Importance of money and kids
It's summer and your young children have already started thinking about ways to earn a little extra money. Besides spending the money they earn on special treats, you usually have them put some in their piggy banks. Are there things you can do to help your kids understand the importance of money and saving?
As the summer days of lemonade stands approach, take this opportunity to give your kids a lesson in finance. As with most good lessons in life, you can never start too early. The sooner you start educating your children about the value of money (and compound interest!), the better your chances are of raising finance-savvy adults.
Besides the obvious piggy bank method, here are some tips to help your children better understand some general money concepts:
Help your kids choose savings goals that are attainable in the near future. Whether they squirrel away their coins for a trip to the candy store or stash away their allowance for a new skateboard, your kids will learn that good things come to those that wait. If your kids seem reluctant at first, you might try sweetening the pot by contributing additional amounts when they hit certain savings amounts on their way towards their goal.
Go to the bank with your children and open savings accounts in their names. Have your kids put a small portion of their allowance in their bank accounts and let them see their savings grow on their bank statements each month (extra bonus here: kids love to get mail!). Check with your bank to see if they have a special children's account program with no or low minimum balance requirements.
A tough economic concept such as inflation is easily demonstrated by comparing the price of certain items when you were a child with what those same items cost today. For example, your kids would be shocked to learn that you could buy a whole bag of candy for a quarter when you were a child and that your house cost 10 times more than their grandparents' paid for a similar house back then.
Let your children play the stock market. Help your kids invest in the companies that make the products or offer the services that interest them (e.g., Mattel, Toys R Us, McDonalds). Show them how to track the progress of their stocks by checking the stock market reports in the newspaper and then calculate their gains (or losses). Note: because many brokerages have relatively high minimum balance requirements, you will probably need to buy and sell stocks via your account.
Making a little extra money during the summer is almost a rite of passage for kids. By taking some time to expose your kids to some basic money concepts, you are enhancing their learning process and may even have a little fun yourself. If you have any questions, please feel free to contact our office.
The information presented in this document is of a general nature only and should not be relied upon to replace professional advice. Before acting on this information, talk with a professional advisor as laws and regulations are constantly changing. Readers accept full responsibility; no document found here is a substitute for a consultation.