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Update: This post was selected as a participant in the Rockstar Rumble, a tournament dedicated to determining the best personal finance blog post of 2017, hosted by Rockstar Finance. 260 entries were made, 128 posts were chosen, and this post made it to Round 3 where only 32 posts remained. Very honored to have been a part of the tournament and glad so many people liked this post. I hope you enjoy it too!
Our attitudes and perceptions about money are often shaped by our background. Since financial education rarely ever happens in schools, a lot of our learning comes from our parents.
Without my parents instilling positive money habits throughout my life, there’s no way I’d be where I am today. It’s also likely that I wouldn’t have the same passion for personal finance.
I was taught that building wealth was achievable through hard work, careful spending, consistent savings, investing for the future, and generosity. This helped me learn the importance of using money as a tool, and encouraged me to learn even more on my own.
How Much Should Parents Help Their Kids Financially?
I’m not a parent yet, but it seems to me that a difficult aspect to parenting is knowing how much help to give your kids. I wrote a piece last year about why I’m not planning to pay for my children’s college tuition. This can be a tricky topic, and people have varying opinions. My overall point in that article was to explain that my parent’s didn’t pay for any of my college expenses, and it ended up being extremely important in my personal growth.
Instead of being handed thousands of dollars, I took my college experience upon my own shoulders, and I’m convinced that I’m better off because of it. My parents could have paid for my college expenses, but instead I graduated with $25,000 of student loan debt. Working through the debt payment process was difficult in the short-term, yet has produced long-term benefits. My student loan debt sparked me to learn more about personal finance and building wealth.
Let me be clear, I’m not against parents helping their children with tuition costs, but I do think that students can learn valuable lessons by working to pay for the costs themselves.
This is one example where I think it’s difficult for parents to decide how much they should help their kids (assuming they have the means to do so). On the one hand, they want their kids to be the best they can be, but on the other hand it’s difficult to watch them struggle.
My dad told me that watching me struggle with my college expenses was one of the hardest things he’s had to do.
At the time, he compared the whole process to a caterpillar breaking through a cocoon. It takes a lot of struggle, but that struggle is necessary in order to gain enough strength to be able to live as a butterfly. At the time, I wasn’t too keen on this lesson, but looking back I can see where he was coming from. The short-term struggle led to long-term lessons.
How My Dad Finally Got Me to Read Investing Books
Now that you understand a bit of the backstory, you can see that my dad doesn’t just give handouts. However, this doesn’t mean that my parents don’t help me at all. Without their love, support, and teaching, I wouldn’t be where I am today. Additionally, my dad sometimes comes up with creative ways to push me towards self-improvement.
His most recent concoction is what he fondly calls, “Dad’s Investment Reading Club.” He has put forth this offer to both my brother-in-law and me.
Here are the terms:
- We can read 4 specific investing books for a reward/bribe of $100 per book.
- We must provide a 2 page “book report” for each book read.
- The funds must be invested in a Roth IRA for long-term savings
- After finishing all 4 books, we get a bonus/bribe of $100, and have the option to read 5 more books for $100/book.
- In total, we have the option to read 9 books about investing for a total of $1,000. The deadline is December 31st, 2017.
Here’s a list of the first 4 books (with the next 5 being decided later on):
- The Intelligent Investor by Benjamin Graham
- Common Stocks and Uncommon Profits and Other Writings by Philip Fisher
- Common Sense on Mutual Funds by John Bogle
- The Intelligent Asset Allocator by William Bernstein
So essentially, my dad is bribing us to read books of his choosing about investing, and I think it’s a brilliant idea for all involved.
It gives me an external push to start reading voraciously, and it gives him the peace of mind that his kids are going to prepare wisely for their future. We also get to build our relationship by talking through these difficult investing topics together.
Creative Ways to Help Your Kids
I think a creative set-up like this is so much more beneficial than simply giving your kids money. Instead, it’s rewarding hard work of building knowledge (reading) and then articulating what was learned (writing the reports).
Dave Ramsey does a similar arrangement with his kids. When they each turned 16, they wanted a car. Instead of buying them a car, he offered to match whatever savings they built up. For example, if his kid saved $3,000, he would match the $3,000 so that they could purchase a $6,000 car. With this arrangement, they’re learning the value of building up savings and also about the value of an “employer match.”
This could be done with tuition expenses as well, where parents match what their kids save up, instead of paying all of the costs for them.
Overall, I’m thankful for my parents approach. They love and support me, while still pushing me to be the best I can be.
Practical Application
What if you don’t have kids though, and what if you’re thinking “my parents never did something like this,” is there still something to be learned from this post?
You can set up your own set of motivators. For example, pick out an investing book and tell yourself you won’t go out for dinner until you finish it. This lets you have a goal, and a reward for completing it. There’s plenty of other examples. You could also do this with a friend so that you each have the added accountability of supporting each other.
The bottom line is to find extra motivation for completing a series of small goals that help improve your knowledge, skillset, or health.
Here are my posts recapping each of the four books:
- 7 Key Takeaways from The Intelligent Asset Allocator
- Recapping John Bogle’s Common Sense on Mutual Funds
- 5 Key Takeaways from Common Stocks & Uncommon Profits
- 5 Key Lessons Learned from the Intelligent Investor
What do you think about the “Dad’s Investment Book Club?” Would you ever try something like this with your own kids? If you don’t have kids, what is a different way you could go about setting up your own motivators?