40 for your basic, you know, decent sneaker, but if you want to pay 75, you're going to have to pay the difference.

So basically, it's a good thing to just lay out ahead of time, these are, these are your needs versus wants, we're going to cover your needs, you're going to save up for your wants with your allowance, your birthday money, or extra money that you earn. So there's kind of a debate whether or not to tie allowance to chores.

And a lot of parents say, you know, do you want to tie it to the chores? Some don't. And I did read several books and listen to some podcasts to prepare for this. And what most people, the kind of experts are saying, you know, a good method is a hybrid method where the allowance is not tied to basic chores, you have to do your basic chores, keep your room clean, whatever else is assigned, take the garbage out, and so those are expected to be done, you know, that's not tied to the allowance, so you're going to get your allowance either way.

But the allowance is kind of a basic amount where you know, we get a few things, but it's not overly generous. And then you can allow your child to earn extra money by doing kind of extra seasonal chores above and beyond the normal chores, raking leaves, you know, that kind of thing.

So that's what a lot of people recommend is like a hybrid method. But basically, you know, you can choose however you want to do it. And then there's the debate over whether you should pay the allowance in cash, or some kind of electronic ledger. I remember when my children were little, we started out with cash, but then we had a problem where if I would go to the store and buy him a toy, then they reimburse me for me, we got we got home.

But then later on, we were like, we can't remember if they got reimbursed. And my child was like, Oh, I know I had $30. Where did it go? And I'm like, I don't know. So it. So then we switched to more of it at the time was just a paper ledger where we keep a running balance.

And then every time they bought something, I would subtract or every week when they got allowance, I would add so they could go back and see if they couldn't remember, you know, because sometimes you can't remember what all you spent on. But nowadays, of course, you can do a spreadsheet, but that might be kind of cumbersome to open the spreadsheet every time you do a vote.

So there's kind of pros and cons of each method. One thing you want to do is encourage your child to plan purchases ahead of time, you know, don't buy an impulse and encourage them to eventually, the goal is to learn to save up for something bigger to delay gratification and save up.

And some parents help by doing like a little thermometer chart where they show the progress towards the goal if they want to, you know, buy something that's $100 that's going to take them a while to save up. Very rare use of what I will call a bribe, I guess you could call it a reward.

The only things I did for my kids was every year we'd have their portrait taken. And you can't really force a child, you know, you have to smile or else, like, what are you going to do? You can't make them smile for the picture. So what I would do is once a year when they had their portraits taken, you know, we're going to go get your portraits taken.

And then I'm going to, you know, you can buy a toy up to $10 or whatever, whatever it is. And then the only other thing I kind of, I guess you could call it a bribe or a reward. The only other thing I kind of bribed them with was when they were out of their crib to their, you know, the big, big bed.

That's a very scary thing for them. And so they really needed like an incentive. If you, the first night you stayed in your big bed all night, you know, you can pick out a toy. And then there's the issue of holiday birthday gifts. What we did was we kind of set a dollar amount and, you know, every once in a while, some years we were just, I'm feeling really generous this year, I'm going to buy them a PlayStation or whatever.

But usually they knew they were only getting a certain amount and we didn't go overboard with the gifts, but you know, that's up to you. There are some board games to make it fun for the child, you know, young children love to play board. I know my kids love to play board games.

So some of the ones I've heard of, we, we personally had life and monopoly, but I've also heard of payday and there's one called the allowance game. Now this is something I do not have personal experience with, but there's something I've heard mentioned several times called fam zoo, family finance app.

And I did kind of look into a little bit. It does have a fee. I think it was maybe if you paid for a whole year, it was like 30 or $40 for the whole year or $6 a month, which isn't super cheap, but it might be worth it.

And you can order debit cards for each child. You can even, even order them for a young child, but if the younger than 13, it had to have the parent's name. And the parent is supposed to be with the child that they make an online purchase. And then it also has all these you know, you could look up, what did you spend on what's the balance for each child and easily transfer from the parents account to the child's account and that kind of thing.

So does anybody have any tips or what worked for them as far as allowances for their young, young children or anything like that? We'd love to hear from you guys. Just use your, if you do just use your raised hand icon and zoom to raise your hand. Keith. Yes.

You know, a couple of things from here that, that we did that I'll, I'll share. The first thing is the holiday and birthday gifts. We lack of better term mandated that half of what they got from grandmas and grandpas and aunts and uncles and everybody for birthdays and holidays went into a savings account.

And then the other half, they, they got to keep that money. And then when they were around 12 or so years old we bought a, like a little plastic container, you know, big enough that you could put papers and a checkbook and things in and they would put the money in there.

And I had them make a basically a checkbook leg ledger with a piece of paper. And if they wanted to go buy something, they had to pay me and then they would mark it off of their balance that was in this container that had their money and other papers and things that they had.

So the objective was to, to a kind of teach them how a checkbook works, but without actually having a checking account because they were just around 12 years old or so. And also the lesson that you should always save when you get something and not just spend it all on something.

And I think over time that message kind of came through. And the other thing we did with, with the gifts is if there's something they wanted to buy with the money that they had left, I would have them pay me and then I would buy it. And I actually put that into my own little container.

And then when they were getting ready to go to college, I handed them all that money back that I had been sitting on that they had paid over the years. And I don't know, it amounted to somewhere between I think $800 and $1,000 for, for each of my three kids.

So number one, they were very surprised that they got that money back because they never knew that that was going on, but to them, they were spending their money. They had to account for it, but since they were 12 or 13 years old, I didn't expect them to pay for it.

I just sat on the money and then handed it back to them. So the lesson was you need to, you know, be responsible with your money and need to keep track of it. You need to make sure that you put it in a safe place that you can find it.

Otherwise you just find money all over the place, all over their rooms. And it hopefully taught them to be kind of responsible and organized with their money. Seems like, it seems like it worked. All three of my kids are in their twenties now, and it, it seemed like it taught them, you know, for the most part, that lesson.

Great. Thank you so much, Keith, for sharing your experiences. Yes, we, we did a similar thing with the bank accounts. Our kids opened their first bank accounts at Chase Bank at maybe they were five or six years old and the bank had a cute account for the kids and it was a savings account and they would walk in, you know, they would be like really small and they'd walk in and they'd stand in line with everybody and put their deposit, their birthday money there.

And it was nice. And they had their little passbook. Not that they really made a lot of money, but it was the, the idea of getting them used to banks, getting used to going into banks, and that this is what we do. This is what our family does. We use banks and we save money in banks and we deposit our money in banks.

And then when they got a little older, actually when they, they, all my kids were at Vanguard, I believe at 16 years of age, as soon as they could have their own accounts, and these were taxable accounts, they opened them there. They were joint accounts with me. And as soon as they started working, they had a Roth IRA and they would deposit, I would show them how to deposit the money into the Roth IRA.

At the end of the year, they would find out how much, when they got their W-2, they had earned that year and then deposit that in the IRA. Actually my husband and I decided early on that what we would do to help our children is to do the depositing.

We would put the money in the IRA for them, especially if they put the rest of that money into their taxable account. And we have done that to this, to this very day. Actually we, we, we finance, fund the IRAs for each of our, all of our children. I don't know how long that will go on, but for right now we do that.

In terms of the working, when they were young, I had a family work day and this was maybe once or twice a year, three times a year, where I decided it was time that everybody in the family pulled together. We are part of a family and this is what we do.

We take care of the house. We do things around the house. We do things around the yard. You know, we clean the hamster cages, we, you know, the bunny cages, we, we, we pitch in and help for the family. And so I would set the family work day, it would be posted on the kitchen counters.

They were to be here at nine o'clock in the morning. This is before they had moved out of the house and there was no pay. This is part of being a family, this is what we do. And then at the end of the work day, we all went out to a restaurant for a very special dinner and they could have all the dessert they wanted.

So it was a nice family time, even though they grumbled and moaned and groaned and the neighbors would think they were really cute working out there with their wheelbarrows and everything. But it, they still talk about it to this day. Oh, that was the worst thing you did, mom, was the family work days, but they remember it and they really liked it.

Also on the, what Keith mentioned about saving the money, I have read, no, we did not do it so much. We did not, was the three buckets or the three jars. You may have read about it. One of the editors, maybe in the Wall Street Journal or the New York Times wrote about this many times, where when his children got money, received money, there were three ways, three places to put it.

One was for charity. They, if you had a birthday money, a little bit, some of it would go to charity in the charity bucket. The second would be for savings. That's what you put in the bank. And the third bucket was you could use for whatever you wanted. I can guarantee you my older son saved every bit of that money.

He saved all his money growing up. My daughter, my daughter was a spend, liked to shop. My younger son would save all his money except for computers. And then he would like to spend it. So each child was different. We raised them all the same. And yet each child was by nature different.

And to this very day, it's the same, they are different. Very good. Thank you, Miriam. Beverly and Tim, you can go ahead and start. Hi, I'm here. I just wanted to mention, we do something similar to Miriam in that my kids are in their mid to late 20s now.

And we started maybe five years ago doing an IRA match at Christmas. So Santa would match whatever they put into their IRA account. And they're very fond of that. But thinking back to our kids having bank accounts when they were younger, we banked at a local bank in Princeton area.

