These tips for parents can help kids develop a healthy relationship with money.
As a guest speaker at colleges and high schools, I discovered that most teenagers are clueless about investing. They get an “A” for knowing how to spend money, and many work hard for income, but few know how or why they should invest in stocks, mutual funds, or index funds. Typically, most teenagers haven’t thought about building wealth by paying themselves first.
2. Open a UGMA account: A UGMA is a custodian account used to hold and protect assets for minors until they reach legal age. The account can be opened at most brokerage firms with no minimum amount. Talk to the representatives for details in opening a UGMA in your state. 5. Have a routine: The goal in opening the account is to get your child into the routine of investing a certain amount of money into the fund every month . If needed, use a portion of his or her allowance to invest in the fund. Here’s a hint: Match by 50% any money your child invests. . Look for reasons to add money to the fund.
2. Teach the difference between investing and speculation: Some teenagers will be so fascinated by the market they may be interested in speculating in individual stocks, or in the latest investment fad. That is fine, but keep the good old reliable index fund separate from any speculative investments.
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