At what age do you begin talking to your child about the rewards of investing and understanding the balances of finances?  Is five too young?  Eight?  What about 12?  The concept of saving for the future may sound impossible to grasp for such a young mind; yet, dealing with real ideas during teachable moments can and will produce a child who thinks about a plan for the future, rather than spending every earned coin because he or she possesses it.

First Lessons: 

One of the first lessons children learn concerning money is about making a decision.  For example, should I buy bubble gum or save the coin?   Is it better to prepare lunch or spend the money at the cafeteria? Saving money begins with the process of thinking through the repercussions of choice.  Children who understand the beginning lessons can advance to more age-appropriate concepts. Afterward, encourage your child to create a budget and identify at least two goals.

Entrepreneurial Spirit

The labors of work often set the wheels in motion for contemplating the idea of expanding wealth; therefore, encourage your daughter or son to start a business.  The entrepreneurial spirit will start with questions such as, “What could I offer as a paying business?” “Would I have expenses?” and “What idea would boost my profits?”  Enterprising kids may consider babysitting, dog walking, or mowing yards as sound business ideas.

Play Money and Board Games

For generations, “Monopoly” instructed young children in the art in making decisions about spending and receiving money.  Another game appropriate for children seven years and older is “Big Money.”   Combining “Monopoly” with “Yahtzee,” up to five players can experience problems such as liquidation, industry crashes, antitrust fines, and bubble bursts. Other games to enjoy are “Money Bags” (6+); “Exact Change” (7+); “Pay Day” (8+); “Buy it Right” (9+); “Act Your Wage” (10+); “The Stock Exchange Game” (10+); and “Thrive Time” (13+).

The Stock Market

Investing, defined in simple terms, is using your money to create wealth over a long period. Rather than depend upon a bank account as a place for investments, kids will ask, “What are my options?”  Open the door with a discussion of businesses in the stock market or watching a YouTube video about the New York Stock Exchange.

Begin by sharing your list of investments and discussing the reasons for growth and loss.  As children grow, they, too, will show interest in financially sound businesses rather than viewing financial markets as an intimidating mystery.  And, by discussing the rise and fall of stocks, young adults will feel more encouraged to consider investments as a means towards financial security.

The Little Red Hen

In the 1880s, the fable of the Little Red Hen taught children the virtues of personal initiative, introduced the concept of “investing,” and spoke of the rewards in establishing a work ethic. Today, there is a long list of books appropriate for the younger, and more advanced, reader.

• It’s Not Fair:A Book About Having Enough,by Caryn Rivadeneira
• What Should Danny Do?(“The Power to Choose Series”), by Adir Levi
• When Grandma Gives You a Lemon Tree,by Jamie L.B. Deenihan
• How a Second Grader Beats Wall Street,by Allan S. Roth Wiley
• Go! Stock! Go! A Stock Market Guide for Enterprising Children and Their Curious Parents:Everything You Were Afraid Your Kids Would Ask, byBennett Zimmerman
• The Kids’ Money Book:Earning, Saving, Spending, Investing, Donating, by Jamie KyleMcGillian
• Why Didn’t They Teach Me This in School? 99 Personal Money Management Principles to Live by,by Cary Siegal

Giving:

Similar to the act of saving money, children, too, can engage in the offering of giving.  Donations of beloved toys and stuffed animals are viable contributions; however, the idea of balancing saving, spending, and giving requires open conversation. Perhaps monetary gifts can include the offering plate at church or coins to a great cause or charity.  The selfless act of thinking of others begins with a willingness to part with coins or bills and feel pride in such an offering.

Teaching your children how to make financial decisions in youth is a worthwhile journey!  It is a lifetime gift for parents to witness a child arriving at adulthood well-rounded and financially savvy!