Financial Knowledge for Your Children

Even Very Young Children Should Be Taught How To Manage Money.

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As another summer draws to an end and September approaches we begin to prepare again for another new school year, visiting the supply store and scouring department stores to take advantage of their back to school sales to outfit our children with new clothes, and we ready ourselves for another few months of bouts with homework assignments.

As my friend Michelle and I were recently shopping for our children at a recent back to school sale, we began to talk about what classes our children were going to take in the fall. During one conversation, as we were paying for clothes at the counter, it dawned on me that the one subject our children would not be taking was how to manage money and basic investing. I had never given my children any advice on how money works, and neither did Michelle. Wondering if there was more I could do, and, not knowing how to go about this with my children, I called my financial advising team, Mike and Mike, to gather their thoughts.

Mike and Mike at once stressed to me how important it is, now more than ever, to educate our children on the basic aspects of money and money management. Think back to your parents, they told me, and how they relied on social security and pensions to provide for them when they were done working. Today, we have no idea if our children will have that luxury, which is why they need to learn about money and investing at an early age so they can manage it themselves.

To this end, Mike and Mike described their passion for working with children and teenagers, and told me of a specific class they tailor to children and teens, which they call "Investeen 101." Mike and Mike simply start with the importance of establishing goals for money, whether it is to buy a new bicycle, or to save for college. They further elaborate on this message by teaching the children ways to earn and save money, including the difference between keeping cash in a piggy bank versus depositing cash in a savings account, and the simple differences between saving and investing.

In helping to teach the basics of investing, Mike and Mike talk about the differences between stocks, bonds, and mutual funds, how to invest in them, and how these investments differ in terms of historical returns, diversification, and risk. Further, Mike and Mike discussed the importance of the power of compound interest, and how to determine how long it will take an investment to double by using the Rule of 72.

I realized that this may be the one subject we still must teach our children about and I asked Mike and Mike if they would conduct one of these classes at my child's school. Make sure, in some way, you are helping your children learn about the importance of money, establishing goals, and how to manage money at an early age, so they can best manage it later.

We all want the very best for our children and we are sending them through school so that they may get a good job and be able to live a good life. But, often times, a good job means good pay, and good pay is no good if our children do not know what to do with their money. With doubts about social security or pensions available to our children, shouldn't we take an active role in trying to educate them in the one subject most schools don't?

An added benefit: discussing the above money-related topics with your children will also get them back into the learning mode and better suited to begin school again this Fall.

For more information on these topics and others involved in the Invest Teen 101 course, please contact Mike & Mike at 213-435-9960.