From the moment you decide to bring a child into your family, you are committed to giving them a happy, bright and successful future. One day, they will set off on their own, whether to college or to pursue a career, and they will need to start saving and investing money for themselves. While this is an important turning point in your child’s life, it doesn’t have to be their first experience with savings and investment. Investing for your kids early on – and making them part of the process – is a good way to instill lifelong positive habits in your children. Here are 5 milestones you can use to start teaching kids about investing.
Amidst all of the emotion and adjustment of bringing your newborn or newly adopted child home, you likely won’t be giving much thought to stocks and bonds or savings accounts. But as you well know, there are many new costs of becoming a parent, and taking the time in your child’s first 30 days at home to review your financial plans can help set your mind at ease.
For most kids, school is the first introduction to the balance of hard work and reward. There are two key lessons to teach your kids as they head into the classroom: investing in education pays off and you get out of something what you put into it. Your youngsters may not quite grasp the concept of investing money, but they will likely understand that as they invest their time and effort into learning, the payoff will be free time and eventually, moving on to the next grade level. As your kids advance in school, you can start incorporating more lessons for teaching kids about investing money and saving for the future.
Whether it’s cutting the neighbor’s grass or setting up a lemonade stand, the first income your child earns on his or her own is a big milestone, and it’s a great time to start investing for your kids. But simply taking some of their earnings and putting it into an account won’t help them learn positive savings and investing habits. Talk to them about what it means to save for later and give them a real-world example of investing. If possible, try it with a small amount of their money and watch it grow together.
Now that your child has had more exposure to saving and spending money, they should better understand the impact a large purchase like their first car will have on their finances. Now is a critical time to teach your child that even when they have other payments to make, they should not stop investing and saving for their future. Help your child create a budget which includes both car payments and their investments, making adjustments where necessary.
No matter what path your child chooses to follow after high school graduation, whether it be , continuing to invest for their future is paramount. As they establish their own lives, remind them about sticking to their investing and savings goals.
Using what they have learned from their first day of school and very first paycheck all the way through to buying their first car and crossing the stage as a high school graduate, the kids in your life can set off toward their future and you can rest assured that you have provided the foundation for them to continue saving and investing confidently. For more tips on teaching kids about investing, saving and budgeting, visit our FutureTrack blog, then come in and see us.