Generational Wealth Starts With a Conversation
If you’ve built a family while spending much of your time stressed out about money, you’re likely hoping that future generations won’t face the same struggles you did. Here’s your chance—allow your children and grandchildren to ask questions. It’s never too early to learn how to manage money.
Tackling the topic early in life seeks to combat the excess of online information, one of the downsides of growing up in the digital age. With many financial firms turning toward social media, this could be of benefit to interested adolescents. “Finfluencers” (financial influencers who provide information and advice to potential retail investors) are taking over the internet. While finfluencers can provide valuable insights, their advice may be influenced by personal biases or financial incentives. Be sure to use reliable sources and to view their content with healthy skepticism.
Teaching The Next Generation About Building Wealth
Instead of letting your lineage slip into a hole of financial confusion and misinformation, encourage better money habits through conversation. Building generational wealth includes passing on your financial assets. Why not also pass down the financial wisdom you’ve acquired? A survey from Insurify, based on Pew Research data, reports that parents and family members are still Gen Z’s top picks for financial advice—TikTok coming in second.
The Good News
You can help clarify young family members’ money-related questions. Teaching the basics of investing for kids seeks to supply the knowledge that children need to one day make important financial decisions—especially considering they may receive a financial inheritance from you in the future!
Here are a few questions to strike up a money mindset discussion:
Before the Age of 15
- If I gave you $100, how would you spend it?
- Why should you save part of your birthday money or allowance?
- How do you think money helps people achieve their goals?
- What would you do if you needed to save for a big purchase, like a bike?
- What questions do you have about money?
After the Age of 15
- How can you be prepared for unexpected expenses?
- What financial goals would you like to work towards in the next 5 years?
- Is there anything significant you want to start saving for?
- How would you explain investing to a friend?
- What will you do when you have an income you need to manage?
Starting Early
There are many approaches to encouraging youngsters to start thinking about their financial future. Asking questions can be helpful at first, but what do you do when they are eager to take advantage of the advice you are giving them?
01 Make Money
Learning about money is much easier when you have some in your pocket! Encouraging chores to be completed for an allowance teaches them what an exchange is. A more entrepreneurial pathway that instills the values of hard work could be starting a kid-friendly business (watering the neighbor’s garden, mowing lawns, lemonade stand, babysitting).
02 Save Money
Once they have some money, teaching them to save it using a nostalgic piggy bank could be a great start. Another fun suggestion is to divide their earnings into three jars: one for future investments, one for their next big purchase, and one to spend immediately.
03 Invest Money
They will eventually save enough money to invest. For older kids or teens who have earned income from a part-time job, consider a Custodial Roth IRA. This method gives the child decades to see their contributions potentially grow and with potential tax and penalty-free withdrawals.
Alternatively, you can give the gift of investing directly into a mutual fund on your minor’s behalf. Mutual funds like NASDX aim to combine innovation, growth, and a long-term track record that could help secure your family’s financial success for years to come.
Not Quite Ready to Work, Save, Invest?
There are thousands of financial literacy games online. If you have young children who are learning about currency for the first time, send them to The U.S. Mint’s children’s money games for individual enrichment as part of a lesson plan.
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