I’ve written a fair bit about planning, investing, and good financial behavior for mom and dad, but what about the kids? Here’s a list of ideas to share with your kids in an effort to grow their knowledge on the topic of money and investing.
- Pay your kids an allowance. Not for chores, just give them some cash to do with what they like. Why wait until your son or daughter has a part time job to teach them about money? Give kids cash and let them spend, save, and if possible, give some away. Having the opportunity to spend (before it matters) allows for some important lessons to be learned. Over time, they may learn where to spend based on their priorities while making sure they always have some cash left over. Mistakes will happen and that’s ok. It’s much better for them to make mistakes while they are young and living at home than learning the hard way with their first credit card as a young adult.
- Bank accounts are ok, but it’s getting kids started with cash that’s most helpful. It’s something they can see and feel. Money decisions tend to be very visual. When our children were younger, we provided each of our boys three plastic Tupperware containers to segment out what they intended to save, spend, or give away from their allowance each week. This creates the habit of segmenting out cash based on a purpose. If you’ve read my other posts, you know the importance of giving each of your accounts a job. This is a great first step in learning how to use cash.
- Segmenting cash allows children to purchase small gifts for siblings and parents for birthdays and holidays. Small gifts, donations to the human society, church offering, or the red Salvation Army bucket, all work and send a positive message. It really is the thought that matters, regardless of the amount. This instills the importance of thinking about someone other than yourself, from a young age. It’s a great way to teach the value of giving by actually letting kids give.
- For older kids, ask them to write down the stock prices of companies like Amazon, Nike, Apple, Target, and Home Depot. Why? You’ve likely purchased something from these companies recently, so it’s relevant to your children. Ask your kids to track the average share price each month, since the beginning of the year, on each company. Why do they think the prices contracted and expanded? Would they like to purchase at higher prices or lower prices? Hint, you buy more at lower prices which all adds up over time.
- Play the Monopoly board game as a family. Take turns as banker and have some fun!
- Review a 529 college investment statement with your kids. Explain that that 529s invest in mutual funds (many companies) not individual companies (single stocks). This supports diversification by owning hundreds of companies based on the mutual fund’s stated objective.
- For high schoolers, have them research the cost of in-state and out-of-state college tuition. Pick your alma mater or other schools your kids may likely want to attend. Discuss the difference in tuition costs.
Advisory services through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Flowerstone Financial are not affiliated.
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