It’s really never too early to start teaching children about the wonderful world of investing. After all, even toddlers can grasp the idea that money is a means to get what one desires. Most financial experts will agree that parents should begin to teach their children the importance of saving and investing as early as they can, making it simple and easy to understand. After all, lessons learned at a young age could prove valuable to them the rest of their lives.
Make it Easy & Fun
Piggy banks are a wonderful way to introduce your children to saving money. It gives them the main idea of saving, and they are able to watch their bank fill up with coins and bills. Young children can be given an allowance based on chores, or simply given money to put in their piggy bank so they can learn the discipline of saving. Allow them to learn how to earn money and how they can save money, and eventually how they can invest that money. Maybe let them use some of the money to buy something special once their piggy bank is full. Explain to them that they will save the remaining funds and keep adding to their savings, as you want them to learn to always have money in savings with the intent to keep growing it.
Use Interactive Websites & Apps
Show your children how investing works. Teach them how it takes money to make money, and that investing is like buying a small piece of a company. Introduce them to interactive websites and apps that help children learn about money and investing. *Stockpile.com is a perfect way to introduce investing to a child, offering clean and straightforward explanations and eye-catching visuals. Stockpile offers fractional shares to large corporations, making investing easier and less expensive than purchasing full shares. Children may not recognize the Mattel or Marvel trademarks, but Barbie and The Avengers branding characters are easily recognized and attractive to children. Parents have control over all transactions, while the children can make the decisions, learning as they choose which stocks to buy and are given the opportunity to trade as well.
Transition to Real Estate Investing
As children learn and begin to understand the concepts of investments, introduce them to real estate investing. The concept of owning a second home, allowing others to pay you to live there, while earning additional money is a simple way to lay out the fundamentals of real estate investing. Parents with rental properties can involve their children in rental property ownership by making them ‘partners’.
Children can also invest in the home, perhaps helping maintain the property and repairs. Painting, lawn mowing, raking, etc. are several ways for the children to be hands on, making it a great learning experience. Pay out small monthly dividends, showing your child the investment results. In turn, they can invest this money into their savings and stocks, saving enough to invest in additional property down the line. Remind them it takes money to make money, and in order to make money, they must save and invest.
As children grow and learn the aspects of saving and investing, allow them to make some decisions on their own. They need to learn the risks, as well as the payoffs of investing. The goal in teaching your children the ins and outs of investing is to educate them with lifelong skills, which will enable them to make sound decisions for their financial future.
*Nothing in this article is intended as financial advice. Please consult your financial adviser before making any investment