The sooner the better: The saying applies to many facets of life, including educating children about money. By introducing sound financial habits early on, you’ll give your child a head start on becoming an informed investor. Here are some creative ideas, as well as book and Web site suggestions, for raising a financially savvy kid.
Lessons for every age
Toddler — Although it may seem early to begin instilling investment know-how in a toddler, the first few years of life are critical for mental development. Toys that incorporate counting, such as building blocks, can help a child develop mathematical skills.
Age 5- 7 — 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 now comes in an electronic banking edition and even as a smartphone or tablet application. Other options include The Game of Life, Billionaire Tycoon, Moneywise Kids and Pay Day.
Age 8 to preteen — At this stage, many children start accumulating income from allowances, birthdays and special occasions, and even small businesses, like lemonade stands or shoveling driveways.
As your child begins dealing with actual money — no matter how small the amount — talk with them about saving and spending. Since many kids in this age group are Internet experts, online games can be an effective teaching tool.
Teenage years — As a teen, your child may take his or her first summer job or build income through part-time work like babysitting. Visit the bank 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 banking transactions. Plus, banks often offer resources geared toward young customers.
Off to college — The transition to college is typically accompanied by a slew of credit card offers. Before sending your young adult off to school, discuss the pros and cons of credit cards and how to establish credit responsibly. Prepaid credit cards can be a good way to help students build credit history.
Young adulthood — Amid the excitement of a first job, it’s all too easy to overlook retirement plans. Remind your adult of the benefits of opening a retirement account early.
At this point, you may wish to pass the baton on to a financial advisor, who can address money management questions on the road to financial independence.
Prologue to success: books
Books on personal finance kill two birds with one stone, getting children to read while teaching them a life skill. Full of illustrations on money and finance, Neale S. Godfrey’s “Ultimate Kids’ Money Book” is a great resource for ages 7-12. For ages 13 and up, “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 to do with a child to put financial concepts into practice.
Wired for wealth: online games
One of the best Web sites for teaching kids about money is www.monetta.com/game.htm. The games are free and range from basic quizzes to advanced activities.
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.