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What Are Some Easy Ways for Kids to Save and Invest Money?

Savings accounts are an easy way for children to invest money.
Teaching kids the importance of earning money may help pave the way for better saving habits later.
Piggy banks are still a popular way for children to save money.
Children who do chores and earn an allowance should be advised to invest some of their earnings.
Article Details
  • Written By: Diana Bocco
  • Edited By: Bronwyn Harris
  • Last Modified Date: 26 August 2014
  • Copyright Protected:
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Children are never too young to start learning ways to save and invest wisely. In fact, there are many ways for kids to save that will make them feel empowered and pave the way for prosperity once their reach adulthood. One of the most popular methods has always been to give children an allowance. Parents should encourage their kids to save part of it as soon as they get it, and embed in them the importance of putting money away for a larger goal. Setting an example also helps, as children tend to imitate parent's ways with money.

If this isn't working, there are some tricks that can be used as ways for kids to save. For example, some parents open a savings account for their kids, and encourage them to put money away every month. Every time kids make a deposit, parents can match the amount. That way, a kid who's saving $10 US Dollars (USD) is actually getting $20 USD in his or her account. This alone is often enough incentive for kids to step up their savings.

Other ways for kids to save money focus on parents helping them make cash, so they can learn the importance of hard-earned money. This can be done by "paying" them for doing chores around the house rather than providing an allowance. Parents can also encourage kids to take on additional chores during the summer, and older children may be encouraged to get a part-time job.

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One of the most overlooked ways to save is through investing. Children over 12 are pretty savvy, and they can be taught about brokers, investments, and long-term returns. Equity mutual funds are a great option, as they are easier to understand, and give kids a chance to get involved in the process.

There are many ways for kids to save, and ultimately, whatever works for a child is the right one. The important thing is to get started early and encourage kids to save on a regular basis so they can learn the value of saving and investing.

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Discuss this Article

SauteePan
Post 3

Jahnavipat- I totally agree with you. I just want to say that an easy way for children to invest in stocks by buying shares directly from the company.

This is called a dividend reinvestment plans or Drips. These plans allow investments as small as $10 that actually goes toward equity in a stock purchase.

Most companies have intermediaries that handle these purchases. It is very motivating for a child because they receive statements and information that any stockholder would have. The only thing is that the parent has to sign on with the minor child.

This is how the program works. For example, if the child wanted to buy a share of Coke Cola, they would go to the Money Papers online and type in the symbol KO for Coke Cola.

The parent would then learn that that stock required a minimum investment of $50, along with its current stock price and potential fees. Over time it is among the best ways to save money for kids.

Jahnavipat
Post 1

Each investing by making it part of the "real" world. For most of us, investing is too abstract. There's this undefined "thing" called "the market" that everyone else seems to understand.

So can your child, and at a very young age. In fact, in about the second grade, kids find the concept of stocks very easy to grasp, if they are defined in terms of ownership in a business.

"When you own a stock," you explain to them, "you own a piece of that company, sometimes called a corporation." This is real. And you can make it more real to your child every day.

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