Fool's Eye View

[ June 20, 2000 ]

Setting A Foolish Example

By Nigel Roberts (TMFNigel)

Chippenham, Wiltshire -- Bringing up children must be one of the hardest things that Foolish parents will ever have to do. I can well remember tut-tutting at the harassed mum in the supermarket queue who was screaming at her children, but that was before I had children of my own, now rather than tut-tutting I am more likely to give a sympathetic smile.

Investing for teenagers?

This morning, when I logged onto the Fool for my daily fix of fun from our discussion boards, I checked out the messages on our Investing for Children board and found a question about investing for teenagers. DCMCD asked, "I have two sons, aged 19 and 17, and have just discovered TMF Guide to Investing. I would like to invest £6,000.00 for them with a view to their retirement in 30-35 years' time. For the 19 year old, I know I could get him to take out a FTSE tracking ISA in his own name, but I want to ensure that he has to leave it alone until 30 years have elapsed. Is there any way I can do this - or are there any other recommendations? For the 17 year old......... I thought of waiting until he is 18 and then doing the same thing. PLEASE HELP."

I replied saying that I was sure there are complicated legal ways for you to tie up the money for 35 years, and that if DCMCD was to see a solicitor they will be happy to charge a fee for doing so. But, I thought the best way is to try and teach your children to be Foolish, let them take control of the money. Tell them what you are doing with the money and why, and try to get them to promise never ever ever to spend the money until they are 45 years old. NinjaChris replied saying "As if!!" which I think means that trying to persuade a teenager to look after money Foolishly is an impossible task!

Deja vu?

I remember having a similar discussion nearly three years ago with Fool UK co-founder David Berger. His wife had just given birth and his parents had given some money to their son, Max, and he wanted to know what he could do with it. My advice was for him to set up a bare trust, which means that when Max turned 18 he would take over control of the money. David was shocked at this suggestion, said that when he was 18 if he had come into some money he would have blown it all on wine, women and song. He wanted to keep control over this until Max was sensible enough to manage the fund Foolishly, and he felt that this would not be when he was 18! My view is that parents must teach their children to be sensible with money, to teach them the value of long-term savings; basically it is important for parents to teach their children to be Foolish. To that end I have total confidence that when my children reach the age of 18 they will be Foolish enough to look after their own money. If they are not then they (and me) will have learnt a very valuable lesson!

Setting a good example

My parents taught me about looking after my finances. I learnt from them not so much through explicit teaching, as from the example they set. My dad was (and is) very debt averse, and both of my parents worked hard to provide for the family. I have always been careful with money, and at the age of 18 I was expected to make my own decisions about my own money. I often use this as an example as to why children should be trusted at the age of 18 to be sensible with any money that has been invested for them. The trouble is I have two brothers. They both had the same up bringing as I did, and while my eldest brother Colin would never ever have wasted a penny, Gordon (the middle one) knew that money was there to be spent, and throughout his teens he did just that, spent the lot!

I think that every parent has to make their own judgements about their own children, but I feel that if you adopt the attitude that at 18 they can't be trusted with their own money, then they may think, "if they don't trust me, why bother?" However, as much as you might like to teach you children to be Foolish, each child will be different and no matter how well you teach them, they could turn out to be one of the world's biggest spenders! If they do, then I think you just have to put it down as a Foolish lesson, and hope that they learn from it.

The important thing as parents is that we are good role models. Children are more likely to be good savers if they see that their parents save regularly and find saving money to be worthwhile. It really does sound simple, doesn't it, but I do think that teaching our children to save and save regularly is one of the most important things we do for them, and the best way to teach them is through setting a good example -- my wife and I both learned the importance of saving from our parents, and we intend to pass that lesson on to our children.

Related links

• Fools guide to Investing for Children
• Investing for children discussion board
• Family Fool discussion board
• Fools letter to David Blunkett
• It's for your own good! By Jane Mack
• Fools at School
• Women's Finance discussion board