If anything proves that it is never too early to learn about money it is the concept of compound interest. In simple terms, it is interest on your interest. And the earlier you invest the more runway your money has to grow.
My husband and I have been saving and investing since we got our first jobs out of the Air Force in 1998. We should have started sooner, but military pay is ridiculously low and we lived pay check to pay check the entire time.
But once we separated from the military and started our jobs as NASA contractors, we took full advantage of our 401k benefits.
We maxed out our 401k benefits for decades. Even with the transient work of being contractors (we both changed jobs or “badges” as contracts ended), we rolled them over and over, continuing to grow our nest egg into a nice low seven figures.
We still have some ways to go before we can retire, but we are working hard to make that happen.
Very early in our careers, we learned as much as we could about saving and investing.
Had we spent every penny like most of our friends did, we wouldn’t be in a position to be knocking on the golden doors of retirement in the next five or so years.
It’s never too early to learn about money.
We are taking the same values we have toward money and teaching our kids the same concepts.
Our early teen has had her own savings account for about five years now and that account is growing nicely. She gets statements each month and can see how the compound interest is helping her nest egg grow.
What does she put in this account? She works as a baby sitter and her baby sitting money and any financial gifts. She sees us work and knows that working is important to being financially secure. We are secretly dropping a little bit in each month when we can, too.
Learning to handle money is great for kids
We have taught her some strong skills when it comes to handling her own money. She knows that she can spend the money she makes if she wants to. She also knows how important saving a good portion of that money is in the long run.
In addition to setting up a savings account for her and teaching her about how that works, we also have a 529 plan to help fund her education. Neither one of us received any help from our families for education (or anything else…) and that is one benefit we want to give our kids.
While we probably won’t be able to cover college 100%, we will be close. And we are teaching her about how that money is invested and how it grows and is compounded year over year.
Our pre-schooler has a 529 as well, but we haven’t set up a savings account for him yet. We hope to do this sometime this year.
Since he is so young, we are teaching him basic money concepts. We hope this will give him a solid foundation for understanding how money works. He knows that we have to pay for some shows on Netflix or Hulu and we are too cheap to do that. Ha!
Our goal is to help both of our kids learn to be financially fit on their own. To learn from our financial mistakes as much as they learn from our wins.
Whether they are three or thirteen, it’s never too early for anyone to learn about money.
Ultimately, we don’t want them living in our basement when they are 30! Ha!
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