Teaching kids to invest

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I’ve written a bunch about why it’s expensive to be poor, why we need better tools for managing money, and how to move from a labor mindset to a capital mindset.  A big takeaway for me is that accumulating wealth isn’t just a functional activity, it’s a mindset that needs to be learned, and taught.

It has taken me a long time — generationally speaking — to begin to figure this out.  Both of my parents grew up poor.  My father grew up especially poor, but managed to break out.  In the 1960s he took a computer programming course and learned to code (50 years ahead of his time!), and then just before I was born he started a small business, which my parents run together to this day.

While this business has been transformative for our family (it sent me to college – I’m the first one on my father’s side ever to graduate), I think it’s fair to say that it hasn’t yet finished the job of helping us relate to money in the right way.  For example, I don’t think I ever really learned, at a young age (or really into my late thirties), the concept of **investing**.  Saving was always a vaguely good idea, but spending was easier, and spending on debt even easier than that.  Basically, I think there is this transition, from having no money, to having some money (but spending all of it), to (in some cases) spending more than you have, to (if you’re lucky) learning how to get money to work for you.

Now that I have kids of my own, I’m trying to think about how to teach them about money.  I want them to learn about budgeting, about saving, and about investing.  I want them to see today’s spending needs/wants as not the whole picture. I want them to learn that if you’re smart about money, not only will you set a solid foundation for yourself, but other good things can happen (e.g., compounding interest).

Here is my v0 approach — no idea yet if this will work.  The primary way my kids spend money (of their own choosing) is on-demand videos.  We have a Roku TV in our living room, and occasionally they rent or buy TV shows or movies.  So, for starters, rather than having them simply ask every time if they can do it, we’re instituting a budget.  The budget is $20 per month per kid.  (that gets you roughly two movies or ten episodes).

The twist is that, at the end of each month, whatever they don’t spend rolls over into the next month — with 20% interest.  So if they spend $10 and save $10, they will roll over $10 + 20% or $2.  So next month they’d start out with $32.  The 20% monthly interest may seem unrealistic and overly generous, but I’m trying to compensate for both the low dollar amounts (hard to get excited about 1% monthly on $5), and also for converting to “kid time” (a month to them feels like a year to us).

I explained the new plan to them the other day (March is our first month), and my heart skipped a beat when my daughter immediately responded: “I think I’ll save most of it”.  :-).  We will see what happens. I am hoping that one of them realizes that the 20% will compound pretty quickly, and decides not to spend any at all.   By my calculations, if they decided to keep 100% of the allowance, by the end of a year they’d each have $950.

I’m curious to know what approaches others have taken to teaching kids about saving and investing.

How to make big problems small and small problems big

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Avoidance is to be avoided. — Nick Grossman (@nickgrossman) February 22, 2018 I’m on a plane right now.  I always find plane/train rides to be some of the best times to focus and get work done.  On this trip, I managed to get two “monkeys” off my back — little tasks that have been lingering… Read more »

You need a budget

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I’ve written for a long time about my desire to re-build personal finance infrastructure in ways that benefit people with the least money.  We see new personal financial products all the time targeting high value customers, but it still feels like they are ignoring a huge, and important part of the market: people scraping by… Read more »

The weakest link

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We have spent a fair bit of time over the past year working on security at USV and across the USV portfolio.  Anyone who has spent time working on personal or corporate security — and in particular information security, knows that there are a million ways in, and you’re never “finished”. Fred wrote a bit… Read more »

From a labor mindset to a capital mindset

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I’ve been quiet on the blog lately — writing is one of those things that’s hard to build a habit for, but always pays big dividends when you do it.  Every time I’ve gotten into a good blogging rhythm I am undoubtedly surprised by the feedback I get (good and bad!), but more importantly, by… Read more »

