Cents and Sensibility
Cents and Sensibility
Starting your children
on path to investingLearning about investment planning as an adult can be a costly process of trial and error. That's why it's a good idea to provide your children with some investment insight.
Teaching your children about personal finance can take many forms. Here are a few suggestions to get your started.
>> Match your child's contribution.
If your child has the self-discipline to invest money received as a gift or earned from a part-time job, reward that enthusiasm by matching the investment. For example, for every dollar your child puts into a savings account, you can put in the same amount, or a pre-determined portion. Then, once the account hits a certain level, for example $500, that money can be rolled into a stock, bond, mutual fund or certificate of deposit to demonstrate how to make money work harder.
>> Seek out kid-friendly investments.
Many investments hold stocks that appeal to children. They will be able to relate better to a company that is familiar to them.
>> Set up a family stock-picking game.
Although long-term investing is recommended for meeting financial goals, you can use a stock-picking game to provide insight about the market and being a shareholder. Have everyone in the family pick a stock and follow it for a month or so. At the end of that time, award a small prize to the person whose stock has done the best. You may also want examining the factors that may have caused the stock to outperform the rest. You'll want to keep all explanations fairly simple, but don't underestimate your children's ability to grasp sophisticated concepts. Children love to learn, and they're often better at it than adults.
>> Children learn by example.
Often people keep money issues from their children. But the best way for children to learn about money and investing is from their parents. Talk with them about your goals and when you reach a target, such as saving enough for a family vacation or a new car, let them know. Tell your children how important it is to establish financial goals and avoid impulse purchases that blow the budget. If you are serious about saving and investing, chances are your children will be too.
Children with a financial education will be able to cope with, and take advantage of many of the circumstances that may come their way in the future.
Guy Steele is a financial planner and head
of the Pali Palms office of Edward Jones. Send
planning and investing questions to him at 970
N. Kalaheo Ave., Suite C-210, Kailua, HI, 96734,
or by email at: gsteele2@pixi.com