Many would say that children and finances don’t go together, especially investments, but experts would disagree. To prepare children the best for the future and the world of adults, you must teach them the basics of finance and investment.
Perhaps this is a taboo for most parents, but by teaching them the basics and regularities of money management, you are preparing them for a carefree future.
You may be wondering what are the best alternatives and ways to teach kids about finances and investing, the best is through a kids debit card.
This type opens up numerous possibilities that make life much easier for parents and children.
Older generations used to save money in piggy banks, and when necessary, they would withdraw money from it. The savers never knew how much was actually in savings.
Of course, there was no option to invest money in shares, that’s the innovation that came with the appearance of credit cards for children.
Now parents together with their children can choose between various types of shares in which they can invest their money.
This type of investment is designed so that children can invest in companies they are familiar with, such as Netflix, Google, and Apple.
How to start?
There are several steps to get started, one of them is primarily to teach them where the money comes from and make them a credit card for the kids.
Once they learn the basics of money and finance, only then can they start investing in stocks.
1. Explain to them what money is
Whatever age children are, they need to know that money is earned through hard work.
There is no better money, nor does it come from magical trees or magical machines (ATMs) whenever you insert a card into it.
2. Get them their credit card
In addition to educating them about finances, this type of card enables them to earn money, spend, donate to those in need, invest in various stocks, and create a savings plan.
They also have the opportunity to acquire skills by completing the activity and work tables prescribed by their parents. By completing tasks, children gain positive or negative points depending on the work done.
Each table is easily adaptable to all age limits and needs of children. Tables can be household chores, curricular and extracurricular activities, charity work as well as sports activities.
3. Encourage them to invest in their education
There is a 529 plan that is designed for kids who want to save money for college.
This plan offers many benefits but is strictly tied to the cost of tuition, rent, books, and course instruction.
The money can only be used for education, and if you use the money for other things, you will have to pay a high tax.
4. Investing in shares
Minors and adult children can invest in various types of industries and their shares. Usually, children invest money in companies they are familiar with, such as Netflix or Apple.
However, experts advise that children invest in various types of industries and that they do not stick to just one branch of industry.
It is desirable to expand knowledge and investment to different types of companies, thus enriching their portfolio and knowledge and preparing them for a better future.
The expert’s advice is to invest small amounts of money, to begin with, and to choose in agreement with the parents in which stocks to invest their money.
5. Children’s Trust fund
This type of investment refers to long-term tax-free money savings that allow them to withdraw money only when they turn 18.
Many parents open this type of fund and pay money every month, children cannot spend or dispose of the money until they turn 18.
What is special is that parents can even set certain conditions that children must fulfill if they want to have access to this fund.
Some parents include items in the contract such as completion of college, taking specific courses, and financial education. Since it is the parents who open the fund on behalf of the children, they have the final say.
Whatever method and type of investment your children choose, they will not make a mistake.
True values are acquired over many years, and one of them is learning to properly invest and manage finances.
Therefore, the sooner your children start, the easier it will be for them to integrate into the world of adults later.