American Girl is a strange brand to put out a guide to money. Some of their dolls cost hundreds of dollars. That’s before you get into the extra clothes and accessories. My wife sold five of her niece’s American Girl dolls for around $500. They were used, without the boxes, and in some cases not even in the original clothes. Back when the nieces were in their American Girl phase my wife saw the prices on the accessories in a catalog and quipped, “I hope you get an American job that pays American money for this stuff.”
I have to admit that when we found out that we having were boys, a part of me was relieved to not have to get drawn into that consumerism. Instead of American Girl stuff, my kids got drawn into Pokemon consumerism. I don’t know if that’s any better.
When my wife saw the book, American Girl: A Smart Girl’s Guide to Money by Nancy Holyoke, we joked that it must be one page long with only four words, “Don’t buy our products!” However, it was used and only a couple of dollars. Curiosity got the best of me, so I bought it. The copy I have is the original version from 2006 and that link is to the revised version that’s in print today. It has a different illustrator, but the same author. Using Amazon’s “Look Inside” feature, it seems like the content itself is the same and the illustrations are just as good – it’s just a different style.
So, with two boys and no daughters, I’m going to attempt to review a personal finance book for teenage girls by a company that sells outlandishly priced products. None of this makes any sense, but this is where we are.
To start, the book isn’t one page and four words long. It’s 95 pages, with colorful illustrations on every page. It’s the perfect presentation for a teenage audience. I can’t emphasize that enough, because getting kids to choose to read about personal finance is not easy. A teenager will plow through this book quickly. I’m tempted to ask my 9-year-old son to read it, but I know it would have be a big bribe – teenage girl books are weird for 9-year-old boys. I’ll give it a try anyway – chocolate usually works. Also, it would give me a chance to put a few dollars in his how to teach kids about money. Finally, there is a page about the power of compound interest.
The book closes out with a few pages on donating to charity. It also included one page about how $20 can mean different things to different people and even different things to you based on how you acquired it and what the expectations were. This particularly resonated with me. I can spend hours writing an article for this site. A dollar earned here means much more than a dollar earned in salary.
American Girl: A Smart Girl’s Guide to Money isn’t a complete guide. For its intended audience, it is close to perfect. It teaches just enough without getting too long and complicated that teenage girls would simply not read it.
The First National Bank of Dad is perhaps the best personal finance book for parents. If it’s not the best, it’s the one I’ve enjoyed the most. It’s also certainly one of the best-kept secret books about how to teach kids about money. For some reason, it only has 35 Amazon reviews – not a lot for a book that is nearly 20 years old.
What makes it so good? I keep coming back to two things:
All the advice makes sense when you think of it from the perspective of the child.
It’s an easy, quick, entertaining read.
You’ll get the most out of it if your kids are around age 5 or 6. It’s perfect for that time when kids are starting to get an allowance. It covers personal finance for kids until about the early teen years – around age 13 and 14. There’s some mid-late teen advice such as who should pay for driver’s insurance and whether a teen should get a summer job, but that’s not the main focus. Author David Owen isn’t afraid to share his strong, often contrarian, opinions, but he brilliantly backs them up.
The First National Bank of Dad is divided into four main parts:
Table of Contents
How to Get Your Kid Interested in Saving Money
This section is the biggest concept – it’s right in the title of the book. The idea is to open up a virtual account (a spreadsheet will work fine) where your kid(s) can deposit money and receive 3% interest monthly. You, the parent, is going to pay this interest. That’s why you are the First National Bank of Dad.
Why open up your bank for your kids?
Bank savings accounts fail kids. They pay almost no interest. Kids can’t easily access their money. Kids have nothing to gain by putting their money in a bank. It isn’t interesting or useful from their point of view.
However, The Bank of Dad, paying out 3% interest each month makes a big difference. For example, $100 grows to $142.57 in a year. A child can see how $42+ in free money is useful. Personally, I’m thinking of implementing this at 1% compounded weekly. On a $100 deposit, that amounts to $167.77 in a year, but I get to show it growing every week, which might be more interesting to my boys. After the first year, I will reduce it to 3% monthly (42% annually). For the third year, maybe I would do 5% every two months (34% annually) and finally, the last year I could do 7% every quarter (31% annually).
David Owen acknowledges that the Bank of Dad can’t exist forever – paying a guaranteed 42% annual interest over the long term just doesn’t work. He says that around age 12, the kids wanted real checking accounts and independence, which effectively shut down the Bank of Dad. Since this book is twenty years old, I’m not sure kids are interested in real checking accounts like he claims. However, I could see them wanting access to money without asking for a withdrawal from their parents.
The Bank of Dad on Allowances
Author David Owen is a big believer in allowances. I am too. It’s hard for kids to learn about money when they don’t have any. He recommends not being to stingy with allowances – kids have to have enough money that they can make mistakes to learn from.
He gives some other great tips on how to do allowances right:
Ask kids how much they want – include them in the process.
