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Teaching Teens About Investment: The Basics

December 23rd, 2016 Posted in financial education, financial literacy for kids, kids and money, teaching children about money, teaching kids about money, teaching students about money
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As a parent with teenagers, you are likely to be worried about their financial futures. If economists are to be believed, millennials could be about to become the first ever generation to be less well off than their parents – so there is obvious cause for concern.

It has never been more important, then, to teach your young adult children the vital importance of saving – and investing in their future. I’ve put together a few ideas which should help you explain – and demonstrate – some of the concepts of investment to your teens.

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Develop their interest in world affairs

Knowledge of global events and their impact on the markets is critical for investors, so encourage your teen to keep in touch with the news. OK, so if you are anything like the average family, your teens are likely to turn off when the news comes on. But, you mustn’t mistake this for disinterest in current and world affairs. There is a good chance that your teens have a keen interest in what’s going on in the world they just choose not to listen to a mainstream voice. Encourage it, of course, but start telling them the benefits of fact-checking and investigating sources. It will prove to be hugely beneficial when it comes to the day they start making investments.

Offer them allowance deals

If you are still giving your teen a weekly allowance, see if you can show them the benefits of putting money way and saving it. For example, let’s say you give them $10 each week. You could suggest that if they gave you back half and save it for 6 months, you would match what they have kept back, doubling their money. Not only will it show them the value of putting money away, but it will also teach them a little about interest and making their money work harder.

Get started on real estate

Buying and selling homes isn’t something your kids will be doing for a while yet. But that doesn’t mean it isn’t a subject you should be discussing. Educational games can help the younger ones, and Monopoly is always a great way to introduce the concept of investing money in property to get more back. If you have the money, you could, potentially, look around for cheap homes for sale, buy one, and let them run it as a business – assuming they are old enough, of course. There’s nothing to stop you from investing in property as a family business, either. You could, perhaps, give everyone tasks they are responsible for and pay them out of any profits earned. Finally, ask their advice. Too many households shield finances from their kids, but being open and honest will help them learn and, most importantly, ask questions.

Talk about the stock markets

Teens love modern technology and big brands – and there is a perfect chance there for you to take their interest further. You could even set them up with a little stock to play with, and see how the markets fluctuate for themselves. As long as your teens have a grasp of money and are interested in the subject matter, it should be easy enough to peak their interest in the relevant markets.

Do you have any suggestions on how to teach teens about investment? Let me know your thoughts in the comments!

 

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Will Your Kids Be Financially Secure?

December 21st, 2016 Posted in financial literacy for kids, kids and money, teaching children about money
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Financing is a scary topic of conversation for most people. The majority of adults struggle to maintain a financially secure situation, but with children, the concept is foreign and boring. It can be hard to make the topic seem a little less dull when explaining it to your kids, but some of these conversations are better had now. I’m sure you’d rather you helped them now, as opposed to when they’re adults and they come back to you with financial problems out of which they’re struggling to wiggle.

The reason you should be asking yourself whether your children will be financially secure is because one day they’ll be sorting out their finances for themselves. There’s only so much you can help them, but one day you won’t be there and they’ll have to make decisions by themselves. It may not be a pressing issue on their minds now, but considering most adults are perplexed by money and how we’re ‘supposed’ to be using it, it’s best to ensure your child never ends up in such a tricky, confusion, unstable situation.

Aiming for success rather than money is a crucial skill.

If you’re in a financially secure position, the reason you most likely ended up here was through a good career at some point in your life, whether that was in the past or you’re currently in a very stable job. The most invaluable advice you can give to your children is to focus their energy on finding out what their true goal out of life is and pursuing their talents. Their skillset will lead them a good career and that will financially support them much more than any savings account or investment scheme.

Teach your children to take advantage of opportunities in life and seek out their own happiness and success before all else. If they think about this, money will come as a result. Just focusing on money can be a damaging way to live, as it doesn’t actually provide any solutions or methods to achieve financial independence and security. If your child ends up in a company with great career progression, they can chase goals rather than money. Of course, the two go hand in hand, so it’ll work out perfectly for them. It’s all about the right mindset.

