My dad gave me a copy of “The Automatic Millionaire” a number of years ago. I had other (stupid) priorities at the time, but about two years ago I finally sat down to read it. It had been in the back of my consciousness all that time, and when I finally sat down, I was READY for the information.

Did I make some financial mistakes before getting around to reading the book? Absolutely. But the book was already on my shelf when I was finally ready to actually put the concepts into practice.

If you combine those approaches, your sister will be ready to read the book you choose even sooner than I was!

So, ask your sister to help you find ways to save for something you really want to purchase in the future. Make it a very expensive item that you really will be buying – prehaps a house – and you want to pay for mostly in cash.

Engage her help in the ways that you can save for that item and then praise her for her ideas even if you have already thought of them. “Mums the word”. This will motivate her to think of more ways since this will be a long term savings project. It will also open her eyes to the fact that she will need to start saving at some time in the near future for those larger items too.

This is the perfect way to help her learn how to think about saving and carry through on her own. It will also open a possible long term dialog for the both of you so that you can help her when she needs it. You might also be surprised to find out that she already has a lot of ideas for her future and how she is going to get there.

If you have to act as if you don’t have the knowledge you need, then do so. After all you will not be in a contest with her. You will be helping each other and bonding at the same time. This can truly lead to a wonderful life long relationship for the both of you.

Then, if she asks for your help – give it. You can offer your help to her after you have shown her what you can/have done but be sure to give her credit for helping you no matter how small her efforts may be. Make her feel that she is smart enough to accomplish her dreams too.

At a later time in the future if the opportunity arises to read books on the subject then you might want to ask her to read one while you read the other. Then you can either exchange books or just exchange the information between you.

One of the guys was pretty motivated to start saving. The other shrugged and said, “I have plenty of time to worry about it later”.

I agree with you about Dave Ramsey. I read and reviewed The Total Money Makeover and the best thing I got out of it were the stories of how other people got themselves out a huge mess. I’m 18.

There’s just not a lot of practical advice for a teenager or college student.

There’s also a good lesson in this though: If you don’t make (too many) mistakes to begin with, you never have to be “gazelle” intense.

While I’m here, though, I do want to say that I would not recommend Dame Ramsey for young people, either. At best, he is addressing older couples or at least people who have already gotten into *very serious* debt and need help getting out of it. Young people do not, in my estimation, need to be “gazelle-intense”. As an example, in IWTYTBR (now who’s getting comped, eh?), salary allocation goes something like this: fixed costs 50-60%, investments 10%, savings goals 5-10% and “guilt-free spending money” 20-35%. Older, married couples or families with significant credit card or student debt, who are Dave’s principle audience, WILL NOT have a salary allocation like that. They are, as he suggests, throwing every possible penny at their debt. A young person who is just starting out does not need that kind of intense, frugal-minded lecturing. A young person has money to burn, and what is money for but doing what you want? As long as they are saving adequately and not carrying credit card debt, why shouldn’t they have fun? And Dave doesn’t set them up to do that. (Of course, after you complete the baby steps, he of course gives you absolute freedom to have as much fun as possible, but it’s sort of an after-thought tagged onto the other 10 or so chapters of “get out of debt now” advice whereas Ramit advises young people to cut down on stuff they don’t care about so they can spend extravagantly on the stuff they do care about.)

Full disclosure: Ramit, Ramsey, and Millionaire Next Door are the only money books I’ve bought and read. (Beyond blogs like JD’s and Ramit’s.) So that’s why I have such strong opinions on all three. I certainly can’t speak to the other books being mentioned here.

Frankly, it was published a long time ago (when the people you’re trying to recommend it to were children, even BABIES) and its references just don’t jibe. 50% of millionaires don’t spend over x amount on watches and suits? Teenagers don’t know people who wear watches and suits, except their teachers and not even then. Not to mention its overtly polemical treatment of taxes and recommending that all kids go to school to be attorneys, tax attorneys, estate attorneys, or accountants.

Don’t get me wrong, I liked the book. It’s just… old, super-educated white guys talking about money. Case in point: I quoted a particularly interesting section on facebook and tagged a bunch of friends in the note and didn’t get a single response (I’ve got a very active facebook profile with an extremely diverse population of friends). Someone who has already caught on to the basics of personal finance — who “gets the bug” so to speak — will enjoy it, but it is certainly not a primer or even required reading.

I Will Teach You to Be Rich; buy it for them. You may not like it but they will, I promise. And as outrageous as Ramit is, it gets their (our) attention.

Does anyone have any suggestions for younger children ages 6-7. My child loves to read, and I would love for him to start saving his money from a very young age.

Thank you

Long story short, and I’ve always peppered our dinner conversations with financial responsibilities and the importance of saving. My son now has a part-time job while he goes to college.

He enjoys the cash in his wallet, but I don’t think the conversations that we had really hit home until I bluntly stated that before I met his father I had no debts and saved 30k in a period of 2 yrs. The expression on his face was priceless.

I was pleased, because I think I finally got through to him. He’s now setting aside 35% each time he gets paid.

She’s going to have to comb craigslist, job boards, and newspapers and find a job that she can get with just a HS diploma. She’ll have to find out how much it pays and make some decisions based on that.

She’ll have to find a place to live with how much she can afford from that job. More decisions to make, more newspaper/craigslist hunting. An apt? A roommate? rent a room in someone’s house? go in with 4 other girls and rent a house?