If they want an allowance raise, have them “apply” for it in writing justifying why they need or deserve more.
He also offers some things that you shouldn’t do with an allowance:
He recommends that you don’t encourage the kids to save, let the awesome compound interest get them excited so it’s their idea
Chores are a family obligation. We all need to pitch in. It’s best not to link money to doing chores. Pay for doing extra work.
Grades are an obligation. It’s the kids’ job. Don’t link money to getting good grades.
There’s one more that I wanted to address specifically.
Don’t force kids to give.
This is a unique concept as almost all the advice on teaching kids about money has giving included. The reasoning behind this is that it doesn’t give kids the ability to control their money. They can control where to give, but not the act of giving itself. If you force kids to give away one-third of their money (as many recommend), kids will see it only getting two-thirds of their allowance.
This makes sense to me. However, I still want them to give. So what do I do about it? I think the best plan is to give an even higher interest rate for money designated for giving. That might not encourage saving for the purpose of giving – after all, the money would all be going away. However, recently my kids have started to want to give each other presents at Christmas and birthdays. If we count this as giving, then they can scheme up a system to multiply their money faster if they cooperate. Most of the time, my kids don’t work well together, but if they have a shared interest, it might bring them closer together.
The Dad Stock Exchange
When the kids have graduated from the Bank of Dad, they are introduced to The Dad Stock Exchange. The Dad Stock Exchange is just like any regular stock exchange, except that the prices of stock are reduced by 100. If a stock trades at $12.45 it would trade at $0.1245 on the Dad Stock Exchange. Kids wouldn’t buy real stock, but Dad would keep track of the value.
Dealing with smaller numbers is easier. Also, kids can diversify more than they normally would be able to with a small amount of money.
One of the difficulties with the Dad Stock Exchange is dealing with dividends. The author didn’t want to keep up with them. I wouldn’t want to either.
The Dad Stock Exchange may have made a lot of sense in 2003 when the book was written. It may even make some sense today. However, many brokerages allow buying fractional shares and have commission-free trades. As I write this, kids could buy a half-share of Roblox for a little more than $25.
I think it’s better to invest in the stock market for real nowadays. In fact, once the kids were about three, I squirreled away a lot of their birthday money and invested it. At ages 8 and 9 now, they have nearly $5,000 a piece. The stock market has done really well over the last 5-6 years. Also Robinhood had a promotion where they were giving out free stock. Maybe they’ll use this money for their first car someday.
True Net Worth
This section is about understanding that money isn’t everything. There are things that money can’t buy. Essentially David Owen is making the case that quality of life is important. Owens goes through some exercises to show that the most valuable things are memories, not stuff bought with money. It’s an important point to make, but this isn’t any new and/or revolutionary. There’s a reason why I went with Kid Wealth and not Kid Money. Wealth encompasses more than money.
There’s some things in the book that I didn’t find much value in. There was a lot about eBay and Beanie Babies. I think that was more relatable in 2003. It’s good in a historic context. Also, selling stuff on eBay is something that is valuable today. I’m not sure it would make an update edition of the book.
There was also a lot written about the value of reading and reading to your kids. In some ways, I liked how it branched out from more than just a discussion of money. However, I could see many people looking for a book that stays more laser-focused on personal finance and kids. If you are like that, then this book may not be for you.
The True Value of Teaching Your Kids About Money
The author’s father was a life-long money manager. That was his career. However, when the father got older and had some health problems, it became clear to the author that the father shouldn’t actively manage his money anymore. So he tells his father that he has an older friend that needs help managing his money and asks if his dad would do it. His dad says something like “Of course now! Are you crazy? I’m too old and I don’t want to do that anymore.”
Then the author says, “Dad, you are that older friend.”
We help our children learn money today. Tomorrow they’ll be the ones helping us with our money.
Do your kids have a Kid Roth IRA? If you can manage it, I highly recommend getting one. A Roth Individual Retirement Account (IRA) is an incredible savings vehicle – perhaps the best deal in all of personal finance.
My kids each have one. That’s very rare – I bet none of their classmates have one. They’ve had one since they were around five years old. They’re 8 and 9 now and they have around $2,000 and $3,000 respectively in retirement savings. They didn’t have to pay income tax on the income because they don’t make much money. They’ll be able to make withdrawals completely tax-free and penalty-free at age 59.5. By starting now, they’ve got the most valuable thing on their side – time.
It’s not easy to get a kid a Roth IRA account. The IRS has an annoying rule that the kids have to have earned income to put money into a Roth IRA. Unfortunately, you have pesky labor laws that make it difficult for kids to earn wages. Ideally, you’d have a kid who has earnings from a baby modeling career, but there aren’t enough of those to go around. It would be nice if people lined up to buy art from children, but I’m not holding my breath on that one.
Table of Contents
Kid Roth IRAs and Self-Employment Income
How do my kids earn this money to comply with the IRS demands? I pay them to help with my dog sitting business. I typically make around $15,000 a year boarding dogs. It’s a very good side hustle while I’m freelancing from home and writing blog articles. After COVID vaccines became available, I made over $30,000 as everyone got pandemic dogs and every wanted to travel.
