David Almonte, a certified public accountant and a member of the AICPA Financial Literacy Commission, grew up playing with money.
He and his four brothers were raised in Rhode Island by their dad Ernie, who is also a CPA, and their mom Kathy, a secretary at an accounting firm. They were taught to focus on financial wellness at a young age, in part because Ernie had seen firsthand the negative repercussions of poor financial planning, and he wanted to make sure his sons had good financial knowledge.
They started by playing simple math games at the dinner table, like, "You have two meatballs, then you have one," David recalls. Then the games and questions got more advanced.
The kids carried these financial lessons into adulthood: Three of David's brothers also work in the accounting industry. Here are some of the top money management tips the Almonte children learned:
The Almonte kids learned from experience that borrowing can lead to debt. "We had to do chores to get our allowance," David says. When he and his brothers wanted to buy something that cost more than they had, they would take out a loan from their parents — with interest.
Ernie says all the financial lessons were conducted to replicate reality. "By charging these boys interest on loans, I was trying to teach them about the reality of life," he says.
He also emphasized the importance of saving, though: David says that his dad would match, dollar-for-dollar, the amount the kids put into their savings accounts. And one Christmas, David says, Ernie gave the boys a piece of paper canceling all their loans: "It was the greatest day ever."
Before he moved away for a job after graduation, David told his dad his new salary. "He wanted to make sure I was set up financially, and he was like, 'You're basically going from zero to $40-45,000, and making up a budget is unbelievably important before you get that check in the bank,'" David says.
The costs of life's necessities totaled a bit more than David expected: "He sat me down and pretty much made me cry."
With his dad's help, he realized, "when you're paying electric and gas it can add up. ... I was trying to find things I could weed out like, 'I don't need the lights on ... all day.' When I got my first paycheck I'm like, 'I'm rich!' And when I called him at the end of the month, I'm like, 'I'm broke.'"
It's crucial to live within or below your means, he learned. "From a very early age our parents would teach us about the importance and difference between needs vs. wants," David says. "They would put this into practice when my brothers or I would be interested in a new toy or added expense."
His parents never told the kids not to buy something. Instead, they helped shape the way the children thought about spending.
Ernie says that by teaching his kids about budgeting, he was teaching them how to take control of their financial lives. "With a proper plan that they created and they followed, they would know what the outcome would be now and in the future," he says.
When it came to the stock market, Ernie made sure his kids did their research. "I was teaching the boys how to invest with play money so they could learn the rules of investing and that this was not gambling," he says.
David says his father set the kids up with a million dollars of fake money to put in a play portfolio. The kids chose their stocks, and the father traded for them on AOL. "It was similar to trading portfolios on Yahoo Finance today where you can open up a free account and track live stock performance via a fake portfolio in terms of dollars," he says. "No real dollars traded hands.
"You could only buy and sell at the end of the day. If someone got a tip and we were in school, they couldn't trade," says David.
Their dad encouraged the kids to make informed choices about their stock purchases. "Let's say it's Apple: You'd have to tell my mom and dad what product Apple makes, and a fun fact like where their headquarters are so you're not just buying," David says. "He would make you support that decision."
David says their father talked to them about how an employer match to a work retirement account is essentially free money, and schooled them in the importance of planning for the future.
The boys could earn $10 an hour doing data entry for their dad on tax returns. When they did, their father put $2 per hour into a Roth IRA on their behalf.
These days, David recommends signing up for a 401(k) as soon as your company offers it. "The reason auto-enrollment plans work is that once they are set up, people do not change them. But the downside is they only set up the 3%." Since an employer might offer a higher match, always check the maximum allowed. "It's like if you went to an ATM and every time you took out $10 they gave you a $20," he says. "That's what they are trying to do, and it's literally like they gave you $10."
Ernie says he wasn't trying to create future accountants, he was trying to future-proof the kids no matter what field they chose. "I know that having a strong financial plan, and following it, relieves stress and allows you to focus on other areas to create family and professional success," he says.
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