Kids and Money

Kids and Money / Wednesday, September 20th, 2006

I ran across this article by Janet Bodnar at Kiplinger’s online today: Six Money Skills for Kids to Master.

Here is the list:

1. How to handle a cash allowance.
2. How to save for a goal.
3. How to compare prices.
4. How to manage a checking account.
5. How to appreciate the magic of compound interest.
6. How to get out of debt (or not).

There are some great ideas here; it’s worth a read.

My favorite is #5. I like to fascinate my kids with the example of compound interest where Sally invests $1000/year for 10 years and then stops and lets her savings site for 20 years. Susie invests nothing for the first ten years and then invests $1000/year for the next 20 years. Assuming the same interest rate ( in this case 6%), who has more at the end of the 30 year period? Sally, of course, even though she’s invested $10,000 less of her own money.

My kids pretend to be interested (actually, no they don’t) but I know they’ll look back someday and remember.

2 Replies to “Kids and Money”

  1. I am hope to follow #5 with my Kids. Put a grand or two away each year for them and then give them the account when they are 20 or so. Give them a leg up for College or starting a family. I hope to do these accounts over and above normal helping with college, first car and so forth. My oldest will be 2 so if I could get something started extra started, he could be on his way to support me at some point.

  2. I have been putting $50 a week into a 529 plan for my son since the day of his first ultrasound. He is now approaching his first birthday and has more than a thousand saved already for college. It was one of the best things I’ve ever done. The best part is that if he uses it for college, the interest is tax-free.

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