Investing Money for Children

One of the most important skills parents can teach their kids is how to handle money responsibly. Learning about saving and even investing will equip children with knowledge that will benefit them throughout their lives. If children develop good habits while they're young, they may avoid the expensive alternative of learning about finances the hard way as adults. Childhood is also an excellent time to begin investing. Kids who are able to invest some money will benefit financially by being years ahead of the game.

Try to make your children's investments age-appropriate so that they understand what's happening to their money. The easiest way for a child to learn about investing is to start by opening a savings account, and gradually add other investments over time. Even young children can understand the basic concept of earning interest when it's explained to them. Older kids may be motivated by seeing how compound interest adds up over a long period of time. Teenagers will gain experience by investing small amounts of real money in the stock market. Even though children don't usually have access to a lot of money, you can help them create a budget which allots certain percentages of their allowance or earnings to categories like spending, investing, charity, and savings. It's also essential for parents to lead by example.

Lessons
Resources

There are plenty of free resources online for teaching kids about money. Some of them include tips for parents or lesson plans for teachers. Others are geared toward the children themselves, and explain investing in simple, easy-to-understand terms. This approach can be very helpful, especially for parents who aren't sure where to begin.

Bank Programs for Kids

Many banks have special programs that are geared toward children. One of the reasons banks do this is that they're hoping to gain new long-term customers by reaching out to children at a young age. They may provide an incentive for opening a new savings account, such as adding a free $10 to an initial $50 deposit. Sometimes they hand out free gifts, such as coloring books, that teach about saving or investing—some banks even throw a party. These things can help make it fun for children to learn about handling money responsibly.

Money-Making Ideas for Kids

Another way to help children learn about money is allowing them to invest in themselves by starting a small business. The business doesn't need to be extravagant—a very low-key enterprise will demonstrate how work can turn a small amount of cash into more money. Some kids seem to have a natural impulse toward entrepreneurship. If you see this in your children, try to encourage them to start a simple business.

Resources for Parents

Kids will learn the most from your example. If you set a good example with your own finances, your children will likely follow in your footsteps.

About The AuthorAbout the Author :

Written by Michael Marcin of Crest Capital. Michael oversees all operations and finance for this national equipment finance lender. He is an excellent technical writer on topics including equipment, vehicle, and software finance and associated tax implications.