Ask savvy investors how they learned their first lessons about money, and they’ll probably tell you lessons their parents taught them.
The money values we learn as children stay with us the rest of our lives. If you are a parent, teaching your children the value of saving and investing will benefit them the rest of their lives. Here’s what you can do:
- Help your child begin to save. Open savings accounts for your children and teach them how the bank adds interest to their savings that makes their money grow. Encourage your children to save a little from every bit of money they receive, such as allowances, birthday gifts, etc. You may even want to set up a matching program, contributing fifty cents for each dollar your child saves.
- Teach your child about stocks. A child in elementary school can start learning about how businesses work. Once your child understands the basics, ask her to think about some of the businesses that might be good stock investments. Then use Morningstar Mutual Fund Guide (available at your library) to find a quality mutual fund that holds some of these companies, or a mutual fund that caters to children such as the Stein Roe Young Investor fund. Many funds accept regular monthly investments as low as $50 a month, so these funds can be a good way to teach children about the stock market while saving for their college education.
- Encourage early IRA saving. The new Roth IRA is a great way for children who are working summers or after school to begin saving for their future. Imagine how much money you’d have today if you had saved $3,000 a year since you were a teenager!
- Let your kids handle their own money. We all learn by doing, so letting your kids manage a segment of their budget will let them learn valuable financial lessons. They may make mistakes, but they will be small mistakes that may help them avoid larger mistakes as adults.
Good stuff all around. I had a newspaper delivery route when I was a kid and my parents let me keep $10/week from it. The rest of it was invested in a mutual fund that I eventually used to buy a car when I turned 16. It was a great learning experience!
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Impressive! I completely agree with Ginita that teaching your child to save and invest money is the duty of every parent for the bright future of your child. Start teaching your child about the value of money and investing right since childhood. By this way, you will be preparing your child to face future economic risks and lead a good life. I feel starting this teaching and training lessons from the tender age of 3 is a good idea. You can start with the habit of waiting and progressively moving forward with basics and teach them to be productive with time.
As a single mom I have decided to involve the kids in sticking to our budget. I’ve posted what goes to each bill on a sheet inside the pantry door. They will see from a young age – how much is sent to savings, how much is spent on gas, how much is spent on groceries, how much is spent on utilities, car insurance, hair cuts, etc. I told them long ago that we can eat out once a month and that we have $25 set aside in the budget for it, that if they want to spend more then we need to figure out where to take it from or maybe save up a couple months for extra. My kids will not be in the dark the way I was.