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    Teach Your Kids About Saving and Investing

    By Bonnie Conrad     

    Teaching kids about money is not always easy, but it is important for parents to have frequent fiscal conversations with their offspring. Many kids, teens and even adults are frighteningly ignorant when it comes to saving and investing, and this ignorance can have serious implications, both on their own lives and on the health of the economy as a whole. It is never too early to start teaching kids about money, and it is the responsibility of every parent to impart these valuable lessons.

    Learning about money can start with even the youngest children, and even preschoolers may already know far more about money than you realize. After all, kids learn by watching, and by the time that child is ready for preschool chances are he or she has seen mom and dad buy countless items. Teaching the kids what those pieces of metal, scraps of paper and plastic cards are, and how they are used, will provide an important foundation going forward.

    A good place to start, at least with younger children, is the good old piggy bank. Buying a young child a colorful piggy bank can be a great way to stimulate saving. Parents can start off the saving by dumping some of their unwanted change into the bank, and they may even want to match some of the savings of the child. Having the child save a portion of his or her allowance, as well as a portion of each monetary birthday and holiday gift, can be an important exercise in financial discipline as well.

    As those kids get older, it is a good idea to teach them how ATM machines and credit cards work. To the young child, an ATM machine can seem like an endless source of free money. It is important to show them that it is anything but, by showing them the withdrawal receipts, and how the bank account balance goes down with every wad of cash pulled from the machine.

    The same is true of credit cards, and it is a good idea to show the kids how to use credit cards wisely, and how their foolish use can lead to all sorts of financial problems. If the child is old enough to have had some basic math, have them calculate the interest charges that would accrue on an unpaid credit card balance. This type of real life lesson can be very memorable, and help keep the child out of financial trouble later in life.

    With more and more college students and even high school students carrying credit cards, and high debt loads, it is more important than ever for parents to lay down a strong financial foundation for their kids to follow. It is never too early to start this important education process; after all, those kids may be dealing with these issues before you realize it.

    Written by Bonnie ConradRate this article:

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