No More Toys: The Unconventional Birthday Gift I Plan to Give to My Niece
This past weekend I attended my niece’s 7th birthday party at a local skating rink. Aside from the overflow of kids from at least four other birthday parties, I noticed something else that wasn’t in short supply: gifts. By the end of the frenzied throwing of tissue paper and ripping of wrapping paper, it was clear there were too many gifts for one child to give the proper amount of attention to.
Already knowing how long my niece’s attention span is when it comes to toys and other easy-to-grow-out-of playthings, I opted to buy her something she couldn’t just toss aside: stocks and a lesson in investing.
How the gift will work
The idea, spurred by a conversation I once had with a coworker, is relatively simple: for every birthday I will give my niece a pre-determined amount of money to invest in the stocks of her choosing. The stocks she chooses will likely be steered by the latest toy, fashion, or food trend, but the decision will be up to her.
While the concept of investing will be entirely foreign and too complicated for a seven-year-old to fully grasp, it can be simplified to fit what she would find interesting at this stage in her life: instead of owning that one specific toy, you can own a portion of the company that makes the toy. If it does well, you could potentially earn money in the process. If it doesn’t do well, you will lose money in the process.
The message is this: instead of simply owning a physical object for the short amount of time it keeps you entertained, you can have the ability to grow a nest egg – something to be used for much bigger purchases (like a college education) down the road.
Even for a seven-year-old that can sound intriguing.
What does this actually do for her?
Given the small amounts of money I will be giving (I’m certainly not known as the rich aunt), my niece won’t be paying for four years worth of college expenses or traveling around the world with her earnings. But she certainly wouldn’t be doing that with the gift of a Barbie doll or pack of lip gloss either.
Instead, she’ll walk away with something that is far more valuable: the gift of financial literacy.
It’s no secret money management doesn’t have space in many classroom curriculums. While she will learn how many dimes are in a dollar, she probably won’t learn much about how to grow her savings or how our economy works.
By giving her this gift, she will learn:
The importance of being a mindful consumer.
Instead of simply purchasing that toy, we are taking that money and putting it towards something that will be much more useful to her now and into the future.
How to move beyond just saving in a piggybank.
My niece loves her piggybank and the concept of having money to her name. This takes the concept of saving a step further and allows her to see how to grow that savings beyond the initial investment.
How to look at the bigger picture and create money goals.
A conversation about saving will always spark one important question: what are we saving for? This exercise will allow me to talk to my niece about all of the big picture goals we can set for our money – if we purposely take control of it.
How the stock market works and the value in investing.
Adopting an investing strategy as an adult when you have very little experience can be extremely intimidating. At least by simplifying the concept and starting young, my niece will be able to understand the basics and graduate to a more comprehensive strategy later on.
Math has a real-world application.
Unfortunately, there is often a significant lag time between when we learn mathematical concepts and when we actually apply them to our lives. By allowing my niece the chance to invest money now, she can see how essential math actually is outside the classroom.
Of course, she could just want the toy instead…
Knowing how tough it would be to grasp my niece’s attention at a birthday party with ten screaming girls and a whole hoard of new toys, I opted to introduce this concept to her in a much calmer setting. Best-case scenario she’s excited and can’t wait to get started. Worst-case scenario the concept flies over her head and she loses interest before she’s even begun.
Either way, I’m going to keep at it. Chances are, at some undesignated point down the road, she’ll thank me for teaching her a thing or two about money and investing. At least I can hope, can’t I?
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