'I' is for investing: teaching kids the basics |
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'G' is for games
A 9-year-old can play a stock market game and a simple Internet search will bring up many role-playing stock games.
Pifher plays a game with his son to simulate bond trading. "I give him a $5 bill and he buys a 'bond' from me," he says. "I pay him a couple of interest payments, then I buy the 'bond' back."
'M' is for mistakes
Don't worry if your children make money mistakes. The younger they mess up, the better. "When you screw up with your money as a kid, you can use it as a learning opportunity," Godfrey says.
In her book, Godfrey writes about a teen who went wild with her new credit card. The girl's grandmother bailed her out, but then insisted that the teen put away the card until she repaid her, with interest (although at a much lower interest rate than the credit card company charged). The girl, who soon began college, became an example to her friends as she saved her card for true emergencies -- instead of using it to buy the latest must-have sweater.
'S' is for serious
If your child shows an interest in any area of finance, take it seriously, Godfrey says. "If your child wants to start a lemonade stand don't say, 'Oh isn't that cute?' Instead, say, 'Let's do a business plan.'"
Once your child has saved enough money, help him purchase stock, shares of a mutual fund or an index fund for a custodial account. "Online buying is much easier to do at a much lower transaction price than it used to be," Bamford says. An Internet search will pull up stocks you can buy for less than $50. The transaction costs can eat into your profits on small trades -- but it may be worth it for the education your child will get. Your child probably can get into an index fund for as little $1,000, Godfrey says.
'N' is for now
Start today. "It's never been more important than it is now to know this stuff," Bamford says. Remember, your kids are the ones who will be taking you out to eat one day.
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