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kids learning money

How Early Should Kids Learn about Investing?

Many parents have debated with regards to what the best gifts to give their children over time would be. While aspects such as a good education, books, educational games, toys and puzzles and a stable home environment are all crucial, one of the most important gifts of all that is often overlooked is that of a good financial education.

Children who don’t learn about using finances correctly and investing a portion of their earnings often end up becoming adults who generate excessive levels of consumer debt because of living beyond their means. In many cases, they may even rely on their parents for financial support well into adulthood as well. 

Below are a few ways in which you can start preparing your children to learn as much as they can about making their money work for them at the earliest possible age.

Introducing Basic Money Concepts

Many children will be able to understand the simpler aspects regarding money from around the ages of three to four years old. As such, you can start off by talking about money whenever it’s relevant to your daily life. For instance, if you’re out shopping with your child, show them how you’re comparing prices and looking for items that are on sale so that you can save money.

Allow them to observe while you’re paying bills and explain to them how much essentials like heat, electricity, groceries, rent or mortgage payments and clothing costs. If you’re paying down debt, explain to them why you have it and how long it will take for you to repay it in full. If your children are slightly older, they will be able to understand the concept of how interest works on debt as well. 

Moving on to Investing

Although teaching children to pay bills on time is crucial, it’s just as important for them to know how they can make their money work for them over the long term by investing a portion of any funds they may receive as gifts, allowances, or even from working at a part-time job when they’re older. 

  • Start small. Show your child how investing works by having them save a portion of their money so they can watch it grow over time. Allowing them to learn this way while they’re young will help prevent them from making costly investment mistakes when they’re older
  • Let your kids invest in something that matters to them. This will help them become more interested in how their money can grow over time
  • Have investing become a new family habit. Whenever your child receives money from an allowance, additional chores or even as gifts from friends and family, have them invest a portion of it as quickly as possible. Over time, saving and investing a portion of whatever income they receive will become second nature – which will pave the way for good financial decisions to be made throughout their lives

Teaching your children to be financially savvy from as early an age as possible will help prevent them from making the same money mistakes you may have made in your early adult years. If you would like to give your kids a head start by having them learn about investing and you’re unsure of how to go about it, contact us today.

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kids saving money

Why it’s Crucial for Kids to Learn about Saving at an Early Age

While most parents take the job of raising their children seriously, many of them forget that teaching them about being financially responsible is just as important as it is to ensure that they learn good manners along the way. Children as young as three to four years old can be taught the basics regarding how to save and budget their money, and this go a long way in teaching them to work as effectively as possible with their money as teens and adults.

During the Earlier Years

It has been noted that children as young as the age of three years are able to understand the basic concept of how money works. For example, your three year old will not only know that money is required to purchase the toy they want; they do realize that Mom or Dad will have to go to work so they can get the money that’s needed. One of the easiest ways to start teaching young children about money is to show them how to count by using dollar bills.

If the toy your child wants costs $30, show them 30 individual dollar bills, have them count them out and explain that this is what will be needed to pay for the toy. The next step to take is to let your child know that you’ll provide them with one bill in exchange for them completing a simple chore or task around the house. Once they have accumulated enough of the dollar bills, they will be able to purchase the toy. 

As your Child becomes Older

As your child becomes older, it will be normal for them to start wanting costlier toys, clothing and gadgets. For instance, your tween may ask for a phone and this can provide you with a great opportunity to teach them about the art of budgeting. In most cases, mobile phones come with their own monthly bills and part of the responsibility of having one can involve requiring your child to earn the funds to pay part or all of that bill. 

If your children are close to the age of 16, you may already have had them asking you to purchase a car for them. If you’ve started teaching them early enough about saving and budgeting, your child may already have sufficient funds to pay cash for their first vehicle. This will also be the right time to teach them about the insurance that’s required to drive and to cover the costs of gas, servicing and maintenance over time. 

In a Nutshell

When teaching your children about money from an early age, you’ll be doing the following:

  • Teaching them that it’s necessary to earn the money needed to buy the items they want or need
  • Explaining the value of money, making them less likely to spend unnecessarily later in life
  • Showing them how important it is to set money aside for unexpected emergencies
  • Teaching them how and why they need to budget their money to cover monthly bills as adults

When your children know how to spend their money responsibly, they stand a far better chance of succeeding in areas of their lives other than just finance. Contact us today if you would like to learn more about learning how to budget or how to teach your children more about money.

