Tuesday, November 30, 2010

Early Lessons in Saving Money

My 16 month old daughter is likely to be better off and wealthier than her dad, as I am when compared to my dear old Pa who was a truck driver who left this earth many years ago with less than zero, bar his life experiences. This seems to be the way that progressive generations develop.

I am keenly aware of money primarily because as a child we didn't have any!

This is probably (no it is definitely) why I have such an interest in investing and the stockmarket today.

As parents though we can instill in our youngsters from an early age the value of a buck, what it takes to earn one, how to hold onto it for as long as possible and perhaps most importantly, how to make it work for you rather than the other way around.

Anyone can do it too, rich or poor or in between.

My girl seems to have taken an early shine to actual physical paper money, not just because kids like to screw it up and listen to the sound it makes but because she has seen her Mum use it many times when going shopping and clearly she has figured out that this paper must be actually something of value if people use it so much!

My wife commented the other day that it must be in her DNA (mine) and I dismissed it at first but then who am I to poo poo something I have little knowledge of ?

There is something that we can all do though to help our little ones onto the ladder of financial success.

Teach then about the value of money early.

There is nothing more exciting (well there is but we are talking money here) than seeing a child excited about earning interest on the money they have in their bank account and our little girl has more money in her bank account now than I did at 15!

She has just over $1000 dollars at the ASB in a savings account, thanks to some generous relatives handing over dosh and it is likely to be a sizable sum (depending on how I invest it for her - she may have some input into this as she gets older) when she turns 21 and I "give" it to her - there will be various incentives and restrictions placed around this sum of money as I said it is likely to be a very large figure.

We are going to show our girl while money certainly isn't the most important part of life it is so integral that earning it and using it wisely will make her life better and hopefully easier in the long-run.

The earlier you start teaching them about money and how it works the better. It wont happen in schools, it is your job if you are a parent to get them to value it as a compliment to life and if you can teach them about the power of earning, saving and investing money from an early age - specifically the power of compound interest - then they will be able to take care of themselves in the future and everything else will fall into place.

I started saving money in the bank as a 5 year old from money earned collecting bottles off the street and then a job at a bakery as a 11 year old and that taught me if I really wanted something I would save most of what I needed to get it and sacrifice my short term gains for long-term ones while still having money to spend on Star Wars (The 1977 Original) Ice blocks and the luxury of a 20c can of Coke from time to time.

Go on and teach your young ones the value of money. Above all it will give them choices for the future.


Related Share Investor Reading

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Stockmarket Education

Stockmarket Dictionary
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10 Basic questions to ask before investing
How the Stockmarket works
Understanding Risk
Watch Your Risk Tolerance
Stockmarket Education: What is a Share?
What Moves the Stockmarket?
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