Teach kids about growing money

juggle-1027152Yes! saving money is extremely important and yes! “making money” is also important. However, most parents ignore the fact that the money that is earned & saved – can and must be invested so it can grow! Tips on growing money is one of the most important lessons in a kids life – why? Because kids learn through observation and repetition, but this one aspect of money- the kids seldom  experience on their own. So where to start and where to go?

Savings match

Remember that tip about the three piggy banks (short-term, long-term savingseuro-1020122 & charity)? Give the kids a taste of money growth by offering to match their long-term savings and their charity contributions. How does it align with their financial education? This has direct correlation to “employer match” benefit that most employers offer for 401K. So when you have that 401K talk with them when they grow up – they will get it!


juggle-1027151moneybox-158346If you haven’t already, it is a good time to tell the children (ages 7+) the difference between a checking and savings account. Most checking accounts do not provide any interest (just like piggy banks), while most savings accounts do (albeit it could be very small % interest, depending on your geographic location). Banks also usually offer CDs or Fixed deposits that grow at a higher rate of interest.

However, you can also introduce the concept of interest very early  during the piggy bank days (4+). Just pay like 1$ extra for every 10$ they put in the long term jar.

401K & Retirement planning

This is a good topic to discuss when kids are 10+. You can start by discussing money_briefcasethe concept of retirement. By this time the kids understand the need of “earning” money and “saving” money. Explain it to them that the idea behind retirement savings is to get a return on the money that you had saved and invested long time ago. When people save for retirement (money saved for over 30-60 years!), they get a steady stream of income as they start getting that saved money back. This helps them cut-down on their work ours if they want to and still meets their monthly needs.


money-1084514Kids often come in contact with commodities like gold and silver through jewelry, watches and other goods they see in the house. This may be a good time to help them understand how supply and demand dynamics change the price of a commodity. You can even play a fun game – during the breakfast – take out one waffle, give everyone same amount of money each and ask everyone to bid on who wants the first one. The kids will realize that the price of the waffle goes up as there is enough demand (everyone is hungry!). Thats a good moment to talk about how same principles apply to the price of gold, silver and other commodities, because these commodities are also limited and there are only so many producers of these commodities.


Teenagers should understand how free markets work. You can startdollar-1362244 first by introducing them with the simple idea of “ownership” within a company. Owning a stock is like a very small amount of that company. Take a company, which makes kids’ products such as Johnson & Johnson, Lego, Mattel, Nestle or Hasbro. You can explain them that if we own a company’s stock, we own a small portion of the company. So every time we make a purchase from these companies, we are purchasing a product of our own company.

You can also introduce the concept of diversified mutual funds. Its like investing in many companies at the same time.

Stocks are a very complex subject and we will cover it in more details in a future article.

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