I just read a very neat and informative post. It talked about a man who had two sons who both ran their own business. One of the sons was a college graduate, while the other was a high school graduate.
The father did not invest in a 529 plan to save for his sons college education. Instead he opened up mutual funds for his sons. Prior to them turning 12, he gave them an allowance for chores they did around the home. However, they had to do a minimum of chores. If they did other stuff, they were paid for that chore.
When they reached the age of 12, the father had them come up with a business they wanted to run. One chose to do lawn cutting and snow blowing. The second one chose math tutoring, as he was excellent in math.
The father gave them seed money to start their businesses. The first one used it to buy a used lawnmower and a used snow shovel. The second one purchased ink and paper and created flyers to advertise his tutoring businesses. He then guided them on their business, as a free consultant. He required that half of the money either had to be reinvested in the business or invested in something else – they could spend the other half. Both sons did well.
The one with tutoring had more money, but the other had more equipment. When they turned 18, they were given their mutual funds and received no further financial support. The son with the lawn care business took that money, bought a lot of ads and some new equipment, and expanded the business. The son with the tutoring business finished his senior year. He then went to college and received degrees in both business and civil engineering on a nearly full scholarship. He worked at an engineering firm for six years, while that fund still grew. Later, he used the money to open his own firm. He now runs an engineering firm.
What a wonderful lesson that father taught his sons. Many of us neglect to teach our children about finances. Then, we are shocked when they don’t know how to manage money, credit cards, and have never heard of a budget. They end-up in debt, including student loans. Don’t let your son or daughter fall into the debt trap. Teach them early how to handle their money and credit cards. More posts will follow on teaching your children about money, credit cards, and debt.