
This post begins where many great important things do, the heart…
I love my kids. My daughter is 10 and son is 8 (the events of this post were 2 years ago). I want to engage them in financial planning conversations and action. I want to bring loved ones along with me without overwhelming them. On a ChooseFI podcast I heard the term Perpetual Money Machine. This post’s objective is to visualize this powerful idea for my kids. My weapon of choice is Microsoft Excel.
How it went down…
Me: “kids, would you like to invest some money?”
Kids: underwhelmed by this idea.
Me: “How about if I match your contributions?”
Kids: “What does that mean?”
Me: “If you can put $25 into an investment, I will match it with $25 dollars to double your investment.”
Kids: “Yeah, let’s do that.”
This occurred late November 2018 – additional motive was to prevent them from buying toys so near Christmas.
Me: “Ok, kids let’s do some research on which mutual funds you want to invest in.”
One kid “Ok”, the other “I hope this doesn’t take too long, I want to watch Fuller House.”
During the next 45 minutes. We logged into my brokerage account, filtered for no transaction fee, $0 minimum index funds and reviewed the results. I explained that a mutual fund is a collection of many different stocks. And the importance of reviewing fees for investments. I pointed out that these don’t have fees to buy and sell. We discussed performance, specifically 10-year average returns – approximately 12% for these, not sure how well they grasped percentage returns, but that’s ok. Eventually I planned to show them actual dollar gains for better understanding. They tallied their financial resources and with $1 bills collected, fund selections made they finalized the deal. I let them each drive to make their first $40 buy orders in their respective index funds.
After a few weeks we checked performance and neither was doing well. They were both down a few bucks, but trusted me when I told them that happens in the short-term. They understood my scribbled up and down yo-yo line of an investment rising over time. To them, long-term is the Disney trip we were planning 2 years out. By then they will have experienced the magic of compounding interest. This is not a significant amount, but everything in life is relative – their current income is $4 for weekly chores. With their initial investments complete, I knew that to maintain motivation for future investment contributions they would need to see possibilities. The Money Machine was born. Below are two screenshots – The First 10 Years and the Rest of Your Life dynamic charts:

Above is the first 10 years as the Money Machine slowly builds speed. These are the numbers we used with my six-year-old son. He and I spent an hour one afternoon plugging in different numbers and seeing the chart change. What was really cool was how we arrived at the First 10 Years idea. It started as many great things do – with a question.
Me: “Son, how much money would you like to have this account pay you each month?”
Son: thinking… “$100 each month.”
Me: “Ok, that sounds good, let’s see how much you would need to make $100/month.” That $100 must have seemed like a fortune to him. We ran different scenarios – asking questions and reviewing the output. Eventually, we started talking in much longer, grander terms, bringing us to the next chart…

The conversation and experience with my son were memorable. It began with the monthly income row from the Money Machine, then morphed into a longer look at his life in 5-year increments – staggering numbers as we projected further out. I asked him questions like “What do you think you could buy for a $1 million or for $5 million?” The big point: once you get the Money Machine going, it works for you. The First 10 Years is $400 invested yearly, then $1000 yearly for the Rest of Your Life chart. I vividly remember showing him the path to his initial goal of $100/month income and questioning:
“you have a choice here, take the $100/month out as income OR let it continue to compound in the account.”
After seeing the big numbers, he had lost interest in the $100 per month – the conversation had shifted to an exponential one.
Son: “What if I leave it until I’m 100?”
Me: “Well, it’s a big number, but here it is.”

Hard to fathom that amount at any age. His eyes widened each time we adjusted a variable, hit enter and watched the chart change.
Creating this tool to enable investment conversations with my kids was fun. I want the best for them. If I can instill in them an understanding of compounding and the simplicity of investing, I will have accomplished my goal to show them a path to a secure financial future.
Start a conversation today with the Money Machine Calculator…