It’s never too early to start teaching your kids the fundamentals of saving and investing. The sooner you introduce the subject, the easier it will be to teach them to spend, save and invest wisely.
Kids are capable of picking up on the value of money at a very young age. Strive to give your kids a basic understanding by the time they’re ready for elementary school.
At this stage it’s more important for kids to fully grasp the concept of saving, but you may also be able to slowly introduce the concept of investing.
As you begin to introduce more complex investing concepts, remember to keep things light. Even though investing is a serious topic, it’s important to include an element of fun to maintain your kids' interest.
Introduce the free 10-minute courses from BB&T and Morningstar® on Understanding Your Investment Options and Managing Your Investment Portfolio. Start with the 100-level courses for an understanding of basic terminology and concepts. Preview the courses in advance to make sure your child will be comfortable with the subject matter.
Set up a simulated portfolio via online resources such as Virtual Stock Exchange Games, provided free of charge from MarketWatch in association with the Wall Street Journal.
A simulated portfolio is a fun, no-risk way to learn about investing, the different kinds of investments available, and the possible risks and rewards involved. Consider making it a game in which other members of the family set up simulated portfolios as well—the highest performers get bragging rights!
This is the time to expand your kids’ financial responsibilities to include discretionary spending for items such as clothing, entertainment, mobile devices and transportation expenses. Discuss the cost of college and explore more advanced investment topics as they transition to adulthood.
Open an IRA for your kids. If they have earned income, they can contribute $5,000 or an amount equal to their earnings, whichever is less.
Introduce the concepts of credit scores, credit reports, and the importance of building a good credit history.
Help your kids create a more detailed budget.
Before your kids make the transition from your residence to one of their own, discuss the pros and cons of renting vs. buying based on their particular situations.
Keep the conversation going. As your kids make their way in the world and encounter choices on issues like company retirement plans, home buying and college savings for their own children, they’ll continue to benefit from your experience and wisdom.