I’m not sure how our 18-year-old son became so money-minded, but there are signs of his obsession around the house.
There’s a yellow Post-it note on the refrigerator that served as a ledger for payments when I lent him money to buy a used truck when he was 16 years old.
There’s a 300-piece puzzle in the TV room he worked while listening to an audio book called, “Set for Life.”
We were talking the other day, and I’m astonished at the random things he knows. Like the fact that you can put up to $35,000 in unused money from a tax-advantaged college savings account into a Roth IRA. And the cost of a duplex in Hixson and how long it would take him save up the 20% down payment. (And what the monthly cash flow would look like if he made such a purchase.)
It’s as if the gears in his brain are constantly turning about money matters.
I read a book decades ago that has shaped my thinking about wealth accumulation. The book is “The Millionaire Next Door,” and its authors made the case that amassing wealth is more about a person’s approach to spending and investing than it is about their education or career choices.
Our son asked me the other day if I would take him to the bank so he could open a Roth IRA and apply for a credit card. He wants to start building a credit history.
“Sure,” I said.
I don’t want him to be overly consumed by money at 18, but I recognize his thought patterns as something of a mind game. He’s one of those people who simply enjoy thinking about money.
He seems to have his priorities in order. He didn’t flinch spending $3,000 of his own money to pay for a Christian mission trip to Africa, yet he won’t wear the new work boots his brother got him last Christmas because he says he still has a bit of tread left on his old ones.
The fact that he’s thinking this way as an 18-year-old is a good sign. I teach a college class, and a lot of my students work hard at part-time jobs, but most are clearly delaying any thoughts of wealth accumulation until after college.
Our son, who will enroll in college next fall, has studied the magic of compound interest and knows that investing in stocks and bonds at 18 could be the key to a worry-free retirement.
I’m a huge proponent of higher education, but I sense a shift in culture. I read in The Wall Street Journal recently that almost a quarter of the Harvard MBA class of 2024 was unemployed three months after graduation. In a low-unemployment environment, it’s hard to believe that people with advanced degrees from an Ivy League university would be hard to place, yet it’s happening.
Meanwhile, some colleges — such as the University of Maryland — report that among their most popular classes are those that teach the basics of personal finance to undergrads.
I blame some of this on parents who didn’t talk about money with their kids when they were younger. Or they talked so much about getting good grades and getting a degree from a fancy school that they neglected to talk about the price of eggs and how to save a dollar.
To his credit, our son has discovered that work boots are as important as books in the American economy.
The white-collar meritocracy that was the gold standard for us baby boomers may have reached its peak.
The fact that our son daydreams about being financially independent someday makes me proud. Instead of millionaires next door, get ready for millionaires in work boots.
If you are wondering, that $35,000 in college savings invested at 10% for 45 years is $2.5 million. And that’s a chunk of change.
Contact Mark Kennedy at mkennedy@timesfreepress.com or 423-757-6645.