By Daniel Goodwin
Anyone you read about these days known for making money started out as a child once and probably learned about the value of money as they grew up. Famous investors such as Warren Buffet learning the value of money and investing early on and now is the go-to-person for many wanting to know where to invest their own money. How exactly should one instill the sense into your child that investing money is important? Use the interests they already have.
These days, kids are very much into technology, with video games being at the top of the list for many of them. A great idea to start the conversation going about money is to pick up a video game and ask your kids if they know where the game comes from. Tell them who and where it is manufactured and show them on the company website the details. The companies that manufacture these games are publicly traded, so you can suggest to your kids that you take a little money and you will help them invest in that company. They can then watch how their money performs with financial reports you provide them over time.
Along the way, your kids may want to withdraw funds in order to purchase something they really do not need, but this will make for a great lesson as well. Let them take the money out and spend it, but show them still the daily and weekly returns their money would have made had they kept it in the investment account. If, on the other hand, your kids want to invest the money in a different stock, definitely encourage them to do that as well and help them learn how to evaluate different companies and stock performances. They will learn about the costs associated with making these transactions as well. The best part about letting them make these changes is that you are helping them learn about adult decision-making, showing them how certain actions they take in life result in certain consequences. This is an incredible life lesson and they will appreciate you for it as they grow up.
Another basic way to start your kids on savings and investing is to open a basic savings account. This too can have long-term goals attached to it and is a great way for them to link to investment accounts in order to fund and withdraw money. Banks and credit unions have great programs to help start kids with saving money and some financial institutions even have branches in schools now to assist kids in learning good savings habits. Make sure to check the various fees and rewards programs that the different programs offer. Many banks and credit unions offer benefits such as providing bonus funds for presenting high marks on grade cards or piggy banks and other incentives to save money. This means of savings and investing is great because your child will learn how to save money and move it around, perhaps saving to purchase something valuable to their needs, using it in school or later in college or taking and returning lump sums to invest in stocks and other programs that interest them.
Children like to see things that are positive and growth and investing is a great way to help them learn about the value of money and how it can affect their future in positive ways. As you invest for them early on and bring them on when they have a better understanding of money, they will be amazed at how the funds can grow on their own. As your children mature, they will come to appreciate the time you took to explain things to them and will pass those lessons along to their children down the road.