Most parents keep taking responsibility for the expenses of their children. Moreover, we often rely too much on government welfare plans like the 401K. It is important to understand they hardly save anything sufficient with such programs.
We already know that inflation is on the rise. It is not a surprise to realise that the times in which our children will be living their adult lives will be tougher than now. In order to prevent bad financial circumstances, we can start investing for children. Moreover, teach your children how to invest from a young age. By investing money, it is not meant just putting in spare money in a piggy bank. Children can prove to be real smart and you can make them learn about the stock market.
Here are a few tips to help teach your children how to invest:
1. Make Children Understand Inflation
The first step before you teach them about investing is to why they need to invest. Children are curious by nature. They will be more motivated to accomplish a task if they understand why they need to. Therefore, make them understand about inflation.
2. Starting Early
Many parents keep delaying this talk because they think the children are too young. Children need to live a carefree life but a sense of responsibility should be developed from an impressionable age. Kids need to realise that they can’t stay dependent on their parents. Of course, parents can give them the push in the right direction. For example, some parents open saving accounts under the name of their kids from the time they hit elementary school. The earlier you start, the better kids will be supported when they need to be.
3. Appeal to Them
As mentioned earlier, children are curious. You should make them invest in companies they understand. For example, your kid may be interested in Disney or Honeywell because they enjoy honey. You can persuade them to invest in respective stocks.
4. Encouraging Investing
You can start making your kids make investment choices when they hit their teens. However, you need to define some limits as to prevent total freedom.
5. Allow Poor Choices
Learning is always about making wrong decisions. Let them make poor investment choices but ensure that they are not derailed due to them.
6. Good Values
Money at such a young age can be really attractive. Parents need to ensure that kids don’t forget good values and become greedy. You can encourage them to support charities with their money.
7. Teach Awareness
In order to invest well, teach your children to pay attention to current affairs. You may want to hear their opinions and discuss with them to make smart decisions.
Parents are a primary source of educations for kids. The way you act financially will impact them as well. Therefore, make sure that your practices are inspiring as well. It is important to understand that financial education from a young age can reduce the risk of being broke when your children reach the age of supporting themselves