And the kids would always go in there and make their deposits. And one day, the manager, who knew us pretty well since it was local, asked how the kids were doing. And I casually mentioned that my daughter was looking for a summer job before college. And I wasn't even fishing, but she said, oh, well, we need a teller.

So here's an application, have her fill that out. So it wound up being a great thing, because every summer, she filled in for other tellers that were vacationing. And she got a work history out of it. It was a minimum wage job, but it was an added bonus of being known at the local institution.

It also became her college job. Well, it became her college summer job also. So she got years worth of that. Very good. Thank you. There's a question in the chat, what age should allowance start? I'll give you my opinion on these two questions, then somebody else can chime in if they want.

And then the other question was, do you give a reward for good grades? So as far as the age, personally, I think as soon as the child understands the concept of money, how much different things cost different amounts, and then they have a desire to buy certain toys, they're ready to have an allowance.

And personally, I think this is around the age, could be as young as four, maybe five. That's kind of when my kids were ready. And as far as paying for grades, it's really highly dependent on the child. Some children would really respond well to that. But some other children are just completely internally motivated, and they don't need that at all.

So it's really highly dependent on the child. Does anybody have any input on those two questions, the age to start the allowance and whether or not you should pay for grades? Oh, Beverly and Tim, go ahead. Do you still have your hand up? Does anybody have any? I forgot to take it down.

I'll do it. Okay. I think. Okay. And then somebody had had a question from the RSVP forums, how to teach kids about money by age. And at the end of this presentation, there is a list of books that are pertinent to this discussion. And some of them, there's one called Beyond, and you don't have to write these down because you'll see them at the end, Beyond Piggy Banks and Lemonade Stands by Liz Frazier.

And this was geared towards younger children, pre-K through fifth grade. It's very, you know, so it has a lot of information on this slide, like allowances for young children. And then there's two that cover more of an age range. One's called Raising Your Money Savvy Family for Next Generation Financial Independence by Carol Pitner and Doug Nordum.

And this has a chapter, chapters, one for toddlers, one for grade school, one for tweens, one for teens and adults. So it kind of covers the whole gamut of ages. And the same thing, there's another book called Kids and Money by Jane A. Pearl. It covers toddlers through young adults.

And this was, the last book I want to mention is called Launching Financial Grownups by Bobby Rebell or Rebel, and this is geared more towards college age and young adult children. So there's several books that kind of covers the whole range of how you, you know, different topics for different age of children.

The second, we had another question from the RCP for this slide, and it's the best simple way to deal with nominal amounts of birthday money, but then they say under $2,500 for age eight. And Keith, you kind of answered that as far as the buckets, but for an amount like $2,500, you know, you might even want to consider putting part of it in a $529.

If there's already one open for the child, they can contribute to their own $529. But definitely you'd want to kind of split that up, you know, charity, savings, $529 and spending for that kind of thing. Okay, we're going to move on to the next slide. Let's see here. Oh, I skipped one.

Okay, the next slide is teens. The only topics I want to bring up for this is you may want to consider for a teen giving your child either a quarterly or an annual lump sum for some categories, such as clothing, just say, I'm going to give you X amount for clothing for the whole year, and you can spend it however you want.

And then hopefully, that will teach them how to manage a lump sum over a longer period of time. And they'll realize, oh, if I buy everything I want right away, all the expensive brands, you know, when I grow two inches at the end of the year, I'm not going to have enough to buy some more jeans, you know, they're going to kind of learn that they need to kind of plan ahead and anticipate their needs for the whole year.

And then some of the books I read, there was a lot of talk about helicopter parenting versus letting children learn from their mistakes. And I know I do kind of err on the side of the helicopter parenting. You know, you should well, let them make some mistakes when the cost is low.

But I think you should enter personally, I intervene when I think the price of the lesson is too high. Some parents like just, you know, they will learn natural consequences of their actions. But to me, it's like if they're going to oversleep on the day of their final for high school, like I'm not going to wake them up, I'm not going to let them learn the natural consequences of something like that.

That's, that's too high, in my opinion. But if it's something like, you know, they're going to have, they didn't return, I know people don't even do red box DVDs anymore. But there was one time when my daughter, you know, I almost I saw it sitting out on the desk.

I'm like, I'm going to remind her to return and then I like, I had to zip my mouth and you know, I'm not going to remind her because the worst thing that can happen is she's going to pay a little bit of a fine. It's not that big a deal.

But so in that case, when the price is a little bit lower. So only you can really draw that line where you think, you know, you need to intervene. But you should definitely look to make a few mistakes, you know, when the cost is low. This when I had my kids, we really didn't have to worry about debit cards for teens because you weren't buying anything online when my kids were little.

But nowadays, a lot of kids want to be able to buy things online. And I don't have personal any experience with these cards. But I know there's I looked at this one called Fam Zoo, Greenlight, Go Henry, Copper. So if anybody at the end of the slide, if you have any experience with any of those, let us know.

And then also someone mentioned Fidelity Youth Account, which is for teens 13 to 17. And that does have a free debit card. Another dilemma is should you work or encourage your child to work during high school. And personally, I know a lot of kids do and that's great personally, like my kids were in marching band, and they you know, marching band, you get up and you go at 630 every morning, you go to band practice, and then you Friday nights, and sometimes you stay late.

And to me, that's almost like a job in itself, even though first, they're not getting paid. But it's teaching them the same things, I guess, teaching them to get up and go somewhere where even they don't feel like it, teaching them to work hard, teaching them to learn things, teaching them to get along with others.

So to me, that was kind of teaching the same values as a job and, and it was taking up as much time as a job. So you know, you kind of have to just depend on your child, do they have if they have a lot of extra time on their hands, and you might want to encourage them to get a job.

Does anybody have any comments on any of these topics for teens? Let me see if there were any Keith, go ahead. I would just say, and this really came in at the very end with with just our daughter, you have all these electronic things going on, like Venmo and that type of thing.

You know, my boys were a little bit older by then, but my daughter was kind of just at that, that age where she was learning about money and Venmo and those kind of transfer companies. So my comment would be if you're if your kids are young, you probably want to have a strategy for those types of things, because right now, they're used a lot, you know, if my one of my kids goes out to eat with his or her friends, somebody pays and then everybody else has the Venmo money to cover their, their cost of their meal.

I don't have a, I don't have an answer or an opinion. It's just that it's out there. And you know, if you have a 14 or 15 year old that's learning about money, that's probably going to be something you're going to have to deal with. Okay, thank you, Keith.

Let's see if we had any. Okay, we did have two questions from the RSVP questions. Okay, strategies to increase children's interest in personal finance and investing. So I guess what they're asking is, what if the child you're trying to sit the child down and teach them something and they're just not interested, they just don't care about hearing about that.

So does anybody have any tips on how to get your children interested in discussing personal finance and investing? And this may be one of those things where I know with my my daughter, sometimes it's best to teach a lesson when they're they need to know, sometimes they don't care until they need to know like they don't they don't know what a, you know, IRAs, but oh, now all of a sudden, they have a job now they kind of need to know, you know, that kind of thing, or they, or they get their first real job with the 401k.

And they don't understand, you know, what's this bond index fund? What's this? You know, mid cap? I don't know, you know, then they might be more receptive to you explaining and so sometimes it's best to introduce topics when they you know, they need to know, they're definitely gonna be more interested.

And the other thing I want to say is a lot we're we're gonna this is on another slide, but oftentimes, you have to explain things, they're not going to get it the first time you have to explain things several times before they it sinks in there. These concepts can be very difficult, you know, you know, my, my daughter, like, what's the difference?

Like, what is a stock? What is this? I don't understand? What is a stock? What is a bond? What's the difference? That kind of thing. You have to explain it several times. Okay, go ahead. Yes, I, um, what I noticed also is that they the kids, when you mentioned that it takes a while for it to sink in it, one thing that happens is when my son, my oldest son, put all his money into Vanguard into a stock fund, when he was young, when he had his first accounts.

And it was a actually it was not, I'm sorry, it was not Vanguard, it was another company that had a stock fund called the young investors fund. Stay away from those you every so often, you'll see them. These are mutual funds that are stock funds. And the manager wants to teach the children how to buy and sell stocks and well, or put it into your mutual fund.

And they sounded neat, it had this really neat little article that they would send out to the kids every month, why I bought Microsoft, why the manager would say this is why I bought Microsoft and he would explain why. And then you could write in a question, why don't you buy Macy's?

Well, I didn't buy Macy's because of this. I thought it was a good education system for my son that he would read it, he would like it and they had cute little bugs running around on the on the papers and stuff like that for the Disney movies. But what happened was, when the 2000.com bubble came, and his money was in this stock fund, he lost 40% of his money.

And I will say right out loud, he had $6,000 in that account, and he lost 40%. His account was worth about $3,500 $3,800. And actually, he had a good friend who did the same thing. He put his money into his, his father was with Merrill Lynch, into a Merrill Lynch stock fund, he lost 50%.