Service

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The week before last, we lost a dear friend to cancer.  Deb was an incredibly sweet, caring and giving person.  The memorial service last weekend was held at the elementary school where she taught first grade for the past 15 years.  The room was decorated — to the hilt — with hearts, butterflies, and ribbons,… Read more »

Changing seasons

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Today is the last day of September, and I’m happy and relieved to see it go. I’ve been holding my breath. September is a violent month.  That may seem like a ridiculous thing to say, but I think there’s some truth in it.  Something about the end of the summer and the abrupt change to… Read more »

Labor Day: Project Repat

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Yesterday, in the process of cleaning out my closet and donating a bunch of old clothes, I did something I’ve wanted to do for a long time: got going creating a t-shirt quilt for my old “sentimental” t-shirts.  I’m a bit of a t-shirt hoarder, especially when it comes to shirts that memorialize some special… Read more »

Optimizing for energy

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In the world of startups and investing and ideas, things are always chaotic and fluid, and as such a key skill is to somehow cut through the noise and find focus.  That’s on a micro level, like what do I do for the next five minutes, and on the macro level, like am I (or… Read more »

On the blockchain: platform first or app first?

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I was emailing with a friend recently, who asked: “On the web, in order to build a platform you first need a hit app. Do you think this dynamic is different in blockchain?” It’s a great question, and one I have been thinking about a lot lately.  First, let’s unpack the idea that the way… Read more »

Who should police content on the Internet?

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The beauty, and the danger, of the internet is that it’s open to everyone.  Anyone can put up a website, about pretty much anything.  This “open platform” is an amazing thing, and means that innovation can come from all corners, without barriers or gatekeepers.  It also introduces new challenges for how to deal with the… Read more »

Learning by doing

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I had lunch yesterday with someone who has been investing in the crypto / token space recently — having pooled together a small “fund” from friends and family.  It’s a short-term vehicle (like, 6 months), and a large part of the goal is simply to become hands-on familiar / capable investing in token sales /… Read more »

Keeping it simple

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We recently had our daughter’s birthday party, and we held it in a public park near our house, where there’s an old parks department building.  The sun plan was outdoors, but of course it thunderstormed and we didn’t have a back-up plan.  So we called an audible and asked if we could use the back… Read more »

What’s your medium?

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Yesterday, I caught up with my old friend Gary Chou.  Gary was the first General Manager of the USV Portfolio Network (predating Brittany and Bethany), and has since been running Orbital, a community space and “studio for building networks” (which happens to be in the original Kickstarter building on the Lower East Side).  We got… Read more »

Speaking page

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I’ve been doing more public speaking recently, and finally assembled videos into a single place: https://www.nickgrossman.is/speaking/ As I look at that list, I realize that I’ve been doing a ton of speaking in Europe. Of course I know this, because I was there, but didn’t quite realize the pattern that the majority of my recently… Read more »

Getting Help

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I’m on vacation this week, and we have some old friends and their family staying with us.  Last night we got to talking about therapy (like psychotherapy) and how valuable it has been for me over the past few years. Maybe four years ago I started seeing a therapist on a bi-weekly basis.  There were… Read more »

The joy of fixing things up

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I am on a plane right now, watching home renovation shows on HGTV, thinking about how much fun it is to fix things up. Doing projects around the house (last year I built an exterior staircase and made new kitchen countertops, the year before that I built a mudroom), coding and buding apps, and working… Read more »

Getting in over your head

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I was out last night with some of the little league coach dads, and we got to talking about whether it’s better for our kids to be bumped up a level (but be at the lower end of skills/experience) or stay back a level and have a chance to really excel.  The consensus was that… Read more »

For web platforms considering a token strategy: cryptocurrency vs. dollars?

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A lot of founders / teams have been asking if they should be adopting a cryptocurrency strategy.  This is understandable given the frenzy of fundraising recently and the ongoing dialogue about the potential for cryptocurrencies as an alternative business model for web platforms. As “traditional” web & mobile platforms explore this option, there are a… Read more »