'I' is for investing: teaching kids the basics |
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The preschool years -- 'F' is for familiar and fun
You can begin naturally introducing fiscal concepts well before your child starts school.
Pifher started when his son was born, by buying him a share of Walt Disney Co. stock. The stock certificate, complete with drawings of the well-known characters, hangs in a frame not far from the alphabet letters that line most of the room.
"Kids can identify with something they like," Pifher says. "Before I had even mentioned what a stock is, he was interested in the characters on the stock. He likes to look at the stock and point out the different characters on it. He is excited and I have his attention because he is interested. This gives me an opportunity to talk about the stock and that it represents a partial ownership in the Disney company."
Early elementary -- 'B' is for basics
When children are between the ages of 5 and 8, give them an allowance. This also is a good time to introduce the idea of compounding interest.
"This is the time for that great dinner table question: 'What would you rather have, a penny doubling every day for a month or a million dollars?'" Bamford says. (Hint: You'd rather have the doubling penny because it'd be worth more than $5 million at the end of the month).
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| Doubling a penny |
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If you introduce the words at a young age, kids will get familiar with the vocabulary and eventually learn the concepts. Take compound interest. "I want the child to be able to spell it at 9," Godfrey says. "A child who can spell it at 9 can understand it at 10 and by the time he or she is 15, can manipulate it. Understanding comes over time as these concepts and skills have more meaning."
'R' is for real
The key is to make the connection to everyday life -- whether it's a stock framed on the wall or discussing how well the corner restaurant is run.
"When you look at an ad for Apple Computer, if you as a family own stock in Apple Computer, then say to the child, 'you own part of that company,'" Godfrey says. "Explain what it means to own part of a company."
If your 10-year-old likes eating fast food, visit three different fast food restaurants and walk the child through some questions, Godfrey suggests. "Tell the child, 'I'd like you to help me decide which one to invest in,'" she says. "Which one is the cleanest? In which one do the employees look the happiest? Which ones seem the busiest? Which one do all of your friends like to visit?"
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