The only good thing was, I would hear these two kids talking in the bedroom about how awful their parents were encouraging them to go into a stock fund, they lost all their money. And trying to explain to my son, no, this is a, a bear market. This is a the tech bubble and trying to explain it to him, that you will recoup your money down the road when the market goes back up.

I could tell the horror, the how upset he was at losing his money was worse than any education that it gave him to lose the money. So what I did was I then, when he turned 16, and he opened his Vanguard taxable account, the money that was left in that young investors fund, it had recouped up to about $5,000.

We immediately sold that. And I sat with him, we sold it, we moved it over to Vanguard, and we put it in Vanguard Wellington, which is a 6040 mutual fund. It's not the best for a taxable account. But at that point, it served its purpose. He saw that money going up, up, up, up, up.

Every time he looked at his statements, he could see he had earned more money. At that age, it seems that that is what they want from their investments, from their savings. They just want to see that it goes up. They don't care if it goes up a little or a lot, they don't know the percentage.

All they want to know is that each month they made more money, they didn't lose the money. And it worked. And to this day, he's a professional, and he still has that same Vanguard fund, a Vanguard in this taxable account. It is now worth so much money, he almost can't move it and incur the tax consequences.

So he doesn't contribute to it, it just builds up on his own by reinvesting dividends and capital gains. But it did work. He then knows a little bit about asset allocation. So that's one thing I would mention about young kids. They don't, they're not going to get the stocks and bonds, they're not going to get what a bear market is, or, or inflation, a taxable account versus an IRA, they're not going to get it until they're a little older.

Thank you, Miriam. Yeah, the last thing we want to do is scare our kids off at the get go, just they lose a bunch of money. So I'm glad your son kind of after he did the well, it wasn't Wellington and started going up because what we want to do is scare them off of investing for the rest of their lives.

So that's exactly right. Yeah. Veronica, I see in the chat, you had a question, we're actually going to somebody else, it might have been you had a question from the RSVP. So I'm going to cover that later on, like in slide number nine, I actually did a little bit of research and about kids IRA.

So we're going to cover that later a little bit later. Okay, and somebody else had a question on how to handle big spenders. Does anybody have advice other than just if they don't have, you know, they can only spend what they have. Right. I know, I'll tell a little story about my son, I think we started him at allowance, like he was like four, he was young, and we gave him $1 a week at that time.

Every week, I he wanted me to take him to Walmart and buy a little matchbox car every single week, because they were $1. And we let that go on for a good six months, maybe a year. And then we kind of said to him, hey, you know what, if you if you don't buy a matchbox car every week, after a while, you'll save up some good amount of money.

And he actually took that to heart, and he didn't spend any money for like, I don't know, until he was like 12. And then he bought an Xbox. So it was kind of crazy. But sometimes you kind of, you know, let them make a mistake. And then maybe just explain, hey, you know, if you constantly spend all the money you have, you're never going to be able to save up for anything bigger that you want.

So if they have something bigger that they want, maybe you could say, hey, you know, if you didn't spend money, or if you only spent half your money for this many weeks or months, you could actually save up for this, whatever item is that they want. That's the only suggestion I have about that.

But anyway, if they have money, you can't stop them, you know, from spending their own money, basically, as long as the item is appropriate, you know, for their age. So okay, we're going to move on to Okay, we Oh, sorry, banking, building credit, and some of this has already been discussed a little bit.

One way to build your child's by credit, I mean, like your credit score, adding your child as an authorized user on your card, and you don't even really even have this bank will send them their own card, but you don't even really have to give it to them. And now not all banks will report an authorized user on a credit report, but a lot of them do.

So you either have to research beforehand, or just do it. And then a few months down the road, check their credit report and see if it's on there. But if it does, if it does get on there, it will help them build a credit history. And then at some point, either high school or college, I know my kids, I think it was right before college, we opened a cup, it was a chase college checking account.

And it waived all the fees, and they don't have to have a minimum amount in there. And I believe it was actually joint with the parents. And at the time you open the account, make sure they understand any fees that it may have. And also, whether or not you should sign up for overdraft protection, which you may not want to because that can be kind of dangerous if you're not watching your account.

And a lot of banks charge like a $34 fee. And some of them even go to the trouble of arranging the transactions where the smallest ones go first of that each that, you know, the smaller ones will do a $34 fee, and then everyone else will do, they can be really ruthless that way.

So make sure that you don't have, you probably don't want overdraft protection. In most cases. The other thing is, you know, back in our day, I still balance my check with the old fashioned way. But realistically, I don't think most teenagers are going to be sitting down with a little budget, some, some may, some may, which is great.

But if they don't balance a checkbook, make sure they at least log on frequently, or more likely, it's going to be on their phone or, you know, check the transaction, make sure nobody got their debit card information or whatever, and make sure they recognize all the transactions and make sure the balance is about what they expect.

And then also, they should be downloading their bank statements every month and, you know, saving them or printing them out, save them on the computer. And when it's time for them to get their first credit card, you know, make sure they understand about in the high interest rate, you know, try to encourage them to pay it off every month, you definitely don't want them to build up a larger balance or really any kind of a balance.

You know, let them know they do have a credit limit, but which does help build their credit and their credit score. But that doesn't necessarily mean they should, you know, charge up to the credit limit. And then if your teen doesn't qualify for a secure, you know, an unsecured card, there are secured card, which I got this information from Clark Howard, I listened to him, and he has a lot of information about secured cards like Petal Chime, what's one called Discover it Secured.

And then when it's time, show them how to check their credit report through and make sure they only go to the annualcreditreport.com and not one time I accidentally somehow went to one of them that wasn't the right one and nothing really bad happened. I realized that, oh, I shouldn't have gone to that one.

So I'm trying to be real careful to go to the right one. It'll say like, this is the official, this is the only official website for the government, you know, it'll be a thing on there. And then to protect their credit, make sure they understand, warn them about scam emails, because that's a lot of times that's how people get your information or get a little virus on your computer, you know, never, unless you're expecting a very specific email that you just did something you're expecting an email, don't ever click on, or click on things in emails or call numbers back from phone if you're, if your bank calls and says, you know, we think you had a fraudulent transaction, you know, is this right?

You should look at the number on the back of your credit card and call that number instead don't ever call the number that they tell you to, because they could even be spoofing the number and it might look like it's the bank on the phone, but it's really not.

Same thing with emails or text, you should never click on a link, always go directly to the bank's website. And I never do banking on my phone, but I think I don't know if that's realistic to tell teenagers never to do anything on their phone, because they do seem to do almost everything on their phone.

Does anybody have any input on suggestions on maybe good credit cards for teams how to build their credit, that kind of thing, what kind of, what to warn them about when getting a credit card? Let's see if anybody's, go ahead Miriam. One way to build good credit is to buy your own car.

And what my husband and I did we, we decided that we would purchase each of our children, we would purchase their first car for them. And then from that point on, they were on their own. So we then learned that if they purchase it in their name, even though we fund it for them, they do get a good credit, you know, the credit report, they get the credit for it and paying off a large sum of money, like a car loan over the years, you know, month by month by month, even though you would put like maybe 50% down payment and then just have maybe one or two years of payments, they can build their credit that way.

Now, they are paying interest on that. But you know, then you decide what to do, maybe pay enough so that they only have a year's payments for their Toyota or their Camry, whatever it is, and paying it off monthly. Then on the credit report, it looks like a very, very good loan that was paid off, it was a car loan, and it was paid off on time, you know, over the course of a year.

Thank you, Miriam. Beverly and Tim, go ahead. Two things. When our kids were in college, I suggested that they each get one or two credit cards before they graduated, because the day after graduation, you're significantly less appealing to all of the credit cards. So they listened and they did that, and NerdWallet is a place where you can find not only our criteria are not only free credit cards, but credit cards that have some kind of cash back reward.

And the other thing that we asked our daughters to do was to get a loan during college, and they didn't want to do that. And now they regret it, because when it came to get mortgages, they wish they had a better credit history. They do have an excellent outstanding credit score, despite all that, but, you know, one of them has a specific number in mind, and she's like, I could have gotten over that, you know, that five-point thing if I'd only gotten that college loan, like you said, Mom.

She never came as, you know, she never said you were right, Mom, but she came really close. Thank you, thank you. Okay, let's move on. The next slide is, I think it's the one Miriam was, oh, just the one you were talking about, Miriam. So Miriam, you said, if I remember correctly, you bought your kids the first car, and then they were on their own after that, right?

I think that's a great way, because then when they have the car, they, you know, one thing they might want to consider doing is after they get the first car, immediately start putting aside money every month, and then in 10 years, they'll have plenty enough to pay cash for the second car, so that's one way to do it, but there's several different ways to do it, and I kind of changed my mind, my first, my thought was, oh, I'm not going to buy my kids a car, but then we ended up, I changed my mind, so, but there's a couple things you can do.

You can give or sell them your old car instead of trading it in, but then you have to kind of balance, well, it's an older car, it may not have as many of the safety features of the newer car, like the, our cars have those little blind spot, the little tiny mirror within the mirror, the blind spot mirror, some of them have the backup cameras and things like that, that make, make it safe for more airbags and things like that, or if you have enough cars within your family, you could just share, share maybe a family car with them.

