Teaching kids about IP's

[Adria]

We have tried to be as open as possible with our children, 20 months and little miss nearly 5yrs.

She knows we have 1 IP and the newest addition been renovated. I have tried to explain in simply terms and the reason, being able to spend quality time with them in a few yrs (10yrs)

Today she leaned out the window of the IP we are reno and said to the next door neighbor we don't live here we are buying it for someone else. (she meant rent)

I was embarrassed, but at the end of the house so i ignored it, what do you teach your kids and what do they tell others, is this a bad thing, should i teach her to say something else.

 

[sparky23]

I would say just let kids be kids, at that age I don't think you will have too much say in what comes out of their mouths anyway!

 

[Project1080]

I have a 6 & 3 yr old and have also been teaching them the value of money and investing. Both get a little pocket money for doing chores and even at this age show maturity with their finances. The way the world is going, they're gonna need all the help they can get. I figure if I can instill sensible thought processes in them early, they will be more responsible and educated wth financial matters and possibly wealthy before they're 30.

When 6yo first asked about an IP we had just bought and were renovating, I told him that some people are not as fortunate as us and can't afford to buy their on home so we are helping them by buying a house and letting them live in it and they pay us to llive there. He is proud of the fact we are helping others.

Depending on your kids age, there is a very good book on investing. Each chapter is like reading a nursery rhyme but it teaches them financial literacy. It's called "Kissing the Frog". Worth the read.

Project 1080

The project: 10 IPs in 80 mths.

 

[Tramsnod]

Little Miss 6 got the cronic sh@ts when she found out we flew to Brsibane to check out an IP which we bought. 6months later we flew up again and checked out 5 properties in a morning and then at lunch asked her which one we should buy. She told us the one she would buy (luckily we agreed) so we bought it.

On wet weekends we wander around a show home village and she assesses each property.

She's now nearly eight and has a good handle on property investment. We were afraid that she might tell her friends but so far she hasn't. Not that it's a secret or anything.

 

[kissfan]

Personally, I'd let them be kids and let them play with their dolls or trucks etc.

They will learn from you just by observing what you do.

As they get a bit older, saving and finance lessons become a bit more applicable.

Just my thoughts.

Regards
Marty

 

[RumpledElf]

My 8yo has pretty much a zero grasp on money, finances, houses or anything useful yet. She doesn't mind we have two houses, she thinks its normal, I was renting a house in Adelaide a few years ago while I had the house up here.

The 1yo is very helpful, very nicely helps us sand the freshly painted walls, dibbles in freshly applied plaster, and fills up my buckets of various gooey or dirty substances with her toys. The 8yo doesn't even notice when we dramatically change the colour of a room, and didn't notice when the kitchen went from being a big empty room to one with lots of nice benches in it.

The 8yo is going to grow up into one of those ditzy cheerleader sorts that gets the boyfriend to do everything for her. The 1yo is going to make nuclear weapons or other fantastic inventions in the shed and never tell anyone.

 

[Buddybee]

Our kids (7 and 5) have been with us through countless open houses over the years and initially struggled with the concept of us not living in the houses we were looking at. My explaination to them is very similar to Project1080's - we are able to purchase another house for someone else to live in who can't afford it. Our kids go to a Christian based school where the kids donate pocket money each week for several world vision children, so in simple 7 and 5 year old context they are also very proud that we are actively helping others by providing shelter.

We had a number of questions asked about the money side of things, and happily answer them in kiddy context along the lines of "It costs $1000's to own a lolly shop, but if you can't afford to own the lolly shop, you can go into the shop and buy a lolly for $1"

With respect to teaching the value of money and understanding instant gratification v's saving for something better, we've been very fortunate in that our work takes us to the USA each year. The kids only travel with us every 2nd or 3rd year, however this made it very easy as toddlers to teach them the value of money. "Mum can I have a ride on the merry-go-round?" or whatever attraction was in the shopping centre or at supermarket checkouts. My reponse was "If you spend $2 on that ride today we won't have enough money for Disneyland - which would you prefer?" Of course Disneyland won out everytime and the kids did get their $2 once back at home for the money box which was cashed in for Disneyland.

Cheers
Buddybee

 

[JamesGG]

The youngest of my two sisters (now fifteen) has been playing cashflow - 101, not the kid's version - since she was about eight or nine. Brilliant kid.

Watching me, and watching our parents; for a long while she thought it was perfectly normal and expected that people bought houses for other people to live in, that people had other people to work for them instead of working for someone else. A little older now, she's starting to understand a lot more and I believe she knows more about building wealth than most adults ever will.

If it weren't for her dropkick boyfriend dragging her down, she could far surpass anything that Dale or I could ever dream of. Easily.