I’ve been dog sitting for more than seven years now, so the kids have grown up with a couple of extra dogs around. They’ve become naturally curious about feeding dogs and they love to play fetch with them. We’ve taught them how to pick up the dog droppings, but that’s not something they like. Some of their peers do that chore for their allowance. However, for the family dog sitting business, it’s part of the job.
Feeding dogs, playing with dogs, keeping the water bowl filled, and picking up after the dogs is most of the dog sitting job. These are all things that my kids can do. Occasionally I have to give them medicine. That’s about the only thing that I need to do 100% myself. The IRS should have no issue with me subcontracting out some of the work to them. A professional pooper scooper company costs a couple of thousand dollars a year for the number of dogs we have and how often they’d have to come. My kids aren’t professionals, but the service doesn’t fill the water bowls or play with the dogs, so I think it averages out.
Kid Roth IRAs: Powerful Stuff
A Roth IRA contribution at this age is very, very powerful. Money grows quite a bit over 55-60 years of compounding until they reach ages 65 and 66.
Before we get to my kids’ Roth IRA numbers, here’s a helpful CNBC video about how kid Roth IRAs works. Who wouldn’t want 3.4 million in one of their accounts?
My kids won’t have 3.4 million like the example in the video. If they were to earn 7% interest over that long period, a single dollar would be nearly $58. So $1000 in a Roth IRA would be worth $58,000. Of course, at 3.5% inflation over that time, you’d need $7,878 to have the buying power of $1,000 today.
When you crunch those numbers, it gives them a real post-inflation gain of 7x their money. Theoretically, if they could earn the $6000 Roth IRA limit, they’d set themselves up with $42,000 in retirement. Of course, that would be an extreme amount of dog care and that wouldn’t be reasonable.
In addition to the Roth IRA, we pay them some real spending money. They saved up for a Nintendo Switch before the pandemic. That was great timing because they were hard to find once COVID hit.
The first year, I settled on paying the younger one $400 and the older $600. In the next year, the younger got $600 and the older got $750. Last year, they got $750 and $1000 for each. The dog sitting business is going well with everyone traveling now that they are vaccinated.
My oldest would have an inflation-adjusted amount of $13,443.70 in his nest egg at age 65. My youngest would have to settle for “only” $10,066.02. He should catch up because he’ll have an extra year when my old son moves on.
Investing My Kids’ Roth IRA
You need to open a kid Roth IRA with a brokerage firm. I chose Fidelity because I already had my SEP-IRA with them. They allow you to buy many mutual funds, bonds, and ETFs with no trading fees. However, a lot of brokers have many investment options to manage the Roth IRA assets.
I normally believe in investing in only index funds for them. However, they always have some money left over. With VTI trading at $222, I buy a couple of shares with $600 and have over $150 leftover. That’s when I look at foreign ETFs such as VEU and VWO.
The Future of My Kids’ Roth IRA
In the next few years, I’m hoping they can participate in some of my blogging work. I need to think a little more about how this would work. Of course, I’d pay them for their time and insight, which would be taxable income.
After that maybe they can do babysitting or lifeguard work. I noticed that McDonald’s is hiring 14-year-olds now. There will be more opportunities for them to earn money as they get older. While all this is nice, their core “job” now is to get good grades in school.
Kid Roth IRAs FAQ
I thought I’d add an FAQ because I know that a lot of people have questions about Kid Roth IRAs. Some of these can get difficult, so I urge you to contact your tax specialist. I’m not a tax specialist and I didn’t even stay at a Holiday Inn last night.
Can I open a Roth IRA for my child?
Yes, as long as the kid has earned income. Some popular self-employment gigs for young people are mowing lawns, babysitting, and dog-walking.
How much can a child put in a Roth IRA? Are there IRA contribution limits?
A child can put the same amount into a Roth IRA as an adult. Right now, in 2022, it is $6,000. There are no minimums to what a kid can put in a Roth IRA.
Can a parent contribute to a child’s IRA?
Technically, yes. I am my kids’ parent. With our dog sitting business, I pay them income for the work that they do. I’m acting as a business owner. As a parent, I put some of that money into their Roth IRA.
Do I get a tax deduction for contributing to a Roth IRA?
Unfortunately, you do not get a tax deduction, but don’t let that stop you. If you’ve learned nothing else in this article, you should realize the Roth IRA is an incredibly good deal.
Can my child use a Roth IRA for college?
Yes, there is no early withdrawal penalty for qualified education expenses such as college tuition. However, most financial experts agree that it’s better to let the Roth IRA to compound interest for retirement and save in a 529 Plan for college. 529 Plans are more flexible and don’t have the earned income requirement.
Can my kids cash out the Roth IRA at age 18?
Yes, when they become adults they’ll be able to take control of the Roth IRA. It’s important to teach your kids about money, so they understand that the penalties for withdrawing the money are severe.
