Would You Give Your High School Graduate $60,000?

My son just started his junior year of high school, and although I have plenty of time to make a decision, I’m already contemplating what I want to give him for a graduation present in the spring of 2017. Television shows and movies tend to exaggerate what teens get from their parents for high school graduation. A brand new car might seem like a common gift, but the digital radio alarm clock I received from my parents is likely closer to the norm. Still, what if parents could give their child a Hollywood worthy graduation present? Would you believe me if I said you could give your son or daughter $60,000 for a graduation present? Here’s how I think you can do just that.

But first, let’s talk about me for a second. I am currently contemplating whether I should give my son $1,000 for his graduation present. The gift will come with a couple restrictions.

He doesn’t get it in cash, it must be invested
He cannot touch it until he reaches the age of 65 years old.

Thinking about the restrictions got me thinking – how much would $1,000 turn into through decades of compounding? Bloomberg suggests that long term investors should expect to earn 6-7% per year on investments. For example’s sake, let’s use 6.5%. After 47 years, that $1,000 would be worth $19,294.41.

Not bad, but I wondered to myself how much better the sum could be had I invested $1,000 for my son on the day he was born, and then gave the investment to him as a graduation present. After redoing the calculations using the same 6.5% average yearly growth, $1,000 invested on the day he was born would be worth roughly $3,100 on graduation day, and grow to just shy of $60,000 by age 65.

Obviously the numbers used in this example heavily dependent on the assumed rate of return and could easily be much higher or lower. The point is, parents have the ability to give their children something significant by investing a sum of money very early in their lives. Parents could use this opportunity to give their children three things:

1. The Power Of Investing

By showing them periodically how much the investment is worth, and helping them keep it invested smartly, children can easily see the growth of their money over time.

2. The Value Of Saving For Retirement

As the child goes through adolescence and through their college years, they will have seen how much their fund has grown over the years. They will understand that time is their greatest asset, and be more knowledgeable and apt to start investing for their future when they enter the workforce and start their careers.

3. A Nest Egg

While the $1,000 investment will not be even close to enough to live on when they retire, every little bit helps. You may not be around anymore, and that nest egg can be your legacy. Hopefully it will also prompt them to pass good financial management skills to their children as well. I missed out on the opportunity to start my son’s investment when he was born, but I’m seriously thinking of giving him a $1,000 investment for a high school graduation present.

You can plant the seed for a fantastic gift by starting an investment for a child early in life. Giving them the fund at their high school graduation would give them something to continue to watch grow, as well as financial lessons that will help them become a more financially savvy adult.

That’s a much better present than an alarm clock.

Do you have a young child, or one that is getting close to high school graduation? Would you consider giving them an investment as a graduation present?

Tagged as: Investing, Kids and Money, Retirement

Editor’s Note: I’ve begun tracking my assets through Personal Capital. I’m only using the free service so far and I no longer have to log into all the different accounts just to pull the numbers. And with a single screen showing all my assets, it’s much easier to figure out when I need to rebalance or where I stand on the path to financial independence.

They developed this pretty nifty 401K Fee Analyzer that will show you whether you are paying too much in fees, as well as an Investment Checkup tool to help determine whether your asset allocation fits your risk profile. The platform literally takes a few minutes to sign up and it’s free to use by following this link here. For those trying to build wealth, Personal Capital is worth a look.

Everything People Failed To Mention When Telling Me Not To Work For Free

When you start out in any creative field, it’s almost a guarantee that someone will remind you to never work for free. “Know your worth,” they’ll say. “Don’t give your work away and get nothing in return.” They’ll make some sort of reference to a totally different profession and say, “Do you think anyone would ask the people trying to break into XYZ field to work for free?”

Yes, I do. A week or two ago, my best friend went back to school to become a registered dietician. She is in a highly-specified program and at the end of two years, she will embark on an eight-month internship in which not only does she not get paid, but she has to pay whichever institution takes her on. And, because she won’t make any money during that time, she will continue to incur debt because she still has to pay rent, buy food, and pay bills. She’s doing it, of course, because she is going to be great in her field and she needs this degree to become a practicing dietician, but isn’t looking forward to the cost.