 

[ethereal]

We hope our kids learn by watching and being actively involved, be that dragged to the engineers, helping to dig sand, weed gardens, go along on inspections, whatever happens to be needing to be done. DD (5) loves to visit open houses.

Unlike some previous posters, I would never say that we rent to people because they can't afford it or are less fortunate though. This is only one of very many reasons why our tenants rent from us. I would worry that this might make them feel unjustifiably 'superior' and comapssion is just not required in these relationships.

We discovered a short time ago that our daughter had some strange ideas about money. Her Dad is a graphic designer and makes stickers and signs at work. She figured that as we say he goes to work to make money, that he must design and print that too. She had similar ideas obout ATM's.

To counter this we have expanded our flock of hens to 6 and are building a really good hen house for them. The chickens will be the kids' responsibility and they can sell the eggs to grandma, saving proceeds to buy toys and other things they want initially. When they get the hang of saving to satisfy their wants, we will move to saving and investing a set proportion for the longer term. DD is already collecting lunch scraps at prep to bring home for the hens, cutting back on the cost of chook feed.

 

[Dazz]

I have tried to explain in simply terms and the reason, being able to spend quality time with them in a few yrs (10yrs)

Hi Adria,


We started teaching our kids about IPs about 10 years ago and it was a waste of time we thought until they could do some simple maths. They helped renovate a few houses whilst we worked, but as Rumpled Elf pointed out, there was more time spent ensuirng they didn't chuck something into the paint pot.


As they got older, they have all put in the hard yards with me, sweeping out factories and cleaning out 20 years worth of built up cr@p from people's disgusting businesses. I reckon that was good for them to see the harsh realities of how some people operate.


What we purchase now, there is no chance of them being able to participate. Kids wandering around CBD office blocks aren't exactly helpful. Time to get the paperwork out and go through some real stuff now that they all understand basic maths - which is all you need IMO.


Piggybanks have been a big help as well. We split the pocket money into two sections. Savings and spendings. Savings has always been bigger than spendings. They get $ 5.00 per week. $ 3 must go into savings. $ 2 can be spent on whatever they wish to buy - no questions asked.


We call their cash savings booster rocket stage # 1. When it gets to a certain stage we take it all to the fee-free Bank account and turn it into booster rocket stage # 2. We are just about to ignite booster rocket # 3 by purchasing some shares for the kids with their savings. Learning the process and investigating what all fo the numbers mean is the objective of course, being able to pick up a financial newspaper and be able to understand it all.


With me being at home permanently now, I am able to spend that quality time with the kids, and therefore the real valuable lessons have started with all of them after the school stuff has been done. What I'm teaching them however, is not remotely what they will be exposed to at school.

 

[Player]

Moderation in all things

We have exposed our (now) eight year old daughter to about half our IP portfolio. I've found that playing Cashflow for Kids has been a strucutred and fun way to introduce the concept of multiple income streams and having passive income exceed one's expenses......to then provide more choices in life.

She loves using google earth and streetview to search properties for me and now looks at what's nearby as far as precedent. She also seems to be inheriting our bias for infill land, with rental boxes for interim rental income, to value add in future.

We don't push her however, when she shows interest in these things we outline the workings of investments and cashflow that leaves more money in our pocket. She saves part of what she receives in gifts and in a year or two I'll introduce her to the stock market principles and charting. Often it is easier and less emotional for a child to look at a chart and know when to sell by following a rule than an adult with too much information and emotional attachment to a stock. I remeber Alan Hull speaking once and mentioning about his daughter's share portfolio at around age 10.

IMHO it is important as parents to walk our talk and lead by example in not looking rich for the sake of perception to impress others but to have some $ub$tance behind us. Nothing wrong with trinketts and trophies, however as well as a big hat I believe it is important to have some cattle.

As well as leaving a legacy that may be physical and financial, it is important (bit by bit) to develop their attitude to selective discipline with spending and also helping others along the way.

Our children will be the eventual custodians of our wealth, so I for one don't wish to bring up a fool. Aside from destroying the actual portfolio she may inherit, too much in young and immature hands might be a potential recipe for disaster as far as addictions and so forth. It's not shaping out that way however at her young age she's plenty of time to be influenced by her eventual peers. Expect the best, but always plan for the worst......there can always be control from the grave.

As has been mentioned already schools won't expose them to these notions. School will teach them to have a rounded (albeit mathematically deficient IMO) education and to be average and have a J.O.B. And there's nothing wrong with that if they wish to remain average. It is our duty and a privilege to fill the void and present scenarios of being fiscally responsible. We do not deny her anything reasonable, however she already understands that she cannot have it all now, all the time, at the same time.

Pan metron ariston.........moderation in all things.

You've started a noble thread Adria.

 

[our obsession]

What Ethereal said:

We hope our kids learn by watching and being actively involved, be that dragged to the engineers, helping to dig sand, weed gardens, go along on inspections, whatever happens to be needing to be done. DD (5) loves to visit open houses.

