What if instead, you could inspire your friends and family to do something more meaningful for your youngsters’ celebrations: to pitch in and grow their nest eggs, help them improve the world and spur them to explore the cooler sides of money.
Some kids get thrilled when their piggy bank gets full. Others would rather play with Barbies or video games. Even if you don’t have a little Alex P. Keaton who aspires to be rich, involving your kids in the process of starting their savings accounts and developing investment portfolios can be fun. Here are five ways to get your kids excited about growing their wealth:
Share Memories of College
Tell your kids about how you and your friends sled down the big hill on campus on cafeteria trays. Or how you met their godmother and your best friend sitting next to you in Psych 101. Share your fun, wacky and mildly wild college stories. Then, discuss how your own parents (or grandparents) invested or saved money to get you there.
“Explaining the purpose of financial gifts and supports, like a college or educational fund, can help children understand the importance of managing money,” says child psychologist Frank Zelinger. “Personal examples and family stories are always carefully listened to by grandchildren.”
You can also share lessons you’ve learned about finances since then — including recent rough times. “Adults should not be afraid to discuss their mistakes and possible misgivings regarding their own missed opportunities,” says Zelinger. “Don’t be afraid to answer questions honestly (using language appropriate for the child’s age and understanding).”
Let Kids Contribute
Clearly, you’ll be spearheading the development of your child’s nest egg. Unless your child becomes the next Justin Bieber or Dakota Fanning, the earlier they start saving money, the better. Youngsters should contribute an amount that is appropriate for their age. For instance, a pre-teen might put $1 from a $5 per week allowance into a savings or college fund. Or a teenager might put 10 percent of their summer job earnings into their account. This can create a feeling of ownership, and for older teens, it can have an almost immediate positive impact, says Neale Godfrey, chairman and CEO at Children’s Financial Network, Inc.
“If [college students] have contributed to a [college fund], there they will figure out each time they skip a class it costs them X amount of money,” says Godfrey, adding that the money should be from funds they earned, not from gifts.
Invest in Companies Kids Can Relate To
Many of us invest in companies that interest us, like Chipotle or Apple. Kids are no different. They develop a connection with certain toys and books. “A little kid might want to invest in the company that makes their favorite toy, like Hasbro or Mattel. Or they might want to invest in Disney,” says Godfrey, author of Money Doesn’t Grow On Trees: A Parent’s Guide To Raising Financially Responsible Children. If your child is obsessed with his iPod or iTouch, for example, talk about Apple and how the company’s products are designed to improve our lives. You can look up the stock history together, let them follow it on their own, and then discuss why it may or may not be a good choice. If it is, let them contribute a little money with you in the stock.
Save for a Big Dream
If you have a daughter under the age of 12, there’s a good chance she’ll get an American Girl doll this holiday season. And as many parents know, young girls love to dress up their dolls, and they can glam them up at the American Girl Salon. Besides the cost of the trip to the nearest major city that has one, it might cost your daughter 6 months of allowance to get her doll’s hair cut and styled and ears pierced. Budget it out. Is that worth saving for? Help her make that happen (with either a piggy bank or a savings account), and she’ll remember not only the experience but the practice of saving that got her there.
If your Little Leaguer gets a new glove this year, he might start talking about the next baseball season and Spring Training. If you’re also interested in a warm weather trip, suggest he save for tickets for his favorite team — and then incorporate those excursion savings into the budget for a vacation for the whole family.
Reach for the Stars
Talk to your teens and pre-teens about their favorite stars who set great examples of how to manage money. For instance, Hilary Duff has donated both money and time to Blessings In A Backpack, part of Harvest USA, a charity that fights childhood hunger. After Hurricane Katrina, she helped provide two million meals to children affected.
Talk to your kids about how much money that would cost — and how great it is that Duff donated part of her earnings to do that. You can also talk about Selena Gomez buying her mom a house, and Justin Bieber buying himself a $200,000 car. What are responsible choices? What are big splurges, or even wastes of money? If your kids start saving money early and make smart spending decisions, they can be stars too.
How do you get your kids excited about money and building wealth?
What does money mean to your kids?
What memories do you share with your kids about how you learned the value of money?