Raising financially fit kids

Practical ways to teach good money habits

Start saving

We suggest giving children four pots to show the different purposes for cash:

Spend – this pot can be used to spend on small treats

Save – this pot is designed to encourage longer-term saving and teach the value of interest, as well as delayed gratification

Donate – this pot helps you teach children about helping others

Invest – this pot is designed to introduce children to investing

 

Interest

If you have a savings pot, you might want to negotiate an interest rate with your child. Maybe they are saving for a bike, or another big purchase. Once a week/month you can review their savings pot and add “interest” on top, showing them that the more they put in the more they get out.

 

Investing

Choose something your child enjoys, for example coffees, clothes, cinema outings, trainers, etc. Look at the companies related to your child’s passion and build a pretend portfolio. Take a set amount of money and “invest” in some related companies. Ideally you could have a balance of dividend-paying and growth stocks. Review your investment performance and decide if you should buy, sell, or hold.

 

Support the entrepreneur in them

If your child has a business idea, offer them some seed money and help them invest it in their business. Speculate to accumulate, but they need to do the work to bring in the profit (and pay back their shareholders).

 

Hopefully some of these tips will help your children open up and talk about money and finances however old they are. As children grow, they are exposed to advertising and social pressures. Talking about these topics from an early age make them far less daunting.

Speak to us to discuss your children's financial future and legacy planning or find out more about how our Wealth Planning team at Arbuthnot Latham can help you.