Your Kids and Investing

There is something about the New Year that encourages people to take stock of their financial standing and think about their futures - maybe it is having to do the taxes! There was an interesting article this month in the Costco Connection by Jim Cramer, the host of "Mad Money" on CNBC and "Real Money," a radio program. In it he suggested that "investing in stocks will make your children much larger profits than if they had kept their money in the bank," which surprised me, but I am a little risk-avoidant.

The other thing that surprised me was that the article suggested teaching children how to invest was more important than teaching them to stay out of debt or budget. Mr. Cramer suggests that starting a bank account is good, and that kids will love the concept of interest, or free money, but that the message will be stronger if the profits are large enough to really impress them. Investing in stocks will also let kids learn about losing money, which sounds a little painful to me, but is a lesson we all learn sooner or later.

I do agree that starting young provides a valuable lesson in investing and that kids, now than ever before, need to be financially savvy. Mr. Cramer suggests the key to getting stocks to come alive for children is to get them involved with something they know and can get excited about. Have them identify a brand or company they are familiar with and buy even one share of that stock, and help your children chart the earnings or loses of that stock, over time. He also suggests family members give stock instead of savings bonds to kids for holidays.

If you are interested in learning more about teaching kids about money, there are many commercial web sites out there, and one I found from PBS that includes a lot of great advice. Good luck!

Photo Credit: Digital Sextant

Labels: Financial Education, Healthline, Parenting, Preteens, Teen Development

Permalink | Email Post