Financial literacy is one of the most powerful gifts we can give children. Teaching kids about investing lays the foundation for a lifetime of wise decision-making and financial freedom.
Nicholas Chavez, Jakob Krygier and Lucy Niskanen, a team from the Valley full-service financial firm Equitable Investments, are sharing their expertise on teaching kids important financial skills.
Q: What are some of the smartest money moves parents can make on behalf of their children?
Three crucial financial moves all parents must make are setting up a college savings plan, purchasing life insurance and saving their own retirement money.
College costs are rising, and student loans burden many young adults with significant debt. Starting a 529 plan early can bring rewards later, and other family can help as well.
Life insurance is another essential piece. Proper coverage can ease devastating emotional and financial stress for families during unexpected tragedies. It provides a vital safety net, ensuring that your children's future remains secure, even if the unimaginable happens.
When it comes to retirement, parents who don't plan for it could inadvertently become a burden to their children later in life. Saving today means independence tomorrow, giving your children an opportunity to create their own independent futures.
Q: How can parents teach their kids about saving and investing?
Involve them in daily financial decisions. You don’t need to let them see your details, but share parts of your budget, how much you save and how you invest. Let them handle money early so they become comfortable. You can also share real-world lessons: show the cost of a restaurant meal versus a home-cooked meal; discuss your vacation budget and allow them to help prioritize activities based on the budget. Experiencing these things first-hand helps kids understand how money works in real life.
Q: Why is talking about money often uncomfortable for parents?
Many people feel they don’t know enough themselves, and that fear of not knowing everything keeps them silent. However, avoiding the topic only continues the cycle of financial illiteracy for future generations.
Q: Is there such a thing as "too early" to start teaching kids about money?
No; understanding money is the key to their financial future. Start young with age-appropriate lessons and talk about money often. One of the most important financial lessons you can teach is investing: the benefits of starting young and investing consistently, and the power of compound interest.
Q: Any final thoughts?
Parents play the most vital role in shaping their children's financial habits. Schools today are not likely to teach your children these important skills, and you cannot always rely on your community to help promote healthy money mindsets. Even if you feel behind because your kids are older, it is never too late to learn and pass those lessons on to the next generation. Your kids can go further because of the foundation you give them today.
480.322.9804 | Equitable.com
"Parents play the most vital role in shaping their children's financial habits...Your kids can go further because of the foundation you give them today."