Teaching kids about money and why we don’t do it

Money is slowly experiencing a generational paradigm shift. The shift has been caused by extended life expectancies. Life spans are increasing by 30% a decade.  In the early 1900s many people would WORK and DIE. In that era, there was no reason to save.  The majority of the greatest generation and the baby boomers are experiencing WORK and LIVE. The vast majority of this demographic have under saved and are shocked they are still alive. Listen for this quote, “I sure would have saved more money and taken better care of myself if I would have  known I was going to live this long.” Welcome to the new reality of money. Medical research is changing faster than Americans are adapting to the new reality. Parents need to pursue new strategies to create generational financial success. Those that don’t will fall prey to the easy credit saddling their kids with student loans and credit card debt. Just look around today and observe what has happened to the uninformed and unprepared.

The new path to success is to start investing at birth. This approach maximizes the most powerful component of compound interest, TIME. When a child is born, a onetime deposit invested in a low cost index fund will multiply 270 times. Four thousand dollars at birth can grow into one million dollars. Wait, 10 years and the money multiplies 114 times. At age 20, the same investment will only grow into (48 x $4,000) $192,000. If you do the same thing at 30, the value is only $80,000. The exciting part is that many years ago investing was hard and expensive, today it’s easy and inexpensive. Open a low cost growth mutual fund (many will accept an initial investment of $100.00) and add a monthly online contribution of $30 a month. One dollar a day from birth will grow to over a million dollars by age 65. Ingrain this habit into your kids, just like brushing and flossing their teeth. Add to the account on birthdays and holidays. Have grandparents and others do the same. When the child starts to work, make matching contributions to instill this activity into their being. This simple act will change their lives and save the heartache that the inexperienced are trapped in today. This is easy, If you can subscribe online to Netflix you can also create financial freedom for someone you love.

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