Will Dividends Teach My Kids to Work Hard?

After reading an article about education and learning from Mr. Money Mustache last week I starting thinking about my kids and their upbringing vs. how I was raised.  There was lots of discipline but also a tremendous amount of freedom.  That combined with loving parents taught me many lessons in life that I believe have led me to a great career and the joy of raising a large family.  The one thing that worries me the most is a fear that my children do not value gifts or money they receive as much as I did as a child.

As a child I remember talking with my sister days before my birthday.  We share the same birthday one year apart.  We would spend the time talking excitedly about what we might get for our birthday.  Gifts were usually only on birthdays or major holidays.  Easter baskets filled with candy, or presents on Christmas or birthdays.

Growing up with one TV that didn’t get the best reception left us with plenty of time to day dream about Christmas morning and all the presents we asked Santa for.  We were all so pumped that morning we would race downstairs once our parents gave the ok.  Those memories alone gives me the will power to drop my satellite TV once my contract runs out next year.

I started working as a caddy at a country club when I was 12.  Before that I helped my brother with his paper route and  we did chores around the house but were not paid an allowance.  Things were tight and I am pretty sure all of my parents income went to surviving and not saving.  A family of 9 back in the 70's still incurred costs like a larger home, higher utility and food bills.  That first job as a caddy opened my eyes as I was receiving cash each day for providing the service of carrying around some rich guys golf clubs.

Each day when I got home I would tally up the earnings and record them in a pad of paper.  Most of the money I would save (unfortunately not in a savings account) in a hidden location.  Some of the money I would use to buy things or go golfing with my brothers and friends.  If I had an easy way to buy dividend growth stocks like we do today I would be very well off.  It probably was not as easy back then.  The weird thing is I was never taught about accounting so I only tracked my income in that pad and not expenses.

I think I went off on a tangent there.  The point is I valued the cash I had earned.  Sure I was horrible at managing money and have made many mistakes along the way, but I have always worked hard and am at a good point in life were I can save a good chunk of change.

Now it is my kids turn.  They all have savings accounts, investment accounts and 529 college savings plans.  The problem is the money in all of those accounts came from my hard work or gifts from friends and relatives.

They all have chores and the older ones do get paid an allowance.  However that allowance they never see because it all goes to paying for their cell phones.  I view them as a want and not a need so I do not cover that expense for them.  When the time comes for the younger kids to own cell phones I think I will go with ones that only allow talk and text as that is the main reason any kid should have one. 

Some day after I have enjoyed my retirement I will pass away.  When that happens my wife will take over.  I am pretty sure she will outlive me as she is very active all day long taking care of the kids while I sit at a desk.  That will leave them the great dividend machine I will have spent decades creating.

These dividends are like free money.  The company does all the work (minus your original seed money) and on top of it they pay you the shareholder.  So as long as I teach my kids how to manage these stocks the dividends will keep growing. But for them it will be minimal work and they may not value it like I do.

My oldest son turned 16 this year.  I can start with him.  Trouble is he has no interest in getting a job.  I keep gently reminding him it might be a good idea to save for college.  Or it might be a good idea to save for a car and the insurance that comes with it.  He is happy just doing nothing with his summer.

At this point I don’t know what else to write.  I could go hard core and take away all forms of entertainment from him (TV, Phone, Computer, etc.).  I think that may cause resentment.  On the other hand being bored out of his mind may be just what he needs to get motivated to earn money.  And more importantly to value what he has earned.

What do you think I should do?  Any tips for raising kids in this day and age?

Comments

  1. Financial IndependenceMay 26, 2016 at 11:51 AM

    This is like being at war, people in Europe were in a major war in 1941-1945 and it prevented them from making any silly mistakes. They were acutely aware about the consequences, however after a couple of generation people forgot entirely.
    Regardless of all the books and memories, the war is now being glorified again.

    The same with raising your kids and financial independence. The only way to get it right is to have actual experience of not having money, earning. So you would understand the value of hardwork, responsibility and financial independence.

    I do not see dividends like a free money, as in most of the cases capital depreciates all the time. In most of the cases to keep up with it you need to re-invest the dividends. Unless you have billions invest, it is likely that you need to work hard - investing in the right companies, looking at their performance, find new companies.