If they do buy it, you want to make sure they understand, like I had, my daughter, she hasn't bought a car yet, but she was talking about it, I'm like, do you understand about, well, now, all bets are off right now in this environment, but, you know, two years ago, before this, all the supply chain problems, you would look up the MSRP on the internet and you might pay your dealer a hundred dollars over the, you know, you never paid sticker price, cars, you never paid sticker price, but, you know, you wouldn't, if you've never been shopping for a car before, you might not necessarily know that, so, and these days it's great, there's so much things you can do on the internet to price things out and order directly, or there's different things you can do, and then if they do get a car loan, you know, don't necessarily get one from the dealer, you might want to shop around for a credit union, you could also consider them either lending money with interest or without interest, and then you definitely want to make it clear who pays for maintenance, insurance, and gas, and that's kind of up to each family as to whether or not you just want to put them on your insurance and pay for it, you know, that's up to each family, but just make it clear ahead of time who's paying for what, and also who's paying for the deductible if they have an accident, and it's, a lot of cases, it's a good idea to have them pay for it so that it really, you know, you want them to be extra careful when they drive, and of course it's not always their fault if they have an accident, but you do, you know, you want them to, that you want that to be kind of painful to have to pay that deductible.

Does anybody have any tips, and Miriam, you gave some great tips on buying the first car, does anybody, Keith, go ahead. Yeah, so like Miriam, you know, we helped our kids buy their first car, we put some money in, and then they actually used some money that they had saved up from, you know, holidays and birthdays and various things like that.

One of the things I would mention, having been in the automobile business, is if your child is getting ready to graduate college, a lot of times there'll be additional rebates or incentives available for "recent college graduates." There's also, do you want to co-sign a loan to help your child or not, you know, do you want to have that liability of being on the loan, that's something you want to think about.

As far as insurance, when we did this for our kids, what I found is that up until the age of 25, if they insure the car under their name only, it's very expensive, and it usually helps a lot with the cost of insurance if they're kind of part of your family.

But obviously, if something were to happen, it affects your rates also, so that's something else to consider. But there are a lot of ways that you can help them, like I say, with, you know, various incentives that car manufacturers have and special loans for recent college graduates, etc. Same thing if you're in the military.

So look for some of those special deals that can apply to your kids that might help them if they are shopping around for a new car or a, you know, relatively late model used car that they have to finance. Those are great tips, Keith. Thank you. Okay, the next slide is basically college funding, and this could be an entire topic for meeting on its own, so we're not going to go into any detail.

But one thing I was reading is it's important to prepare your kids well in advance. Some said, you know, middle school, we're talking about it, how much you're going to help, you know, you might want to say, oh, you know, we've saved up enough for you to attend a state school, or we've saved up for you to attend a two-year community college, and then you're on for the rest, or whatever it is that you've decided you can cover, just let them know so that they don't pick out the most, you know, expensive private school, and then it's only after they've got accepted then you let them know that, you know, you're not going to cover that.

So just, you know, set their expectations. 529s can also be used, not everybody wants to go to college or is right for college, so 529s can also be used for accredited trade and vocational school. That's always a good, sometimes a good option for kids. One tip I've heard for saving money is consider a community college for the first two years, preferably with living at home, but just make sure that the credits will transfer because they don't always.

And the child should research and apply for scholarships. I remember when I was in college, of course, this was a long time ago, but somehow I saw this very small, you know, it was a kind of very modest scholarship, and I think, oh, you had to write an essay.

I'm thinking, oh, I'll never get that, but I did, and for some reason, like, I'm sure there's multiple ones, but I was surprised that I actually got the modest scholarship, but every little bit, you know, helps. So in similar to high school, there's, you know, whether the child should work in college, and to me, it's the same as in high school, where it's highly dependent on your course load, your extracurricular activities, and then the necessities.

Sometimes it's necessary. Sometimes the course load isn't that tough, and, you know, 20 hours a week is easy to fit in. So some parents really feel that the child will take college more seriously if they're paying for part of it, which could be true for a lot of children, but on the other hand, some children are very internally motivated to do well regardless, and if they have a really heavy load, you know, it may not be right for them to have a job, so it's very highly dependent on the child and the situation.

College loans, if your child does get one, just make sure that they really understand how much it is. Some children just don't, even if a 20, 19-year-old, they might not have an idea, like, what is 100,000? What is 150,000? They might not really comprehend what that is. Kind of maybe have them research what their, the career that they're wanting to go in, how much it pays, and then say, well, you know, you don't get that whole amount.

You got to pay taxes and FICA taxes, and then you probably want to put some away to your 401(k), so after it's all said and done, your take-home pay is going to be this much. Kind of calculate how long it's going to take them to pay off the college loan, and then, you know, you may end up paying three times, twice as much as the loan amount in interest, and make sure they understand all that, so they're kind of going, if they do get a loan, they're going into it kind of with their eyes open.

One tip I do have is don't put 100% of needed money into 529. There's still, and I did research in it, I do believe it's been made permanent, but it is still in effect the American Opportunity Tax Credit, which is, it's not even a deduction, it's an actual credit of up to $2,500, but if you're covering the entire amount under the 529 plan, you don't qualify for that tax credit because that money has that, to qualify for the tax credit, you have to pay part of the college expenses with money that's not, what is it called, qualified or is not coming from a qualified plan.

It has to be outside the plan, so, you know, try to hold back a little bit. If you're planning to fully fund, you know, don't necessarily put 100% into the 529, maybe hold back a little bit in one of your taxable accounts. And I think I did mention, yeah, have the child research salaries, when deciding on a career, and don't necessarily rule out, you know, don't necessarily discourage them from becoming one of the lower paid careers, but just, you know, make sure they go in with an understanding.

You may need to adjust your, you know, your lifestyle, you may not be jet setting to Europe every year, and you may not have a big fancy house, but just make sure they understand that, you know, the salary versus the lifestyle. And then this is always a tough one.

What if you have one child that becomes a teacher, when another child goes to medical school and law school, if you fund both of them 100%, you know, you have to figure out for yourself, is that is that really fair? Because the, you know, one child may go on to make a higher salary.

And, you know, it's very tricky, it's a very tricky situation. And I definitely don't have any answers. But it's just something to consider. Kind of before you, you know, help the first child, you kind of want to maybe have a plan for all the children to make sure everything is, is fair.

Does anybody have any? I do have a couple comments from the RSVP. But does anybody have any comments on this slide? Go ahead, Keith. Yeah, I'll just just really quickly mention on the scholarships, I've had three kids that have gone through this process, my youngest is currently in college now.

And there's something called a merit scholarship, but not every college offers it. So if you have kids that are going to be future college, college students, and you're going to be starting that process, I told my kids that you had to go to a college that offered a merit scholarship, it's usually based on your GPA in high school.

And there's a dollar amount that is essentially discounted from the price of tuition, based on that GPA. Each of the three schools that my kids went to had different amounts that they received. But they were all in the 1000s or 10s of 1000s of dollars per year. So over the course of four years, it was a substantial discount, so to speak, off of the, you know, the stated price.

So always look for merit scholarships if it's available at the colleges that your your your children are going to be looking at. And then of course, if you had, you know, any any local for the town or where you work at the company that I work for had one you could apply for, it was only a few $1,000, but it was worth applying for.

So always look for that, but especially the merit scholarships, because you'd be surprised. There are quite a few schools that do not offer that. And there are and then the rest of them do, but the amounts vary pretty significantly. But it's worth looking into because it could save you 20 30 $40,000 over the course of four years.

Very good. Thank you, Keith. Yeah, speaking of the merit scholarships, the college my son went to gave, they had this tier level based purely on your SAT score, the higher they gave a merit scholarship, and the higher it was, the more the more they covered. And then also, I've heard that if your child is lucky enough, not, you know, lucky enough, you're working enough to be a national merit scholar.

There are some colleges that will give you 100% tuition or sometimes tuition on board room and board merit scholarship just based on that. We have a couple of questions from the RCPs. I think we kind of covered my one wanted to know private versus public school, my kids both went to public schools.

So I don't know a whole lot about private schools. I know they do tend to give out a lot more. I think they give a lot of scholarships. But of course, that doesn't guarantee scholarship. But does anybody have any comments on private versus public schools? Okay, the other question from RCP was, I'd like to start investing for kids retirement, but I don't want to mess up college financial aid or any best practices.

And I did find an article, how students IRA is counted for financial aid, it's a Kip Winter article. And I'm just going to read read the this one couple sentences. Assets in an IRA, whether held by the parent or the student are excluded from financial aid calculations. IRA withdrawals, on the other hand, are included in the income calculation on the federal financial aid forms.

Money withdrawn from a child's IRA is considered to be the student's income and is hit hard by the financial aid calculation. So in other words, having money in an IRA is fine, as long as you don't take it out the year that it's going to show up on the FAFSA.

That's what I get from that. So it's not a problem that they have. It won't even be counted at all if they just have an IRA money in an IRA and keep it there. Okay, let's go to the next slide. Okay, so now they've graduated and their job interviewing.

