Most adults are aware of the fact that the earlier you begin investing for retirement, the more money you’ll have when it’s time to retire. However, most adults still start investing too late, and do not take full advantage of all the time they have. Although this is the case for many adults, kids luckily don’t have this problem. As a parent, you want your kids to have a successful future, well, think about how different could your kids’ future could be if they understood how to build wealth before they even graduate high school? You can start by teaching them simple concepts that will build over time.
Start with the Basics
Kids of any age can learn about money especially when it comes to the relationship between money and work. Little kids can earn money by doing simple jobs such as picking up their toys. Once they get a little older, they can begin doing regular chores and earning money in different ways. As a parent, you can help them learn to budget money with three simple categories: give, save and spend. With this foundation, they’ll learn how rewarding it is to set a savings goal and regularly put aside money to reach it—the basis for successful retirement investing!
Be a Role-Model
From an early age, your kids will pay close attention to what you do, especially when it comes to money. It is important for them to see how living on a budget, avoiding debt, and consistent investing helps you achieve your financial goals, so make sure to include them in that process.
Even when your kids ask for multiple things, try to take that opportunity to give them a lesson about the importance of saving. Explain that when you’re focused on reaching a goal like saving for retirement, sometimes you have to sacrifice buying a new toy or a new video game. If your kids can understand this concept at a young age, then they’ll be way ahead of most adults when it comes to saving for retirement.
Investing for Retirement
Once your children develop strong saving habits and have experience managing their money, they will soon be ready to learn how to invest for retirement. Involve them in the process by discussing your investing plan, and explain to them what you believe are the best ways to build wealth for retirement.
When your kids get older (around their college years), you may want to show them the Ben and Arthur chart. This chart shows how early investing can have a huge impact on how much money they’ll be able to accumulate over their lifetimes. If your kids have an earned income, they can even begin investing in a Roth IRA with their own money.
It’s essential to teach your kids about the importance of saving at a young age as well as other crucial skills such as managing money. Once they get into their teens, you can begin to teach them about more complex concepts which includes investing for retirement. Not every concept is taught in school, so it is important that you as a parent educate your child as much as possible. Together, you and your kids can change your family tree forever!
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