No matter how many investment portfolios we have or how big they are, the investment we care about most is our kids. That’s why in honor of summer vacation we’re going to talk about how you can help your kids (and teenagers) on the road to informed, sophisticated financial behavior. After all, summer vacation can strain your finances and it’s a great opportunity to give the next generation the tools for a healthy financial lifestyle. Here are some lessons that you can teach in fun, creative ways.
1 - Sticking to a Budget
Knowing how to create and follow a budget is an important, and even critical, life skill. Because we’re talking about young people who are still working on some basic skills, it’s best to start with planning a budget for a short period of time: a day or two, a week, or even a particular event. For example, start by planning a budget for your day at the beach or a trip to grandma’s. Choose a time period, set a budget, and let the kids plan out their expenses.
2 - Setting Savings Goals and Creating a Plan for Reaching Them
Two months of summer vacation is just enough time to set a challenging, but realistic, goal and to implement a plan for reaching it. Your child may want to save for a particular toy, a trip somewhere, or a new outfit for the first day of school. Each kid will have a different goal that will motivate them. Once they’ve decided on their goal, double check the cost with them and decide if it’s something they can achieve within the time available or if they’ll have to wait for birthday money to supplement their savings. To make it more practical, you can even help increase their yield by offering to match every dollar that goes into their piggy banks.
3 - Understanding Investments and Investment Options
In investing, like in the Olympics, one country can “beat” another country, with various economic sectors surpassing their foreign counterparts. You can use the Cherries platform to simulate investments and demo different strategies. You can also help your kids track a particular stock or index over the course of the summer. Discuss what might be affecting prices and tie it into current events.
4 - Becoming a Smart Consumer
Believe it or not, the way Warren Buffet chooses stocks isn’t that different from the way any savvy shopper compares products and prices. Summer is the perfect time to start making smarter purchases. Should you “invest” in homemade ice cream or in a basic Popsicle? Turn this important decision into an educational, family-wide game, and learn how to make a sophisticated choice. Discuss the ingredients of each treat, which one you enjoy more, and even nutritional content. In other words, apply the tools of smart investment decisions to the little every-day decisions. This gives kids a chance to practice smart consumption, thoughtful investing, and even some hearty research.
Why Is This So Important?
More and more parents and educators are realizing that financial literacy, savings, investing, and smart decision-making all need to be a part of the training kids get for their future. Helping your kids get to know the world of finance up close will give them the tools they need to support themselves and grow into confident, self-sufficient adults.