Every father and mother wants the best for their kids, and this often includes financial security. Financially savvy parents often provide sufficient financial education for their kids throughout their time in the house. This may begin with a basic savings account and learning about the benefits of saving regularly, and it can grow into stock investing. Financial planning and personal finance are topics that many adults prefer to avoid altogether, and this can be a source of stress. However, when you talk to your kids about long term investments and financial security earlier in life, they can actually get excited about the money. By understanding these steps, you may be able to get your kids excited about their economic investments.
Encourage Them to Save Money For Their Own Investments
Saving money can generally be rather boring for kids, and it may even seem like a punishment to some. For example, if a child received money for allowance or as a birthday gift and you require the child to put half of that money into a savings account, he or she may feel punished because the money cannot be spent on their terms. However, when kids are permitted to save money for their own investment purchases, they may see a reason for their savings.
Let Them Research and Pick Their Own Stocks
Everyone likes to be in control of their money, and this includes kids. There are many ways to pick stocks, and you may want to save an earnings per share analysis or another similar form of analysis until kids are well into their teen years. Younger kids may be able to pick their stocks by choosing brands they are familiar with, reviewing stock charts on a basic level and looking at buy, sell or hold recommendations from experts. Of course, you should have the final say in their stock picks. You also should show them how dividends work and the benefits of choosing dividend stocks.
Make Investing a Regular Activity They Can Look Forward To
The best way to watch your child’s account grow is to make regular contributions. Consider setting up a regular time when you and your child sit down to make stock picks and to review account growth. By making investing a regular activity that you do together, you may find that he or she begins to enjoy this quality time with you.
Show Them How to Monitor Account Growth
Everyone loves to see their money grow, and this holds true for kids as well. Show your kids how to read their account information online. Clearly, show them the number of donations they have made, their total balance and the current growth. Monitoring account growth is an excellent way to encourage kids to take a greater interest in their finances.
Use an Online Investment Growth Calculator to Project Their Future Wealth
Even children understand the importance and value of money on some level, and this knowledge expands as they get older. When you think your child has a solid grasp on how much things cost and how much money they may need when they get older, show them investment growth calculators online. These are excellent tools that can be used to determine your future account value if you continue to enjoy the same rate of growth and make the same regular contributions to your account. Many kids who start investing at an early age and who continue the activity into their young adult years can retire with financial security at a very young age.
Finances and investments are common challenges for adults, and the unfortunate reality is that many adults were never formally educated by their parents about these matters. By teaching your child about finances and by getting him or her excited about money, you are taking great strides to promote your child’s financial security.