 

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teaching kids finances

Teach your Kids about Finances during Lockdown

The pandemic has resulted in millions of parents around the world scrambling to find ways of entertaining their children such as home schooling, baking, arts and crafts, and various other activities. However, with finances being extremely tight in many households because of parents not being able to work, this can also present an ideal opportunity for them to teach their kids more about the household budget and finances in general. 

Below are some easy ways in which you can teach your children how to manage their money.

  1. Help them Set Savings Goals

Helping your child to set a savings goal for that must-have toy or video game will teach them that nothing in life comes for free. You can allow them to earn money by doing additional chores that aren’t part of their daily routine if they need to earn extra cash to save up for the item they want. If you can afford it, offer to match the amount of money your child saves.

Once your child achieves their financial goal, it will help them see the benefit of saving a portion of any money they earn going forward. This will also help set them on the path to long-term financial security when they are adults.

  1. Make Use of Money Apps for Kids

As more and more banking and other money-related services move over to digital platforms, children are being exposed to fewer physical checks and cash money. However, there are several fun and child friendly money management apps available that can help teach them about spending, saving, and investing wisely from a young age.

  1. Don’t Underestimate your Child’s Understanding of Finances

Although your children may be too young to start investing money on their own at the moment, it doesn’t mean that they don’t understand anything about finances. 

Children as young as three or four years of age can start being taught the basics of how to use and save some of their money. In many cases, you can open a Junior ISA for your children so that they can familiarize themselves with the ups and downs associated with investing money over time. 

  1. Let them Assist when Compiling your Budget

At present, money is extremely tight in millions of households across the country. This means that budgeting the little money you may have more important than ever. 

Letting your children assist with compiling your household budget plan will allow them to see what items such as mortgage payments, utilities, and groceries really cost compared to the amount of income you currently have to work with. 

Another great way to teach them about saving money is to encourage them to find ways to cut expenses around the house. You could even turn it into a contest to see which child comes up with the most ideas or even the most unusual money saving tips. 

If you’re keen to teach your children more about financial matters and are unsure how to go about doing so, contact one of our professional advisors today. 

 

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5 Ways to Get Your Kids Interested in Saving Money

If there’s one thing that’s true when it comes to kids and money, it’s that kids often let those bills burn holes in their pockets. However, with a little bit of encouragement and some guidance, it’s possible to get your kids interested in (and even excited about) saving their money, instead. Here are five tips to get you started.

#1 – Help Them Create Four “Piggy Banks”

Most kids have a piggy bank or jar that they use to collect the money they receive over time, whether that means coins they find on the ground or the birthday money they got from Grandma. Instead of one bank, create four, and label them “Save”, “Spend”, “Invest”, and “Give”. Encourage your child to put at least 50% of the money he or she receives in the “Save” bank and divide the rest as he or she sees fit. This way, your child will be proud of his or her accomplishments and more inclined to not only save, but to invest wisely and donate to charity in the future.

#2 – Help Them Set Goals

Is there something expensive that your child really, really wants? If so, use this as the perfect opportunity to get your child interested in saving his or her money. For example, if your child really wants a gaming console that costs $400, sit down and do the math to determine how long he or she will need to save in order to make the purchase. Tell your child that if he or she can earn just $10 a week, that’s the same as $40 a month. If your child saves that $10 a week every single week, he or she can have the console in ten months.

#3 – Set Up an Allowance System

If your child doesn’t receive money on a regular basis, then he or she doesn’t have much of an opportunity to save. Be sure that you take the time to set up some sort of allowance system that works for your budget and is age-appropriate. What’s more, don’t just hand out allowances on payday; have your child earn the allowance and keep track of the tasks he or she has done throughout the week so you can pay accordingly.

#4 – Set Up a Savings Account

You can set up a savings account for a child of any age, but children age eight and older will get the most benefit. Take your child with you to the bank along with his or her saved money, and set up the account together. Your child will love seeing his or her name on the account, and having “official” deposit slips for a real account gives children a sense of empowerment. In fact, you might find that your son or daughter wants to rush to the bank to make a deposit with every dollar he or she earns.

#5 – Offer Rewards for Meeting Savings Goals

Although you might think this sounds like bribery, think again. Doesn’t your bank reward you for keeping a certain balance in your savings account by paying you an annual interest rate? Why not do the same for your child? As an example, you could tell your child that you will give him or her $1 for every $20 saved. It’s not much, but it’s free money – and it’s a great way to get kids to stick to their guns.

Kids who learn how to save money at an early age are more financially responsible when they become adults. As such, implementing these tips is a great way to make sure that your child learns money management techniques that he or she can utilize for a lifetime.

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