We all know the importance of financial well-being, yet many of us are self-taught when it comes to figuring out the best way to manage our expenses, grow our savings and learn how to invest for the future. But what about our kids?
Surveys from the National Council on Economic Education show that “nearly half of our young people don’t understand how to save and invest for retirement, nor how to handle credit cards, don’t know the difference between inflation and recession, nor how government spending affects them.” Ouch! That’s a lot we can improve on.
Education.com, a one-stop destination for educational information and services for families of kids in preschool through grade 12, is there with parents who want to supplement their children’s education to be successful in school and in life. And a huge part of that is financial know-how.
Aside from an entire resource section dedicated to helping kids learn about money management and grow up to be educated consumers, Education.com is continually publishing articles that help parents and educators teach kids about money, like today’s homepage feature Investing 101, which may seem basic to some, but highlights six important things to know if you’re thinking of investing money for your child:
1. You will have to make the investment on behalf of your child. In order to buy stock, you must be at least 18 years old.
2. Your goal as an investor is to build an increasingly large and profitable portfolio, a collection of investments.
3. There are all kinds of investments with all kinds of risks. Some investments may be very high-risk. That means that you may make a lot of money, but you may also lose a lot of money. There are also investments that are considered low-risk, and almost no-risk. How you invest your money depends on your personality, your appetite for adventure, and what is happening in your life.
4. Ask questions about the investment you’re considering: What if I end up with less money than I started with? How soon can I get my money if I need it? How can I find out more about the particular investment?
5. Know the risks involved and try to match your personality to the right level of investment risk. If you like life in the fast lane, and you can afford to lost the money, go for it. But if you worry about losing your money, do something more conservative. Of course, less risk may mean less profit on your money.
6. Don’t put all your eggs in one basket. That means, try to diversify; put your money in several different kinds of investments, not just one. That way, if you take a loss on something, chances are you’ll make a profit on something else.
For those looking to foster financial literacy in their kids, it can be as easy as going shopping together to talk about the relative prices of products and their value or just setting a good example, so children see how to apply money management basics that can establish positive habits that will benefit them throughout their economic lifetime.
With so many ways you can positively impact the financial future of your kids, even sharing pieces of personal wisdom can positively influence the future financial guru in your home. So what do you wish you were taught when you were young? What is the most important financial lesson you’ve learned so far?
Start a conversation today and see where it takes your family’s financial journey! Do you have any tips you use to get your kids financially savvy?
photo by: Sukanto Debnath