3 Strategies to Teach Your Child to Invest

Chicago, Ill.-based actor Mike Wollner says at ages 7 and 10 his daughters are already learning how to invest.

Three years ago, Wollner opened custodial brokerage accounts for the girls through Monetta Mutual Funds, which has a Young Investor Fund specifically for young people to invest for the future. Through the fund, parents can open custodial brokerage accounts or 529 college savings accounts on behalf of their children, as well as get access to financial education and a tuition rewards program.

Wollner decided to open the accounts once his daughters began to nab acting gigs and earn an income. They’re already beginning to understand what it means to own a part of the world’s largest companies. “They will ask me to drive past Wendy’s to go to McDonald’s and say, ‘well, we own part of McDonald’s,’” he says.

Wollner hopes his daughters will have saved enough for college by the time they graduate high school. His 10-year-old’s account balance already hovers around $13,000, while his 7-year-old has a little less than $10,000 saved for college in her account.

The contents of the package a child receives in the mail when an adult opens a Monetta Mutual Young Investor Fund custodial account on their behalf.

The Value of Starting Young

The Monetta Fund is only one example of a way to invest on a child’s behalf. The downside to using an actively managed investment account like the one Monetta offers is that it comes with higher fees — the fund’s expense ratio of 1.18% in 2016 is higher than the 0.10% – 0.70% fees typically charged by state-administered 529 college savings plans.

In addition to 529 plans, parents can open Coverdell Education Savings Accounts, or other custodial brokerage or IRA accounts through most financial institutions like Fidelity, Vanguard, or TD Ameritrade.

A college fund serves as a great way to teach kids a little about the time-value of money, but they’ll need to know more than that to manage their finances as well as adults.

“There’s no guarantee that they are going to be financially successful because anything can happen in life, but you’ll be better off with those skills and have a better chance of being successful with those skills than without them,” says Frank Park, founder of Future Investor Clubs of America. The organization operates a financial education program for kids and teens as young as 8 years old about financial management and investing.

He says FICA begins teaching financial concepts at an early age with hopes that the kids who start out with good money management habits now will continue to build on them as they age.

“If they fail to get that type of training now, it may be years into their late 20s, 30s, or 40s before they start. By then it could be too late. It could take 20 years to undo the mistakes they’ve made,” says Park.

3 Ways to Teach Young Kids About Money

Use real-world experiences

Wollner has each daughter cash and physically count out each check they receive from acting gigs.

“They just see a big stack of green bills, but that to a child is cool. It’s like what they see in a suitcase in the movies,” says Wollner.

He then uses the opportunity to teach how taxes work as he has his daughters set aside part of the stack of cash to pay taxes, union fees, and their agent.

“They start to see their big old pile of money diminish and get smaller and smaller,” says Wollner, who says the practice teaches his daughters “everything you make isn’t all yours, and I truly believe that that’s a lesson not many in our society learn.”

Kids don’t need to earn their own money to start learning. Simply getting a child involved with the household’s budgeting process or taking the opportunity to teach how to save with deals when shopping helps teach foundational money management skills.

Park urges parents to also share financial failures and struggles in addition to successes.

“They need to prepare their kids for the ups and downs of financial life so that they don’t panic if they lose their job, have an accident, or [their] identity [is] stolen,” says Park.

Gamify investing

Gamified learning through apps or online games can be a fun way to spark or keep younger kids’ interest in a “boring” topic like investing.

There are a number of free resources for games online like those offered through Monetta, Education.com, or the federal government that aim to teach kids about different financial concepts.
Wollner says his youngest daughter benefited from playing a coin game online. He says the 7-year-old is ahead of her peers in fractions and learning about the monetary values of dollars and coins.

“This is how the kids learn. It’s the fun of doing it. They don’t think of it as learning about money, they think of it as a game,” says Bob Monetta, founder of Monetta Mutual Fund. The games Monetta has developed on its website are often used in classrooms.