And this is something if they've never been to I mean, I guess I call this a real job. I mean, not that working at McDonald's isn't a real job. But I think it's a slightly different kind of an interview if you're going to go to a big corporate job versus going to McDonald's.

But you may want to encourage your child to do a little bit of research. Because there's a I'm sure you just research, you know, what are some common interview questions? You know, one of the most common is what are your weaknesses? And if the child's never really thought about that, and then, of course, you got a word in such a way that it's, here's a weakness, but here's how I overcome it.

So that doesn't look like it's a bad thing. What made you want to interview with this company, but there's going to be a whole list of very common interview questions that they should be prepared to answer. And I've also read, they should always do a little bit of research on the company to have questions to ask the interview about the company and also to explain how they can contribute to the specific company.

And then, you know, help them shop for appropriate interview attire. And there's a lot of articles out there on job interviewing and also tips on salary negotiation, which is a very tough thing if you've never done it before, and I'm really bad at it. So that's why you probably want to encourage child to just read up some tips.

I'm sure there's plenty of articles out there with tips on that kind of thing. And then also, if you have any contacts as far as friends, neighbors, co-workers that are even that are working for that company that they're interviewing or just in that field or the position that your child's going to be interviewing for, you could maybe have them go out to lunch with them or just have a phone conversation, just get some tips on, you know, whether or not they want that kind of position, whether or not they want to work for that company, some kind of tips on interviewing, that kind of thing.

Anybody have any tips? Miriam, go ahead. Yes, there are counselors and tutors who help people learn how to interview. And I think especially when they come out of college, when they come out of high school for kids, it might be useful to pay for some sessions to help them learn the interview process, what is appropriate, what is not appropriate, how to answer certain kinds of questions, how to read when they're in the interview, how to read how it's going, how to learn ahead of time about the company that you're interviewing for or the job or the position so that the employer, prospective employer thinks you're excited about the job.

I think that's a useful way of approaching it. Great tip. I don't know if I thought I would have thought of that. So that's a great tip. And it's probably well worth any small amount that you would spend on that for, like you said, one or two sessions. It may not have mattered so much, but nowadays it's so competitive.

I think it's a useful, a useful thing to do. Definitely. OK, so great. Now they have the first job, like the real first job. And I know I think it was Miriam you talked about this, but or other people talking about this, but consider matching or because most children aren't going to be positioned when they get their first job to contribute to the 401(k) and also a Roth outside of it.

They may be, but if you were able to, it'd be and you want to, it would be a good thing to match their earned income into a Roth. And this applies to even high school jobs that they have, any job that they have, because most children, if they're working at McDonald's in high school, they're not going to want to put all their earned income into a Roth.

What fun is that? They want to be able to have some spending money. So but you really don't want to pass up. You only get so much, so much, so many opportunities in your life to contribute to a Roth. There's only so much per year. So you want to start that as it's well worth it with the compounding, compounding nature of that kind of especially tax free.

So if you're able, it's a great thing to match earned income into a Roth. And I kind of keep track of my kids because I want anything that would give them to kind of be, you don't want it to be fair and equal. So over the years, I keep track, you know, this child, I put this much into the Roth or whatever.

And then, of course, you make sure once they get a real job that there's enough. If if they put all their money, not that they could, if they put all their money into a 401(k), they couldn't, you couldn't contribute to a Roth. There has to be basically, what is it, six thousand, seven thousand, is it six thousand or seven thousand dollars on their W-2 that shows up as income for you to be able to contribute to the Roth.

And it's kind of funny, I had to explain to my daughter, it doesn't have to be the same six. Like she's like, well, that's not my money. Like I can't you know, it doesn't have to be the same six thousand dollars. It can be a different six thousand dollars, but it can't be more than that.

Now, when they sign up for their job, they're usually going to have a lot of choices to make as far as choosing if they're lucky enough to get benefits, choosing health plans, there's going to be all these, you know, high deductible, low deductible. There's going to be one that has a better prescription plan.

It's going to be complicated. There's going to be one that has an FHA where it costs more, but the employer puts in five hundred dollars towards their HSA or the FSA. And if they don't have experience with health insurance, they may not even know what's a deductible, what's a copay, what's a coinsurance, what is the negotiated discount, what's an EOB.

And you're probably going to have to explain all this. And this is probably one of those things that they're not going to be able to absorb the information until they need to know. And a good idea would be once they go to the doctor, show them, you know, you can log on your insurance, you can print out your EOB.

Here's here's the full price of this lab test was I always get them. They're like three hundred dollars negotiated. But after the negotiated discount, it's only thirty dollars. And then just kind of explain all that, because that's very confusing and very confusing. And then they're going to have to decide how much to contribute to their 401k.

They may have options as far as pre-tax Roth. They may not understand what the company match, how many years it takes to vest. If they're going to quit, you know, two years and eleven months in a job and it's best in three years. You want to know that because if you only have to stay an extra month to get investing, you might as well.

So that's a good thing to know. When they get the first paycheck, you know, you're going to kind of want to go through their paycheck stuff with them and explain or, you know, better yet, even before they go to, you know, just because you're making fifty thousand a year, you're not getting fifty thousand a year.

They may not understand what FICA is. They most most of them have an idea on federal income tax, but it all comes out of the paycheck. They're going to have health insurance. They have to usually pay a little bit of their health insurance. They're going to have 401k taken out, FICA, tax withholding, and then explain to them the tax withholding.

That's not necessarily you kind of have to settle up with the government at the end of the year. You may get some back. You may have to pay more. So let them make their own choices after you explain everything. But as we stated earlier, kind of. If they're procrastinating, if they're not getting around to it and you really think, obviously, if they never, ever sign up for 401k, that price would be too high.

You don't know, wait five or 10 years. Oh, did you ever sign up? Oh, no, I never got around to that kind of you're going to have to nag them if they don't do it, because that's definitely something that the price would be too high to to skip out on that if they don't ever get around to doing that.

Does anybody have any tips on helping your child navigate, you know, getting set up for the first job and getting all their benefits signed up if they're lucky enough to have them? Any tips? Okay. Mary, go ahead. I have found that with my kids and with their friends, they do not realize that when they retire, they are not going to retire like my husband and I retire because we have pensions and also because we diligently saved in addition to the pensions.

And nowadays, the employers do not you know, there are very few pensions out there. And the the goal is by from employers is to have the employees save for their own retirement to these different plans. And my kids always had the attitude of, well, don't worry, Mom, I will.

I'll have plenty of money in retirement. Don't worry. I'm going to get a good job. I'll be fine. And they they obviously, you know, they do not get it. And our I simply would lay out anything I found any graphs any any spreadsheets that I found that were appropriate for teenagers and for college kids to show them what compounding does over time, you have to have that money in the account to compound.

And then the more you have in that account to compound, the more you will make. Don't you want to make money? And don't you want to have that for your retirement? Because otherwise, you will be and that's when you give them Bill Bernstein's book. And it says on the first page or the second page, you will be living under a bridge eating cat food, you have to save a certain portion of your money over the longest period of time.

And then that money works for you. And they will get it when they see this happening. And they only see it happening if they contribute to a 401k, or to a five or 457 B, or to a not even an IRA over time. And then you just lay out those statements, you lay out the graphs if you can print it out on Morningstar on Vanguard or fidelity, and you print it out and you show them how the contributions even though they may be small, every year add up.

And even now this is a good time I show my kids on there. My especially my youngest son is a Schwab 401k. It's really, really interesting to show him the graph from when he started that job to today. If you look at you select that graph and you show him what it points out the one year your one year earnings, and it shows the graph of his contributions and his market value of his account is 401k.

Well, most of it is in red, it's down below, he's lost money, he's lost 16% this year, his what is it called his whatever it's called his what he's earned this year is down 16%. But if you change that graph to the time he began his job there to today, which has been about three years, three and a half years, well, it looks very different.

The graph looks beautiful. It shows him contributing and the market value going up, up, up, up, up, up, up, up, up to today goes down a little bit. So he can see that while it looks like the world is ending today, financially on Wall Street, in his account, it's not.

And it's not because he's contributing regularly, little by little every month, it's he's contributing every paycheck, actually, he's contributing. And because it's invested in, well, he's in mostly stocks, so it's mostly going up. Now I can get into later on, if anybody wants, we did an experiment with bonds, two types of bonds.

So try to teach him a little bit about that. And also, I'm learning from that too. But most is 80 to 90% stocks. So it goes up, and then his Vanguard account, anyway, you can make a huge amount of money. These kids can make a lot of money if they are consistent in contributing as much as they can early on.

And Jonathan Clements had a wonderful article years ago about how if the kids could, if they do that now, they may then not buy the big TVs, buy a smaller TV, not buy a new phone every year, hold on to it, be more frugal be more careful in your spending when you're young.

It's not as much fun, especially if you have a group of friends who like to go out and have fun and spend money. But when you are in your 40s and 50s, and you are really tired of working, especially if you are tired of working at the same job for 20 years, 25 years, you will not feel so it will not be such a terrible thing.

If you step back and take a sabbatical, maybe change jobs in your 50s. If you're a techie, you may not have any choice, you may be your company may hire young techs just out of college, two of them for the price of you. So you may be you may be unwillingly downsized.

