How can we make sure our kids start on the right path?

In March, I struck out on my own for a road trip across the Midwest ending up in Texas.  This was a first for me, as I had never taken a vacation by myself.  It really gave me some time to think and reflect on life and what is important, and it is this self-reflection that fueled the FIRE.  While on this quest, I stayed at a lovely bed and breakfast in Wimberley, Texas that had walking trails winding throughout the property.  Along the trails were numerous cairns, or rock piles.  While their main purpose was to mark the path, physically, I couldn’t help but also see the symbolism.  With each step along the journey you were brought closer to the next cairn (or goal) and based on the number of rocks, others had travelled the same path and reached their goal as well.

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I see this as a metaphor for FIRE (Financially Independent, Retiring Early).  It is a journey with many steps (and choices), but with every milestone (no pun intended), you join the others who walked those steps, reached that goal and placed their rock upon the pile.

But what about our kids?  What path will they start out on?  How do we teach our children not to make the mistakes we did, but to take the path we have all found that, in today’s world, is literally the path less taken?  On Friday my 13 year-old, 8th grade son started asking me questions about stocks.  I questioned why he was asking (because I have tried to educate him on fiscal responsibility and investing, and alas a 13 year old boy has no interest in having these discussions with his Mom).  He shared that his social studies class is doing a project where they each were allowed to “buy” 3 stocks with “$10,000” and at the end of the year they will see who does the best.

Now of course this is where I immediately started asking if there was an option for index fund investing or even if he could do an index fund ETF, and he just stared blankly at me.  I attempted to explain, but he just glazed over, so I asked what stocks he picked.  Caterpillar (his Dad works as an engineer there, as do many of the parents in our school district, so my guess is there was quite a bit of this purchased), PepsiCo (because they own Mountain Dew right Mom?) and Nike (because he couldn’t think of anyone else).  Yikes!

What if we taught all children more around the basics of money and investing?  How can we get their attention at an early age so that they understand that moves they make when they are young can make a HUGE impact on their future?  Now 13 may be too young to really make an impact, but more focus in high school and college is absolutely crucial!

I remember when I graduated from college and started my first job (it did happen to be at Caterpillar) and the first week of orientation, someone from the benefits department came and showed us an investment schedule comparison of someone our age who maxed out their 401k for the first 6 years, then stopped investing and just let compound interest take over vs someone who didn’t invest anything for the first 6 years and then at year 7 maxed out their 401k every year until retirement.  At the end of their careers, the first person had more in their retirement fund!  Do you think I did that?  NOPE!  I didn’t have the solid foundation to really grasp the implications of my decision when I was that young, and it was the first time I had ever heard anything like that!  So… alas…. I was not as aggressive as I should have been!

We all have paths we have gone down in life, traveling form cairn to cairn, and often times the segments between each milestone are long and winding.  How do we teach our kids to bypass the meandering way to financial independence and embrace the straight shot, that may seem more difficult going straight uphill, but will allow them to avoid our mistakes?  I have chosen to constantly educate my son, whether he is listening or not!  Eventually some of it may soak in!  This exercise at school will present a very nice learning lesson for him as I am sure my balanced portfolio in low-cost mutual funds will do better than his stock picks over the year (or at least I hope it does or my message may be lost as he may have trouble grasping a discussion on 10-20 year return rates!)

Cairn to cairn, let’s all keep putting one step in front of the other, including pulling our children onto the path behind us,  until that final rock is placed atop the pile of FIRE!

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