Teaching kids about finance and stocks


Children, they grow up so fast, don’t they? Our son turned 8 last month and our daughter turned 3 in January as well. Time flies. Last night I put our daughter to sleep and noticed that she had picked out my son’s old pajama shirt to wear to bed. Wow, that kinda knocked.

It’s only a matter of time before my son asks for the car key or even worse the girl brings home a boy! Haha. Just crazy.

Anyway, with my son having Christmas and his birthday so close together, he was bombarded with presents. (He’s a lucky child). When his birthday came, he really didn’t want/need much. We gave him rollerblades and a Fortnite game and cash. Yes, it’s trending right now, he and his friends love this game and are really doing something fantastic in it. He comes running down from his fort to tell me that we won Battle Royale again! I try the game and I’m destroyed. Give me an N64 controller with golden-eye and I’ll show him a thing or two!

He also received money. Normally, for larger sums, we throw them into their RESP accounts. But this year, I wanted to try something different. I want him to really experience dividend growth investing.

Our Childhood Finances

I think I’ve said before that when I was young, my parents didn’t talk much about money. I’d get my allowance or whatever, call my best friend and we’d walk down the street to the local convenience store. Then I would have a few green frogs, a few bottles of coke and/or these Nanaimo taffy bars. If I had some change, you know I’d leave that on those candies. Just like that, it was all gone.

As a teenager, I was making a lot of money landscaping for that age, but was spending it on the typical teenage stuff – clothes, drugs and booze for those bush parties! Good times were had, and I really have no regrets, but I still think how much better off we would be if we saved 10% of that income back then.

My wife’s family didn’t talk much about money either, they said go to school, get a good job and get what you want after that. She didn’t get an allowance, but if they went shopping they could choose something.

I think that’s pretty normal. Most people don’t want to talk about finances or sex, even with their friends. Why? I have no idea. I’m sure we both treat. If I can learn and improve in each, why wouldn’t I? Now, I’m not going to rush and talk to kids about sex, but finances, I’d like to teach them.

Procurement

So one day last week I sat down with our son and told him and showed him our website. All that money basically comes from us not doing anything, pretty cool huh. He thought that was pretty neat. I showed him before, but this time we were talking about his money. He had $180 and really didn’t know anything he wanted to buy other than more Fortnite cash. I convinced him to let me invest it and he might have the change for Fortnite.

He agreed, but when I asked him what stock he would like to buy, he said, “Walmart”. Interesting to hear his choice. I convinced him to go for something different, just because I want him to start seeing cash flow and Walmart (NYSE: WMT) the yield is so low. Of course I raised the 3 stocks I’m currently thinking of buying and after talking a bit about it we decided on TC Energy (NYSE: TRP).

So we bought 3 shares of TC Energy at $56.60 per share. A small purchase, but I got a bunch of free trades and in the end it’s just getting started. A few days later, I have to tell him the good news. He got a 7.5% raise. How cool is that? He was all excited, I didn’t do anything – he said. Yes, it is a dividend growth oriented investment.

We purchased these shares in my TFSA account with my existing TC Energy shares. Now I just create a notepad on the computer and keep track of his holdings there.

Finances with our children

Now, the plan for now is to pay him the money whenever TC Energy pays its dividend. While I redeploy all the cash flow we get from our sources of passive income, we think he could benefit more from seeing the money. I don’t think kids get really excited to see numbers on the screen, but if out of the blue, I’m like, “Here’s $2.61 your stocks paid you today.” He will probably hit differently.

When it comes to finances, we also encourage household chores. My daughter 3 gets 25 cents a day to feed our dog and our son gets a dollar a day to clean up all the loose toys that Lily throws all over the house every day. We pay them weekly and it’s sort of our way of introducing them more into the finances. They adore him.

Conclusion

Well, these are our son’s first steps into the world of investing. It’s kind of an experiment, I wonder if in the future when he gets bigger sums of money, he will invest it.

Obviously, they are still children, I do not want to bombard them. Here’s your allowance, you wanna go to the Dollar Store and buy some stuff? Let them enjoy it too. Also, try to show them the importance of giving, we are very lucky.

I’m writing this talking about how we introduce our kids to the world of finance, but honestly, I’m more curious about what you do or have done? We can all learn tips or tricks to help our children in the future.

There are many different ideas and I would love to hear from you.

Cheers!

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Editor’s note: The summary bullet points for this article were chosen by the Seeking Alpha editors.

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