I have a question that’s not listed here. How can I ask it?
When I was growing up, I didn’t know anything about the family finances. It was simply my job to do well in school and my best everywhere else. My father died when I was 13 and my mother invested the insurance money. I started to learn a little more about the family finances, but I still didn’t know much. Even today, I couldn’t tell you when my parents paid off the mortgage on the house.
I didn’t need to know the family finances, but I feel like I would have been more prepared if I had that information. I might not have taken for granted all the things that seemingly magically happened. In college, I might have understood the value of a dollar a little better.
I think it’s a good idea for kids to know some basics about the family money. They certainly don’t need to know the details.
I was trying to think of a way to show the kids roughly how we spend our money. My kids are 8 and 9 and they have a fairly good handle on place value. However, whenever possible, I feel like younger kids work better with smaller numbers.
That’s when I came up with an idea. What if I took our rough finances and deleted three zeros? Yes, I’m dividing everything by one thousand.
Here’s an example of what a conversation of what our family’s numbers might look like:
“Mom and I make about $200 a year. We actually make more than this and things cost more than this, but this is an example of where we spend money.
We spend about $40 in taxes. Taxes pay for libraries, roads, police, firefighters, and schools – many things that we share as a community. Many adults don’t like paying taxes, but everyone I know enjoys having these things.
We spend $40 to buy and maintain this house. We’ve been paying money to buy this house for ten years now. We have five years left. Then we won’t have to may so much.
We spend $25 to send both of you to the best school around. It’s so good it costs most people $50 to send two kids and they happily pay it. We get a discount because mom is in the military. Everyone has the choice to pay $0 for the public school – it is paid for by the taxes above. Those public schools are good here too. Some of your good friends go to public schools and they are great kids. It’s always important to try your best to do well at school, but it feels more important to us because we pay so much money.
We spend another $13 on cars and trains. Much of that was for when mom was in the office. Remember she’d spend the night in Boston so that she didn’t have to drive so much. Those hotels add up, but it gives her hours more of free time. With COVID, she’s been at home a lot more, so we don’t have to pay this much. We also own our cars just like we plan to own our house in five years. Most people make payments every month to buy their cars. There’s a lot more to car costs than the cars themselves. We have to pay for gas and to maintain them in case they break down. We also have to pay for insurance in case we, or someone else, get in an accident. Insurance is something we can talk about later.
We spend $14 on food. Half of that is food that we eat at home. The other half is food that we eat at restaurants. We don’t eat out at restaurants very often, but it costs a lot more. We get you those cooking classes so that maybe someday you can make restaurant-quality food from your kitchen at home. That would save a lot of money.
We spend another $5 on utilities. These are things like heat, electricity, water, internet, and phones. I’ve done a few things to save money on these things. The solar panels saved a lot of money. The new heater in the basement works a lot better than the ones they made 25 years ago.
We spend another $5 on other random stuff that we buy. Things like shampoo, toothpaste, shirts, pants, and shoes.
When you add up all these costs of things we get to $137. That leaves us with $63 left.
We spend money on a lot of other fun things. We have that zoo membership. We are going to do those bumper boats on ice. I don’t add up how much these things cost. They aren’t free, but they are fun. We spend another $10 on vacations. We spend another $5 on summer camps and another $3 on activities like karate and snow sports.
That’s $155 of the $200 spent, so we have about $45 left. We still have some other expenses here and there and the rest we save.
We’re making this simple for you and some of these numbers are estimates, but it gives you an idea of where our money goes and the decisions we make when spending it.
I haven’t had this conversation with them yet. Maybe they won’t care. Maybe they’ll find some of the stuff interesting. In any case, I feel it’s good to be prepared to cover that conversation if it comes up.
The only downside to this that I can see is if my kids think they can give me $3 and pay for a year of karate and snow sports. I don’t think it will too bad though. They have had some school exercises where one icon is equal to a hundred units, so five icons are equal to five hundred units. This is a similar exercise except that one dollar is equal to one thousand dollars.
I am passionate about several things, but two of them are teaching kids and money. Teaching kids comes with the territory of being a stay-at-home dad. I couldn’t have gotten through 15 years of money blogging if I found financial literacy a chore.
There are so many ways to teach kids about money… perhaps too many. I started outlining this article and found more and more ways to teach valuable money lessons. It’s easy to go overboard, remember that young children need to just be children. Money management should be near the bottom of their priority list. That’s why many of the suggestions below focus on things that kids find fun.
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Set a Good Example
Whether you like it or not, your kids are watching you all the time. They see a lot of the everyday ways that you use money. I know my frugal and investing habits came from my mother. As a young child, I remember rare triple coupon shopping at the grocery store. As a teen, I would also read the copy of Kiplinger’s Personal Finance magazine that came to the house. That was a good way to learn about financial topics such as corporate earnings and interest rates.
There are two main ways to teach kids about money with books, give them one or read one yourself. I recommend doing both.
