I was recently on a camping trip with several families and their children. Many of the kids are approaching their high school graduation in a year or two and, naturally, the subject of their futures popped up now and then while talking around the campfire.
I was pleasantly surprised to learn that a couple of the older kids were interested in retirement and saving money. Wow! These are teenagers? I was excited to talk with them about saving money and the benefits that grow from starting the practice early. I told them (true story) that I bought my first home before my 21st birthday from savings I had tucked away. I have to thank my parents for making me save ten percent of my lawn mowing, stable shoveling, and busboy jobs. Admittedly, I really didn’t understand how important it was when I was a young teen, so I was fortunate.
Anyway, if you have kids or grandkids, yesterday is the best time to start instilling the discipline of saving and teaching the power of compounding. Every kid should have a Roth individual retirement account (IRA). Don’t question the wisdom of starting to early as your kids might… the earlier the better. To open one, a child must have some type of earned income, however. The annual contribution is limited to the amount they earn during the year or $5,000 in 2009 (whichever is less).
Children of real estate brokers and agents can have good jobs too! My daughter helps her mother with mailers, wrapping client gifts, gathering information, filing, and the like. As she became a little older, she answers the phone and makes appointments, and even helps out at open houses.
With summer job season here, now is certainly the best time to teach these valuable life lessons.
Scott LeForce
President
Scott.LeForce@rwnc.net
A 16 year old who puts away $5,000 per year every year until age 60, and can earn a 5% average annual return (Historical stock market return is 8+% including reinvestment of dividends), will have $755,715 on his or her 60th birthday. Time is a wonderful thing.
Thanks for the great example Mark! The power of financial compounding is a very powerful thing and one can’t argue the tremendous benefit one has by starting early and being a disciplined saver.
my daughter has it automatically taken out of her account. i am keeping track of it and will surprise her in years to come with the balance…yeah!