This is a guest post from Scott at The Passive Dad. Scott is a WAHD (Work at home dad) who loves spending time at home with his two children and helping friends find creative ways to make more money. If you enjoy the post, consider subscribing to his site’s updates.
I took my daughter shopping this week to pick up some items at our local Walmart when she turned to me near the toy aisle and asked the question. “Dad, can I look at the toys?” I agreed to let her browse for a few minutes and then we continued with our shopping list. Having a shopping list is wonderful to keep me organized, but a 5 year old has a hard time understanding why toys aren’t on the list.
The next mention of toys occurred around the cleaning supplies as she saw a picture of a Disney princess on a nearby shelf. Oh boy, I thought. Here we go with the toy questions again. The next thing that popped out of my mouth actually surprised me. I looked at my daughter and said “You own this store”. She just looked at me an gave me a look like I wasn’t telling the truth or I was pulling some kind of joke on her. My daughter stayed pretty quiet the rest of the shopping trip and waited until I was putting her in the car seat until she asked her next question.
“I own Walmart Daddy?” Yes, I said. I then explained in 5 year old words that she owned part of the Walmart store with other kids around the world. This got her really excited and she started asking many more questions, including if Santa Claus owned Walmart too. I didn’t have the heart to tell her the truth yet. My daughter indirectly owns several shares of Walmart through her 529 college savings account held at Vanguard. Obviously, this is over the head of my 5 year old. For now she is content in thinking she owns part of our local Walmart store.
“Can you buy me a new princess doll today?” Back in the store I asked my daughter if she would rather have a new doll today or several dolls in a few years. Again, this question just made her think a little harder and we continued the conversation on our car ride home. She really wanted a new doll, but the thought of having a bunch of dolls got her really excited. I told her that one day she will have the choice of buying 100 dolls or going to college. Wouldn’t it be nice if college only cost that?
Since she has no concept of college yet, the thought of having 100 dolls was almost unthinkable. I could tell she wanted to get home very quickly to tell mom she was going to get 100 dolls for her next birthday. I then explained to my daughter that college is many years away and that Walmart will continue to sell more dolls to children. “Those dolls will pay for your college.” She was still looking a little puzzled.
I want to see my Walmart dolls. Since she’s only 5, my daughter only made it one day before she asked to see her Walmart dolls again. This time we visited the Walmart website and found the doll she wanted. I reassured her that the doll was fine and that many more would be available. I told her that we could visit the website together the next day to make sure the doll was still at Walmart. I’m hoping Walmart doesn’t become the new bookmark on my web browser for much longer.
How can I give my daughter something tangible to represent her shares in Walmart? Since we own shares indirectly through her 529 account, we don’t have physical Walmart stock certificates. What we do have is a Walmart gift card that doesn’t have any money left on it. My daughter knows how to spell and recognized the Walmart logo on the gift card. I explained to her that this was her Walmart card and she can use it to pay for college.
Does my 5 year-old understand investing yet? Compared to when she was 4, yes. Does she have more to learn? Absolutely. I hope she continues to ask me questions about Walmart or other stores we use to buy food and merchandise. I also hopes she asks me questions that continue to challenge my way of thinking and stump me. I’m still researching her questions about how many dolls does college cost. That one was priceless.
Investment ideas for children. I opened a 529 plan for my daughter when she was a few months old, but you can start a 529 plan at any age. If you don’t have a few hundred dollars to put towards a 529 plan now, start a savings account for your children. Many banks will allow you to open a savings account for your child and you can educate them about saving towards a particular goal or for college. If you don’t have the funds to open a savings account, start with an emergency savings account. An emergency savings account is an account for household emergencies like fixing a flat tire or replacing a broken appliance. Get your kids involved in savings and have them start getting excited about the future interest they can be building. What else can you do? If you’re family wants to plan a trip to Disneyland, start a Disney fund. Have your children add coins to the jar and find ways they can help contribute to the Disney fund.
How are you teaching your children about investing? I would love to hear your stories and ideas at my blog The Passive Dad.
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This is an interesting post, and an interesting dilemma. At some point, I think you’re going to have to explain that she’s not really going to get 100 dolls, lol. It sounds to me like she’s expecting some dolls in the very near future. But, that was a great way to introduce college to her and I’d very much be interested to know how many dolls will actually pay for college so I can tell my niece about it some day.
As for me, I don’t have kids, but I do spend time talking to kids at work about finance. I work at a credit union and parents will bring their kids in and have us explain how accounts work and so forth. Most of the time I think they understand it. Sometimes I think they just don’t want to part with their money. But, starting young is definitely the way to go!
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