The best book to give a kid to teach them about money was written in 1989. It’s If You Made a Million. It’s written for kids and introduces them to coins, saving, spending, investing, compound interest, mortgages, and even financial independence. It does it with excellent illustrations. I wrote a review of If You Made a Million here.
If you are looking for a second book, I helped fund one on Kickstarter. I got my copy recently and it is very good. It is M is for Money by Rob Phelan. You can pre-order it now.
This is mostly for very young kids, such as kindergartners. It covers the basics of how to save, being mindful about your spending, and giving. Anisa Kurji and her two sons take you through a money journey in about 10 minutes (or less). It’s perfect for the ride to school. There are only about 10 episodes, but that might be enough to mix in to change the routine every couple of weeks.
This podcast tackles interesting questions like why we need money and how it came about. Most of the episodes tackle one question. Each episode is about 22 minutes long, so you could plan for this on long car rides. This is a good speed for my 9-year-old.
It’s sponsored by Greenlight, which is a debit card for kids. I haven’t heard too much about it, so if you have experience with that, let me know in the comments below.
I know, kids watch too much television these days. It’s good to have limits. However, if they are going to watch television anyway, you can use it to advance their financial education. There are two shows that I think you should focus on.
That link goes to a list of about a half-dozen episodes that focus on personal finance. There are more than 325 episodes of Teen Titans Go! so it’s usually not about personal finance. However, there’s an episode about building wealth with rental properties. That covers the importance of good credit history and credit score. Another episode teaches the value of money with a weird analogy of bees being the currency.
Did you know that Warren Buffett’s entrepreneurial lessons are available as a cartoon for kids? Yep. You can watch over twenty episodes of his group of young teens learn money lessons. It’s free to stream, with no subscription service to buy. Usually, I mix this in as a treat on days that I’ve had to homeschool as a break.
Every reader has to be familiar with Monopoly, so I won’t waste words covering it. You are also probably familiar with the game of Life. It wasn’t until playing that with my kids recently that I realized it can teach the importance of having a high-earning career at an early age. Perhaps the best of the mainstream money games is Pay Day.
The best board game to teach your kids about money is The Allowance Game. You earn money for doing things like mowing the lawn, but you can lose money if you break a window. Like all the other board games you use play money which is good for learning math concepts like addition and subtraction. This one adds coins to the mix which is great for learning decimals.
When COVID-19 hit, parents and kids turned to online learning. It wasn’t as good as being in the classroom, but many kids now have improved computer skills. That makes online courses for teaching kids about money a perfect fit.
I reviewed MoneyTime at the link above. It’s designed for kids ages 10 to 14, but my oldest battled through it when he was 8 and it went okay. He’s 9 now and his math skills have improved a lot in the last year. Unless you’re an evil parent writing about kid money, I would stick with those recommended ages. If I were to build a personal finance curriculum for kids MoneyTime would be a core component.
Choose FI Foundation
The Choose FI Foundation has another money course for kids designed for kids in the 3rd to 5th grade. I haven’t gotten the opportunity to review this yet, but I have a 3rd grader now, so hopefully, we get a chance over one of the school vacations this year.
Both of these courses cover important topics like the danger of credit cards and bad debt.
Video games can teach kids about money
One of my earliest memories of learning about money comes from the classic video game Lemonade Stand. There are ad-supported free versions online and versions in your mobile app store of choice. It’s a great way to learn about supply and demand, but it will probably get old after a few hours.
If you are looking for a 2021 version of Lemonade Stand, I suggest Pizza Company by Osmo. Osmo makes video games come alive in the real world. You set the tablet in a stand and a mirror redirects the camera in front of the tablet. Kids build things in front of the tablet and the Osmo game interprets it on the screen. It sounds complicated but it’s so easy a 4-year-old can get it. The Pizza Company game is better for kids age 7 or 8 though. If you are curious about the Osmo learning system, I wrote a review here
When I was in high school my graphic calculator had a game called Dope Wars (it also goes by Drug Wars). Due to the content (i.e. illegal drug trafficking), it’s best for older kids. Essentially the game taught you how to buy low and sell high. Wired has a history of the game which is 40 years old this year. You can get a version on the Google Play store here.
Research shows that kids develop their money behavior from a young age. Unfortunately, financial literacy is not taught in many schools. That leaves it up to parents to fill in the gap. With the above resources, you can mix and match the education necessary to build a foundation for a great financial future.
Today’s article is something a little different – something light to send you into the weekend. Yes, it’s another example of teaching your kids about money with television. What if we could take a kids’ song and make it into a money lesson? I didn’t set out to make this happen. However, spending a lot of time with kids and thinking about personal finance often leads to odd combinations.
Or to put it another way, “Something weird might just be something familiar viewed from a different angle.”
My kids love Adventure Time and it’s good for adults to watch as well. Somewhere along the line, I couldn’t follow the story (it’s very weird). However, I enjoyed the songs, particularly the ones from Marceline (Olivia Olson), so I got the soundtrack for the kids. That’s when one song caught my attention in the car. I would later find out that it made the an LA Times list of top songs that make you cry.
