5 Tips To Raise Financially Smart Kids

Schools teach our kids numbers and math, but little is taught about using the math to apply to one of life’s most important skills, managing their finances.  Here are some tips I use to teach my kids to be financially savvy.

#1. Teach by Example

Kids learn by watching us. Be financially responsible and you’ll raise financially responsible kids.

#2. Start Them Young

Money management is a life skill. Teach them when they’re young the basics of savings and spending wisely. You can start with a simple lesson, for example, when receiving monetary gifts, spending half while saving the other half.

#3. Open an Account

Consider opening an online account (Ally.com, CapitalOne.com, American Express Personal Savings) for your kids as online banks pay higher interest than brick and mortar banks. For teens, consider Fidelity.com. Also, banks often provide incentives for kids, so look for bonus deals when opening their accounts.

#4. Make It a Game

Kids like visuals. Show them the interest earned in their account each month. For no additional work, their money is making money!

#5. The Power of Compounding

Teach your kids the power of compounding interest. In this simple example, saving $100 at 5% interest over 5 years yields $127.63. Emphasize that every year, interest earned is more than the previous year!! That’s the power of compounding interest!!!