 Welcome to the Bogleheads chapter series. This episode was hosted by the pre and early retirement life stage chapter and recorded May 18, 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 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. 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 probably all been to the store where at the checkout you hear a poor parent kind of, you know, with the 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 that 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, 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 parents going to pay for the need, which includes you know base basic clothing, clothing of course foods, you know school supplies, that kind of thing. But once 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 and expensive sneaker wears 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 it'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. You're expected to be gone regard, 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 I can choose however you want to do it. And then there's the debate of 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 a toy then they'd 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 will say oh I know I had $30 where did it go and I'm like, I don't know so it. So 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 I mean you can't remember what all you spent on. But nowadays of course you could 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. So it's a 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 or else like what are you going to do, you know you can't make them smile for the picture so what I would do is once a year when they had their purchase taken, you know, we're going to go to your purchase taken and then I'm going to, you know you can buy a toy up to $10 or whatever and then the only other thing I kind of I guess you could call that a bribe or a reward the only other thing I kind of bribe 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 stay 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 I 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 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 just kind of look into a little bit. It does have a fee. I think it was maybe if you pay 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 they younger than 13 it had to have the parents name and then the parent is supposed to be with the child if they make an online purchase. 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. 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 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 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 checkbook and things in. And they would put the money in there and I had to 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. So 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 we 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 what 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 and I just sat on the money and then handed it back to them. The lesson was you need to, you know, be responsible with your money, you 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 20s now and it, it seemed like it taught them, you know, for the most part that lesson. Thank you so much Keith for sharing your experiences, Miriam. Yes, 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. 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 base, 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 two, they had earned that year, and then deposit that in the IRA. And 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. We've done that to this, to this very day actually we, we, we find out, 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. Where I decided it was time that everybody in the family pulled together we are part of the 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. 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. 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, 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. So 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 of 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. First for charity, they depart if you have 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, he saved all his money growing up. My daughter. My daughter was a spending like 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. Hi, I'm here. I just wanted to mention we do something similar to Miriam and that my kids are in their middle age 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, we banked at a local bank in Princeton area and the kids would always go in there and make their deposits. And one day that 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, you know, here's an application. Have her fill that out. So it wound up being a great thing because every summer, you know, 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. Well, it came became her college summer job also so she got years. 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 a good grades. So as far as the age, personally, I think as soon as the child understands the concept of money how much think 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 I should pay for grades. Beverly and Tim, go ahead. You still have your hand up. Does anybody have any. I forgot to put it down. I'll do it. Okay, I think. Okay. Somebody had had a question from the RCP forums on 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. And then there's three 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 and for young children. And then there's two that cover more of an age range once called raising money, raising your money savvy family for next generation financial independence by Carol Pitner and Doug Nordham and this has a chapter chapters one for toddlers one for grade one for teens and young adults so it kind of covers the whole gammon of ages and the same thing there's another book called kids and money by Jane a pearl. It had covers toddlers three and adults. And this was the last book I want to mention is called launching financial grownups by Bobby rebel 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 2500 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. See here. Oh, I skipped one. Okay, the next slide is teens. One of the 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 kind of 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. So 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 I 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 like I'm not going to I'm going to wake 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 and 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 they could 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 let them make a few mistakes, you know when the cost is low. I had my kids we really didn't have to have to worry about debit cards for teens because you weren't buying anything online and 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 a looked up this one called fam zoo, go Henry copper. 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 1317 and that does have a free debit card. Another dilemma is should you work or encourage your child to work during high school, and person I know a lot of kids do and that's great personally, like my kids were in marching bands, and they, you know marching bands go for 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 of course they're not getting paid but it's teaching them the same things like it's teaching them to get up and go somewhere we even 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 kind of have to just depend on your childhood they have actually 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. 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. Everybody 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 a 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. 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 him 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 that definitely be more interested and the other thing I want to say is a lot we're looking at 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 the. These concepts can be very difficult, you know, you know my my daughter like what's the difference in what what is a stock what what is this I don't understand what is the stock what is the bond what's the difference. That kind of thing you have to explain it several times, Miriam go ahead. Yes, I. 