When kids get a little older and can understand more complicated financial concepts, they can try out a virtual stock market game available for free online such as the SIFMA Foundation’s stock market game, the Knowledge@Wharton High School’s annual investment competition, or MarketWatch’s stock market game.

“The prospect of winning is what makes them leave the classroom still talking about their portfolios and their games,” says Melanie Mortimer, president of the SIFMA Foundation.

Anyone can play the simulation games, including full classrooms of students.

Aaron Greberman teaches personal finance and International Baccalaureate-level business management at Bodine High School for International Affairs in Philadelphia Penn. He says he uses Knowledge@Wharton High School’s annual investment competition in addition to online games like VISA’s websites, financialsoccer.com, and practicalmoneyskills.com, to help teach his high school students financial concepts.

Adults should play the games with children so that they can help when they struggle with a concept or have questions. Adults might even learn something about money in the process. Consider also leveraging mobile apps like Savings Spree and Unleash the Loot to gamify financial learning on the go.

Reinforce with clubs or programs

For more formal reinforcement, try signing kids up for a club or other financial education program targeting kids and teens.

FICA, the Future Investors Clubs of America, provides educational materials and other support to a network of clubs, chapters, and centers sponsored by schools, parents, and other groups across the nation.

When looking at financial education programs, it’s important to recognize all programs are not equal, says FICA founder, Frank Park.

“Generally speaking, you’re going to go with the company that has a good reputation of providing these services, especially if your kid is considering going into business in the future,” says Park.

The National Financial Educators Council says a financial literacy youth program should cover the key lessons on budgeting, credit and debt, savings, financial psychology, skill development, income, risk management, investing, and long-term planning.

Mortimer suggests parents also try getting involved at the child’s school by offering to start or sponsor an after-school investing club. She says many after-school youth financial education or investing organizations nationwide use SIFMA’s stock market simulation to place virtual trades and compete against other teams.

The post 3 Strategies to Teach Your Child to Invest appeared first on MagnifyMoney.

12 Cheap Ways to Keep Your Kids Busy This Summer

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Whether you’re a stay-at-home parent or a working parent, it’s likely that summertime gets tough. When kids are home all day, or at least out of the routine of school, they get bored easily. Boredom often leads to whining or other forms of mischief.

So what if you’re looking to keep your kids busy, but don’t want to spend loads of money on a trip to the local zoo twice a week? Here are some cheap options to maintain your sanity, I mean, keep your kids busy for the summer.

1. Let Them Be Bored

Step One in surviving summer as a parent is to let your kids be bored. As kids these days experience ever more scheduled lives, they’re left less and less often to their own devices. So, of course, as soon as you let them be, they’re bored because they need to learn to play on their own and be creative. In fact, experts say boredom is essential for learning creativity!

So number one on your list is also the easiest option: give your kids down time. Provide them with space and time to come up with things to do, and don’t immediately fill up their schedules when boredom inevitably strikes. It doesn’t get much cheaper than that!

2. Institute a Chore Chart

You might as well keep your kids busy and get something out of it. If you don’t already, now is the time to teach them responsibility with a chore chart. This could include unpaid daily chores like making their beds, feeding the family pet, etc. Or you could step up your game a notch with commission-based paid chores. Just make a list or chart of chores kids can get paid for, including the chores’ monetary value. When kids check a chore off the list to your satisfaction, they get paid.

Sure, you’ve got to invest some money in this one. But it’s a great way to teach kids responsibility and help them start managing their own money.

3. Visit the Local Library

These days, most local libraries run summer reading programs. These can incentivize even non-readers to pick up a book this summer. Just make a habit of stopping by the library once a week or more often, and be sure to let kids pick appropriate books that they find interesting (even if you don’t see the attraction). This is a two-birds-one-stone approach, since visiting the library makes for a fun outing, and reading all those books whiles away hours of the summer.