By being role models and involving in the hands on stuff, (when they are here).

Making it fun.

I learnt a long time ago, it's gotta be fun, be silly, laugh, but very powerful messages and lessons and education can be conveyed through fun stuff.

Naturally it depends upon age, temperament, etc...mindset cultivation/education/curiousity gets cracking through it being fun. They see us having fun and accumulating wealth, yes, putting in hard yards and work, and serious stuff too, good, bad and ugly, but then we get the solution solving skills out and sharpen them up...but they see it mostly as simple and fun and effective.

We are simple people ...and I like to have fun with all this. Mr OO is a little more serious, but we seem to have found the beautiful balance. The kids are sitting up and taking notice, those old enough are buying....seeds have been sown. They have also learnt to explore and travel and develop their minds and experiences, part thereof because of our, "broadening our horizons".

I am very proud, very happy with the characters they are...the lives they lead, really interesting young people. They each have an individual approach to wealth creation, and some of them are doing this by/via property.

 

[Xenia]

I was embarrassed, but at the end of the house so i ignored it, what do you teach your kids and what do they tell others, is this a bad thing, should i teach her to say something else.

Adria YOU were embarrassed, your daughter was not! The way you feel is not her issue. I would allow her to explain it however she wants. She will learn in her own way what is appropriate and what isn't as she comes across consequences.

My children used to walk into anyon'e front yard as we were out and about and used to tell people that we own their house because we own everything. 10 properties is the entire world when you are 5 and 6. We just point out to them that "no we don't own THAT one!" while the home owners just stare and wonder what on earth are these people on about?

The other day my son (6) came home and had to point out to me that "you know mum there are people that have alot more money than us". I said, yes absolutely! First realisation that we don't own everything!

He also told his teacher that when he grows up he wants to be like mummy. He's teacher replied what does your mummy do and he said, "she does nothing and makes money!" Happy to be a hard working role model for him

 

[wylie]

Only thing I would add to what has already been said is that our three boys have grown up helping to paint, rip out walls, renovate etc etc. They jumped in and were fantastic helpers, but now the 20 year old really doesn't want to do the physical work any more and the 17 year old also is not too interested.

They both have jobs while one is in uni and the other in senior. So I get dirty and do physical work while they sit at home. That has taken some adjustment I have to say.

Beware that they don't get "over it" before they have really begun. Our 13 year old still helps out when we are doing a reno because he doesn't have a job, likes my company and likes making some money.

We didn't always pay them when they were younger but as they hit the teenage years we would not have them help without paying them. When they were younger, we would maybe take them out to eat out and/or pay them something, but we tried to instil in them an attitude of wanting to help us get the job done. We would then maybe do a Dreamworld day as a payback, or things like that. We didn't want them to help only because we were paying. Sometimes it is just something we ALL do as a family to get the house rented. They were fine with that, and handing over money was a nice surprise for them when they were younger.

My oldest son got the "shopping and spending" gene that skipped a generation. It is something that we cannot fathom because his attitude to spending and "having the best" is not something he got from us. He has way more shoes and clothes than I do.

I suppose what I am saying is that whilst I agree kids often don't fall far from the tree, sometimes they do, and all you can do is love them and accept them for what they are. I have no doubt our oldest son will make a success of his life, but it may indeed NEVER again include painting or ripping out a wall .

With the recent thread where I was quite anguished over my desire to stop doing the hands-on stuff of renovating, I must say that I understand and accept my sons' decisions on the same matter.

As far as what they said when they were young.... I don't really remember being embarrassed many times by them blurting out anything. I really think that with my parents having IPs and us having always had IPs, they thought that anyone WITHOUT a rental house was rather unusual . They didn't skite about having houses because they assumed everyone had them.

 

[weg]

Other than putting measures in place to teach our children how to handle money and emphasizing having to work towards something yourself we ensure we teach them by example and by answering the many Q they ask.

Both children but moreso the older one asks a lot of Q or makes statements like...

Can I and how do I buy a house while I'm at Uni and working part time at XXX?

Mum can you show me how to make money when I grow up? (10 yo when he was 9 yo and who probably won't need much guidance)

S has bought shares and he's only 10 can I buy some too? (10yo who saves well because he hates parting with money )

Does someone that works a 7 day business earn more than someone that works a 5 day business??? (16 yo asked this the other day)

It's not about how hard you work is it? A person that works long hours doesn't necessarily make more money than someone that work much less?

X and Z's family are really rich but don't look it, but A and D who look rich aren't are they? (no son they can afford the repayments)

Why would B's parents buy B (who just got his P plates) a late model Merc to drive to school, that's stupid.

These are just the money statements - my kids yap a lot.

