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Three ways I’m teaching my son about money

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A few years ago, a journalist asked me what financial lessons I was teaching our son about money and I couldn’t answer her question. At the time, Beau was three years old and I was far more concerned with teaching him how to wipe his butt than explaining the power of compounding interest.  But now that he’s older, routinely receives money from family and occasionally earns income through us, I have plenty of stories to tell about how we’re teaching him about the importance of money, saving and investing.

In full transparency, I’ve written about my experiences as a father and the early financial lessons I’ve taught him before.  Once was for CNBC Grow [an offshoot of CNBC sponsored by Acorns]  and the other was for NextAdvisor [a subsidiary of Time Magazine].  Since both of these sites are now defunct, I’m capturing the stories here where I can be as long-winded and colorful I want to be.

Here are three of the early lessons I’ve taught my son about money.


An extended scene from Season 1 of Money on the Table. Click here to subscribe to our YouTube channel

What does expensive mean?

For Christmas 2021, we bought a shiny, new camera.  If you know anything about new cameras, you know they’re not cheap.  Between the camera, lens, a tripod and other accessories, we dropped a little over three grand.  And like any photography enthusiast knows, the next few weeks were filled with me crouching, bending and contorting my body to capture every mundane moment in my life.  From the shadows on our walls, the Run DMC Funko pop figurine on our bookshelf to the eye crust caked onto our son’s lashes, I wanted to capture it all in high resolution.

Just two months later, I went down to our basement to discover the display screen on the back of the camera was shattered.  I’d left it mounted on the tripod tucked into a corner and somehow, Beau found it, knocked it over and stood it back up as if nothing happened.  

I immediately ran upstairs to ask him what happened.  At first, he tried to get away with it; only to come to the realization that his preschool brain wasn’t equipped to wiggle out of what he’d done.  However, his heart was up for the task.

Beau, did you break Dada’s camera?  Tell me what happened?  Why didn’t you say something?

The combination of questioning and Dad voice was overwhelming and after repeated failed attempts to utter a coherent word, he resolved to hang his head in shame, cry for thirty minutes straight and hide in his room.  He knew he did something really bad and he genuinely feared I would be upset with him. 

And if we’re being honest…I was upset. But there was no point in piling onto the weight he was already carrying on his tiny shoulders. Recognizing this was a teachable moment, Kiersten stepped in to console him and we all had a long talk about the word expensive. 

Beau? Can you say expensive?

He couldn’t. He was so afraid of what might happen to him, he couldn’t muster the breath to try. It brought me back to a similar moment in my childhood when I broke my Aunt’s vacuum. Even now, whenever I smell burning rubber, I’m brought back to that Sunday afternoon in the Bronx. Except in this case, I’m pretty sure that Dirt Devil didn’t set her back a few mortgage payments.

When it was all said and done, Beau learned to be more careful, to always tell the truth and that even though a screen was shattered, our love for him would always be intact.  As parents, we learned to not leave expensive shit lying around and that there was a camera repair shop right around the corner. Who knew?


Channeling the need for speed and saving

Beau playing Horizon Chase on Apple TV

As a kid, I didn’t play video games much.  In part, this is because I grew up an only child and didn’t have anyone at home to play them with.  But it was also because we couldn’t afford to buy the coolest console, multiple controllers and new games. However, my son is also an only child and even though we can afford to buy a gaming console, we’ve chosen to take a more frugal and thoughtful approach introducing him to video games. So instead of dropping a couple hundred bucks on an Xbox or PlayStation, we ventured over to the Arcade App on our Apple TV and found a ton of free games there.

His favorite Disney movie is Cars, so I knew the game Horizon Chase 2 would blow his mind.  It’s easy to play and allows him to customize cars, race on different tracks while developing a healthy sense of competition.  Before we knew it, he was trash talking, jumping around and screaming at every driver he passed on the track.

“Beat my dust” he’d say as we fought the urge to correct him.

