Teaching Prudent Investment Habits to Children

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By Tom Cleveland In today’s modern, fast-paced age, many parents live in hope that our educational institutions will prepare their kids for every challenge they might face when they are on their own.  Somewhere in this thought process, we suddenly realize that we,  were not nearly as prepared as we would have liked, and, according to statistics that reflect how our country ranks in the world in such matters, we are slipping backward in our approach, not the other way around.

Is there one area that stands out that should require more effort from us adults?  I wish I had received much more guidance in the area of investing money.  It would have impressed upon me at an early stage the true value of money, how to preserve it, and how to make it grow.  Yes, my grandmother did give me a “passbook” savings account and a savings bond, but my education stopped there.

Most experts suggest that kids need a more interactive experience to learn things, obviously leveraging their desire to play video games.  Your child needs quality time with a parent, and what better way is there than to use FamilyMint to learn about managing money and go through good books together and highlight what is important and what is not.

In order for an investor to find the right books on the topic, they might search for an article on trend following strategy to check the active market at hand, but in this case, we need look no further than our best market indicator for book popularity and appreciation – Amazon.com.  Based on reader reviews and ratings, here are the top four in the field:

  • “Growing Money: A Complete Investing Guide for Kids”, by Gail Karlitz:  Tailored for the Grade 4-8 level, this book includes cartoons and engaging stories to explain a host of financial topics.  Sean Flynn, the author of “Economics for Dummies”, has opined, “Growing Money is the best book about economics, finance, and investing ever written for children. It is engaging, fun, and informative.”
  • “Money Sense for Kids”, by Hollis Page Harman:  For similar age levels, this comprehensive guide presents ideas for kids on earning, saving, budgeting, and investing money of their own, with a fascinating mix of puzzles and games that focus on the topic of money.
  • “The Everything Kids' Money Book: Earn it, save it, and watch it grow!”, by Brette McWhorter Sember:  This volume is another in the popular “Everything” series for kids with input on online banking, opening a bank account, saving for a new bike, or even investing online;
  • “The Young Investor: Projects and Activities for Making Your Money Grow”, by Katherine R. Bateman:  Lastly, the best way to learn is by doing.  This book, in addition to basic explanations, includes dozens of projects that “illustrate how to balance a checkbook, read a stock table, and understand common financial terms such as inflation, recession, and the Federal Reserve Board.”

Wise investment habits are worthwhile at any age, but teaching them is another story.  Expect to spend many occasions at the task, searching out “teachable moments”, particularly when away from home, to reinforce each principle related to money’s value and how to use it, how to save and grow it over time, how to spend it, and, yes, how to borrow it, too.  Unfortunately, money does make the world go around, but learning how to make it work for you is a lesson we could all use, especially at an early age.

Tom Cleveland is an investment analyst for the team at ForexTraders.com and has a mixed background of international payments and investment experience. Tom has had his investment work published on popular sources such as Business Insider, New York Daily News, and others.