Note that the brothers Gardner are by no means experts in financial child-rearing. They're just Fools, after all. For some additional ideas, talk with your friends and relatives, read as much as you can on the topic (perhaps at our Family Fool area), and try some things out with your kids.
Can you describe one or more of your earliest financial memories?
Tom: When we were around six and eight, we had a coin collecting kit, including one of those shiny 1941 silver pennies. I'm not really sure what happened to it. But I remember going through lots of jars of coins looking for D's or P's on pennies, connoting the Denver and Philadelphia mints.
Then, not long after that, we started in with the typical lemonade stands, on our sidewalk in Washington, D.C. A table, crackers, juice... and a little bit of marketing. But my best memories actually revolve around playing games -- Monopoly, Life, Acquire, and other stock-market investment games. Winning the games meant more than learning about money, to be honest. But the two ended up traveling together.
David: The lemonade stand -- it's such an icon of early entrepreneurial spirit. But we didn't really run with it. We weren't the guys lining up all the other kids in the neighborhood to franchise their stands or expand their reach or anything.
How did you get money at various ages? Allowances? Chores? Odd-jobs? Lemonade stands?
Tom: Around age seven, we started getting an allowance. I think we got two dimes each week. It didn't change much over the years, until we learned the concept of inflation and re-negotiated.
David: One summer, when I was around 12, I did do some gardening at a Georgetown Visitation convent. I earned a little money -- and I probably spent it all. Actually, now that I think about it, the nun overseeing the garden was the school's computer teacher. That was my first introduction to computers! They were pretty primitive then, of course, with punch cards and all that jazz.
I remember getting a dime or a quarter for making our beds. [Laughs] The children in my wife's family learned to make beds without being paid to! Come to think of it, she's the one who makes our bed most days....
What did you learn about money as a little kid, from your parents or others?
David: I remember getting some gifts of money at Christmas. They'd typically be for $50 or $100 and were deposited in bank accounts. I never felt any attachment to the money -- it was as if it wasn't really mine. Perhaps if our parents had shown us the account statements, or maybe let us withdraw a little money now and then from the accounts, we'd have felt more connected to it.
What did you learn about money as a pre-teen?
Tom: Well, the value of a dollar was taught in terms of investing more than in terms of saving or spending. We were a pretty average family -- kids buying Pong, plastic cups of Slime, whiffle ball bats, and Nerf footballs. But we were probably unique in that the value of money was a part of our childhood -- taught to us just as we might learn the game of baseball. It was a game, not a plodding lesson. What we did most in our childhood was play games. Investing naturally fit in.
David: In fourth grade, we had a stock-picking contest at school. I think that for most of us, our parents did much of the stock picking for our portfolios. Dad was enthusiastic about it, and picked Harcourt Brace Jovanovich, the Washington Post Co., Getty Oil, Hershey, and so on. Not all were companies I was familiar with, but I think he was making sure that I did know some of 'em. Once a week in class we'd check the newspaper stock listings and would calculate our gains, to see how we were doing. And as it turned out, I won the contest, bay-bee! I remember being presented with a giant Hershey bar. That certainly helped me stay interested in investing -- winning generally warms one up to most things.
How about as a teenager?
David: Around eighth grade, dad started sitting us down with Value Line -- the big black book full of company reports. He'd update it each week, when fresh reports arrived. He would teach us some numbers -- such as net profit margin or return on equity. (To some these remain arcane calculations, but they're really just simple ratios.) Value Line is organized by industry, so dad would have me go through, say, the defense industry, and compare margins among the companies in it. He'd explain that higher is better, and when I pointed out which companies had the highest margins, he'd ask me why I thought that was. He pointed out how higher margins can lead to competition in an industry, but that companies which MAINTAIN high margins over time are strong, defensible businesses worth considering for investment. To that end, dad taught me to look for companies with double-digit net margins. I think that the Value Line sessions were really instructive. It's good to teach your kids with props, not just discussion. Children learn from props -- such as Value Line reports.
