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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free 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.
-
Dave Ramsey Tells Us the Biggest Retirement Mistake You Can MakeThe talk-show host, author and podcaster tells Kiplinger what people can do to ensure a happy retirement.
-
Pros and Cons of Alternative Assets in Workplace Retirement PlansWhile alternatives offer diversification and higher potential returns, including them in your workplace retirement plan would require careful consideration.
-
Budget Hacks Won't Cut It: These Five Strategies From a Financial Planner Can Help Build Significant WealthCutting out your daily latte might make you feel virtuous, but tracking pennies won't pay off. Here are some strategies that can actually build wealth.
-
To Unwrap a Budget-Friendly Holiday, Consider These Smart Moves From a Financial ProfessionalYou can avoid a 'holiday hangover' of debt by setting a realistic budget, making a detailed list, considering alternative gifts, starting to save now and more.
-
Treat Home Equity Like Other Investments in Your Retirement Plan: Look at Its Track RecordHomeowners who are considering using home equity in their retirement plan can analyze it like they do their other investments. Here's how.
-
Why Does It Take Insurers So Darn Long to Pay Claims? An Insurance Expert ExplainsThe process of verification, investigation and cost assessment after a loss is complex and goes beyond simply cutting a check.
-
Two Reasons to Consider Deferred Compensation in the Wake of the OBBB, From a Financial PlannerDeferred compensation plans let you potentially lower your current taxes and help to keep you out of a higher tax bracket. It's important to consider the risks.
-
Financial Fact vs Fiction: The Truth About Social Security Entitlement (and Reverse Mortgages' Bad Rap)Despite the 'entitlement' moniker, Social Security and Medicare are both benefits that workers earn. And reverse mortgages can be a strategic tool for certain people. Plus, we're setting the record straight on three other myths.
-
The End of 2%? An Investment Adviser's Case for Why the Fed Should Raise Its Inflation TargetYes, inflation can be tough on those living on fixed incomes, but protecting us from it too strictly could do our overall economy more harm than good.
-
How the One Big Beautiful Bill Will Change Charitable GivingTaxpayers who don't itemize will be able to take a bigger deduction for donations, which could boost giving. However, high-income donors could see their tax benefits reduced.