Admittedly, I also have a friend who, after his second year of law school made an very high hourly rate at an internship in NYC this summer, but even he took an unpaid internship after his first year. We underestimate how many people are working for free to get their foot in the door, even in careers that we wouldn’t consider “aspirational.” The people who, in a blanket statement, tell you not to work for free don’t ever mention the fact that many people work for free at some point in their career. And shaming that is by no means encouraging.

It’s not just writing for free to break into advertising. People volunteer, and parlay that experience into their work at a larger community organization, or jobs in government. Post grads take unpaid internships after college to try to get hired by the company three months later. To break into Hollywood, people create YouTube videos, or a web series, and they write specs or a pilot after working a 12-hour shift at their day job, hoping that a manager might take them on. In order to even get into physician assistant school, people are busting their asses to get their volunteer hours in, just so they’re qualified to apply to school. We are all trying to hustle, so we can get paid in a career that means something to us. In an ideal world, everyone would get paid for the exact number of hours they put in, but we all know that’s not how it works, and are humble enough to understand when that’s fair, but to still ask for money when it’s appropriate, or long overdue.

The first article I ever had published outside of college or small town publications went up about a year ago. It wasn’t paid. You can’t track it down because I never shared it and it’s buried in a ‘from our readers’ section, which very clearly reminds people that I didn’t get paid, and in fact, followed up a few times just to get that article published. But, it was the push I needed to start submitting to other sites.

Within the last year, I have been scrambling to get published, get paid, leave my full-time job, get more freelance contracts, get more bylines, etc., and because I’m starting out, I’ve gotten the age old “don’t write for free” warning in person, and via email. I’ve also read the same advice in articles, and I’ve witnessed many Twitter rants on the subject. But the people who warn you to never work for free, typically seasoned creatives who have been in their industries for years, seem to leave too many important details out when urging you to “know your worth” and “always ask for money.” When I quit my job to write full-time, a creative at my ad agency told me I had to demand an hourly rate of $40/hour, and not work for any less.

I’m sure she thought she was helping me, and I appreciate that there have been so many people who have tried to look out for me in the last year. But, would you turn down an entry-level job valued at $35,000/year because it didn’t pay $70,000/year? The fact is, the sites that pay well are rarely willing to publish writers with no previous experience, so it behooves writers to get published, then get paid at the starting rate, and try to work their way up to better-paying publications, just like you’d climb a career ladder in any other industry.

The places that were willing to publish me were willing to take the time and help me with my work, improve it, and give me a platform where thousands of people would actually read my work. Which then enabled me to go to places that did pay, and have something to show for myself. I honestly do not think we give enough credit to the people who publish work for free, because the fact is, they are giving unknown writers a huge opportunity. When you tell a young creative to never work for free, you’re dissuading them from adding more work to their portfolio, or getting bylines that will help them get paid, and look more competitive when applying for other jobs.

Understandably, most of the tirades against working for free are with regard to situations where writers were continuously not compensated even once they have proven their worth, and were then being led on. That is, of course, a problem, but the onus is still on the creative to take initiative and leave, allot less time to the publications that do not pay, or do it because they love to. And while knowing your value means sticking up for yourself, negotiating, selling yourself, etc., it also means realizing when working for free will help you more in the long run. Part of knowing your own value is learning to bet on yourself— and if people can do that by saving up and going to graduate school, or traveling the world, then I should be able to save up and write a few articles for free without it being a travesty.

Some people start their own blogs, some are volunteering, and others are struggling through a side job to fund their unpaid internships. Breaking into a field — aspirational, or not — requires hustling your ass off. And if the people who no longer have to hustle want to sit back and tell you not to put in any hours for free, that advice could potentially, in my opinion, lead you astray. Your work has value, and you should know your worth. But someone who truly knows their worth understands that climbing a career ladder means creating a foundation, so that when they tell a company what they’re worth in hopes of getting a job, it works.