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're 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 and 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 two little bugs running around on the on the papers and stuff like that for the Disney movies. And 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 mail, 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. I'm trying to explain to my son, no this is a bear market, this is a 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, 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 60 40 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. If they don't care if it, you know, goes up a little or a lot they don't know the percentage. What they don't 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 at 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. And 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. 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, was it well intended started going up because I do is scare them off of investing for the rest of their life so that's exactly right. Veronica I seen the chat you had a question we're actually going to somebody else it might have been you had a question from the RCP so I'm going to cover that later on like in slide number nine I actually did a little bit of research and above 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. I don't know if I'd advise other than just if they don't have you know they can always spend what they have. Right. I know I'll tell a little story about my son, I think we started him on allowance like he was like for 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 a dollar. He didn't go on for a good six months maybe a year and then we kind of said don't 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 you bought an Xbox was kind of crazy. He had a, you know, let him 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 he's, he didn't spend money or if he 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. I mean if they have money you can't stop them, you know, from spending their own money basically, if honestly 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 is already been discussed a little bit. By credit I mean like their 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. 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 at some point either high school or college I know my kids I think it was right before college, we opened a, 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 parent. 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 over drip over drip over draft protection, which you may not want to 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 to make sure that you don't have you know 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 your most teenagers are going to be sitting down like a little budget some some may something which is great. But if they don't bounce 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 their credit score, but that doesn't necessarily mean they should you know charge up to the credit limit. The team doesn't qualify for a sec, you know 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 pedal chime. And then when it's time show them how to check their credit report through and make sure they only go to the annual credit report.com and not one time I accidentally somehow went to one of them that wasn't the right one and nothing really bad happened but I realized that Oh, that shouldn't have gone to that now and so I'm trying to be real careful to go to the right one. Oh, 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 get a little virus on your computer. 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 banks website. 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 inputs on suggestions on maybe good credit cards for for teams how to build their credit that kind of thing what kind of what to warn them about when getting a credit card. See if anybody's. 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 funded for them. They do get the good credit you know the credit report, they could get the credit for it, and paying off a large, some 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. To 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 camera or 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. Beverly and team go ahead. Two things. When our kids were in college. I, 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 I did that and nerd wallet is a place where you can find not only our criteria are right not only free credit cards but credit cards that have some kind of cashback reward. And the other thing that we asked our daughters to do was to get a loan during college and and they didn't want to do that. 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. Thank you thank you. Okay, let's move on the next slide is I think it's the one Miriam was up just when you were talking about Miriam. So, so Miriam you said, but remember quickly, you bought your kids the first car and then they were on their own after that right. That's a great way because then when they have the car that you know one 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 change my mind and why 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. 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 may not have as many of the safety features of the newer car like the 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 fans 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 career but she was talking about it I'm like do you understand about. 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 $100 over them, you know you 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 is 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. If they do get a car loan, you know don't necessarily get one from the dealer you might want to shop a 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 whether or not you just want to put them on your insurance and pay for it. So 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 like Miriam, you know we we helped our kids buy their their first car we put some money in and then they actually use 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, your child is getting ready to graduate college, a lot of times there'll be additional rebates or incentives available for quote recent college graduates. There's also do you want to cosine alone 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 ensure 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 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. 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 use car that they have to finance. Those are great tips key thank you. Okay, the next slide is about college funding and this could be an entire topic on its 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 start talking about it how much you're going to help us, you know you might want to say, Oh, you know we've only we've saved up enough for you to attend a state school, or we've saved up for you to attend to your community college or whatever it is that you decided you can cover. Just let them know so that they don't pick out the most, you know, expensive private school and then 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. And also we use not not everybody's wants to go to college or is is right for college so I couldn't turn and 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 community college for the first two years, preferably with living at home and but just make sure that the credits will transfer because not they don't always I've done childhood research and applied 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 and think 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. Before to high school there's a 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 the your course load your extracurricular activities and then the necessity sometimes it's necessary. Sometimes the course load isn't that 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 is could be true for a lot of children. On