She’ll have to set up an “ideal” budget, either in YNAB or excel or pen & paper.

Then, every 5 days or so in real time will be considered a month in the game time. I’m going to randomly send her emails with statements like, “you’ve got a flat tire. Repair costs $80″ and she’ll have to adjust her budget accordingly.

She’s excited about doing this.

It wouldn’t work if she didn’t want to do it, but we’re both looking forward to it.

Being a bright eyed, bushy tailed teen she’ll probably think “Then I don’t want to be a millionaire, I want to enjoy my life” which is teenage-speak for “I will work until the day I die,” they just don’t know it yet.

Some examples to teach her about saving (this would ordinarily work on someone younger but its worth a try). Take her to the mall, hand her 20 bucks, tell her to try and not spend it, and walk around with her. After a while, hand her another dollar and tell her that is the interest on her 20 dollars (I know, it’s a high yield account ), and after that, hand her another dollar, and so fourth. I guarantee she won’t spend that twenty bucks because she will want to see how much she can get out of it.

After she has collected all of the money and you’re about to leave, explain to her that this was a lesson in interest (if she hadn’t figured it out). Then tell her, that her credit card bill is due and she owes you $106.00 plus $14.00 interest. It will help show both sides of the coin. You can either get paid for having money, or get charged for being broke. Hopefully this doesn’t sound too outlandish .

Thanks,
Timothy
Wealth Artisan Team Member

I just remember asking my sister why my dad took me to open a bank account aged 7. She taught me very simply about interest. The thought of earning money for doing nothing started me off on my upwards journey of saving. I’m so glad I started to save from 16 as after 5 years of compounding I’m making enough interest a year to pay for a 10 day trip to California!

I’ve archived your articles on approaching these matters with kids as well as the simple dollar articles from Trent but I love that this site brings up these issues that really do come up often.

In terms of giving someone advice who isn’t ready to hear it I’ve found something more difficult. Someone asking you that they want to be better with their finances but not taking any advice that you give. I literally gave her some links to your website about the basics of saving and why it’s good to be in control of your finances and guess what…I’ve heard nothing since. She was almost broke when she asked me and then a week later her mum sent her a lump sum. She’s 29. Sometimes people will never want to hear it. I guess that’s their loss.

I also think you have to have an idea of what they’re going thru, and the pressures they face, rather than just spouting off advice like “Save your money…..don’t spend.”

If you talk to your children with some sense of “I know, I’ve been there before”, I think they’re much more likely to follow your advice.

I’d also like to second 26/Tiffany’s suggestion of the pay-for-a-book-report. This technique was actually used on me (quite successfully, I might add). Although for me, it was introduced by a friend’s wealthy dad… he said: Read “Richest Man in Babylon” (which has been suggested also, and is a GREAT suggestion!) and “The Millionaire Next Store” (which hasn’t been mentioned, but it still a great book) and in return, I was offered $1000… which I immediately put towards my college tuition.

Mind you, I’m sure $100 would be a great “carrot” to dangle in order to get her to read it. It’s money well spent.

My little sister is graduating from college next month, and I’ve been thinking about buying her a personal finance book. The problem with many of the books directed towards young adults is that the titles seem condescending. I think it might offend her if I give her a book titled, “Reality Check.”

Opportunity Cost
This is a fantastic way to get a teenager to understand purchase choices. If you only have X amount of dollars, what are you going to spend it on, and how does it affect all of the other areas your life, and what are you giving up by purchasing this particular item.
This obviously doesn’t work if they know that someone is going to be there 2 weeks later to buy the 2nd, or 3rd choice item they wanted.

Sitting down and going through a budget with what they earn/make. Go through the fun items first and see how much is left, if anything for the real needs such as rent or food.

The majority of us failed at times while we were young… I can remember spending way too much at bars or on video games or buying weed.
Useless items that are emotionally fun but not worth the financial cost when you look back. Sorta like buying a sports car(made that mistake when I was old) we all relapse.

The way I got my teenaged daughter (18) to start caring is we sat down with an online RRSP calculator and plugged in some numbers. She estimated that this year she could save enough to put $800 in long term, retirement savings. She realized that if she never contributed another dime in her life that the original $800 would turn into $29,000 by the time she was 65. I could SEE the lightbulb go on over her head! She has been a savings machine ever since and has saved over $2000 in 5 months in long and short term savings from her part-time job. We have also had the same “compound interest” conversation regarding credit and carrying debt.

I’m hoping these little lessons turn into a lifetime of responsible money management for her. Especially because she still has a teenagers mind when it comes to life expectations and sometimes gets carried away dreaming about what her future career earnings will buy her. She figures that once she has her career established in four or five years, she’ll be wearing Louis Vuitton and Chanel everyday. Keep dreaming, Sweetie!

Offer to go with her to set up a Roth IRA and direct deposit (if she will have income this year)

Books will not work until she is bought in.

Because my biggest issue as a teen re saving money—I didn’t have any so it didn’t make any sense to save–so why not spend it instead? Perhaps if you give them concrete a reason to save and help them to do it, they will get the reward and start to realize the power of saving.

Maybe start with a “you may already know this but I really wish I had known it at your age…” intro, and emphasize that good behavior allows for more independence (whereas loads of debt = slavery).

If a total failure, you can then tell her true horrible stories of herself and see if it soaks in…