Watch this short 90-second “Everything Stays” from the Cartoon Network show Adventure Time:
In case you aren’t able to watch here are some of the lyrics: (It’s much more meaningful in the full context with the music.)
“Everything stays right where you left it Everything stays But it still changes Ever so slightly, daily and nightly In little ways, when everything stays”
Isn’t that a tremendous description of buy-and-hold investing? Your shares stay, but there are slight daily changes to the value of the shares.
“Go down to the ocean The crystal tide is raising waters’ gotten higher as the shore washes out Keep your eyes wide open, even when the sun is blazin’ The moon controls the tide, it can cause you to drown”
This quote reminds me of watching the warning signs when you own a stock. The last line about the moon controlling the tide is a reminder that the fate of a stock is often out of your hands once you’ve made the decision to buy.
Index funds don’t require you to keep your eyes open. The moon rarely can cause few diversified portfolios to drown.
What did you think? Was this something too weird or familiar when looked at from a different angle? Let me know in the comments.
I have two boys, one in the second grade and one in the first grade. My second grader is doing basic math with money at school, things like making change correctly. It’s certainly a good start, it is math disguised as adding and subtracting tens and twenty-fives. My kids learn more about personal finance when I take them shopping and show them how I compare unit pricing on a jar of spaghetti sauce. For the most part, I should be focusing on how to give your child an allowance.
Alas, two of my greatest interests in life are personal finance and my kids… I would inevitably try to combine the two. I can’t teach all personal finance through television. So when I heard that MoneyTime was an online class for teaching kids personal finance, I did a little research and reached out to them to find out more. Every week, I get a dozen or more companies asking me to pitch their product or service. This was one of the few times that I’ve reached out to the company. (You may have noticed that I review very few services.)
MoneyTime Review: The Overview
MoneyTime is designed for kids between the ages of 10 to 14. From their FAQ:
“We’ve found after testing that children below 10 years old found the math to be a little too complex and those above 14 found the graphics of the game to be too childish. That’s why this age range is perfect for MoneyTime.”
My 8-year-old is in challenge math classes at school, so I figure it was worth a shot. All year, he’s been getting extra instruction in school about how to work with computers just in case they have to go to home-schooling. That proved very helpful in getting him going with the basics of navigating the application. They were right about the math though. Early on, there were some multiplication questions. Armed with his Multiplication Machine, he was ready to go. I was always nearby, but he only called on me a couple of times. If I wasn’t a personal finance blogger (and a Tiger Dad) curious to push the age limits, I would wait until age 10 for the kid to get the most out of the classes.
The MoneyTime system is broken up into 8 major topics:
Topic 1: Earning, saving and interest
Topic 2: Employment
Topic 3: Managing your money
Topic 4: Borrowing money
Topic 5: Property
Topic 6: Investing
Topic 7: Business
Topic 8: Protecting your money
Each of those topics is broken up into 4-6 modules or lessons. For example, “Managing your money” has modules of Smart Spending, Budgeting, Banking, and Paying. I’m not sure that a 10-year-old needs to consider employment in topic 2, especially the “resume” module. However, I think it’s based on the outline of “earn, save, invest” in that order.
My son completed the first topic, so this review will be based only on that section. The lower right-hand part of the dashboard gives you a little view on how that went:
If you read from the bottom up, you can see my son got only 67% of the pre-test questions on earning, saving, and investing correct. I was very impressed by this pre-test because had little exposure to some of the topics. I had to remind him a couple of times that he wasn’t expected to know the answers. I used this opportunity to teach him how to eliminate some answers that seemed obviously wrong and then take his best guess of what’s left.
After a module of instruction, there is a 10 question quiz. He got 60%, 90%, and 80% respectively on the earn, save, invest sections. The invest section introduced the difference of compound interest vs. simple interest – a distinction he still talks about today. When it came to the final review test on the topic of saving, earning, investing, he scored a 93%. I expected some improvement because he was learning the material on the test, but this was outstanding.
MoneyTime Keeps Kids Motivated
You may have noticed that my son has an avatar of a weird orange bird superhero. He likes fire-type Pokemon and my theory is that this most closely resembled Blaziken – the fire chicken.
You can spend your earnings (which come from completing modules) on improving your avatar. This was an important motivation for my 8-year-old. He also made investments in education (the stack of books) and investments (the treasure chest). The education helps him earn more as he completes more modules, he’ll earn more. This seems to be a little like the game of life where having a good career helps you earn more from the “Pay Day” spots on the board. His current job as a “trainer” earns $1000 a year. His $5,500 savings is enough to upgrade to Carpenter that would give him a 50% raise per year ($1500).