the other hand, some children are very internally motivated to do well regardless and they have a really heavy load, you know, may not be right for them to have a job so it's very highly dependent on the child in the situation. How much 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 2019 year old they might not have an idea like what what is 100,000 what is 150,000 they might not really comprehend what that is. I kind of maybe have them research what they're the career that they're wanting to go on how much it pays and then say well you know you don't get the whole amount you got to pay taxes and FICA taxes and then you probably want to put some away to your 401k so after all is said and done you're taking those pays 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 as 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. The tip I do have is don't put 100% of needed money into 529. There's still and I did research and I do believe it's been made permanent but it is still in effect the American opportunity to tax credit, which is it's not even a deductions national credit 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 that 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 you have the child research salaries. You don't have to be siding 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 the Europe every year and you may not have a big fancy house but just make sure they understand you know the salary versus the lifestyle. What if you have one child that becomes a teacher one another child goes to medical school 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 you know one child may go on to make a higher salary and you know it's it's very tricky is a very tricky situation and I definitely don't have any answers but it's just something to consider. And that's where you, you know, help the first child you kind of want to maybe have a plan for all the children to make sure everything kind of is, is fair. Does anybody have any. I do have a couple comments from the RSP people does anybody have any comments on this slide, go ahead Keith. Yeah I'll just just really quickly mentioned on the scholarships, I've had three kids that have gone through this process might my youngest is currently in college now. It's usually 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 thousands or 10s of thousands 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 have 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 thousand dollars 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 very pretty significantly, but it's worth looking into because it could save you 20 30 40 thousand dollars 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 tiered 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 hard working enough to be a national merit scholar. The college is that will give you a 100% tuition or sometimes tuition and board room and board merit scholarship just based on 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. There's a 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 if it 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 any best practices. I did find an article how a student's IRA is counted for financial aid as a key point your 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. The IRA withdrawals on the other hand are included in the income calculation on the federal financial aid forms money can withdrawn from a child's IRA is considered to be the students income and it's hit hard by the financial aid calculation so in other words, having money in an IRA is fine. Take it out the year that it's going to show up on the fast flow 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 enough 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. And 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. But I'm sure you just research you know what are some common interview questions are, 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 week is but here's how I overcome it so that doesn't look like it's a bad thing. What made you want to do with this company but there's going to be a whole list of very common interview questions that they should be prepared to answer. 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 is a very tough thing. If you've never done it before and I'm really bad at it. So that's all 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 coworkers 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 for lunch with them or just have a phone conversation just get some tips on. If they want that kind of position where they're not they want to work for that company, some kind of tips on interviewing that kind of thing. Anybody have any tips, Maria. 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, what would how to read when they're in the interview how to read how it's going. And they had a time about the company that you're interviewing for the job or the position, so that the employer perspective 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 probably well worth any song that you would spend on that for like you said one or two sessions. I think it's not a matter so much but nowadays it's so competitive. I think it's a useful, a useful thing to do. Definitely. Okay, so great now they have the first job like the real first, you know, grown up job. I know. I think was Miriam you talked about this but, or other people talk about this but consider matching, or, because most, most children are going to be positioned when they get their first job to contribute to the 401k, and also a Roth outside of it they may be able to. If you were able to it'd be, and you want to it would be a good thing to could 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 income into a Rothman or what fun is that they want to be able to have some spending money. So, but you really don't want to pass up. There's so much so many opportunities in your life to 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 our income into a Roth. And I kind of keep track of my kids because I want anything that would give them the kind of the you don't want it to be fair and equal so I keep 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 they put all their money, not that they could, if they put all their money into a 401k, they couldn't you couldn't contribute to a Roth there has to be. Basically, what is it 6,000 7,000 is a $6,000 or $7,000 on their w two that shows up as income for you to be able to contribute to the world and it's kind of funny I had to explain to my daughter it doesn't have to be the same. And she's like, Well, I that's not my money like what I can you know it doesn't have to be the same 6,000 dollars it can be a different $6,000 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. There's going to be 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's an has an FH SHA where it costs more but the employer puts in $500 towards their HSA or the FSA. And your child, if they don't have experience with health insurance they may not even know you know what's a deductible what's a co pay what's a co insurance. 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 until they. You 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, you know lab test was. I always get them they're like $300 the negotiated, but after negotiating discount it's only $30 is like, and then just kind of explain all that because that's very confusing 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 the best if they're going to quit you know two years and 11 months into the job and it's vested 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. So first paycheck, you know you're going to kind of want to go through their paycheck stub with them and explain, or, you know better yet even before they go to you know just because you're making $50,000 a year you're not getting $50,000 a year. They may not understand what FICA is. They most most of them have an idea on federal income tax but you know it all comes out of the, the paycheck they're going to have health insurance they have to usually pay a little bit of their health insurance. Okay, taken out FICA tax withholding. And then explain to them the tax withholding that's not necessarily you know 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. And 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 full one K that price would be too high you don't know wait five or 10 years oh did you ever sign up for 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 on that if they don't ever get around to doing that. Do you 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. My kids always had the attitude of well don't worry mom, I will, I will 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. 