HELPING YOUR KIDS ACHIEVE A LIFETIME OF FINANCIAL FREEDOM!
Disclaimer: Good Day, Readers. WealthBuildingPowers blog is a financial literacy/competency blog and does not provide specific investment recommendations.
HELPING YOUR KIDS ACHIEVE A LIFETIME OF FINANCIAL FREEDOM!
Years ago, my daughter Amanda and I had a bedtime routine that I cherished. She would climb in the bed, and we would read. Initially, I did the reading, but my little genius quickly learned to read! We would sit at the end of the day and enjoy adventures we found in books. Like my mom, we are avid readers. I enjoyed setting that example.
Amanda told me a few years ago she was confident I would prepare her before I departed this earth. I found that comment enlightening and maybe a wee bit frightening. One preparation has been building her financial literacy.
The President’s Advisory Council on Financial Literacy defines financial literacy as “the ability to use knowledge and skills to manage financial resources EFFECTIVELY for a LIFETIME of financial well-being.” –
As a nation, we have a serious financial literacy deficit!
FRIENDS, WE HAVE A CRISIS – RED ALERT – SHIELDS UP – AMERICANS ARE FAILING BASIC FINANCIAL LITERACY! {I LOVE Star Trek}
- Only six states require high school students to complete a semester-long, stand-alone personal finance course.
- 40% of Americans cannot cover a $400.00 emergency, while 60% do not have the money to cover a $1,000.00 emergency.
- 76% of millennials lack basic financial knowledge
- Nearly 50% of Americans do not have a retirement savings account
IT IS A PARENT’S RESPONSIBILITY TO HELP YOUR KIDS BECOME FINANCIALLY LITERATE!
Education does not stop at the classroom doorway or only includes math, reading, science, etc. For your kid’s future well-being, BUILD their financial literacy.
If your financial literacy is low, learn this competency together.
Building your child’s financial literacy is about ensuring they are educated on the best way to manage finances for the rest of their life!
A GREAT LEARNING TOOL – INVESTING IN STOCKS
Educate your kids so they understand the stock market is NOT a boogeyman! Help them research companies they have an interest in. For minors, you will have to set up a Guardian or Custodial Account.
- Guardian Account: You retain ownership of the account, and gains are taxed at the parent’s rate.
- Custodial Account: The child owns the account, and you manage or control the account. Gains are taxed at the child’s tax rate. Once the child reaches 18 or 21, the assets fall under your child’s control.
- If you have set up a college education account, involve your children in selecting the investments.
TEACH DIVERSIFICATION WITH ETF’S
For those more risk-averse or who are uncomfortable picking individual stocks, look at the S&P 500 ETF. This low-fee ETF invests in the very best 500 U.S. companies. ETFs provide immediate diversification, protecting you from risking it all on one or a few stocks.
BUYING INDIVIDUAL STOCKS
Investing in the stock market is an INVESTMENT in your child’s future providing an opportunity for an early lesson in saving and investing. Help grow the interest by researching companies your kids are familiar with: Examples: Domino’s Pizza, Chipotle, Coca Cola, Pepsi, Red Bull, Apple, Netflix, Hulu, Disney, Facebook, etc., Work together to research the companies your child identifies. If you have an investment account {Fidelity, Charles Schwab, Vanguard, etc.}, these sites have excellent research tools and reports. You can also utilize Google and Yahoo Finance.
A few stock evaluation factors to research are below.
CONCLUSION – HELPING YOUR KIDS ACHIEVE A LIFETIME OF FINANCIAL FREEDOM!
If not ready to invest money, do like all great performers – PRACTICE, PRACTICE, PRACTICE! Below, websites allow you to create a hypothetical portfolio and track its performance. Encourage your child to follow the investments they are interested in to understand how well their selections are performing.
Three FREE tools:
- “Investopedia Stock Simulator gives you the chance to gain hands-on experience with investing. When you sign up, you get $100,000 in virtual cash. You can invest that money however you wish and compete with more than 700,000 other users who’ve signed up for the simulator.
- Wall Street Survivor is an educational and competition-focused investment simulator. When you sign up for an account, you can start by taking Wall Street Survivor’s courses. These will teach you the basics of reading a stock quote or determining the best stocks to invest in. Once you feel ready start investing with your virtual cash.
- HowTheMarketWorks is geared towards educators but is an excellent way for anyone to simulate investments. More than 10,000 college, high school, and middle school classes used the website last year. In addition to the simulation, which gives players $100,000 to start, the website offers hundreds of videos and tutorials and teaches materials that educators can use in the classroom.”
Once you are more confident, begin purchasing a small number of shares of ETFs or stock. Let your children see you will be right and gain money while sometimes lose money.
Look for investing courses at local community colleges. Explore different investing books and magazines at the local library.
‘If you don’t know where you’re going, you might end up someplace else.’ Yogi Berra
LET’S MAKE SOME MONEY – CRYPTOCURRENCY IS ACCEPTED!
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ABOUT ME
I am a proud nerd (as my beautiful wife and daughter have told me) investment and finance blogger with an N.C. State, Chemical Engineering, University Rutgers, MBA and Harvard University, Advanced Management education.
I left a corporate career because I desired to make a difference as a speaker and writer. I was blessed to be coached and mentored by strong women and men in my family and professional life. It is my time to serve and give back.
DISCLAIMER
I started my first business at ~13 years of age (a small but brilliantly created plant nursery). I am a successful investor in stocks, options, real estate and am happy to share my finance and investment lessons. I am NOT a licensed financial advisor. Please do not construe my suggestions on this blog as recommendations for your situation.As an investor, you must establish your risk/loss tolerance. Investment in any asset involves risk, including complete loss.
Please seek your licensed CPA or fiduciary financial advisors for individual financial advice.
I write this weekly blog to make an impact by reaching an audience and demonstrating the need for financial literacy. I will help you get there.
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