As parents, we shape our children’s understanding of the world, and that includes money. Kids are like these fast-learning sponges, absorbing everything we do. If they see us treating money wisely, they’ll pick up those habits. But beyond just setting a good example, we can actively involve them in managing their money. Whether it’s through watching us or through more hands-on guidance, we give them tools to secure their future.
Every family is different, this is how my partner and I are planning to tackle investing for our child.
Set our goals
Before you start, think about your goals. Are you putting money aside for their education, helping them with a future property purchase, or giving them a financial cushion at a specific point in time? Whatever your plans, having clear goals will shape the investment timeline. Or maybe you don’t want to give them anything monetary, but more teach them ‘how to fish’ by involving them in the investment process instead.
Long-term investments can handle ups and downs, and the longer the time horizon, the more potential there is for growth, not to mention my favourite – compounding over time. If we looked at the ASX 200, there have been an 8.8% return in the last 10 years. There are also high savings accounts and term deposit if you’re on a time crunch.
Get the kids involved
Make it a habit: Just like brushing their teeth, regular investment discussions should be part of their routine. Help them track prices, monitor performance, and make decisions. Over time, this habit will build their knowledge.
Keep it simple and relatable: what if your child love Disney? Or maybe they’re into the local supermarket where they shop with you? You can make investing relatable by explaining how you can invest in companies they know and like.
Teaching through real life
I have always been a bit hesitant about giving kids pocket money, but I’m starting to see the value. By using actual money, you can work with your kids and allocate it to spending, saving, and investing. And once they’re old enough to get a part-time job, this can be extended with helping them to manage their own earnings.
A tricky one might surface where if your child put their money into investments and it lost value. For a child who might have spent months saving, this can feel devastating. How can we be mindful and use this as a teaching moment to prepare them for the real world of investing?
By starting early, you can give your kids a head start in building a financially secure future. Whether you’re putting money aside for them or actively investing together, the lessons they learn will last a lifetime.