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This crazy method requires virtually no unique skills...just a basic understanding of finances.
And yes...a $200k investment from parents. Perhaps in a trust so the child can’t touch it for a certain amount of time.
I would submit that by age 25-30 an intelligent young person with a little guidance could have a net worth of $500,000+ and no debt. This could essentially make them self sustaining for life...and rich by 40-50 if they hold on to a few basic principles. The person would also be young enough to still attend college if they so choose.
And let’s face it, who’s the same person at 25 as they are at 18? By 25 most people will have a much better understanding of who they are and where their interest lie.
For a young person that lives at home (or on the cheap with roommates), $200k + contributing $15k+/year of their own money + no debt could pay huge dividends long term. Not to mention the life skills accumulated through being in the working world and understanding exactly how to manage finances.
Look at all the people out here who are 30 with a negative net worth (a worst case scenario for any child of mine). Most will probably be 55+ before they can even imagine what $500k looks like.
For this to work you need a very level headed and practical child that is capable of doing more than working for minimum wage. Something like HVAC, plumbing or good car salesman would be perfect.
You are basically front loading a good understanding of finances/modesty which long term could be way more valuable than college.
If your child succeeds by coming out on the other end with $500k + no debt....well, they will have earned their PHD and most likely have a long comfy life ahead of themselves. They won’t be working a job they hate...they’ll have plenty of time for family/kids...plenty of time to take care of their mind/body, etc.
I guess the most valuable lesson would be how they’ll have to quickly learn the value of a dollar to reach $500k. Once THIS lesson is instilled in a person - money becomes ‘one less thing’ as Forest Gump would say.
Your premise is that everyone goes to college to get a better job and make more money.
Some people actually go to college to become a more well rounded and educated person. Or, in the current state of things, to be educated at all considering the quality of most public high schools in the US.
Your premise is that everyone goes to college to get a better job and make more money.
Some people actually go to college to become a more well rounded and educated person. Or, in the current state of things, to be educated at all considering the quality of most public high schools in the US.
Maybe so but when I hear about that glorious well roundedness I think of this...
This crazy method requires virtually no unique skills...just a basic understanding of finances.
And yes...a $200k investment from parents. Perhaps in a trust so the child can’t touch it for a certain amount of time.
I would submit that by age 25-30 an intelligent young person with a little guidance could have a net worth of $500,000+ and no debt. This could essentially make them self sustaining for life...and rich by 40-50 if they hold on to a few basic principles. The person would also be young enough to still attend college if they so choose.
And let’s face it, who’s the same person at 25 as they are at 18? By 25 most people will have a much better understanding of who they are and where their interest lie.
For a young person that lives at home (or on the cheap with roommates), $200k + contributing $15k+/year of their own money + no debt could pay huge dividends long term. Not to mention the life skills accumulated through being in the working world and understanding exactly how to manage finances.
Look at all the people out here who are 30 with a negative net worth (a worst case scenario for any child of mine). Most will probably be 55+ before they can even imagine what $500k looks like.
For this to work you need a very level headed and practical child that is capable of doing more than working for minimum wage. Something like HVAC, plumbing or good car salesman would be perfect.
You are basically front loading a good understanding of finances/modesty which long term could be way more valuable than college.
If your child succeeds by coming out on the other end with $500k + no debt....well, they will have earned their PHD and most likely have a long comfy life ahead of themselves. They won’t be working a job they hate...they’ll have plenty of time for family/kids...plenty of time to take care of their mind/body, etc.
I guess the most valuable lesson would be how they’ll have to quickly learn the value of a dollar to reach $500k. Once THIS lesson is instilled in a person - money becomes ‘one less thing’ as Forest Gump would say.
Well, Eddie, you currently have $800,000 and you have a child. Give that child $200,000 right now and don't wait until he is 20. He can be quite wealthy very young if he has an investment portfolio of $200,000 right now to start with. You can set him up so that he never has to work.
Like the above poster mentions - if you live and breathe financial prudence kids can pick up on it up early. Hopefully by 21 or so at the latest.
That 17-21 time frame is huge. Think of the difference between being +$50,000 at 21 years old (achievable) vs being -$50,000 at 21 (common...credit cards, car, college, etc).
A mature 21 year old that’s +$50,000 is a FIRE soldier. That’s a working class person who could live relatively well and retire by 35. Possibly a millionaire by 40 - not the distinction it used to be but still ~95th percentile at that age.
In over a decade in investment/wealth management, having seen many, many well intentioned trust funds for children, I can count on one hand the times where trust funds worked out well. Giving an 18 year old cash, even with education is a mistake. Pay for part of their college. Let them graduate with some debt so that they learn how to pay it off.
What you're saying sounds good in theory, but in reality people aren't mature enough to do what you say when they are 18, regardless of what their parents say. The smarter financial decision from my experience in seeing thousands of people's financial situations is to get them a college education with a little (but some) debt.
Well, Eddie, you currently have $800,000 and you have a child. Give that child $200,000 right now and don't wait until he is 20. He can be quite wealthy very young if he has an investment portfolio of $200,000 right now to start with. You can set him up so that he never has to work.
In over a decade in investment/wealth management, having seen many, many well intentioned trust funds for children, I can count on one hand the times where trust funds worked out well. Giving an 18 year old cash, even with education is a mistake. Pay for part of their college. Let them graduate with some debt so that they learn how to pay it off.
What you're saying sounds good in theory, but in reality people aren't mature enough to do what you say when they are 18, regardless of what their parents say. The smarter financial decision from my experience in seeing thousands of people's financial situations is to get them a college education with a little (but some) debt.
So we assume they’re mature enough to do college in high school, but they can’t possibly be mature enough to handle finances? Why do we baby our children financially?
So we assume they’re mature enough to do college in high school, but they can’t possibly be mature enough to handle finances? Why do we baby our children financially?
Sorry, but what are you talking about? School is a set curriculum to learn a set of skills. Handing someone cash does not teach them anything. It will lead to young people burning through money and being even worse off then before, because they had enough money to get by without learning anything. Your plan would actually make people less equipped to handle life than if they were given some debt, and made to work for their first financial success.
Again, I've seen people try what you're proposing. 9/10 times their kids just withdraw more money than they should so that they can pay rent, eat, drink, and have fun without working. If the money is in a fund where they can't touch it (ie, they aren't old enough), they call behind their parent's backs to try and withdraw more money anyway. Once the money dries up, they panic and suddenly need to learn how to be an adult much later in life than most people. The idea posed in this thread is not very good. It's not more complicated than that. It's a much smarter idea to pay for some of the child's college, so that they graduate with a degree from a good school and a manageable amount of debt. Those people are the ones who end up in better financial positions later in life. Data very clearly shows people with a college degree have a significantly higher lifetime net worth than people without.
But please, do tell us how you'll have 200k for your kid at 18 when you're "retired" at 35k year.
Oh yea - magically you'll have gobs of money by post #31
I will have more than enough to give my child $200,000 spread out over the young adult life.
I never said I was giving a child a lump sum of $200k at 18. I will however be able to assist them as long as they show me they are working toward a path of life long financial security. I will consider myself a failure in some regard if my child is a spendthrift. I would hope my child will adopt my belief that money doesn’t buy happiness.
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