Fear at a Young Age Helped Craft My View of Money
At the age of 12, my father was laid off from his 29-year job in computer programming. At the time, finding a job that would pay enough for him to support my nine siblings and I was all but impossible. Although my father did his best to present confidence while finding work (and ultimately started an entirely different career at age 52), my mother was less than reassuring, routinely letting us know that we were only days away from living on the streets in cardboard boxes. This experience of fear and hopelessness would profoundly shape the way I viewed money the rest of my life.
At 7, My Daughter Knew What a Stock Dividend Was
Wanting my children to have this same understanding, but without the trauma that taught me, I began their financial education at a young age. So young in fact, that by the age of seven, I’m certain my older daughter could explain stock dividends better than most adults. The best part is that this whole process happened naturally one day while sitting outside a Starbucks. While we were enjoying our espresso (she started drinking espresso at two…a story for another time) a guy lit up a cigarette, irritating her to the point of loudly saying “that smells disgusting.” Being a long time holder of Altria stock, I joked that it smelled like dividends to me, and her education began. Now that alone would have done nothing to impact her, but the subsequent discussion made her wonder. Even younger than seven, kids understand money in it’s simplest sense, that having it is a good thing, and that it can be exchanged for things that you want. Telling her that dividends were a source of money, had her attention, but really explaining the process was trickier, so I stepped up my game. That week after school, we sat down and opened a UTMA brokerage account with her. Notice I said “with” and not “for,” as she was there for every step of the process. I funded it with a few thousand dollars from my own brokerage, but the amount really isn’t important, as trading accounts are readily accessible that allow fractional share ownership for just about any dollar amount. What was important was the discussion of what company to invest in, whether they were publicly traded and, of course, if they paid a dividend. We stuck with companies that she knew, such as Disney or Target, and ultimately landed on McDonald’s, purchasing 25 shares of stock.
My Daughter Sees The Benefits
Almost ten years later, she vaguely remembers that conversation at Starbucks, but what she doesn’t need help recalling is the impact of investing early, and the way dividends make money. One look at her account holdings and those same 25 shares have grown 185%, and now pay a 6% yield.
Guest Post By: Greg Kar
Greg is a guest author for Fortis Life Group writing on topics of Personal Finance and Fatherhood
