Taylor Schulte | These Financial Times
“The more you learn, the more you’ll earn.” – Warren Buffett
Some experts suggest that many students lose more than two months of knowledge over the summer. In an effort to help keep their minds sharp, we think summer break could be a great opportunity to help teach your children about money. Here are some ideas to get you started.
Open a bank account. A bank account is the foundation of financial education. Helping your child open their first account creates an opportunity to begin teaching them about saving, fees, and interest. Rather than just opening an account at your current bank, ask them to help you do research on finding the right bank for them. One suggestion is to choose a bank with a physical location that you can bring your child to. It might not seem important but it can make a big impact on the lessons you are trying to enforce. Taking a special trip to the bank to deposit their money creates a memorable and rewarding experience.
Develop a savings plan. Saving money can often be as difficult as earning it. Consider offering a matching program for every dollar deposited to help incentivize your children to start funding their account. Additionally, you might make saving a condition of their allowance and mutually agree on a percentage that will be saved each month.
Teach them about investing. Prospective retirees are now forced to plan for 20-30 years of retirement. Waiting for that first full-time job to start investing for retirement isn’t enough anymore.
For teens, discuss opening a custodial account or Roth IRA (if applicable). This is a great opportunity to talk to them about taxes, investments, and compounding returns. For an initial investment, consider a broadly diversified, low cost index fund.
For younger children, online games or websites can be useful in teaching kids the basic concepts of investing. Consider Warren Buffet’s recent business venture, Secret Millionaires Club. The online program teaches valuable lessons about money management through a fun, animated series that kids can relate to.
Discuss giving. We don’t just save, spend, and invest money. For varying reasons, sometimes we choose to give it away. Don’t hesitate to include your children in this process and teach them about the concepts of charitable giving. Consider having them research charities on charitynavigator.org, America’s largest independent charity evaluator, and provide you with their suggestions.
It’s never too early to begin. Kids are exposed to the concept of money at a young age. Helping them to understand it and develop good habits early on can be very beneficial to their financial future.
For a financial workbook that you and your children can work through together, please contact my office at [email protected] or 619-881-0388.
Taylor Schulte is a CERTIFIED FINANCIAL PLANNER™ professional for Beverly Hills Wealth Management in Downtown San Diego. Schulte specializes in providing independent, objective, financial advice to individuals, families, and businesses. He can be reached at 619-881-0388 or [email protected].
