When it comes to personal finance, the sad truth is that for most of us, it is something we never are taught. We learn how to handle money by watching those close to us.This can be good or bad, depending on your experience.
Grow up with parents who are great at managing their money, and chances are you too will be successful in handling your finances. But grow up with parents who are bad at managing their money, and chances are you will struggle to get by financially.
Since our parents are our greatest influencers when it comes to money, why not take action, regardless of how you are with money, to ensure your children have a shot at being successful with money?
If you take the time to teach your kids about money and get them investing early, it will open many doors for them later on in life. And if you happen to be someone who isn’t great with money, how amazing will it feel to see your children not make the same financial mistakes you are making?
In this post, I am going to walk you through 4 powerful reasons to get your kids investing early. By the end of the post, you will see how taking a little time now can have a major impact on your kid’s future.
4 Powerful Reasons To Get Your Kids Investing Early
#1. Understand Money Better
The first reason to get your kid’s investing early is that it will help them to understand money better. As they invest their money and see it grow over time, they will be interested in investing more of their money.
This is where you can teach them about the importance of hard work and earning a living. You can also teach them about the perils of debt and why it is important to save money.
Usually, this is best done through personal examples. Instead of making up stories about finances, open up your checkbook or credit card statement and show your kids how it all works. This will help them to better understand money.
Finally, let them be part of the decision making process. Explain to them the situation you are in and the options you have to resolve it. Then ask which option they think is best and why. Also encourage them to think of additional solutions.
Doing this will help them to understand money better and as they grow, make smarter financial decisions.
#2. Be Better With Money
I touched on this in the previous point. By getting your kids started with investing early, they will become better stewards of their money overall.
They will think through purchases more instead of blindly buying things. They will be conscious about their savings and making sure they are saving enough money to limit the stress money can have in their life.
Next, they will learn about the power of supply and demand, and will be able to use this in many areas of life.
Finally, they will understand the value of money. They will be able to make the connection that money and work are related and that not everything is worth the price it is selling for.
#3. Learn About The World Sooner
Investing in the stock market makes one aware of global events. Not only will this help your child to learn about these important events, but it will teach them much more.
They will learn where countries and nations are located and what values the people have. They will also see that life in America isn’t the same as everywhere else.
This can help them become more emotionally stronger and stable in life as they will be able to better relate to others struggles.
So while we tend to think that money skills will only help us to be wiser with our finances, the truth is it can help us be better people overall.
#4.More Options In Life
Many times when we see someone stumble into money, we think they are lucky to have gotten that break. But the reality is most lucky events are more planning than luck. You just don’t see the planning because it is done behind the scenes.
For example, look at the aftermath of the housing bubble collapsing in 2008. There were many people after prices dropped who were able to buy properties for very little money. Were they simply lucky?
Not at all. They worked hard to stay out of debt and build up a reserve of cash. When the opportunity of lower housing prices came about, they were able to take advantage of it because they planned.
The same could be said about your career. If you live frugally, you won’t be stuck in a job you hate because you need a certain income to survive.
You could take a job you love that pays much less because you planned for life on a smaller income.
You can even take this one step further and talk about early retirement as well. If you plan your finances wisely, you can take advantage of opportunities when they present themselves.
When your kids invest their money at a very young age, they get the benefit of compound growth over a long period of time. This allows them to invest very little money and still end up with a life changing amount.
Final Thoughts
At the end of the day, there are many benefits to get your kids investing early. They will become smarter with their finances, learn about themselves and the world in general, and they will have more opportunities in life.
Really there isn’t a reason why you shouldn’t get your kids started investing early. So take the first step and get started. Thanks to technology, starting is easier than ever before.
You will be happy knowing you are doing the right thing and your children will thank you in the future as well when they see the results of the lesson you taught them.
Written by Jeremy Biberdorf
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