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One day it hit me: my kids were approaching the end of their school years, and I had not gotten around to teaching them my favorite subject!
You might not realize it, but one of the most crucial lessons you can teach your kids is how to invest well. One of the biggest pitfalls that many adults fall into is money issues. Teaching your children early about the advantages of investing, how to invest, and the importance of personal finance can have a huge impact on their lives and careers. Here are some ideas on a few of the lessons you should teach your kid.
Even an 8- or 9-year-old can learn how to save. Offering your children an allowance is a great way for them to begin to learn the importance of money and savings. One technique to use is to reward them when they successfully save money and or achieve a short-term money goal.
When kids become teenagers, you should help them open a savings account and encourage them to deposit money into it weekly or monthly. Teaching your children how banks work and helping them establish good savings habits while they are still young can help them be more successful in later years.
Kids grow up extremely quickly and it will not be long before it is time for them to apply for a credit card. Talking with your children about the ins and outs of credit is essential. Do not put it off until they are packing the car to leave for their first term at college!
When you are shopping with your kids, show them how to use the credit card effectively, explain to them how interest works, and discuss when it is appropriate to charge things and when it might be better to plan ahead and use cash for a purchase. Encourage kids not to buy things impulsively, but instead plan out (or even budget!) their purchases.
These are all lessons that can help kids avoid the mistakes many adults make when they start using credit cards.
As a parent, one of your main objectives is for your children to be extremely successful and never have money problems. One of the ways to put your children on the best path is to discuss with them investing for the future. For lots of kids, retirement is not an idea that they can relate to, however purchasing a house or nice car might be. Teach your children various methods which they can use for investing, what tools they might need to invest properly, and how to use the power of compounding interest.
