Parents should talk to their kids about finances

Parents report importance of talking to kids about money

Posted on 10/25/12 12:23:00 PM

According to a recently released national survey that was conducted by Ipsos America, which is a leading market research company, nine out of 10 American parents believe they are important resources in teaching their kids about basic savings and money management.

The survey also showed that less than four in 10 parents talk to their kids about money management on a weekly basis, which can be important to the financial well-being of kids in the long run when they consider the tips that their parents taught them when they were younger.

Tips were recently offered to parents on how they should teach their children about saving and investing, whether they are young or graduating from college and starting their first job.

For those who have children between age 5 and 9, it's suggested that parents explain to them why saving and investing is important in life. This is especially important considering the recently experienced conditions during the economic downturn in which Americans who had properly saved had more cushion than those who had not.

Those in the 5-9 age range should also be introduced to the concept of having a bank account, as money in a bank account earns interest.

For those with children between the ages of 10 and 12, once the basics are in place, they should educate their children on the concept of risk and the importance of having a balanced investment portfolio by using a language they understand, staying with simple concepts.

For those who have children between the ages of 13-19, they should have their kids invest a small sum of money in a few stocks that were previously being tracked, and possibly match any gains the child makes in their stocks. Parents should also consider setting up a custodial account that their child can contribute to as part of his or her savings.

According to Forbes, many parents were raised to not talk about money, but they should change their mindset for the sake of teaching their children good money management habits to prepare them for the future.