Wednesday, March 3, 2010

Kids and Money...

Billionaire Warren Buffet knows how to make money... lots of it.  While his fortune will largely go to philanthropy through the Bill Gates Foundation when he dies, his children did receive a substantial number of shares of stock as young adults from their grandfather.  However, Warren Buffet gave them no teaching or instruction when they received the stock.   Largely absent from their lives as children, they did not learn about money from him.  He did not even explain to them that they could borrow against the value of the stock rather then sell it should they need cash.  As young adults, they sold the stock even as it continued multiply in value.  They each received 600 shares worth about $1000 per share.  Selling them would have netted each child $600,000.    (Warren Buffet's daughter Suzy sold hers to buy a Porsche.) This week those class A shares were selling for nearly $124,000 each....  $74,400,000.  Because they did not learn about money as children they paid a high pricetag as young adults.

We may not have a lot of wealth to pass on to our children but we can figure out how to teach them while they are young the skills that they will need to survive as they grow older.  Love and Logic reminds us that the price tag for learning from experience is small when children are small but grows exponentially as they get older.  Wise parents intentionally teach or develop experiences in a way that allows children the opportunity to fail and gain wisdom.  Sometimes we don't need to teach at all but just let consequences be the teacher.

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