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Home › Articles › Your Toddlers › Tiny Investors

Tiny Investors

Getting Children on the Road to Financial Security

By Deborah Ng

Pages:  1  2  3  4  

According to Patty Gale, a former investment manager and owner of CommuteInYourJammies.com, it's important for kids to learn sooner rather than later. "We live in a society that has become so dependent upon living on credit that the federal government has had to step in and make it more difficult for consumers to file bankruptcy," says Gale. "Teaching children from a very young age to be responsible with money is one of the greatest gifts we can give them. Not only will they truly understand and appreciate what real financial management is, they can take pride in knowing they have accomplished so much and have taken ownership of their security."

For parents looking to help their kids invest at an early age, there are plenty of options:

  • Kid Saver Accounts: Most banks now have Kid Saver programs available. These are ideal for children who receive lots of birthday money from relatives or deliver papers on the weekends. Parents can open an account for very young children, or kids can do it themselves once they're old enough to write their own name. Janel and Jason DeZam set up a Kid Saver account for their son, Hayden, who just turned 1. "The account will help him understand saving, and when he gets old enough, a checking account will be added," says Janel DeZam. "I want him to fully understand how to create a monthly budget, balance his checkbook and manage his credit before graduating high school and moving out of the house."
  • IRA: It may sound silly, but children need to be educated when they are young so they can provide for themselves when they are seniors. A Roth IRA is perfect for securing a child's financial future. Parents can fund their babies' retirement account themselvs until children are ready to contribute on their own. After that, parents can offer an incentive by matching funds. Children who are taught to contribute regularly can retire as millionaires. The benefit of a Roth IRA is that investment earnings aren't taxed. The downside to this is that contributions aren't tax deductible.

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