The Informed Investor
Many of our clients have the means to provide their children with everything they could possibly need or want—but doing this isn’t the best way to teach good money management habits to the next generation. In order to be good stewards of family wealth, children must learn financial responsibility, which means understanding the value of money through personal economic experiences. Below, we share some suggestions on how to teach kids about money.
Give Your Child a Piggy Bank
These days, most of our financial transactions take place through the internet or via credit or debit cards. This is convenient for us as adults, but it also means that kids don’t have the benefit of handling coins and bills like they have for decades. It is hard for young children to understand the concept of money without something tangible, which is where a piggy bank comes into play. Encourage your child to save up for something they’ve been asking for. This allows children to work toward a tangible goal by counting and saving enough cash for their purchase.
Give Your Child an Allowance
To truly understand the value of a dollar, it is important to be able to connect it to the work that needs to be done to earn it. An allowance is an excellent way to do this. Of course, children should take care of their rooms and such on their own but offer to pay them for chores that extend beyond cleaning up after themselves. In addition to teaching them the connection between work and money, an allowance will help your child with budgeting and saving.
Open a Savings Account
Once your child has grasped these basics, it might be time to help them open a savings account. While you may have one for their college fund already, this savings account should be strictly for your child’s use so they can understand how interest accrues, monitor the amount of money in their account and watch it grow or diminish depending on their saving and spending.
Encourage Entrepreneurial Skills
Did you earn your money through owning your own business? Or does your family have a business that they run? Tell your child about how that business came to be and encourage your child to develop their own entrepreneurial endeavors, whether it is a lemonade stand or babysitting. These activities are enriching in many ways, teaching kids not only about money, but also the skills and supplies needed to run a business.
Introduce Your Child to the Stock Market
Once your child has proven themselves to be financially responsible, you might want to introduce them to some broader economic concepts, like investing and stocks. Let them choose a few of their favorite companies to invest in and help them understand the fluctuations of the market.
Learn More About Our Financial Services
If you have $3 million or more in investable assets and would like to learn more about our financial services, our financial advisors are here to help. ICC provides clear and unbiased guidance for its clients, backed by a team of experienced fiduciary, financial experts. Contact us today at 702-871-8510 to learn how our team can help you.
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