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 or 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. And especially my younger 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 what he's earned this year is down 16%. But if you change that graph to from 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 is 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 in do an experiment with bonds to types of bonds. So try to teach him a little bit about that. And so I'm learning from that too. But most is, he's 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 you if the kids could, if they do that now. They may then not buy the big TVs, buy a smaller TV not buy all the new and not buy a new phone every year, hold on to it, be more frugal be more careful in your spending when you're young. 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 may 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 a young text just out of college, two of them for the price of you. 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 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. I have a 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 bring them to the Bogleheads conference. There's a young kid in high school 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. 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 going to be old one that you know what I'm saying like, it's just, you know that theoretically when you're 20 you're going to be 70 minute but it's hard to, you know what I mean. 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 years. So, I guess it doesn't even have to get agreed upon by a child that'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. Make them break out everything you buy the grocery store all 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 the story 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. 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 Keith that was saying a lot of times it just makes sense to keep on the car insurance it's going to 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 why just, you know, and it's only $25 a month it's no big deal either way so you can keep them on it's no big deal. Some, you're going to have to explain to them if they don't have health insurance with their job. Why they need even though they build oh I'm healthy I don't need health insurance they can explain why they need it, you know, even if they're healthy. They have a major accident or they get a heart attack it's going to it's going to 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've been taking that for granted while living with you. 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 it maybe make a simple spreadsheet and show them how to do that. You 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 occasions 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 why now which is you need a budget I've also heard of monarch money dance men every dollar spreadsheet. 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. So I have a house, explain and make sure they understand all the, there's so many expenses with buying and maintaining a house 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 cost 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 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 so a lot of maintenance you got to do. You know we have our conditioner service twice a year, you got to change your filters that kind of things smoke detector batteries. So if you're in the position to help with the down payment, that would be 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. We have information on that. 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 and got married and we were out of college. 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 to, 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 a coffee maker, and she bought us a little. 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 and 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 was a tendency for the kids to say well just put it on the credit card, and then I'll pay it off. So then starts the cycle of credit cycle of not saving for something the cycle of buying it 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 souls 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, and on the Bogleheads form there are many many threads of how how it is to let your children know that and 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, 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 as the way their friends are. In terms of another way of what we 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 go up then we can just. 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 on the also on moving out. Well, one thing I wanted to mention about going back to college. My kids, sad to say but my son, he, he was he went to college. We paid for the dormitories we paid for the fraternities and pay for the sororities we pay for wherever they lived. But when he graduated college and his graduation, when they were done. And 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 put together is to. So that's this stupid landlord is not returning our security deposits. He said, Well, I don't know why he said he says this he says that. So I said, you mean as 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. And he said, Well, the bathrooms are full of mold, there is mold from top to bottom side to side. It has never been clean. And 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 work went into 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. 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 my son and 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 paid 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 to but in the beginning. You know, that's one thing you can. 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, they don't get it. Interesting story, Miriam. Thank you so much for sharing that. 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 robo advisors and I'm not really even familiar with those someone had mentioned a fidelity youth account which has parental rights and which can transition into 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 course you want them to teach them the bow heads philosophy. 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 cost 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. We're regulating we're almost I think we're down about 18% from the heim thing and I just really wish we could just do the 20% so it'd be a bear market get it over with and then we can maybe. Because we know we all know that it's, it's kind of 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 we need to just stay the co stay the course through all that. And I had this earlier, but for many topics, especially like investing things like different things to stock and bond. What's the difference in 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. They can only absorb sometimes she'll say, 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 it 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, we know when they're older just gross compounds so much. So let's go ahead and there was a couple of questions from the rcps. Okay, so this someone asked her 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 the chat but I'm going to repeat it your child, regardless of age can contribute to an IRA provided they have earned income. They cannot establish iris 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 W to 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. The first job job that doesn't have a 1099 or W to is often the first child child's first job examples can include doing yard chores for neighbors watching kids old 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 also you got to watch out for the tax implications if a child or teen has earned income more than $400 and income, they must report the income on a schedule C when filing taxes. If the child doesn't get a W to 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 to keep the best records as you can of either the children or just hand write and 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 and what is the positive 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 anything else my kids can be doing the kids are fifth and eighth graders. I think if they have a 529 at that age and up my and a custodial Roth I think they're doing great for a fifth to eighth 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 just 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. 