Summary

The author advocates for teaching children financial responsibility by saving and investing 50% of their earnings or gifts, emphasizing the power of time and compounding in wealth accumulation.

Abstract

The article discusses the importance of financial education and the role of saving and investing from a young age. The author, reflecting on their own financial missteps, stresses that money should be viewed as a tool for building wealth over time. They illustrate the potential growth of investments with examples, such as the impressive performance of Monster Beverage Corp (MNST) and the compounded returns of investing in SPY (an S&P 500 ETF) over the years. The author's personal regret over not investing early inspires them to ensure their children understand the value of money and the benefits of long-term investing. To this end, the children are encouraged to save half of all money they receive, which is then invested in broad market ETFs like VOO and QQQM, as a means to provide them with financial freedom in the future.

Opinions

The author believes that having a good money mentor is crucial for financial success, something they lacked growing up.
They express regret over not investing during their youth, particularly when they had minimal expenses and a steady income.
The author emphasizes that money should be saved and invested to create options and freedom in life, rather than just spent.
They highlight the concept of compounding as a powerful wealth-building tool when given enough time to work.
The author uses the exceptional performance of MNST stock as an example of the potential rewards of early investment.
They advocate for consistent investment habits, such as investing $100 weekly, to accumulate significant wealth over time.
The author is committed to passing on these financial lessons to their children by having them invest 50% of their earnings or gifts.
They suggest that teaching children about financial stewardship is a gift that can lead to their future financial freedom.
The author offers additional resources, such as their "Zero To Wealth Workbook," to help others with debt management and wealth building.

Why I Make Our Children Save and Invest 50% of All Monies Earned or Gifted.

Time is the greatest wealth-building tool.

As discussed on this blog, I never had what I consider good money mentors growing up.

All I ever learned about money was that it could be spent.

Now, I know money is a tool. Additionally, life is easier the more you have of it, and saving and investing your money, over time, provides you options.

Having options equals freedom.

This is a handful of lessons I am working hard to impart to our children.

When I add up all the money I have made in my life compared to what I have to show for it, I go to dark places mentally.

For instance, between the ages of 16 and 19, with no actual expenses, I regularly made between $100 and $300 a day working at a private country club. In cash!

Conservatively speaking, I likely brought home $700 a week.

I should be able to show you my massive brokerage account, which I opened when I was sixteen, or ROTH IRA.

What if I had put just $100 in Monster Beverage Corp (MNST) in October of 1999, then lost my eTrade login info?

That $100 in MNST in 1999 is worth a mind-blowing $118,345.15 today!

MNST is the best-performing stock in the last 20+ years or so, so admittedly it's an outlier.

But, what about $100 in the SPY every week since October of 1999? Shit, I made over $700 and had no expenses. Since then, I have only ever made more money, so $100 a week would not have been a difficult endeavor to keep up.

Again, just $100 a week since 1999.

$441,352.75.

This is what time and compounding can do for you!

So, this is why I make our children put 50% of all money they are gifted or earn into a brokerage account, right now split between $VOO and $QQQM.

I cannot go back in time, but I can give our children the gift of financial freedom by showing them how a dollar today is worth potentially thousands tomorrow.

Thanks for reading. Be good stewards of your earnings!

If you are looking for more help getting out of debt and building wealth, you can get my newly published Zero To Wealth Workbook here! This is the exact method I used to pay off debt and build wealth.

Some of my other, recent stories.

Why A Financial Education Isn’t Guaranteed, But Necessary!

“F*ck! I Think We Are Getting Ripped Off!”

Car Payments Are Stupid.

The information provided here is for informational and educational purposes only. It is not intended to be, and should not be considered as, financial advice. We do not provide personalized financial, investment, or legal advice. The Matadore is not a registered CFP.