While the educational institutions of this country are capable of teaching our children academic subjects, educating them about the important aspect of wealth building usually lies with the parents.
Although we often assume that children are too young to consider their financial futures, they have the essential factor of time on their side; time to begin saving and investing from an early age so that compounding interest can work its magic. Raising financially responsible children begins with teaching them that money is not simply a commodity meant to be spent but rather a tool that can be traded and invested. We need to help them get excited about the role they can play in securing for themselves a quality financial future.
One of the most effective ways parents can influence their children with respect towards money involves the willingness to share our own personal financial struggles in an attempt to save them from making many of the same mistakes we have. On the other hand, sharing our financial successes with them, especially when they involve hard work, dedication, and sacrifice, can be equally beneficial. We need to demonstrate to them that money should not be a taboo subject but rather an element of life that has the potential to offer both security and excitement.
There are various ways to teach children not only the value of saving for a rainy day but in building wealth via investments. Playing board games like “Monopoly” and “Life” and online games such as the “Stock Market Game” teach children that money management is not a drudgery but a cooperative, competitive, and often lucrative endeavor. One of the most effective ways to accomplish this task is to encourage children of any age to become invested in successful companies that personally appeal to them. Purchase a few stocks in their company of interest, and then watch the stock together. Encouraging children to be actively involved in the operations will captivate and retain their interest, but be sure to keep the process age-appropriate and be realistic about the benefits as well as the risks of investing.
Finally, help ignite a passion in your children by sharing stories of successful, young investors. Multi-billionaire, Warren Buffet, for example, performed his first stock trade at the tender age of eleven. He provides for us an excellent reminder that children are never too young to begin thinking about their financial futures.
David Milberg is a financial analyst from New York City.