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Start Good Saving Habits Early
By Ginita
Wall, CPA, CFP
 Ask savvy investors how they learned their first lessons about
money, and they’ll probably tell you lessons their parents taught them.
The money values we learn as children stay with us the rest of our
lives. If you are a parent, teaching your children the value of saving and investing will
benefit them the rest of their lives. Here’s what you can do:
- Help your child begin to save. Open savings accounts for your
children, and teach them how the bank adds interest to their savings that makes their
money grow. Encourage your children to save a little from every bit of money they receive,
such as allowances, birthday gifts, etc. You may even want to set up a matching program,
contributing fifty cents for each dollar your child saves.
- Teach your child about stocks. A child in elementary school can start
learning about how businesses work. Once your child understands the basics, ask her to
think about some of the businesses that might be good stock investments. Then use
Morningstar Mutual Fund Guide (available at your library) to find a quality mutual fund
that holds some of these companies, or a mutual fund that caters to children such as the
Stein Roe Young Investor fund. Many funds accept regular monthly investments as low as $50
a month, so these funds can be a good way to teach children about the stock market while
saving for their college education.
- Encourage early IRA saving. The new Roth
IRA is a great way for children who are working
summers or after school to begin saving for
their future. Imagine how much money you’d
have today if you had saved $3,000 a year since
you were a teenager!
- Let your kids handle their own money. We all learn by doing, so
letting your kids manage a segment of their budget will let them learn valuable financial
lessons. They may make mistakes, but they will be small mistakes that may help them avoid
larger mistakes as adults.
At WIFE we welcome your comments. Please feel free to contact us.
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