(re-using my Russian nesting doll image to represent children 🙂 )

I’ve written that I grew up in a blue-collar town in New England where most of my friends’ parents didn’t have college degrees and worked with their hands. My public schooling from kindergarten through high school was only fair and often conveyed the wrong priorities to students (like popularity or football over education!). After I achieved some financial success and had options, I wanted my children to go to decent schools, and I believed that a good public-school system would be preferred by me to give my children a wider diversity of classmates.

We moved to a town with a very good public-school system and we were happy that the town was far from the wealthiest in our state. What I didn’t know at the time, however, was that this town has one of the highest household-earned-incomes in the state, and this presented a challenge. We came to realize that the money lessons our children were learning from other families didn’t align with our own beliefs and we had to be more active in educating them.

It is interesting to have lived in a town for over 25 years with so many people who are high income, but aren’t very wealthy.  Many of these people are very competitive and strive for so much for themselves and their children – the biggest houses, the nicest cars, the best vacations, the best sports programs and clubs, the most prestigious colleges – because they didn’t have these growing up themselves and want to provide for their children. It is so different from what I experienced growing up in my home town, and this new experience challenged my wife and me as parents.

My children have each come back from school or a play date many a time saying that a friend or classmate has said that she is “rich,” or that my child is “rich.”  Of course, children equate “rich” as having discretionary money to buy fancy shoes, clothes, toys, and the like.  I have tried to use those opportunities to discuss with my children the different definitions of being “rich” – is rich meaning having a satisfying life, having freedom to choose between work and free time, or having many toys and nice clothes?

In addition to seeing many other examples that didn’t align with our beliefs, our public school system had only a single one-semester high-school class covering basic personal finance and career paths. Most students don’t have the opportunity to take it because the classes are over-subscribed and full. This lack of education was a huge gap from my own education, so we realized that in addition to regular conversations about personal finance at the dinner table, we had to educate our children more formally. The challenge is, various personal finance topics resonate at different ages of the child and if taught too young when they don’t have an opportunity to apply the learnings, he or she won’t retain any of it. 

I found that we had to align personal finance lessons and tools with each child’s age. Here is a high-level overview as to how I thought about the topics and what tools we used:

• Age 0-18: Topics include age-appropriate financial education (chores/work, saving, money gifts, basic budgeting, how local businesses make profit, house value/mortgage, taxes/government functions, etc.), experiences>things, college readiness and decision, etc., and tools include personal savings account, checking account, debit card, career testing service, college counseling service, traditional custodial IRA.
• Age 19-22: Topics include age-appropriate financial education (first steps to financial independence/living on one’s own, financial “guard rails” while in college, credit, credit score, budgeting, retirement saving, etc.), career direction and readiness, etc., and tools include college budget (see post on how we approach college funding), first credit card under my name with him/her as authorized user, then final college year with his/her own credit card but paid by me so build strong credit score, internships/summer work, convert trad IRA account to Roth, power of attorney/healthcare proxy/HIPAA information release documents.
• Age early working years: Topics include age-appropriate financial education (financial independence, paying bills on time, earning a wage, paying taxes, getting an apartment/eventually purchasing home/condo, work benefits decisions, Social Security, etc.), and tools include a letter by me to my child laying out what he/she can expect from parental support moving forward, full-time job, transition accounts to him/her, 401k/403b account, high-yield savings account, Social Security account registration, credit report monitoring.
• Age post-marriage/mid-working years: Topics include age-appropriate financial education (parents’ estate plan, his/her own estate planning, traditional IRA vs Roth IRA trade-off, children college funding strategies, various insurances, etc.) and tools include traditional IRA, spousal IRA, 529/UTMAs, estate plan, insurance policies.

Now that our children are no longer living at our home, we have used some of our wealth to create opportunities to be together as a broader family through free vacations for attendees. I take the opportunity to hold one or two “family meetings” during the vacation where we review an important topic or two from the above list. Now that the children are all relatively in the same life-stage, the topics are more relevant to all the kids. We’ve also had a few boyfriends/girlfriends/spouses attend where appropriate, and we often hear back from his/her parents about how much their child learned in the session(s).

We expect having these vacations (and in-person family meetings) will get harder as the kids build out their own families and further spread out. Depending upon how the children spread out and their willingness (or not) to still vacation together, I may do these sessions on Zoom in the future. Maybe in the future we’ll be able to have hologram-virtual family meetings!