At that point, when you're in your 50s, you won't be so you won't just panic that you haven't saved enough for retirement, you will look at your account and you will realize over the years, the account worked for you. It made money by compounding over time. And you can take a little breather, you can take a little break and not panic.

Or you can continue on and cut back just a little. In other words, you have more options, you have more flexibility, rather than so you have to look ahead. These kids don't want to look ahead. But around the dinner table, my husband and I can talk about looking ahead and not suggesting that they do it just pointing out that it could be done.

Among friends, you know, bring bring your kids in with your friends and talk about things, bring them to the bogo heads conference. There's a young kid in high school who used to come with his dad to the conferences. So that's what I see with my kids. And what I see with their accounts.

Also, the 401ks are normally pre tax normally. And then the IRA we use are the Roth IRAs, which are after tax. The good thing about that is that when they get close to retirement, they will have both a good amount of pre tax a good amount of after tax.

And then the net another good thing is that if they contribute as much as they can to 401k, that is taken out before taxes on their paycheck. That means if they have a little paycheck like this, but you have little taxes to your taxes are lower. So you have a more money available to you to spend right now from your paycheck, because you're not paying it for taxes.

So you know, you can show them this and then, you know, help them with their 401k asset allocation, mostly stocks, maybe some bonds. And it will work if they stick with it, they will see don't make them open up that statement and show them how it works. It really does work.

Thank you, Miriam. Just the only thing I want to add is, it's so hard when you're young to realize that you are actually gonna be old when they didn't, you know what I'm saying? Like, it's just, you know, that theoretically, when you're 20, you're going to be 70 when it but it's hard to you know what I mean?

You know, it's just a hard concept to it seems so far away. So thank you so much for all that. All those tips, Miriam. Okay, so I guess the goal would be to eventually they would move out. If they do continue to live at home, you do want to set clear expectations as to a timeframe, who pays for what and does what towards and this is not necessary, you know, this could be a great thing, because it could allow them to save up a lot more money the first couple of years after college or after high school, by living at home.

But just make sure that you have a timeframe that agreed upon by everybody. Well, I guess it doesn't even have to be agreed upon by a child. It's up to the, it's your house. So it's up to you to set the timeframe. And then also who pays for what does what chores, you know, if you want them to do a little bit of work around there, you know, whether or not most people don't make them break out everything you buy the grocery store, this is for you know, you drank a cup of milk, you know, you're probably not going to do that.

But if they buy anything major, maybe, you know, at the store, you can want to reimburse have them reimburse that that kind of thing. Usually these days, a lot of kids you're going to be they're going to be on the car insurance, the cell phone plan, we have like the toll tag plan that my kids are actually still on our toll tag.

You just kind of set forth rules about when they're going to kind of ideally they want to separate from all these plans. Well, like I think was keep that was saying, a lot of times it just makes sense to keep them on the country is gonna be cheaper overall.

I think I have a thing later. But like with the cell phone, we got, you know, for grandfathered into a great plan. And that's a family plan. And it would cost them so much more to get their own just to get their own, you know, wine, just you know, and it's only $25 a month.

It's just it's no big deal either way. So you can keep them on. It's no big deal. Some you're gonna have to explain to them if they don't have health insurance with their job. Why they need even Oh, I'm healthy. I don't need health insurance, they get explained why they need it.

You know, even if they're healthy, they have a major accident or they could have a heart attack, it's gonna it's gonna bankrupt them and wipe out everything they have. So just explain to them, encourage them to get a plan through the ACA. They don't have one through work, even if it's of course, the highest deductible they can get.

When they're moving out, they may need a little bit of they may not realize what all expenses are going to be involved. They may not realize they have to pay, you know, gas, water, sewer, garbage, electricity, you know, internet, they may just take it for granted that, you know, they been taking that for granted while living with you.

If they're not already know how to use a spreadsheet, this is a great time to Oh, here's a little spreadsheet. Here's how I do my monthly budget. And then you can show them make maybe make a simple spreadsheet and show them how to do that. And they may not think ahead.

But, you know, in addition to just your monthly expenses, you're going to want to kind of set aside month money for long term things like new cars, vacations, gifts, things like that. That's all part of your budget, even though you may not necessarily spend that every month. And now I don't use any of this.

But I know there's a lot of budget software out there like YNAB, which is you need a budget. I've also heard of Monarch, Money Danceman, Every Dollar Spreadsheet. So if anybody has any experience with any of these, please raise your hand after the slide. And then make sure they have a method of remembering to pay the bills because of course, one of the worst things you can do for your credit score is to, you know, forget to pay your credit card bill on time.

If they do buy a house, explain and make sure they understand all the there's so many expenses with buying and maintaining a house, you got mortgage, property tax, insurance, maintenance, HOA fees, utility, lawn care, there's just so much and then as far as closing for the house, there's going to be closing costs, PMI, escrow for mortgage, mortgage payments, insurance and property tax.

And then also like with the other budget expenses, they should be setting aside money, you know, in 20 years, you're going to need a new air conditioner, a new roof, a new fence, new washer, dryer, there's just so much to save up for when you have a house. And then, you know, but I mean, a little bit of reminders, you might have some a lot of maintenance, you got to do, you know, we have our air conditioner service twice a year, you got to change your filters, that kind of thing, smoke detector batteries.

If you're in a position to help with the down payment, that would be a good, a good thing to help them out with that just to give them a little boost. And we're going to talk about that later, you know, these little boosts we can give our children with without, you know, spoiling them or giving them subsidizing them too much.

We're going to kind of talk about that later. Does anybody have any tips on helping your child when it comes time to move out? Oh, yeah, Miriam, you have information on that, don't you? Yes, yes. One thing is, we have to remember is that our children, most of our children, they grow up in a different environment, a different time than we did.

When my husband and I got, you know, got married, and we were out of college, we lived, you know, our apartments were furnished with wood from Home Depot and bricks, you know, those were our shelves. Sometimes it was the pantry in the kitchen, too. And, you know, we would have to save up just to buy little things.

And I remember we would make our coffee with instant coffee, boiling water on the stove, you know, making instant coffee until my mom said, you know, really, you guys really have to have a coffee maker. And she bought us a little Mr. Coffee. So our kids, when they move out, I've noticed, they want the TV, first of all, they want a big TV, not a little one, a big TV.

Obviously, they have their computers and their cell phones. They want the kitchen already, you know, they want everything in the kitchen already, including a blender and this, they want the whole apartment set up as our nice suburban family home. But our nice suburban family home is the result of 40 years, 50 years of working and saving and cluttering up the house.

And so there is a tendency for the kids to say, well, I'll just put it on the credit card, and then I'll pay it off. So then starts the cycle of credit, the cycle of not saving for something, the cycle of buying it now, and then putting it on credit.

So that is very difficult for some kids. And I mentioned that my kids all they're all different. And some get it right away. And they would not put they're just really careful about their credit cards. And others, the other other ones are more, I'll just put it on the credit card, I can pay it off, I have a good job.

But meanwhile, the 401k suffers. You know, they're not putting their money as we would prefer. They're not balancing out as we would prefer. They're not their priorities are different. My family, my parents and most of our parents grew up in the depression. And my mother told me that she, her mother would have to stuff her shoes with cardboard, because there was no money to put new soles on the shoes, let alone buy new shoes.

Now you just put it on the credit card, go buy a new pair of shoes. So it is people have told me in on the bogleheads form, there are so many threads of how, how it is to let your children know that to realize that you're our children grow up in a different environment, and that they are just used to having all this good stuff, as if they are entitled to it.

I don't know, I know, we try hard not to, to let them see that that's not the way it is. But it is hard, because that is the way they all grow up. That's the way their friends are. In terms of another way of that, what I would do with my kids, I realized in high school, they didn't have a clue how much a roof cost.

They didn't have a clue how much a car really cost. I started putting our bills on the kitchen counter. If we had to have the roof cleaned, the bill went on the kitchen counter. And they would look and they would say $600 to clean the roof. Are you kidding?

I can have my friends, we can walk down, we can just, well, it doesn't work like that. And $6,000 for a new roof catches their eye, after a while, when they're especially when they're in college. So I would put the bills on the kitchen counter, so they would realize how much it really costs to have a house.

Also on moving out. Well, one thing I wanted to mention about going back to college. I learned that my kids, sad to say, but my son, he, he was, he, when he went to college, we paid for the dormitories, we paid for the fraternities, we paid for the sororities, we paid for wherever they lived.

But when he graduated college, when he and his graduation, when they were done, he said, he sent me an email said, this stupid landlord is not returning our deposits, our security deposits. Now he lived in this big house with all these, you know, guys and, and sorority girls and whatever.

And it was this huge house, the landlord had put together is to so that's the stupid landlord is not returning our security deposits. So I said, Well, why? He said, Well, I don't know why he said he says this, he says that. So I said, give me that. So I took the landlord's phone number, and I called and I asked the landlord, who was this nice guy.

And I said, why, you know, why are the kids not getting their security deposits back? He said, Well, the bathrooms are full of mold there. It is mold from top to bottom, side to side. It has never been clean. My son said, Well, mom, it was mold when we moved in.

