FIREkids is a social platform designed to teach kids how money works and how to use it responsibly. FIREkids provides children ownership of their financial decisions and gives them real world consequences to those decisions.
How FIREkids works: A Step by Step Guide
Adopting the FIREkids program can create a generational change in economic prosperity for your family.
If you are anything like me, when I was growing up I learned very little about how money works and how to use it to my benefit. I had a personal finance class, that pretty much consisted of a football coach showing us his portfolio on one of the online brokerage companies and having us compute compounding interest by hand. Are you kidding me coach? Nobody in here understands what a brokerage account is and I can give you exactly zero examples where I have compounding interest by hand. I didn’t learn how to use the money that I earned to set myself up in the future. There was no talk of an emergency fund, no talk of why compound interest matters, or how much to spend on a car or house. Basically, we all go out into the real world completely lost on how to spend our money, so we spend it all and wonder why we can never get ahead.
FIREkids is an educational program that teaches kids how to be responsible with money at an early age, by rerouting the money you would be spending on them anyway, and giving them responsibility over it.
So, How to do it:
1, Start with a chore chart, I have provided Zeke and Myka’s for free under the resources tab, feel free to use and customize.
a. Print the chore chart weekly for each child participating, and display it where it is seen and used. We use the refrigerator.
b. The child will mark with their initial that they have completed the chore, on the day it was to be completed.
c. If the child doesn’t do a chore, or doesn’t initial that they completed it, then they receive no payment for that item.
d. On the template there is a dollar amount for each chore that is multiplied by the number of times they completed that chore.
e. Sum up the total for each chore, and then add up the totals to get how much the child receives for that weeks work.
2. Go to the bank, take out the amount that the child had earned in $1 bills.
a. It is important to do this in $1 bills, so that when a child buys something, it hurts every time they see one of their dollars going away.
b. We recommend adding an extra $50 as a retirement matching contribution. Like an employer matching a 401k.
i. What this does, is it (at least) doubles the amount of of money in the child’s future account.
ii. The future money can be used for college, seed money for a business, or a down payment on a house/investment property.
3. Present the child with a fat stack of singles, have them separate by:
a. first 10% out for God/Charity, and put into an envelope or wallet specifically designated for that use.
b. second the 50% for future, and put into a shoe box or similar to fill up as the weeks and months pass. It’s AWESOME to watch it grow.
c. the remainder (hopefully 40%) for their current spending needs will go in their wallet.
d. Charity and Future contributions are based on POTENTIAL earnings, not ACTUAL earnings..
4. With the 40% that they have received they are allowed to spend as smartly or as stupidly as they see fit.
a. Things required to be spent out of the 40%:
i. Clothes
ii. Out to eat food - Groceries and home cooked meals will still be provided by the parents at no cost to the child
iii. Toys/Fun Stuff
5. If the child runs out of money, you can loan from future earnings. If the child is old enough, use simple interest to teach about the cost of lending.
a. If the child runs out of money and borrows $10 from parent, then child would pay back $10 if they are too young to understand interest
b. If the child runs out of money and borrows $10 from parent, then child would pay back $11 if they are old enough to understand interest.
Starting the child out at the 10/50/40 spending habits will teach them how to handle money on a small scale, so that when they are older and enter the job market, they will not be overwhelmed and make decisions that will put them and their future at risk.
If you have further questions of how to use this program, please join us in the FIREkids community on facebook.