It’s not clear to me how years pass in this world, but I think it’s because we stopped where we did. My son did one topic (the three modules) over two days during school break. He hasn’t gone back to it since then. I don’t think it is because MoneyTime didn’t have the staying power. Instead, my kids simply don’t have a lot of time with school/homework/karate/cub scouts/etc. I want them to have some unstructured time as well. We should revisit it over the summer. He’ll have more free time and be almost 9 then.
MoneyTime Review: The Conclusion
I gave you our experience with MoneyTime, but I think the company’s professionally-made, less than 90-second, video shows off a little more from a different perspective. It’s worth the quick watch:
There are a couple of online courses for kids and personal finance, but this is the first one I’ve tried. It works very well. Then again, kids’ personal finance education is non-existent, so the bar is very, very low. When I think of what we spend on karate/skiing classes and specialty camps, the value of this education is way, way, off the charts.
This link will give you 25% off bringing your annual membership to $49. That price is current as of this writing (1/26/2022). They have a deal going on now. The pricing used to be $99 a year. If you think it’s something that you might be interested in, I would buy it now. In the interest of full disclosure, I should mention that the company will give me a commission on sales.
I love whenever anyone’s best tips for raising money-smart kids. However, Kiplinger’s Personal Finance Magazine holds a special place in my heart. I’ve been reading Kiplinger’s since… well, I was a kid. My mother subscribed to it and I was interested. She had explained compound interest to me a long time ago. Back in those ancient days of around 1988, banks paid a real interest rate – around 7-8% if my memory serves. I had some money saved from my paper route and first job at Papa Gino’s Pizzeria, so it seemed like a good idea to learn more about investing worked.
A lot of personal finance is now online (such as this site), but I’ve been a Kiplinger’s subscriber since around college. You can get a couple of years of it for around $40, which is a great deal compared to the cover price of a whopping $6.99. I’m all for recognizing the value of financial advice, but that’s a lot of money for 72 ad-filled pages of often out-of-date information. It shows how difficult the print world is nowadays.
Today, I’d like to cover Kiplinger’s tips for raising money-smart kids, which was spread out over two issues last year. Specifically, I’m talking about Janet Bodnar who runs the Money Smart Women column. Fortunately, the column covers some fathers who have tips about raising money-smart kids too. Personal finance should be something the whole family can be a part of. My family is a real-life example of it… I just happen to have a crazy obsession.
Part 1: Kiplinger’s Tips for Raising Money Smart Kids
The article makes a point that high-net-worth women have jumped into estate planning due to COVID. These families with a lot of money want their kids to know how to take care of it. Maybe we fit that profile too. However, I’m far from the stage of worrying about how my 8 and 9-year-olds are going to manage money years from now. I simply want to help them have a foundation now rather than be disappointed later. It’s what I know and what I’m passionate about, so I might pass that knowledge on.
The article continues that the two most important things to teach are spending and saving. I agree, especially for young kids. Older kids have more opportunities to focus on earning more and investing. That said, I believe that schoolwork comes first, so earning more has to be “work smarter” rather than “work longer/harder.” At least investing can be very quick, setting up an automatic investing plan can be done in just a few minutes.
The next tip was to have younger kids use cash and let older kids use an ATM account attached to a bank – avoid credit cards. This tip is reasonable. Although, I should mention that my kids have been authorized users on my Amazon card for a few years now. They have no idea about it and wouldn’t know where it is or how to use it, but it will help them earn credit whenever they need it.
The final tip was that young kids don’t need to know about the family income. I think that’s obvious. Young children are still learning place value and numbers like hundreds of thousands simply don’t make much sense.
Part 2: Kiplinger’s Tips for Raising Money Smart Kids
One reader shared a “parent matching” strategy. That’s where a parent will reward a child for saving with more money similar to how a 401k match works at many companies. Another reader made it simple, “Live below your means.” Finally, one reader stressed the value of saving over earning, because you pay taxes on money earned.
Some readers disagreed with the above tip about not giving kids credit cards. Like me, one reader wanted their children to establish great credit at a young age. Another reader required kids to pay it off in full every month. I love that last tip as it builds a habit and establishes the importance of it before the kids are on their own in college.
I found all these reader tips (along with Bodnar’s book recommendation) better than the original article. Over both articles, there are plenty of good tips – definitely worth a few minutes of your time.
Does it make sense to teach kids about money with television shows? At first, it may make sense to avoid it. Some argue that kids watch too much television these days. It’s good to have limits, but I think television can be a useful tool. My opinion is, if they are going to watch television anyway, teaching kids financial literacy is a good use of that time. I’ve put together a few shows that can help form (or supplement) their financial education.
There are very few other places where you’ll find an entertaining episode about building wealth with rental properties. One episode covers the importance of good credit history and credit score. Another episode teaches the value of money with a weird analogy of bees being the currency – a perfect starter to talk about cryptocurrency. There’s also an episode with an analogy of taking on too much student loan debt to go to the dream college instead of making the fiscally smart decision.
Warren Buffett has a cartoon teaching kids entrepreneurial lessons. There are more than twenty episodes of his group of young teens learning money lessons. It’s free to stream on Kartoon Channel at the link above. No subscription service to buy!