And you know, we were studying, we didn't have time to clean. Then the landlord said to me, there was a burned out microwave in the kitchen, and it was attached somehow it was attached to the floor, I had to have workman in to take out the microwave. And my son said, Whitney, she burned the popcorn in the microwave.

I don't know how it got on the floor. And then the landlord said there was all this mattresses, a mattress and a box spring and all this stuff in the backyard. And I had to hire a drunk remover to come remove that and to clean out the backyard. And my son's response was, Oh, that was Anthony, he got into the Naval Academy and he didn't know where to put his stuff.

And I had images of Anthony, you know, piloting a Navy ship in the ocean, but he didn't know where to put his stuff. And I told my son, my son says, I'm going to sue him. And so I said, Okay, well, you know, but really, you should have taken the reins and brought that house together and said, to get our security deposits back, we have to do this, this and this.

I mean, that's what you have, you should have done to get your security deposit back. Now mind you, it was my security deposit. I pay my husband, I first must rent last month and security deposit. From that point on, the security deposit was on the kids, no matter where they go.

Even now, they're renting apartments, they're renting condos, they pay the security deposit. Well, now they're all paying their rent too. But in the beginning, you know, that's one thing you can know, they paid it, they don't have the like you say, the money in the game, if they don't, if they're not responsible for the money, even the best kids that you think are responsible, they don't get it.

Interesting story, Miriam. Thank you so much for sharing that. Okay. Okay, investing basics. So this would be things like where to keep a taxable savings, or for that matter, IRAs, low cost brokerage. I know there's today there's a lot of different things like robo advisors, and I'm not really even familiar with those.

Someone had mentioned a Fidelity youth account, which has parental oversight, and which can transition into a Fidelity brokerage account when the child turns 18. So if anybody has any experiences with any of those, we'll be happy to hear that. And then I did list the you want to teach your child these, of course, you want them to teach them the Bobo Heads philosophy.

Live beneath your means develop a workable plan, never bear too much or too little risk. You know, that would be your asset allocation, invest early and often, like you were saying, Miriam early to get that compounding, diversify, invest with simplicity doesn't have to be complicated. Use the next funds to keep your costs down and to also track the index, minimize costs and taxes.

Never try to time the market and stay the course, which is important for right now. In fact, I was calculating, we're almost I think we're down about 18% from the Heimdingen. I just really wish we could just do the 20%. So it'd be a bear market, get over with and then we can maybe because we all know that it's it's I mean, a bear market is past due.

So just let's just get it over with. And then we can maybe start looking forward ahead. But you need to just stay the course through all that. OK, we were talking about this earlier. But for many topics, especially like investing things like difference in the stock and bond, what's the difference?

I was trying to explain to my daughter the other day the difference between a mutual fund and ETF. And, you know, she kind of understood. But this is one of those things you have to explain multiple times before it really sinks in. Or sometimes they just won't understand until they see it actually applied to them.

And they can only absorb some natural state. Mom, that's enough for today. My brain is hurting like you can only explain so much at a single sitting and then you have to let it sink in and you can do it again and then add on and on another day.

They just can only absorb so much. And like like Miriam, you were saying, show them charts with compounded savings when they start young, that money that they put in when they're young is even, you know, when they're older, just gross compounds so much. I'm going to go ahead and there was a couple of questions from the RCPs.

OK, so this someone asked, how are you hiring your kids and paying them so they can officially invest in their IRA? What is the youngest age they can do this? And has anyone done this? So what I looked up today was and someone did answer this in a chat, but I'm going to repeat it.

Your child, regardless of age, can contribute to an IRA provided they have earned income. But minor children cannot establish IRAs on their own. The parent has to be set up an account with the child. It is the child's money and account. But since they're underage, the parent needs to sign the paperwork as long as they have earned income, they can contribute to an IRA.

But for jobs that don't have a 1099 or a W-2, it is important to keep records of the type of work, when and where it was performed and who paid the work and what amounts. And this type of job that doesn't have a 1099 or W-2 is often the first child.

Child's first job examples can include doing yard chores for neighbors watching kids or a family friend or helping local organization with some temporary work. If you're going to want to use these earnings up as a basis to make a contribution to an IRA, you're going to need proof that this is really earned income.

And then also you got to watch out for the tax implications. If a child or teen has earned income more than $400 in income, they must report the income on a Schedule C when filing taxes. If the child doesn't get a W-2 for babysitting, which they're probably not going to, it's up to the child or the parent to keep good records or logs.

In other words, if you don't have a 1099 or W-2, keep as best records as you can of either the transactions or just hand write a log. And then just keep in mind that you may have to file, there may be some tax implications for the child. One of the other questions is what is the positives and negatives of a custodial brokerage account?

Are there any good books on the topic of teaching kids about money and investing? I do have a list of books at the end, but it was more, it wasn't specifically too much about investing, but more about just teaching your kids like we've been talking about the basics of, you know, managing money and that kind of thing.

So those will be listed at the end. And somebody asked, other than 529s, the kids, UTMA brokerage accounts and custodial Roth IRAs, is there anything else my kids can be doing? The kids are 5th and 8th graders. I would think if they have a 529 at that age and an UTMA and a custodial Roth, I think they're doing great for a 5th to 8th graders.

So I'm not sure what else, you know, you could be doing at that age. That sounds great already. Does anybody have any tips on just teaching them investing basics, helping them get set up with a, I think Miriam, you already talked about the, they had at a young age, they had a brokerage account that they started with.

And, you know, sometimes they have a lesson that's kind of hard to learn if it goes down right away. That's, that's kind of a hard lesson to learn, but it's a good lesson. Yeah. They also, many of them want to, now they want to go into Robin hood. They want to buy stocks, like they want to buy Elon Musk.

What is it? Tesla. They want to buy Amazon. They want to buy Bitcoin. You know, many of them, they talk about it. My kids have not really paid much attention to that. So I think that maybe after years of listening to me, hammer it into them, that mutual funds are safe.

They're safe. You don't have to research your stocks. You don't have to worry about stocks at night. You don't have to worry about having that awful feeling that you made a terrible decision and bought a company that is going to go under that mutual funds are safe. Maybe it did sink in.

On the other hand, they will often come back and say, well, no, it's not going to go under, you know, Tesla will never go under. Microsoft will never go under. And then you can say, well, what about Eastman Kodak? And of course, what's that? Who's that? It's, you know, it takes a while.

They'd only listen so much to their parents. They have to listen to other people. That's where the Vogelheads forum comes on that, you know, to try to introduce them to forums like that, you know, afraid to let the Vogelheads go to some other forum, financial forum and try to, you know, read that.

Bill Bernstein's book, If You Can, is really, really wonderful for children, for kids, not children, I'm sorry. It's for high school, college, and it's called If You Can. It's a little tiny book like this. You can get it on Amazon with a little nest egg on front. It's really cute.

I bought like a lot of them, and I would give them away at work as presents to the young people who would come into work. And I would, you know, I was like an old preacher walking around with my book. But it was helpful to the young people just starting out.

For my kids, we went to a Vogelheads conference, I had Bill Bernstein, Dr. Bernstein, sign the books, autograph the books. So each of my kids has an autograph book from Bill Bernstein. So I looked at what he wrote, and he wrote, kids, read this book, there will be a pop quiz.

And then he wrote his name. But it's a great book. And it lays it out pretty clearly that if they don't get their act together, and invest at least something regularly get into that habit, they are going to be in deep trouble as they get older, because they will have missed out on time, and they will have missed out on compounding.

There are other writers, another writer who's coming to the Vogelheads conference is Michelle Singletary. She writes for the Washington Post, and she has a book out. I haven't read her book. But she is great. She just lays it out for kids. And for young people investing. There is a there are other Oh, I am going to say Bill Bernstein's book is free.

Also, on his website, you can download it. It's a PDF in his website, I have there's a link to that at the patient frontier, I think. Yeah, right. So, um, you know, that's, that's what I do. And for presents, I give them books. I give them Jane Bryant Quinn, who has a wonderful book called making them not making, making your I don't remember the name of making the most of your money was the first one.

And I Jane Bryant, Quint, Quint, Jane Bryant, Quinn, Quinn, q u i n n. And it's a thick books like this thick. It's like, yeah, it's like a it's not something you read from cover to cover. If you want to know about life insurance, you read that book on the sections on life insurance.

She's very much a Vogelhead. And I've read about her, she's invested basically in Vanguard. And she she also like if you want to know about the difference between 401ks, whether to do a Roth 401k or a regular, you can just go to her chapter there and she will lay it out in very easy terms for people.

I tried to get her to come on to speak. And I was unable to contact her directly because I believe she has retired now. But her books on the Vogelheads forum, they talk about her books as being very, very helpful compendium of all things investing that are easy to read as the kids start out and move into their own lives.

Great, thank you so much, Miriam. Let's see what we got. Okay, a few things about taxes. If your child does have a brokerage account, make sure you're aware of the kitty tax and they're probably not going to be earning enough for that to kick in. But just kind of read up on that real quick.

