Kid's Investment Account as Tax Savings Tool
Nowadays, many parents worry that their children are going to spend all of their hard-earned money on fancy clothing, expensive gifts, and junk food. That didn't used to be a problem: When I was a child, we lived in the same house for years, didn't have cable television or cellphones, and rode our bikes to the stores. We enjoyed a nice home-cooked meal, but we certainly didn't have any extra money to spend on luxury items. My parents never had to worry about saving for my college education; my sister and I got free tuition at our state schools.
The situation is quite different today. Now you need to save for virtually every purpose, from retirement to your children's college tuition. And you can't count on the government to help out; it's up to you to save as much money as possible. So it only makes sense for you to consider opening some kind of account for your children and to start contributing to it as soon as feasible.
Kid's Investment Account as Educational Opportunity
It can be a bit nerve-wracking to teach kids about money, because everyone worries about exposing children to concepts before they can fully comprehend them. And we all know how quickly kids pick up on the more subtle nuances of life.
Still, at some point, most parents are going to have to tackle the delicate issue of helping children learn how to manage money. You can start from a young age by teaching them about saving versus spending, interest, counterfeiting and risk taking.
Help Your Kids Develop a Healthy Relationship with Money
Although it can be tempting to start kids off with a full-on resume of financial instruction, the smarter option is to start slow. Depending on how old your child is, you can take baby steps or giant leaps.
The first thing you want to teach your kids is that money, like most things in life, is based on a concept of fairness. Just because you have enough money to pay for a car doesn’t mean that you should. At some point, you’ll have to pay it all back.
And if you can’t get a loan, then you won’t be able to get the car. The important thing is to teach kids to look at money as something that must be earned and not as something that will automatically appear if you need it.
The Perfect Age to Open an Investment Account
Some people are taught about money and investing from a young age, while others are never taught anything about it. It is up to you to decide if you want to teach your child about money.
Kids will naturally have an interest in money as they grow up. With this article, you will be able to help your child get in on the game when he or she is young.
Where Should I Put Money to Earn Interest?
If you would like to start teaching your child about money, there is a perfect way to do so, and it starts with a savings account.
Most kids of this age have no idea what an interest rate is, or what interest is. Luckily, they won’t have to care about the interest rate, because they will not be depositing any money. We will be choosing a savings account that charges a zero interest rate.
We do not want your child to start adding money to an account, only to have you withdraw it. There will be enough temptation for your child to find out how they can access their investment later on in life.
It is a good idea to open a savings account for your child, because it will get them used to the idea of saving and investing. A savings account is also a great activity you can do with your child to bond and discuss money.