School House Rock
Decades ago, School House Rock famously taught millions of kids how a bill became a law and how parts of speech work. I don’t remember seeing their lessons about money, but my local library had a DVD that was pure gold, Schoolhouse Rock: Money.
It’s another great way to teach your kids about money with television and you can watch all 8 money lessons on YouTube! These videos aren’t the best quality.
If you have a Disney+ subscription, you can get perfect quality by looking up School House Rock and skipping to season 6 for all the money lessons. The other seasons cover a variety of different topics that are worth your time too. If you have a Disney+ subscription, look up School House Rock and skip to season 6 for all the money lessons. (While you are there check out all the other seasons.)
The short songs cover money management, economics, taxes, the national debt, investing in stocks, and dollar-cost averaging. There’s a little history of money, explaining how barter and coins work.
Cha-Ching Money Smart Kids
There’s a very complete curriculum of money education available at Cha-Ching Money Smart Kids. The lessons consist of 3-minute videos and PDFs designed for teachers (classroom activity) and parents (family activity).
Dr. Alice Wilder, the creator, is known for Blues Clues, Tumble Leaf, and Super Why, one of my favorite shows for teaching younger kids how to read. Forbes gave Cha-Ching Money Smart Kids a good review.
Older kids may appreciate Shark Tank. While some topics may be boring to kids, there are quite a few episodes with kids who are entrepreneurs. My oldest saw an episode where a kid started a dog treat business that was very successful. He wanted to start cooking right away.
Biz Kid$ is a show designed to teach kids everything about personal finance. You can find some clips here. Those clips come with a lesson plan. All the lesson plans are available in English, but some are available in Spanish as well. There are a few free streaming episodes on Vimeo. Unfortunately, if you want to watch all the episodes, it is quite expensive. It seems like the pricing is geared towards school districts. Each 28-minute episode costs $5 to buy or $2 to rent. It would cost about $350 to buy all 71 episodes. You can buy a subscription to stream seasons 1-3 for $30/mo. You’d have to buy another subscription to stream seasons 4-6 for another $30/mo. So if you were really good about binge-watching 71 episodes, you could do it for $60. That’s a tall order. I haven’t taken the time to watch this series yet, but I hope to at least watch and review the free episodes soon.
The Toy Box
I’ve never seen this show, but I’ve read some interesting things about it. It sounds a little like Shark Tank where kids (and toy experts) are judges of toys. I’m not sure how much personal finance it will teach, but it sounds like it would be a fun show. You can buy each of the two seasons of The Toy Box for $15 on Amazon. I can’t seem to find it available for streaming on any major platform.
Final Thoughts on Teaching Your Kids Money with Television
There are a lot of resources out there. I think it makes sense to start with the free ones like Warren Buffett’s Secret Millionaire Club. We’ve watched most of them and, while it isn’t our kids’ most favorite show, it’s among their favorite learning shows.
Welcome to Kid Wealth, where kids (and their parents) learn to take control of their money.
Kid Wealth is for both parents and kids. Initially, I’ll be focusing more on parents. That’s my most recent experience. I’ve got 35 years of rust gathered on my kid experience. Don’t worry if you are a kid reading this. I’m going to need your perspective to make this work. It’s going to take a real team effort.
For now, I’ve got a message for each of you. Feel free to spy on each other’s messages, we don’t need to have any secrets here.
Kid Wealth for Parents
We all want our kids to have a better life than we had, right? One of the best ways to ensure that is to have enough money.
I know what you are thinking, “Money doesn’t buy happiness. I don’t want my kid thinking that it does.” I don’t disagree. That’s why this website is called “Kid Wealth.” Wealth, by many people’s definitions, can extend beyond money itself.
Besides, even though money may not buy happiness, it can help you avoid the stress that is associated with unhappiness.
Kid Wealth for Kids
You’ve got the more difficult job here. It’s your money and your hard work that went into making it. Parents have it easy, they only have to talk about money. Talk is cheap, right? So while this may seem like a lot of learning and a lot of doing, I want you to note one very important thing.
Mastering money at a young age is much, much than when you are older. You’ve got much more time for compound interest* to help your investments grow into millions of dollars. You’ll be amazed at how much money you can make without doing any work at all.
Doesn’t that sound like something worth learning and working for?
Getting Started at Kid Wealth
The very best article to get started is: How to Teach Your Kids About Money. You may also want to read more about Kid Wealth. We offer no products or services, and show no ads – only information to help you and your kids make the most of their money.
Next, you may want to join our mailing list or follow Kid Wealth on social media. There are forms and links in the right sidebar for that.
* If you don’t know what compound interest is, don’t worry about it. We’ll get to it soon.
Kid Wealth is reader-supported. When you buy through links on our site, we may earn an affiliate commission.
I am not a financial adviser. Kid Wealth content is for educational purposes only and the information should not be construed as professional financial advice.