7 Tips on Getting Kids to Save & Invest!
According to the ASX one of the best books parents can read with their children is ‘The Richest Man in Babylon’ by George S. Clason.
It’s a parable about how to be successful and talks about using 10 per cent of your money to reduce debt, 10 per cent for savings and 10 per cent to give away.
If everyone adopted a similar mindset, we would have far less people on a pension.
Here are seven things Dale Gillham has written that will assist parents in getting children tuned into saving and investing:
Work out their why. Unless they understand the benefit to them, they really won’t get involved. Offer general ideas about why it’s important to save and invest. Ask them questions about what’s important to them and show them what’s possible.
Help your children write down saving and investing goals, and also rewards that are fun and interesting.
Put up the plan where they’ll see it and get them to mark their current position. Schools have used fun stamps for years. Use these to mark the plan when they achieve important savings milestones. Make sticking to the plan a must and they will follow. Remember, parents’ enthusiasm now will dramatically shape their children’s financial future.
They need to understand the importance of constantly putting money aside for their future and the difference spending will make to the total. Teach them to make wise decisions and know the real cost of spending, say $500 on a new iPad versus investing that money in shares. A savings calculator is a good way to demonstrate how saving and compounding works. Check out ASIC’s compounding calculator at its Money Smart website.
Start their investing education on the ASX website. Over the long term, shares can generate great returns. Remember, $500 compounded over 40 years at just 5 per cent per annum becomes $3,500 and at 10 per cent becomes just over $22,600.
Make investing fun by letting them select a couple of shares. Get them to research companies they know such as banks or JB HiFi or Village Roadshow on the ASX website.
Discipline is required. As a parent, every time your child gets money, you need to be disciplined. Get the plan out and follow it with them so they develop good habits.
To read more by Dale Gillham, please click on the image.