The sex and religion Q are far more interesting and I've had to tell them that some of the things discussed especially religion may offend others.

Which bring me back to discretion and diplomacy (yet another subject that gets discussed). Whether it's IP's money sex or religion if you teach your children to be mindful of others they'll know what to discuss and what not to as they grow up.

 

[Rixter]

I took my eldest to the bank when he was 5 to deposit his piggy bank savings for the firs time. We stood in line and when we got to the tellers window I lifted him up onto the tellers counter so he could hand over his piggy bank and let him get to see what the teller does with his savings.

After The lady teller counted all the coins ( $7 worth), she asked my son what he was going to do with it. Without any prompting by myself or wife my 5 year old said, and I quote - " Im going to put it in the bank, then take it out , and buy a house , and then people are going to pay me money to live in it".

Well you should have seen the look on the tellers face. She was gob smacked and couldnt believe what she just heard coming from a 5 year old. Her eyes were like saucers and her jaw was on the floor.

I silently thought to myself with great pride, Thats my boy!- It was Priceless.

 

[Player]

Very nice Rixter, priceless indeed..........lucky he didn't continue the story and explain to her that once he's accumulated a couple of dozen, he'll commence the drawdown strategy.....ring 000 and call the paramedics for the poor lady teller.

 

[firstmillion]

My 5 yr old used to join us 2 yrs back, when we were looking for our PPOR. (Couldn't afford to put him in a childcare then, so was more for financial reasons). Ever since he has come with us for every open inspection. He is quite excited and always takes a brochure, makes notes about no of bedrooms, bathrooms, carpet etc. His favorite website is www.realestate.com.au and sometimes suggests us some houses .

He likes talking about property and has his own works clothes, gloves, boots and painting kit.

Recently he has started reading Jan Somers property book and also comes with us to seminars.

He enjoys it. Never talks about what we do with others. He has started collecting recycling bottles to earn 10c, puts them in his piggy bank. His sense of money quite good.

I think this is his best education.

Cheers

 

[firstmillion]

Well you should have seen the look on the tellers face. She was gob smacked and couldnt believe what she just heard coming from a 5 year old. Her eyes were like saucers and her jaw was on the floor.

I silently thought to myself with great pride, Thats my boy!- It was Priceless.

you should have taken the photograph...somethings are priceless...

 

[Adria]

Great work everyone *claps for you all*
Your stories are so cute and inspiring. I know we are onto the right track with our kids.

Piggybanks have been a big help as well. We split the pocket money into two sections. Savings and spendings. Savings has always been bigger than spendings. They get $ 5.00 per week. $ 3 must go into savings. $ 2 can be spent on whatever they wish to buy - no questions asked.

I like this idea, DD (5yrs) said she wanted more money in her piggy bank, we don't really give her money, uncles and grand dads usually hand over lose change.
After reading this i thought we should do some thing like this

Adria YOU were embarrassed, your daughter was not! The way you feel is not her issue. I would allow her to explain it however she wants. She will learn in her own way what is appropriate and what isn't as she comes across consequences.

So true, and really that is life.

Only thing I would add to what has already been said is that our three boys have grown up helping to paint, rip out walls, renovate etc etc. They jumped in and were fantastic helpers, but now the 20 year old really doesn't want to do the physical work any more and the 17 year old also is not too interested.

They both have jobs while one is in uni and the other in senior. So I get dirty and do physical work while they sit at home. That has taken some adjustment I have to say.

Beware that they don't get "over it" before they have really begun. Our 13 year old still helps out when we are doing a reno because he doesn't have a job, likes my company and likes making some money.

We didn't always pay them when they were younger but as they hit the teenage years we would not have them help without paying them. When they were younger, we would maybe take them out to eat out and/or pay them something, but we tried to instil in them an attitude of wanting to help us get the job done. We would then maybe do a Dreamworld day as a payback, or things like that. We didn't want them to help only because we were paying. Sometimes it is just something we ALL do as a family to get the house rented. They were fine with that, and handing over money was a nice surprise for them when they were younger.

My oldest son got the "shopping and spending" gene that skipped a generation. It is something that we cannot fathom because his attitude to spending and "having the best" is not something he got from us. He has way more shoes and clothes than I do.

I suppose what I am saying is that whilst I agree kids often don't fall far from the tree, sometimes they do, and all you can do is love them and accept them for what they are. I have no doubt our oldest son will make a success of his life, but it may indeed NEVER again include painting or ripping out a wall .

Wylie, it is still possiable that he will own IP's. Prehaps he will pay someone else to reno for him.

Which bring me back to discretion and diplomacy (yet another subject that gets discussed). Whether it's IP's money sex or religion if you teach your children to be mindful of others they'll know what to discuss and what not to as they grow up.

I guess that is the esscence of my orignal post, it is the tact i wish to teach my children.