While sitting at my computer last night, Son #2 wandered over and started chatting me up. He recently received some cash gifts for his 10th birthday, and had money on his mind. He’s always been good with money and often amazes me with his wisdom.
Once again, he didn’t disappoint:
“You shouldn’t spend more money than you have or you’ll go into debt. And the amount of debt doesn’t stay the same – interest gets added onto it. And the longer you’re in debt, the more you have to pay.”
See? Personal finance isn’t that hard. Even a ten year old gets it. 🙂
Curious as to the depths of his understanding when it comes to things like this, I asked a question:
What if you’re already in debt? How do you get out of debt?
He replied:
“You should stop spending so much and find a job where you get paid enough to pay back your debt. You still have to meet your five basic needs, but you should buy as little as you can.”
Intrigued, I asked him what are your five basics needs?
“Food, water, clothing, shelter, and air. But clothing isn’t really a need unless you live in really cold weather, or where there are laws against being naked in public.”
So there you have it… A straightforward plan for keeping (or getting) yourself out of financial trouble. When you get right down to it, the basic tenets are personal finance are very simple. If a ten year old can grasp them, why can’t adults?
Eric: Precocious – the only thing I added was punctuation. I was actually at my computer, so I started typing while he was talking. I did my best to capture it word for word.
Either your son is really precocious or you did some editing for him. 🙂
Either way, good boy!
Excellent! Well done. That has to be satisfying to see this type of wisdom from a kid. There are many grown-ups that could get some perspective from this!
My 6 year old was singing “Save and Invest!” the other day, with such glee. Admittedly, she doesn’t really understand exacly what investing means, or probably much of substance related to personal finance. That said, she does know that we should be thankful for what we do have. Its a good start:)
@Nickle – dunno, maybe they use credit cards to buy all that sun block and those big floppy hats.
But I just love how kids say things in a way that demonstrates such a complete understanding. The genius is that when he says “need” he means it in the purest sense of the word. He is all about the utility. Whereas, most adults start with the assumptions that are imposed by the norms to which they have become accustomed.
Anyway, it was a great post.
If a 10 year-old can get it, why can’t the people who DEPEND on our government?
These people include:
* those who think SocialSecurity is a retirement plan
* unemployed people collecting benefits for 2 years
* banks needing bailouts / borrowing at 0%
* etc
Bender: I wonder if the average debt load is lower in nudist colonies, as people living there only have four needs? 😉
“But clothing isn’t really a need unless you live in really cold weather, or where there are laws against being naked in public.” —– Genius. This is one of the many reason why children are awesome, they cut right through all the nonsense.
If a 10 year-old can get it, why can’t our GOVERNMENT?!?
ckstevenson: It’s hard to say for sure. I’m certain he’s picked up a lot of money sense from just being around the house, but I also think some of his responsibility is innate. We’re not in debt so we don’t talk much about that sort of thing, so I’m sure he’s picked up a lot of it by things he’s seen or heard. I was just amazed that he could put the pieces together so coherently.
First, that’s a cute story, thanks for sharing.
Second, I agree with everything your son said. But I do prefer everyone wear some level of clothing.
Third, of what he said, what % do you think is from being around you and hearing what you say and seeing what you value vs his own original thoughts?