4. Create a Craft Station

Got creative kids? Consolidate all of your crafting materials into one place, and let them go to town. Warning: this will get messy!

You don’t have to go buy a bunch of brand-name craft kits, either. Start collecting things like used printer paper, old crayons, toilet paper rolls, and nature items. Keep these, along with basic supplies like craft paper, scissors, and glue, in the craft area. Let kids go to town on their own, or use social media sites like Pinterest for inspiration on projects they can create.

5. Check Out Your Local Parks & Recreation Department

Just need the kids out of the house for a day or several this summer? Summer camps can be prohibitively expensive if you’re on a tight budget. But, often times, local parks and recreation departments run day camps that are much cheaper, and allow kids to get outdoors and burn off some energy.

Even if your local department doesn’t run camps where they’ll actually take your kids for the day, chances are they’re hosting some cheap or free summer events you can attend as a family.

6. Plant a Garden

Get kids out of the house and into a healthy pastime with gardening. Even small kids can help plant corn if you’ve got room, as it’s easy to grow in many U.S. climates. Or talk to your local gardening center about fruits, vegetables, or flowers that are particularly easy to grow in your area.

Be sure to give the kids some autonomy over this project, to really let them get involved. They should be able to help choose the plants and the layout. But they should also be responsible for weeding, watering, and other garden maintenance. This is a great skill building activity that can also keep kids busy all summer long.

7. Get to Know Free Activities in Your Area

The internet is rife with great blogs highlighting local activities, especially for families with kids. Run a quick Google search for your area, and get familiar with what’s out there. Often times, these blogs will keep calendars of family-friendly activities, often free or cheap ones, throughout the summer.

8. Create an Activity Bucket

Often times, there’s plenty to do around your house, but the kids aren’t great at sussing out the next best idea. Write down potential activities on popsicle sticks, and stick them in a jar or bucket. Let the kids choose one activity each day, and make it happen.

This could include things like making homemade ice cream, building a bicycle ramp in the back yard, creating a sprinkler out of an old two liter bottle, or building a fort in the living room. Try to come up with ideas using only materials you’ve got on hand, especially if they’re things the kids can do largely unsupervised.

9. Explore New Local Parks

Make it a goal to go to one new park each week this summer. If you’re in a medium to large metropolitan area, there are probably loads of neighborhood parks you’ve never even heard of. And you might discover a few new favorites. Just set aside one afternoon each week, pack a picnic lunch, and try out a new park.

10. Create a Summer Memory Board

Kids love to collect things, whether it’s movie ticket stubs or rocks from each park you visit. And if you’re like many parents, you like to take photos of your kids having fun. Combine all these memory-sparking items and photos onto a summer memory board.

All you need is a large cork board, which you can get for a few bucks at a local craft store. Each time you try something new or create new memories, add to your board. Looking at the board may help spark new activity ideas for your kids, and it’ll be a great memento to have at the end of the summer.

11. Pick Up Some Board Games

Board games for kids have come a long way since Candy Land. While the old games are still great, many new games teach skills like resource management, teamwork, and basic strategy skills. You’ll need to invest some money up front in these board games, but you can get most kids’ games for $20 or less. And if your kids end up loving them, it’s an investment you won’t regret!

12. Start a Small Business

If you want to keep your kids really busy this summer, get them thinking about how to earn, save, and invest money. Young kids can plan for a garage sale late in the summer, spending the summer sorting through clothes and toys they no longer need. Bigger kids can mow lawns or pull weeds for the neighbors, or act as mother’s helpers, taking care of little kids while mom is still around.

Just be sure to start your young entrepreneur off right with a checking account and savings tool. A regular savings account or piggy bank may work, but you could also start teaching your kids the basics of investing with an IRA

[Editor’s Note: You also want to be sure to keep track of your own finances over the summer. High levels of debt related to summer spending could hurt your credit score. You can see where you currently stand by viewing your two free credit scores, updated each month, on Credit.com.]

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Image: ArtMarie

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