Tips & Tools for Raising a Smart Investor

The sooner, the better. That saying applies to many facets of life, including educating children about money. By introducing sound financial habits early, you’ll give your child a head start on the path to becoming an informed investor. Below you’ll find creative ideas, as well as book and website suggestions, for raising a financially savvy kid.

Toddler. Although it may seem early to begin instilling investment know-how in your child, the first few years of life are critical for mental development. Toys that incorporate counting, such as building blocks, can help your child develop mathematical skills. Other educational toys include:

Ages 5 and older. Board games are an entertaining way to teach kids about managing finances. Monopoly covers all the bases—earning money, saving and spending, capital budgeting, risk and reward, and taxes. This classic game comes in an electronic banking edition as well as an app. Other options for a fun-filled family game night include the Game of Life, Moneywise Kids, and Pay Day.

Ages 8 to preteen. At this stage, many children start to accumulate income from allowances, cash gifts from birthdays and special occasions, and even small businesses like lemonade stands or driveway shoveling. As your child begins dealing with actual money—no matter how small the amount—talk to them about saving and spending. Because many kids in this age group are technology experts, online games and apps can be effective teaching tools.

Teenage years. As a teenager, your child may take their first summer job or build income through part-time work like babysitting. Visit the local bank together and set up personal savings and checking accounts in their name. This will give your child a sense of responsibility and help familiarize them with different banking transactions. Plus, banks often offer useful resources geared toward young customers.

Prologue to Success: Books
Books on personal finance kill two birds with one stone: getting children to read while teaching them an important life skill. Full of illustrations on all aspects of money and finance, Neale S. Godfrey’s Ultimate Kids’ Money Book is a great resource for children ages 7–12. For young people ages 13 and older, Growing Money: A Complete (and Completely Updated!) Investing Guide for Kids by Gail Karlitz and Debbie Honig focuses solely on investing.

Written especially for parents, Yes, You Can . . . Raise Financially Aware Kids by Jack Jonathan includes activities you can do with your child to put financial concepts into practice.

Wired for Wealth: Online Games
One of the best websites for teaching kids about money is presented by the Monetta Young Investor Fund, a mutual fund that invests in companies familiar to children and teenagers. Although most of the games can be found elsewhere online, the site brings them all together and organizes them by age group. The games are free and range from basic quizzes to more advanced activities.

Of course, there are plenty of other websites that aim to help children build financial literacy. Keep in mind that, though the internet can be a valuable tool, it’s no substitute for one-on-one conversations and your own good example.

Start Early
As with many financial matters, the best advice is to start early. The sooner children learn financial fundamentals, the more likely they are to become informed investors later in life. You may even benefit from learning alongside your child! If there are areas where you could use a refresher, take the time to review those topics before you approach them with your child.

If you have any questions about how to teach your kids positive money habits, please reach out to me. I would be happy to help and share some tips I’ve used with my own kids. Click here to view my calendar and schedule an appointment that is convenient for you.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

 

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