Kidpreneurs: 10 Tips for Managing Kids and Money
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6. Help them to pay themselves first. Be an automatic saver. Make them immediately save a portion of their income. Open a savings account for them with a small minimum and take them to the bank with you. Have them put part of their allowance or earnings away each month. They will see how compound interest can work for you, not against you!
7. Teach them about the power of compound interest. It is "the most powerful force in the universe," according to Albert Einstein. Compound interest is how you can become a millionaire by investing only $25 a month over the course of a lifetime. The goal: get higher interest rates, and double your money faster! This creates great incentive to save that money instead of spending it right away.
8. Explain how compound interest can work against them. Have them pay back "loans" from friends or family quickly. Explain how banks charge a fee called "interest" on money they lend. Pay off your debt to those who've lent money so that you aren't paying unnecessary fees.
9. Have them read about the rules of money. Education is the key. There are thousands of great books about what to do with money. Instead of playing with videogames, educate! We suggest ABCs of Making Money for Teens by Denis Cauvier and Alan Lysaght.
10. Give back. Teaching children to give back is so important. Be an example and donate money and share this experience with your kids. Help them research different organizations so they can find a cause that they truly have interest in. Giving is what makes you happy anyway, not money!
Now you know! Imagine our society as a place where we show our next generation that hard work pays off. This doesn't mean they can't have fun. It just means we show them how to work hard, save, and be responsible with money. Money and time are valuable assets — way too valuable to neglect, just like our children!
GEOFF AND KRISTIN GEMBALA are the co-founders of Appreciate the World, Inc., and the authors of Couples Chat. The Gembalas live in St. Louis, MO, with their four children and dog, CoCo Chenille. For information, visit www.appreciatetheworld.com.