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Teaching Children About Money, You Can Never Invest Too Early

Aug 17, 2007
Young children often have no concept of where money comes from. Every parent wants to make sure their children have their needs and wants filled however what are you teaching your children about the value of money and hard work. It is easy to take out a credit card and instantly gratify your desires however what sort of message does that send to your child. Remember it is important to teach your children about money and investing. Your children are never too young to be involved in their own financial success. Developing money and investing skills early will help their future success.

Make sure you establish a savings account for each child and have a plan. Even extremely young child understand the concept of a piggy bank. Establish an allowance for your child. Allow each child to get paid for the chores they do around the house. Encourage them to divide up their earnings between a charity gift, short term savings for toys, pocket money, and long term savings for a college education. If may seem silly but establishing good investments habits in childhood can last throughout their lifetime. A good balance for your children would be 10% charity, 50% short term saving, 30% short term saving, and 10% spending. As the child grows older and his needs change the percentages can be adjusted as they (and you) see fit.

Another great way to teach your child about money and investments is having a financial family night. Make a list of all your monthly, and weekly expenses. Write each expense on a separate pieces of paper. Then total up the family's income for the month. While fake money works well, if you have have the actually money available for a one time presentation, it can really be eye opening. Give the bills to your children and have them collect payment from you. This is a great visual of how money is spent within the family, how hard earned pay checks are spent, and that money really does not grow on trees. After the meeting discuss with the kids how everyone can do their part to cut spending and increase savings.

Start your children investing. It takes very little money to invest in a mutual- $2000 is a just enough to invest and turn a small profit. Let your children have their "own" investments, and work together to track it's growth or decline. Each dip and low in the market offers good investment learning points. This will allow them to see that money can be saved and invested for the future. Make sure your encourage your children to work. For school aged children it may be extra chores around the house, or yard work. For teenagers it may be a part time job after school. Letting children understand that money comes from hard work and should not misspent is an important lesson. Additionally it build self esteem and pride.

A family can also establish a savings fund for items that benefit the whole family - a vacation, a pool, dvds are also a great thing to save for. Have a jar and post a chart of the progress. Each of these suggestions are a great way to teach a child about money and see the benefits of saving and investing.
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