Like most racing games, there’s a turbo button that allows you to hit top speed for brief and limited periods of time. In Horizon Chase 2, they’re called Nitro and you learn pretty quickly to use it sparingly. Just like in real life, it’s more difficult to steer around curves when you’re driving at top speed. But like most kids, he had no interest in pacing himself and would routinely use all three of his Nitro on the first lap even though he was crashing into everything and every driver around him. 

Eventually, he realized he couldn’t advance to new tracks, see new places or customize his car further until he started winning races.  This forced him to be more mindful of when he used his Nitro and whether it was worth using them in the beginning of the race. He began to self-regulate, opting to reserve his use of Nitro only in the moments that helped him win. And then…it clicked! I sensed an opportunity to use his need for speed to explain the importance of saving to him and, it worked!

In fact, maybe it worked a little too well because soon, he was giving me pointers, reminding me I didn’t have to use all of my Nitro and that it was okay to save them for when I really needed it. But I didn’t mind taking advice from a five year old. As his Dad, I was just happy to see…


the wheels turning on the screen got the the wheels turning in his head and at five years old, he's already learned it's not smart to spend all your money as soon as he gets it.
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Investing the money he earns, birthday and Christmas money

Beau: Christmas morning 2022

Me: Beau?  Do you remember when this toy was your favorite? (holds up a random truck)

Beau:  Yeah

Me:  What about this one?  Or this one?

We have lots of extended family and they love to spoil him with the things they hear he’s currently obsessed with.  As his parents, we don’t mind this but it does get annoying trying to find storage for the latest giant toy truck, car or set that shows up on our doorstep.  

Because of this, we’ve made a point to invest half of the cash he receives on his birthday and Christmas.  The money goes into one of two places: either his college savings account [a 529 plan] or a custodial account [UGMA/UTMA].  We do the same for any money we’ve committed to paying him if/when he participates in work we do as a family.  


For all intents and purposes, our six year old son has a 50% savings rate!
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One time, we were contacted by a company called Catch & Release because they’d found an Instagram post of me and Beau working side by side and wanted to license the photo.  In exchange, they offered $1,000 and we gladly accepted.  To sweeten the pot, we then pitched the story of this experience to a media company and wrote about the importance teaching early lessons to our son about money—using the exact story we’re sharing here. 

For this, we were paid an additional $700 and with the proceeds from both, we invested the full $1,700 [aggressively] into a Fidelity tech sector index fund [FSPTX] estimated to return around 16% annually and an average 18% rate of return for the ten years between 2014 and 2023. 

Here’s how that money may grow assuming the anticipated 16% rate of return at ten, twenty and thirty years. When our son turns 16, he’ll have just under $7,500. When he’s 26, it grows to $33,000 and by the time he’s 36 years old, the $1,700 from a random photo and corresponding story would have grown to $145,945. But this assumes we don’t make any further contributions to this account.


If we contribute another $1,000 on an annual basis, by the time he's 36, the account would have just over $676,000.
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Note: Balance does not reflect the cost of the mutual fund, taxes or inflation.

We love telling this story because it highlights the power of compounding interest, the maturation of the creator economy, the role time plays in investing and how remarkably simple it could all be.  Our son obviously doesn’t understand everything about money, but he’s already made the connection between saving money and delayed gratification.  He knows that in our family, we value experiences over things. And he knows investing money makes his balance grow as sure as he understands healthy food choices makes his body grow.  In so many ways, his childhood is already fundamentally different than mine was.

He’s never known his parents to be employees. He’s joined us to receive awards on stages. He sees our faces on the cover of a book, in magazines and sometimes on TV.  His Kindergarten teacher listens to our podcast and one of his go-to jokes is to call us rich

We’re obviously biased but he’s a really good kid with an incredibly big heart.  We’re slowly inching him closer to understanding why we’re able to do things other family’s can’t.  As a young Black boy, it’s only a matter of time before something shatters his innocence like he did the screen on my camera.  So this summer, in addition to creating lifelong memories, we plan on teaching him all about what it means to be fortunate.  

Julien


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