And I did, there's a link to a good article on kitty tax at the bottom of this, you know, when it applies. So when your child gets even their first job at McDonald's or whatever, they're going to kind of need to know just the basics of taxes, but the gross incomes, you know, taxable income, standard deduction, tax brackets, what's the capital gain?

And then how does the 401k health insurance premiums, etc, affect their W-2 and their taxes? Explain, you know, there's a, you can file on paper, you can file online, make sure they know the deadline, April 15, you know, that they can do an extension if they need to. And then when it comes time to do taxes, if you live nearby, what I do is I let, you know, I have triple tax, and then I let my daughter come over and do her taxes.

And I kind of sit next to her, but I kind of make her sit in a seat and like, you know, actually do the typing and enter the data, but I'm sitting next to her and kind of helping her out. So that seems to work pretty well. Does anybody have any tips on kids and taxes?

Yeah. Okay. I do the same thing. I make them sit next to me to do their taxes. And my older son got it. And he actually, he still does it. My daughter, well, I still do her taxes. And sometimes she comes over and helps me. My younger son, I do his taxes with him.

And he's got it, because he's a he's a techie. And so the actually he uses TurboTax. Now I never used TurboTax until recently, because I'm older, and I'm used to doing it pencil and paper and calculator. But it's a very what is useful about doing your own taxes is that you then understand how the tax system works.

You can figure it out after all after a while you just get it. Oh, there's income and there's different kinds of income. Oh, and then there's the standard deduction. Oh, it comes off. And then there is the you subtract what I paid in, and then the rest is mine.

Oh, okay. I get it income. Eventually they get the income part of it. And they realize that what is in my 401k is not there in the income. Well, where is that? Where do I pay the taxes on that? When you're retired, and you're in a lower tax bracket, so you will pay lower taxes on it.

Eventually, that kind of sinks in, especially if they can see it. I don't know if they're visually visual, especially they can see it on a 1040 form. They can see it working. Right, right. Like, yeah, that's one of those things. It just takes a while to sink in. Look at the chat and see.

Okay, Carol, there was one thing they asked about the books, and I have it here. This is the one book. I don't know if people can see it. I have that book on my shelf, yeah. Yeah. Making the Most of Your Money Now. Like you said, that is a thick book.

Oh, yeah. By Jane Bryant Quinn. And it's like a compendium of everything. And then everything financial for families and for young people starting out. And then this is Bill Bernstein's book, Dr. Bernstein's book. I don't know if people can see it. If you can. And this is a very, very thin book, as you can see, but it is packed, packed with, it's packed.

It's absolutely packed with information, very succinctly. Kids, you got to get your act together, or you are going to be in big trouble when you get into retirement. Here's his signature, you know, he autographed it. So those are the books that I would recommend. Oh, there's another interesting book called The Richest Man in Babylon.

I don't know if anybody's ever read that. I've heard about it for years, and I didn't read it until a couple of years ago. I loved it. I loved it. And I gave it to one of my, I gave it to my kids and someone was like, Oh, come on, this is ridiculous.

And my one of my sons loved it. So if you're a kid, if your child likes it, it is lessons to financial lessons, set in ancient Babylon sounds, it sounds ridiculous, but it's not it works. You can see yourself in that you can in the stories that are presented there, you can see yourself today.

And it was written, I think, in the 1930s, or the 1920s by a banker who saw that his customers didn't understand finance. And he would write out these little pamphlets and he put them on the in his bank, you put them there for people to pick up and read.

It's a neat book. And also, of course, the Millionaire Next Door. Many people read that book, and they like that. Right? That's a great one. Okay, thanks, Miriam. Now I think this is our last slide. Other than there's resources, but yeah, okay. So we do have a slide on continuing helper gifts.

And what I mean by that is, as everyone gets older, so there's two, there's two different sides to this. We'll do the positive side first. So once your kids get settled in, they have a job, you know, they're responsible, you know, they're not spoiled, you know, they're good with money.

Then, you know, if you're able and you want to, you can start maybe you might want to think about giving some special gifts to them. And this is, I like this book from Launching Financial Growness by Bobbi Rebell. What she said was, my mom and dad were able to balance making sure I knew that they would be there in a true financial emergency with making sure I never wanted to be in a position to need their emergency support.

So you want to be there for your kids if they really, really need you, but you don't want them to need you. Right? And what, what I've been reading is the experts say in general, don't subsidize a higher lifestyle for your child on a regular basis. Don't just say, I'm going to give you $1,000 a month for your, you know, help you with your rent or whatever you want them to be able to support their own basic needs.

But what I like this term that Bobbi Rebell in her Launching Financial Growness book, she coined, I don't know if she coined this term, but she used the term strategic financial boost. And what this is, is a one time limited financial boost to basically get your child, get them started, get them to the next level.

For example, you know, they, they have this great job or they could get this great job in New York city, but you know, they, they need a little bit of help to move, to get the first apartment or whatever, or they just got out of college. They have no money saved.

They may need a little bit help, just a little bit help for a couple of months until they get the first couple of paychecks. They may want to take a training, you know, training course, help with house down payment, pay for them to stay on the family health plan until they get a job with health insurance or until they turn 26.

But all these things are just, they're temporary. They have a limited time period there, or they're just one time things. And you want to kind of keep these items separate or specific for specific purposes. Like I said, the experts that I read say you don't want to supplement them on a regular basis to increase their, to a lifestyle that they can't afford on based on what they're earning.

Cause you want the child to have pride and be able to provide in their own basic needs. There's page two to this slide. So, oops, there we go. And as I mentioned earlier, it's, to me, it's okay to continue to pay some small bills. That makes sense. If you have a grandfathered in their family cell phone plan, you know, that's no big deal.

Here's a couple of ideas. If you do want to financially help your adult children later in life, you know, once you determine that they're financially responsible and if you're able, and if you want to, one idea is to pay for family vacations for the whole extended family, fund grandchildren's 529.

And don't forget about possibly having to file IRS form 709, if your gifts succeed, the annual exclusion amount, which is $16,000. And one thing they mentioned on that is it is, it is capable, like one spouse can give 16, the other spouse can give 16 and you can give to the, your child spouse too, if you want to, to kind of multiply those gifts.

One other idea that's been mentioned that not, of course, not everybody's going to be able to do this or want to do this, but to consider is if you're, you're set for your own retirement and you're, you know, your children could use a boost, you might, one thing you could do is disclaim and you're getting an inheritance from your parents, which is not always the case.

You could consider disclaiming your own inheritance and letting it go to your children. If you do plan to do this, you want to make sure your parents' wills and IRAs and everything is set up to where it would go to your children as contingent beneficiaries if you disclaim them.

Hopefully by this time, your children will be older and able to handle receiving the inheritance. And like I said, you may be already retired. You're already set. You don't need the extra money. Whereas your child may be just in the phase of life where they could definitely use that extra boost.

Not that they need it, but they could use it to maybe get a little bit bigger house, maybe some remodeling, pay for their child's college. Maybe, maybe both parents don't have to work so hard and maybe have young kids at home. One of them could stay home, that kind of thing.

So just something to consider and also watch out for, there's something called the generation skipping tax might come into play if you do the, do this strategy. Okay. There was, there was one question on the RSVP about this and it's, what are options for leaving inheritance now that the stretch IRA has been eliminated?

And if you're not aware of what the stretch IRA was, it's if you left your, for example, your, your child in IRA, they used to be able to stretch it out. And I don't know the exact rules, but they basically over their own life expectancy and a few years back, they changed it where they have to take it out over 10 years.

And this could be a big problem. If you leave a large taxable IRA to a, anybody or a child or anybody else, and they're working, they're already in a pretty high tax bracket. And they say you have a million, you know, $2 million IRA, they're going to have to take out.

Now they could wait until the end of the 10 years. And well, there's other rules about RMDs, but I'm not going to get into that, but say they, they spread it out $200,000 a year, $100,000 a year, that's going to put them in a real, could potentially put them in a much higher tax bracket.

The only suggestion I have for that is to pop, you know, convert as much as you can to a Roth, because if it's in a Roth, then they still have to take out the money, but they don't have to pay tax on it. So I don't know if anybody else has any other ideas on what to do about the, they call it the death of the stretch IRA.

Does anybody have any tips on that? I know Jim, I listen to a podcast, his name is Jim Lang. He has a lot of podcasts and articles on, they were actually anticipating the death of the stretch IRA for about five years before it happened. So they, they have a lot of podcasts and articles and things on that.

So that's about all. Okay. And then we have like I said, we have a whole page of resources. There's a lot of there's a few, sorry, vocal heads discussion that I kind of bookmarked. There's articles from Clark Howard about credit cards, credit cards for kids, that kind of thing.

What else do we have? Some articles I found seven ways to raise money savvy kids. There's JL Collins website on there. Oh, the last link is all about the kitty tax and when it applies, then there's books and most of which I have kind of skimmed through to prepare for this.

Some of which I got from the library, some of which I actually purchased this, that's launching financial grownups by Bobby Rabel and it is really good, really good book. And then the last page is podcasts that are interest of interest about having to do with this discussion about teaching finance to children.