Teaching KIDS... Saving VS Investing

Last Saturday, for the first time ever, I handed one of my sons a $1 bill to pay for some chips at Music in the Park... He's 3 and a half & seemed as though that was the first time he'd seen a dollar... though he quickly took it and handed it over as told.

Something tells me teaching kids about money isn't necessarily going to be done the same way as in the past, but the values still exist.

Kids will grow up to be adults. They'll figure out how to read an account statement, that sort of thing...  but what you're really teaching them is with your actions... and talking to them about what YOU are doing!

Many people grow up to do something very similar to their parents, whether it's how they manage money, career choices, spouse choices, extra-curricular activity interests, faith & religion, etc.

So, when you first want to think about what you want to teach your children about money, reflect on yourself first.

Many young families seem do a decent job teaching their children to save, but there's a difference in teaching them to save and teaching them to invest. The young parents have lived long enough and had enough real life experiences to know that lifestyle is usually correlated to career advancements and that those adjustments have to be kept in check.

Where many people get behind, however, is realizing the value in developing both an appetite for investing & risk tolerance... that by starting to invest early in life, to BUY AND HOLD through thick and thin, you can achieve financial freedom & not stress, even as you go through growing pains of life.

For example, let's say a parent (or grandparent) starts an account for their newborn with just $100/ month going in. Maybe this is an UTMA account that is theirs when they're an adult. Maybe it's a 529... or some combination of the two.

$100/month - if the child keeps that up through adulthood, by the time they're 65, they'd have around $1.5 million assuming a modest 7% annualized return.

Compare that to getting started much later in life, and the monthly requirements are much more intense.

I'm a fan of having enough cash for emergencies, but just know that the larger the emergency fund, the more money can't grow over time. 

So, do you want to teach your kids to SAVE or do you want to teach them to INVEST?