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Investment lesson is not lost on 9-year-old

I hadn’t kept track of how many times the question had been asked; it probably ran into the hundreds.

This time I was ready with a different answer: "Yes, Steven, I think it’s time you started getting an allowance."

It clearly caught him off guard. He seemed resigned to the fact that I would eventually include his allowance with his college tuition check.

"Really? How much money can I have?" he asked.

I had an amount in mind but decided to tell a "When I was a kid" story first: "When I was a kid, I got 10 cents a week."  (I also walked 12 miles to school each day … uphill both ways … but decided to save that story until he asks if I will buy him a car.)


I could tell by the look on his face that he was trying to frame an answer that wouldn’t jeopardize his allowance while still letting me know he thought I was insane.

"But that was back in the olden days," he said.

Ordinarily I might have been offended by the term, but when you’re 9, "olden days" refers to anything that happened before your last birthday.

I considered telling him something I’d once heard from an investment guy about how 10 cents a week, saved and wisely invested, could grow to $3.9 million by the time you turn 18.

I wasn’t sure of the exact numbers, so I kept the math lesson to myself.

"You have to understand," I continued, "that there are some responsibilities that go with an allowance. We expect you to do more to help around the house. And an allowance is a good way for you to learn to manage money."

Then I told him how much we had decided to give him each week. It seemed like a reasonable amount, taking into account inflation between 1966 and 2010.

His eyes lit up.


It was more than 10 cents a week, but even Warren Buffet would have trouble turning it into $3.9 million. Still, it was a big enough amount to earn me a hug.

"Thanks, Dad!" he said.

"But here’s the deal," I continued.

He winced. "Here’s the deal" is one of those phrases 9-year-olds put in the same category as, "You can’t have dessert until that spinach is gone" and "Would you rub my feet?"

"Awwwwww," he said, stretching the single syllable until it lasted slightly longer than most ‘50s rock-n-roll songs.

I wasn’t deterred. I explained the deal: "You need to put some of it into savings," I said, and I told him how much.

He seemed all right with that. Maybe he knew the money would still be his eventually.

"And you need to give some of it to church and to charity," and I chiseled even further into his allowance.


He did the math in his head: "Does that mean I can spend …" and he told me how much would be left after deductions.

"Yes, you can spend it," I said. "But that doesn’t mean we’re going to run out every week to spend it just because you have it. You can always save it up and buy something bigger."

He did some more mental math.

"How long would it take me to buy the Lego Death Star?"

"How much does it cost?" I asked. He told me.

When the smelling salts kicked in, I did some mental math of my own: "17 years," I told him.

He didn’t seem discouraged.

"Can we start right now?" he asked.


"Why not?" I said. I pulled my wallet out of my hip pocket and handed him his first allowance.

He held the money in his hand and smiled. I recalled doing the same thing with my first dime.

"I’m going to go put it in my room," he said. Halfway down the hall he stopped, turned back to me and asked, "How soon before I can have a raise?"

Watch out, Warren Buffet. I think you’ve got competition.

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