One of the most important decisions a parent can make when raising their child is teaching them finances. Avoiding debt and building wealth is a good way to secure a child’s financial future. Teaching children at a young age instills good habits which leads to good habits into adulthood. Teaching children how to build real wealth is a good way to instill values for generations to come.
Investing in stocks
Investing in stocks next to savings is the easiest way to see your investment portfolio grow. Stocks do not require a lot of money like a house. Investing in stocks teaches kids on how the economy is reflected in the stock market. Investing in stocks at a young age is a good source to potentially pay for college or take the money and put it into an IRA or savings account.
Teaching kids the value of 401(k) is a good way for kids to get a head start on their retirement savings before they start accumulating real debt. When kids are in school if they are taught about retirement savings and how hard it becomes to save money once debt is factor- increases the chances of taking retirement savings a little more seriously.
Despite the economy real estate is still a good investment for those who haven’t owned a home yet. Teaching kids to buy property in a recession as opposed to a booming economy helps children understand the concept of supply and demand. Real estate in today’s economy does require more documentation than in the mid 90’s, but kids will understand the importance and commitment required with purchasing a home.
Teaching kids about credit cards is a good way for them to understand how to use it to their advantage. Credit cards should not be avoided because there are many factors associated with credit cards when determining your credit score. Teaching kids not to make minimum payments and to keep the balance below 30% of the credit limit will put them on the path of outstanding credit. Credit cards given to children at a young age helps cleanse the urge of bad purchasing decisions when they enter adulthood.
There are many things which should be taught to children, but finance is one of the most important. Teaching children money values helps contribute to a better future both for their families and the economy. Good luck!