What is more exciting as a kid than playing outside and hearing the ubiquitous jingle of the ice cream truck approaching? Nothing! As a kid I remember waving down the truck and then rushing inside the house to search through the couch cushions for spare change. I didn’t know it at the time, but that experience would teach me some key investing principles.
Increasing my savings rate.
True, at 8 years old I had no expenses (Thanks mom and dad!). But the few dollars I made doing chores, from birthdays, or looking through couch cushions I saved in a drawer in the kitchen. When the ice cream truck came I would run to that drawer to buy my Spongebob Ice Cream. I learned I could either spend a quarter buying a round bubble gum from the machine, or keep it in that drawer so I could have enough money to buy ice cream in the future.
I can’t time the market.
I never knew when the ice cream truck would drive down my street, but I quickly learned that I could save money so I could be ready when he came. By saving a bit when I could, I made sure that when I heard the upbeat tune I was ready, cash in hand. Similar to investing, I never know when the market will be up or down, but by having some cash on hand I can be ready during large downturns to put money in the market.
Although I loved Spongebob shaped popsicles, at $2 each they were monstrously expensive at the time. Sometimes I would buy a Firecracker popsicle instead to save money. Although it did not come with those delicious bubblegum eyeballs, it scratched the itch of buying ice cream.
I can’t always afford the stocks I want, but I can afford similarly prices companies or buy into an index fund that is heavily weighted towards that company. Apple may be my Spongebob ice cream, but in the meantime I can always buy an index fund that tracks the Dow Jones Industrial Average!
What experiences taught you about handling money as a kid? Share a comment below!