Kids, Money, and Retirement

Wow, kids are really much smarter than we we adults give them credit for (at least this adult).  At a recent visit with my nephews, my youngest nephew, Chad, asked me, "Aunt Syd, when you retire, does that mean you won't have any job?"

"That's right," I told him, "I'll have no job when I'm retired."

He hesitated, and then with a puzzled look on his face continued, "so, but then, if you don't have a job, how will you get the money to buy stuff?"  Wow, what a great question for a nine-year-old!  He threw me for a loop, I had no idea he had that whole job-equals-money thing down.

I explained to him, that while I worked, we put all the money we didn't use buying "stuff" in the bank (we'll save that investing and miracle of compounding discussion until he's, say, ten) and now we're going to use all that money that's in the bank to buy stuff instead of using the money from having a job."

Seems reasonable, but that didn't totally do the trick, "but what if you run out of money, then will you get another job?"  My in-laws told me that Chad was very worried about their financial situation, too, when they retired, so I told him, "yes, if we run out of money, one of us will go get another job."  He seemed relieved.

I wondered if his line of questioning had resulted from overhearing his parents discuss our upcoming retirement, until the very next day I received the very same line of questioning from another one of our very precocious young little friends.  I guess these kids really do have a grasp of basic finance; I honestly didn't expect kids at this age to be articulating some of the very same concerns as our grown-up friends!

What is even more interesting to me about both of these conversations is they are both children of two of the most affluent families I know.  These kids have iPhones, computers, iPods, and Game Boys.  They go to private schools, live in beautiful, large homes and take fabulous vacations.  They really have so much, I wouldn't have expected them to really understand the value of a dollar and what it takes to buy these material goods. 

Clearly, they have the capacity for financial education we adults either do not acknowledge or want to shelter them from.  Perhaps I should have taken this opportunity to explain to my nephew that what "running out of money" really means is "spending more than you have."  Perhaps I should have explained that we ultimately have control over what we spend, so if we control our spending successfully, we will not run out of money.  Maybe I should have told him that many people, even WITH jobs, spend way beyond what they have by using credit cards, which makes them run out of money much faster.

Even without those lessons, I hope they both at least walked away with the concept that if you don't spend all the money you make at your job, there will come a time when you can decide that you don't have to go to work at that job anymore if you don't want to. 

At the very least, it was so refreshing to have at least one segment of the population not worrying about what we will actually DO with our time when we are retired.  That is clearly something that does not puzzle kids the way it does grown-ups!

Comments

[freedom is priceless]

Wow, what a great conversation. The concept of "living within your means" has escaped many because they need to live a certain life style. Talking to your nephew about it will help him develop his value system around money. For some of us having personal freedom is more important than having all of the latest stuff and expensive vacations. But it is a matter of priorities and I understand the other side of the argument also.

[Retired Syd]

Thanks for your comments, and I agree, freedom IS priceless!