    ReplyDelete
    Replies
    1. Dividend Family GuyMay 27, 2016 at 4:02 PM

      So your saying if my kids don't work to keep investing on top of what I have done and keep reviewing the companies my investment will disappear? I think that is probably right. Or I guess I could just dump everything as part of my will into a trust that invests in an index fund. Thanks for the comment,
      DFG

      Delete
    2. Dividend LifeJune 4, 2016 at 12:31 AM

      Hi DFG,
      To add to FI's comment, what will happen to any dividend paying stock over several generations (60 years) is either:
      1) It'll continue to pay more dividends -> change in amount
      2) It'll reduce / suspend dividends -> change in amount
      3) It'll go bankrupt -> no dividends
      4) It'll be taken private -> no dividends
      5) It'll be merged / acquired -> change in dividend amount

      I've seen several spinoffs / mergers in the stocks I hold in only 4 years, so a portfolio will likely turn into an entirely different portfolio in 50 years' time if there's no oversight. That's one of the reasons I like the dividend index funds; they take care of any churn.
      The sum of the dividend amount changes will likely make it less valuable of an income stream, but could go the other way of course.

      Best wishes,
      -DL

      Delete
  2. DividendTIMEMay 27, 2016 at 1:53 AM

    Great post!

    I would also add another issue - young people generally do not have any hobby, look historically people were collecting stamps, coins, training sport etc. Now for many Internet is "enough" for a free time...

    Best regards!

    ReplyDelete
    Replies
    1. Dividend Family GuyMay 27, 2016 at 4:04 PM

      I agree DTime. I had like 5 or six hobbies as a kid. My son has none. I try to encourage him to pick one up. Luckily my oldest daughter has several so she is on the right track.
      Cheers,
      DFG

      Delete
    2. DivHutMay 30, 2016 at 8:38 PM

      So true. The offline world has been replaced with screen staring.

      Delete
  3. Tracy EskewMay 31, 2016 at 4:41 AM

    I think if someone doesn't want to do anything, nothing/noone forces him. I think you should find a stimulus and he/she will want to study/work and http://paidforessay.com/ can help during the first time!

    ReplyDelete
  4. Millennial MoolaJune 1, 2016 at 5:24 PM

    I'd encourage him to find a passion rather than get a job. If he gets really good at something, he could turn it into a business. My brother learned the ins and outs of Disney working there, and now he could become a private tour guide if he wanted.

    ReplyDelete
    Replies
    1. Dividend Family GuyJune 7, 2016 at 12:16 PM

      Good point. Got to enjoy your work as that is where you will spend most of your life.
      Thanks,
      DFG

      Delete
  5. Dividend LifeJune 4, 2016 at 12:45 AM

    Hi DFG,
    That's a great post - very interesting! :) I have no children so don't have any specific advice. I do subscribe to the "some things must be learned and can't be taught" saying, especially when it comes to teenagers.

    I would also imagine it's better for children to have skin in the game early on, so rather than "here's $10 for your chores", perhaps a "here's $20 for your chores but you need to pay me back $10 next month for xbox/phone whatever. Don't pay the $10, lose xbox for the month".

    As for any inheritance from my parents, I don't want any and I'd rather they spent the money on themselves leaving nothing for me (or else give mine to the rest of the family). But I've always had that independent mindset I think.
    Best wishes,
    -DL

    ReplyDelete
    Replies
    1. Dividend Family GuyJune 7, 2016 at 12:17 PM

      Thanks DL,
      I might try that. He never sees the money thus never has to think about a budget.
      Cheers,
      DFG

      Delete
  6. DividendsdownunderJune 8, 2016 at 7:32 PM

    Hey DFG,

    I can tell you're a great Dad because you really care about your family. Sometimes parents can teach kids all the things the world and they don't listen. Sometimes parents teach them nothing and they turn out great.

    It's the subconscious lessons that work best, as they don't try to actively fight it lol. We do want to teach our kids about money, good habits, investing. There isn't one best way, it's what they respond best to. But the earlier the better, because habits from a young age have a habit of 'compounding' into adulthood.

    Tristan

    ReplyDelete
    Replies
    1. Dividend Family GuyJune 13, 2016 at 12:05 PM

      Thanks Tristan your absolutely right. I try to repeat enought times it will sink in and they will recall it someday. I don't force them to do anything. Just highly recoomend ;-)

      Delete

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