Goals should be short-term.

We’ve already discussed the importance of reaching for goals and happiness, rather than simply money in and of itself. Of course, this doesn’t mean your children should be stretching endlessly for distant future objectives. When they become a young adult and enter the working world, they’ll still have their whole lives ahead of them. This will be a time for them to learn about the fine balance between socialising and working. They might benefit from getting help from companies such as Blueprint Wealth – financial advisors; as there’s only so much you can do to teach them how to use their money. It is their money, after all.

Of course, saving is still important.

Whilst building a career and striving for happiness is key, let’s not discourage the importance of saving. It’s always important to think about future investments, rather than encourage your kids to blow money as soon as they earn it. Some element of planning should be involved. That’s a crucial thing to teach your kids, because, as recent educational reforms have shown, we haven’t done a great job at educating the younger generation about debt as of the last few decades.

Whilst that may change in the future, it’s up to you to act now to educate your children. They might have a secure job, but they need to know what to do with their salary once they’ve earnt it.

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Help Your Child Achieve Their Dream Home By Teaching Them How While They’re Young

December 21st, 2016 Posted in financial literacy for kids, teaching children about money, teaching kids about money
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It’s never too early to start teaching your children about money. In fact, the sooner you start, the more likely they are to find financial security in later life. Having money awareness from the off will allow them to make stable life decisions. Most parents want their children to get all their dreams. This includes their dream home. Mistakes made early in life can stop that happening. Help your child make the right moves to ensure they get the home of their dreams when they’re older.

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THE IMPORTANCE OF HARD WORK

Teaching your child the importance of hard work is the first step in ensuring they achieve their dreams. When you’re young, it’s hard to take education seriously. Encourage your children to take responsibility for their learning. The better they do at school, the more likely they’ll be able to afford a house when they’re older. Encouragement is easier said than done. Helping your children realise their dreams will go a long way towards giving them an incentive. Remember that your dreams might not be the same as theirs. Take a step back and help them realise what they want. Have conversations about the future and see what their plans are. Children can get carried away. If they go off on a tangent, try to bring them back to the considerations they’ll face down the line.

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HELP THEM CHOOSE A CAREER

When you’re young, you’re asked to make the biggest career choices in your life. It seems strange when children rarely know what they want to do. Choosing the wrong subjects at school and college can hold your kid back. It can even stop them getting what they want. Without that good paying career, they’re unlikely to get the million pound mortgage and dream home. Again, be sure to let your children make their own choices here. The best thing you can do is make sure they’re aware of their options. It might help to show them what problems the wrong choices can cause. Give them an idea, too, of the financial situation each career choice would land them in. Children and young adults often make decisions based on what their friends are doing. Make sure your child knows which jobs offer the best future and makes decisions based on that.

TEACH THEM THE IMPORTANCE OF SAVING

Even with a high paying career, your child won’t be able to achieve that dream home without some savings. Teach them about the importance of savings from early on. If they receive pocket money, it’s worth limiting this. A smaller amount of pocket money each week will mean that they have to save up for the things they need. Financial knowledge is the whole point of pocket money, after all. Without starting early, your kid is unlikely to be able to afford a deposit or mortgage. Talk to them about your saving process, and what it has helped you to afford. Show them, too, what they could achieve with substantial savings behind them.

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Teach Your Children About Affording A House

December 20th, 2016 Posted in financial literacy for kids, learning about money
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Your child most likely loves your house. Whether it’s been the family home ever since they were born, or a recent buy, those four walls and the memories made within them mean the absolute world to a young mind which is still learning about life, money and all the confusing things inbetween. It’s up to us to take the opportunity, whilst our children are growing, to help teach them about the boring ‘behind the scenes’ elements to owning all these luxuries we take for granted. If they want the perfect home when they’re older and have their own family, you’ve got to teach them how that works.

Financing a home may not be something your child understands right now, but as they get older, there are some steps you can teach in order to help instill financial independence and understanding in your children as they become young adults and get closer to having to make these decisions for themselves. The key is to ensure that their spending, even at expensive times of year such as the holidays, never outweighs their saving.

