Four Facts To Teach Your Children About Financing And Investing

Four Facts To Teach Your Children About Financing And Investing

Apr 18, 2017

    Teaching your kids the value of saving and investments is always a good idea. You might also learn a thing or too! Kunjal Mehta from Edward Jones Investments gives you four key facts for your kids. 

    High debt levels, lack of savings, the inability to budget — these problems all have several causes, but one of them is almost certainly financial illiteracy. Too many of us just never developed the money management skills necessary to cope with our complicated, expensive world. But if you have young children, you can teach them some money-smart lessons. And who knows? You could use the opportunity to give yourself a few valuable reminders, too.

    Here are some suggestions for a financial “curriculum.”

    Save for a goal. In our highly commercialized culture, it’s almost inevitable that your children will eventually become somewhat acquisitive. When teaching your kids about savings and investments, it’s important to teach them that they can’t have everything — and they certainly can’t have everything right now. So, once they’re old enough to receive an allowance or earn money in some fashion, encourage them to set a goal for something they want, such as a toy or video game, and put money aside every week for that goal.

    It’s also an excellent idea to model this behaviour yourself. If you’re considering making a major purchase in the not-too-distant future, such as a car, show your children how you set aside money regularly for this purpose rather than borrowing as much as you can or putting the entire purchase on a credit card.

     

    Teaching your kids about savings and investments
    Teaching your kids about savings and investments: It’s never too late to learn! Photo Credit: The Black Home School

     

    Establish a budget. It can be challenging to create a household budget and just as difficult to stick to it. But for most people, it’s worth the effort. You’ll be doing your children a favour by showing them how you have a certain amount of income and where it goes — your mortgage, utilities, groceries, retirement accounts, et cetera — each month. Explain to your kids that by staying within your budget, you can help avoid problems such as debt and extra fees tacked onto bills for late payments. You might also want to point out that, as your income rises, you can gain greater flexibility in budgeting. Here’s the key point: living within your means pays off in the long run.

    Have fun with investing. It might surprise you, but even young children enjoy learning about the investment process, especially if you explain to them that they can own a company that makes a product or service they like. You might want to select an interesting company and, along with your child, chart its course over time.

    Teaching your kids about saving and investing.
    Teaching your kids about savings and investments: You can also learn a thing or two! Photo Credit: www.bethkobliner.com

    You could give your child a pretend $100 bill to “invest” in this company and then see how its value changes, explaining along the way that various factors — such as the popularity of the company’s products, the skill of its managers, and so on — will affect the stock’s price. At some point, you might even wish to purchase real stock for your child and place it within a custodial account. And you might also want to show your child how your own stocks and other investments are performing. The investment world can be fascinating, and by sharing your enthusiasm for it with your children, you can encourage them to invest throughout their lives.

    Knowledge is power. The more knowledge about finances and investing you can impart on your children now, the more empowered they will be to make smart financial moves in the future.

    Main Image Photo Credit: www.thefinancialphysician.com 

    Speak with your financial advisor to create a long-term strategy that can help meet your needs today and into the future.

    Reported by: Kunjal Mehta, Financial Advisor – Edward Jones Investments. 3621 Hwy 7 East, Markham ON, L3R0G6. Office: (905)947-1165, Mobile: (647)388-1391. [email protected]

    Edward Jones, Member Canadian Investor Protection Fund.

    * Insurance and annuities are offered by Edward Jones Insurance Agency (except in Quebec). In Quebec, insurance and annuities are offered by Edward Jones Insurance Agency (Quebec), Inc.

     Kunjal Mehta  is a GTA-based Financial Advisor serving the Province of Ontario in partnership with Edward Jones Investments. His vision for his practice is to help clients achieve their financial goals utilizing his skill and knowledge that have been developed over the course of a 10-year career in the Financial Services Industry and Capital Markets Trading.

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