It's interesting that dad wasn't having us focus on buying what we knew -- he didn't invest that way as a rule himself. But both his and our own best investments have always tended to be in companies we're interested in and understand well.
Tom: As teens, we sometimes traveled to the headquarters of companies in which our dad had made an investment. We'd meet with investor relations representatives or cross paths with an executive. We were just small investors dropping in on our business holdings. The trips were often more about the personalities we met than the products and services of each business. I think dad helped us put a familiar face on the business world� and we began to get a sense of why some people succeeded at work and why others didn't. A lot of it seemed to be in the economic design of a company. You could have thousands of people working hard under a bad business model and likely you'd find failure there.
I remember Dave went to a Washington Post shareholder meeting with my dad and met Warren Buffett. Too bad there isn't a photo of that meeting -- that would be pretty funny.
What do you think was the single most important thing that you learned about money as a child?
Tom: I learned from our mom that it enabled you to do things, to go places. That it was a means to some fuller life, not an end to other means.
David: I guess, when you really come down to it, the most obvious lesson I learned is that money is a good thing! It's that simple. Money is opportunity. It lets you do stuff. Whatever stuff you like.
How was money talked about, or thought of, or regarded in your home?
David: Money was never a big issue at home. My parents didn't talk much about it, which partly means they didn't revel in it or worship it, and partly means we never felt deprived of anything.
Tom: From our father, we learned to understand money -- where it came from, where it went, how it was used. Whether its value was inflated or not. Our dad was formerly a banking lawyer with the Federal Reserve and a free-market economist. He wanted us to understand economic concepts and their influence on society -- in part because we grew up in Washington, D.C. It has always been important to our dad to match the story of a business with its economic underpinnings. Coca-Cola had a history -- a story of its people and ideas -- and it had a business plan. It was important to learn about both.
As you grew up, what were you taught about business and companies and the economy?
David: Since dad is an economist, we learned more than the average teenager about economics. Dad had his own charts and everything -- he's a real student of macroeconomics. I think what was most important was that we were exposed to a lot of the financial vocabulary. Not in a highfalutin way, but just in passing. Financial jargon was quickly familiar to me. Investing never seemed full of cryptic words. I was always aware of investing, and expected that one day I too would participate in it. I've naturally learned a lot more about investing in my last 10 years than in the previous 10, but that early education laid the groundwork for later lessons.
How often was money and business and investing discussed in your home -- regularly or occasionally?
David: Just occasionally. We might happen upon dad in his den and then get to talking about business. There was no integrated educational plan, no hoops or certificates or badges. It might have actually been even better if there had been some fun, creative master plan. But the occasional talks were still quite effective.
Did you learn any important financial lessons while in elementary, junior or high school? If so, what?
Tom: Nope, none. And I say this even though I had an absolutely first-rate education.
David: I learned little in school about finances. I took lots of economics courses in college, always hoping that it would be made more relevant to business -- but it never was.
What experiences with banks did you have as children?
David: We'd often go with mom to the bank, when she had to deposit or withdraw money. I remember leaning, bored, against the cold white marble of the place. Needless to say, banking was NOT interesting to me. I suppose you could make it more interesting for kids if you show them statements for their accounts, let them learn their account number, and maybe even have statements mailed to them in their name at home. You have to look for ways to make this stuff relevant to the child on the child's terms.
Tom: Our grandfather was on the board of Riggs National Bank of D.C. In fact, we often heard stories about our grandfathers and their businesses. One owned an insurance company. The other purchased patents on agricultural equipment and saws, packaged under the brandname Dewalt, which was ultimately purchased by Black & Decker. Both of our grandparents were lifelong students of enterprise. When our paternal grandfather was young, he put together a list of the fifty top business people in America and traveled around the country to meet them. He assembled a collection of their thoughts in interview form and many of his business instincts grew out of that experience. Ahh, but you asked me about banks! Well, yes, we learned about savings accounts when young -- boooring! Were they beating inflation? Not really, no.
David: I remember that our grandfather was responsible for having the bank painted yellow.