Experts suggest that students lose more than two months' worth of knowledge over the summer break. Many parents fill the downtime with outdoor activities and trips to keep kids busy and motivated, and, of course, there’s always that mandatory summer reading list. I think a great way to keep kids’ minds sharp, regardless of the holiday length, is to teach them about money. It’s never too early to start. In fact, the sooner, the better.
Here are my recommendations on ways parents can get children involved in learning and understanding the value of money, so they are better prepared for their future:
Open a bank account. Helping your children establish their first account – a foundation of financial education – creates an opportunity to teach about savings, fees and interest. Rather than just opening an account at your current bank, ask your kids to help you research finding the right bank. One suggestion: Choose a bank with a nearby physical location where you can take your child. A special trip to a real branch to deposit money creates a memorable and rewarding experience for your children and can reinforce your lessons.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Develop a savings plan. Saving money can often be as difficult as earning it. Consider offering a matching program for every dollar deposited to help incentivize your children to start funding their account. Additionally, you might make saving a condition of their allowance and mutually agree on a percentage that will be saved each month.
Teach them about investing. Prospective retirees are now forced to plan for 20-30 years of retirement. Waiting for that first full-time job to start investing for retirement isn’t enough anymore.
For teens, discuss opening a custodial account or Roth IRA (if applicable). This is a great opportunity to talk to them about taxes, investments, and compounding returns. For an initial investment, consider a broadly diversified, low-cost index fund.
For younger children, online games or websites can be useful in teaching kids the basic concepts of investing. Consider Warren Buffett’s recent business venture, Secret Millionaires Club. The online program teaches valuable lessons about money management through a fun, animated series that kids can relate to.
Discuss charitable giving. We don’t just save, spend, and invest money. For varying reasons, sometimes we choose to give it away. Teach your children about the concepts of charitable giving. Consider having them research charities on charitynavigator.org, America’s largest independent charity evaluator. The Web site will provide you with their suggestions.
Helping kids to understand the value of money and to develop good habits early can be very beneficial to their financial future.
Taylor Schulte, CFP® is founder and CEO of Define Financial, a San Diego-based fee-only firm. He is passionate about helping clients accumulate wealth and plan for retirement.
-
Five Things to Do if You're Forced Into Early Retirement (and How to Reset and Recover)Developing a solid retirement plan — before a layoff — can help you to adapt to unexpected changes in your timeline. Once the initial panic eases, you can confidently reimagine what's next.
-
Five Ways to Adapt Your Charitable Giving Strategy in a Changing World: An Expert GuideEconomic uncertainty, global events and increasing wealth are shaping the charitable landscape this year. Here are the philanthropic trends and some tips that could help affluent donors optimize their impact.
-
The Truth About the Dark Side of Rooftop Solar PanelsRampant bankruptcies in the solar panel industry have left many consumers with systems that don't work and no way to get them fixed. Worse, they're being hounded to keep paying despite not receiving what they were promised. What can they do?
-
Five Ways to Maintain Charitable Giving During Volatile Times: A Giver's GuideWhen the economic outlook is uncertain, charitable giving is even more important — and impactful. You can be strategic by using donor-advised funds, diversifying assets and prioritizing unrestricted gifts.
-
I'm a Financial Adviser: This Is How You Can Save for Big Goals Even if You Feel Like You're Barely Getting ByLearning good financial habits — building an emergency fund, paying down debt, saving consistently — gives you flexibility, options and a path to security.
-
Financial Fact vs Fiction: Why Inflation Is Lower, But Prices Are NotDo you think bonds protect you from stock losses? Are you confident your assets will go to your intended heirs if all you have is a will? Think again — and read on for other myths that could be leading you astray.
-
'Buy Now, Pay Later' for Everyday Spending? This Financial Pro Thinks It's Risky'Buy Now, Pay Later' apps can get you out of a jam when you need money quickly. But using them regularly for small purchases could create problems.
-
From Dream Apartment to Nightmare: When Your Landlord Evicts You Through No Fault of Your OwnThis is what I suggested a tenant do to get out of her lease after her landlord's inexperience and lack of action made her rental situation unsafe. It's a legal situation called 'constructive eviction.'
