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A Teenage Passive Income Bedtime Story

No, this one's not about earning money from passive income streams while you sleep, though that's one of my favorites!

Bedtime Story

At tuck-in last night, I laid down next to my 14-year-old. She asked what would have improved my day. I said I was behind on my video curriculum and would have liked to have made more progress. She asked if I was doing more on the ABCs, starting with Assets.


Laughing, I asked if she had any ideas of what her assets are. She said her savings. I said yep.


I shared that her savings have been invested in Vanguard VTSAX (total stock market index fund) since the beginning of December 2023. [We opened the account with the $3000 minimum investment. Automatic weekly transfers tap into dollar-cost-averaging. CYA disclaimer - This is NOT investment advice, you do you.]


After a brief education on mutual funds, she asked how much she has invested.


I replied, “You’ve invested a little over $7000. This was a combination of your original savings from Nana & Papa’s gifts when you were little, plus the half you’ve been saving with your allowance and pet care income over the last 5 years.”


This amount stunned her. She asked how much she’s made with her investments.


With numbers fresh in my mind, I replied, “You’ve already gained $625.


Astonished, she did some quick math. “I’ve made $125 per month for five months?” Yep.


"What did you have to do to make that money?" I asked.
“Nothing,” she breathed.

That led us to the conversation about passive vs. active income.


We discussed the magic of having your money work for you, instead of you working for your money. Sure, you have to earn something to ignite it, but once you get the magic green money-printing machine started and either leave it alone or add more fuel to the fire, it’s a beauty to behold.


Her next question was about the money that she has in her spending account. She has over $1000 in her Chase First Banking account, remnants from her spring break pet care income. She asked whether or not she should put $1000 of her spending money into her Vanguard account, and how hard it would be to take it out later when she wanted it.


Daughter's Investment Gains to Date
Daughter's Investment Gains to Date

I said she certainly could, and it led to the conversation about liquidity and how much money did she think she might want to spend, and on which time horizon. When I opened her account, VTSAX traded at $110. This week it’s just under $125. I cautioned her that markets go up – and they also go down, as illustrated in April in the graph above. She accepted this fact.


She reflected silently for a moment, then pivoted, asking what the best vet schools are. She's wanted to become a veterinarian as long as I can recall.


In the darkness, we asked Google, who started rattling off U. Penn, Cornell, Purdue …


She inquired and I made a wild guess at how much tuition would be. I hadn’t priced it out, but estimated with room & board it could be $80-120K/yr.

Revised Vet School Tuition Commentary

It was dark, but her eyes must’ve been huge. In a small voice she said, “I don’t know how I’m ever gonna save up for that. What if I can’t get any scholarships?”


While I love her immediate instinct to save in advance, I found it interesting she assumed she was on the hook to pay for it all. I tried to squash her anxiety immediately. I shared that we’ve been planning for her education since the day she was born. Not explicitly for veterinary school (because who knew what her passion would be), but to go at least through undergrad on our dime.


This is a gift my parents gave that we intend to pay forward to our children. I encouraged her to think about how she also could offer that gift to her kids when the time comes. It’s a different take on generational wealth, to be able to start adult life debt-free.


In the end, she agreed that passive income is a fabulous thing. She wants more. And she’s interested in investing, now that she knows more about it.


It was a profoundly deeper conversation than I expected when I went in to kiss her good night. While she and I were both a little sleepy this morning, it was another great highlight of how important it is to talk to our children about money.


They can handle it. They truly can.



Not sure how to introduce money concepts to your children? Check out this online course: Raising Wealthy Kids


 

Stephanie Brooke Lennon is the author of Family Bank Blueprint, GoldQuest, and What Would Water Do? Simple Strategies for Navigating Life's Obstacles. Her titles are available in Paperback and Kindle on Amazon.com. Follow Stephanie Brooke on Facebook, Instagram, TikTok, YouTube, Twitter, Amazon, and at ​BrookeLennon.com.

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