Publication 12. 2018
How soon is too soon for your child to start to learn about money or to learn about the responsibility of saving it? How old do you think your grandchild should be before you start to speak with him or her about putting money aside for savings? Does your child have a piggy bank? Does your teenage grandchild have a bank account? If not, what are you waiting on?
Money management is hardly one of the traits that parents believe they should teach their child. It is definitely not up there with the other extracurricular activities like music classes, ballet or swimming classes that most parents prioritize for their kids. And it’s definitely not normally listed among the important topics parents normally discuss with their kids. Conversations like the importance of not lying, the importance of being respectful, especially to elders, the importance of being kind or even the importance of keeping your room clean. But isn’t the role of a parent or guardian, to guide the development of the child in such a way that they become productive adults to society, themselves, their family and community. Wouldn’t you agree that being financially aware and responsible, is one such quality that a teenager should have as he or she matriculates to young adulthood?
We have seen the extent to which the lack of financial knowledge and know-how in our young adults who are just starting their work life, has led to overspending, high debt levels, and staggering credit card bills. How much do you think can be changed with simple activities that you as a parent, guardian, grandparent, aunt, uncle or older sibling can do at some very early years of a child’s life?
Recently I came across an article, where Kevin O’Leary, one of the investors on ABC’s Shark tank, admitted to purchasing transparent piggy banks for his kids so that they could see how much money was inside. To cement the idea that money is hard at work through compound interest, he would put extra coins in his kid’s piggy banks during the nights while they were sleeping. When they awake in the mornings, they would see that their money grew. Perhaps you might not take it to that extent. But think about it, those kids were being taught from a very young age, the concept of delaying immediate gratification for the benefits of compounded interest on savings, in a very simple way!
Such practices will undoubtedly let these kids grow-up, better appreciating the need for investing and having a higher level of responsibility for proper money management. Perhaps you do not have the time to be sneaking into your kids’ room in the middle of the night to top-up their piggy bank, but there are a lot more things that you can do as a parent for your child.
Here are a few tips that can go a long way in teaching your child or grandchild about money and savings:
This editorial is presented to you by the DCSX with the collaboration of Vertex Investments.
Author of this publication: Stephanie Shaw CFA, MBA.