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. These have not really 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 those that what what's that was that it's, you know, it takes a while to, they don't listen so much to their parents, they have to listen to other people that's where the Bogleheads forum comes on that, you know, to try to introduce them to forums like that, you know, a failure to not the Bogleheads go to some other forum financial forum, and try to, you know, read that. And 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 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 a preacher walking around with my book, but it was helpful to the young people just starting from my kids went into a Bogleheads conference I had Bill Bernstein, Dr. Bernstein signed 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 Bogleheads 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's a PDF and his website. There's a link to that. There's a link to that here, I think there's a link. Yeah, right. So, you know, that's, that's what I do in it for presence I give them books. I give them Jane, Brian Quinn, where has a wonderful book called making them. 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, Brian, Quinn, Quinn, QINN, and it's a thick books like this thick. 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. There's very much a boggle head. And I've read about her she's invested basically a vanguard, and she. She also like if you want to know about the difference but in 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 vocal heads 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. See what we got. Okay, a few things about taxes. If your child does have a brokerage account make sure you you're aware of the kitty tax and they're probably not going to be earning enough to 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. When it applies. So when your town 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 different gross incomes, you know, tax well income standard deduction tax brackets what's the capital gain. What is the 401k health insurance premiums etc effective w two 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. I do the next year but I kind of made I make her sit in the seat and like, you know, actually do the typing and enter the data but I'm sitting next door and kind of helping her out. So that seems to work pretty well. Does anybody have any tips on kids and taxes. 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 turbo tax now I never use turbo tax 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 all you just get it. Oh, there's income and there's different kinds of income. Oh, and then there's the standard deduction. Oh, comes off and then there is that 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. Oh, what is in my 401k is not there in the income. Well, where is that in where do I pay the taxes on that, when you're retired, and you're in a lower tax bracket, so you'll 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 that 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 people can see it. Yes, I have that book on my shelf. Yeah, making the most of your money now. That is a thick. 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. I don't know if people there is. If you can. And this is a very, very thin book, as you can see, but it is packed, packed with its 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, his indoor is a signature, you know, he autographed it. So it, 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 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 ridiculous. And my, one of my sons loved it. So if your kid, if your child likes it, it is lessons to financial lessons set in ancient Babylon sounds, 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 any 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. 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. I like this book from launching financial growing us by Bobby rebel, 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. 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 1000 hours a month for your, you know, help you with your run or whatever. You want them to be able to support their own basic needs. But what I like this term that Bobby rebel and her launching financial grounds book she coined, I don't know she coined this term but she used the term. So teaching financial boost and what this is a one time limited financial boost to basically get your child, get them started to 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. Where 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 months until they get the first couple 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. So you want to kind of keep these items separate or 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. Because you want the child to have pride and be able to provide in their own basic needs. There's page two to this slide. Nope, there we go. And as I mentioned earlier it's to me it's okay to continue to pay some small bills that make sense if you have a grandfathered in their family cell phone plan you know that's no big deal. Here's a couple 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 529. And don't forget about possibly having to file IRS form 709 if your gifts give succeed the annual exclusion amount which is $16,000. And one thing to mention on that is it is, it is capable like you, one spouse can give 16 the other spouse can give 16 and you can give to the, your child spouse to if you want to, to kind of multiply those gifts. And that 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 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 plan to do this you want to make sure your parents wills and IRAs and everything is set up to where you would go to your children if 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. You can use your child maybe 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 maybe to 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 generations giving tax might come into play if you do the strategy. There's 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 child and 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 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 till 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've, they spread it out $200,000 a year $100,000 a year that's going to put them in a really 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 and 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 has any other ideas on what to do about the, they call the death of the stretch IRA, does anybody have any tips on that. I know Jim, I listen to podcasts, his name is Jim Lang he has a lot of podcasts and articles on. They were actually anticipating the death of the stretch area 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. 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, debit 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 jr jl Collins website on there. Oh, the last link is all about the kitty tax someone is when it applies, then there's books and most of which I have kind of skim through to prepare for this some of which I got from library some of which I actually purchased this that's launching financial grownups by Bobby rebelling it is really good really good book. The next page is podcasts that are interest of interest about all having to do with this discussion about teaching children finance to children and