Talk about debt early on.

Before your child can consider buying a home, they’ll have to take a look at their finances. Young people in the current economic climate feel discouraged from buying a home, because they’re overwhelmed by all the debts and other costs of life which they feel will take too large a chunk out of their income for them to be able to afford anything else.

Of course, this isn’t true. If debt and other costs are approached early on in a young adult’s life, they’ll find that affording the bigger things and achieving that stability they seek becomes much easier. Teach your child that disposable income can be disposed on something really valuable today, so that they can have all the luxuries they want tomorrow.

If your child loves the idea of owning a home now, then help them ensure that dream becomes a reality when they’re older, rather than dwindling away when they realise they aren’t financially prepared for it and it may be a long time before they are.

Mortgages aren’t a scary thing if you have a stable job.

You might be wondering about the future for your children, considering the dire situation facing many younger people struggling to break into their industry and career of choice. However, it doesn’t have to be so bleak. Help your child prepare by teaching them about the costs of owning a home and the savings which will need to be made. Once they understand the costs, they might feel motivated to pursue a specific career or work harder at high school, or college, in the hopes of attaining a stable career and being able to cope with the financial element of having the perfect home.

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Houses can be expensive on the whole, but I’m sure you realise there are manageable ways to afford the right home with the right job. With a Homestead Financial Mortgage, for example, your child, as young adult purchasing a home, could be set for life with a manageable, fair way of paying for their home gradually.

Remember, teaching our children about finance is our job. If you want to ensure they’re prepared for the future and owning a home, pass on all the knowledge you can, along with the tips we’ve given here.

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Are Your Kids Ready For Their Inheritance, Or Will They Blow It All In Vegas?

December 14th, 2016 Posted in financial education, financial literacy for kids, teaching children about money
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Parents often worry about their inheritance. Most of the time, they’re concerned about the amount of tax that they’re going to have to pay. But they’re often frequently worried about how their children will manage their money once they’re gone. After all, they’ve spent their whole lives building wealth – it would be a shame for it to all disappear overnight thanks to financial mismanagement.

Other parents are worried that gifting a lump sum to their kids will rob their children of ambition. What’s the point of working hard and trying to find fulfilment if you’ve already won the lottery? As a result, more and more parents are looking for ways to prepare their children for suddenly coming into contact with wealth.

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One example of parents trying to avoid issues around inheritance can be found in the example of CNN anchor, Anderson Cooper. Cooper is the son of successful fashion designer, Gloria Vanderbilt, who is believed to be worth more than £150 million, according to Forbes. Anderson went on the Howard Stern show in the US and told the radio host what he thought about inheritance. He said that he didn’t believe in inheritance and called it a curse, saying it was an “initiative sucker.”

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So what should parents do if they’re concerned with leaving their children an inheritance?

Give Your Children A Financial Test

Parents can gift up to £3,000 a year, tax-free, to their children. Here’s an idea: use these smaller gifts to see how your kids react to receiving a large chunk of money. Do they wisely squirrel it away or invest it? Or do they blow it all in Vegas? It’s a good idea to see exactly how your kids react to having a relatively small amount of money before they inherit the entire $10 million estate.

Get Kids Involved In Your Personal Foundation

A private foundation can be a great opportunity to build wealth and teach kids about money. There are stories all over the internet of parents selling their businesses for a fortune and then using personal foundations to disburse that money over time. In one example, a man sold his business overnight for $25 million. He then created a personal foundation disbursing 5 percent of its balance each year to his children. Each child, however, had to donate 1 percent to their own cause, which the man hoped would increase their work ethic.

This is a good idea for your kids too. When they approach probate purchasers in the future, they’re more likely to put their money into a personal foundation, if they see themselves as stewards of the family estate.

Give Without Giving Cash

There’s an alternative to giving money directly, of course. An estate planning attorney, Jeff Lewis, says that some of his clients have used their money to pay down the mortgages of their children, rather than giving them money directly to do what they want with. Parents can use their annual gift allowance to do things in their children’s lives that will help them to be more financially free and reduce some of the annoying financial responsibilities that come with living independently.

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