This holiday season, why not give something to your children that can make them wealthy?
While these gifts may not bring the instant screams of joy that a new video game or other trendy toy may produce, over the long run these personal finance gifts -- and the lessons that they teach -- could become among the most memorable and appreciated.
If you really want to help your kids learn to become wealthy, here are a few gift ideas:
A smarter piggy bank
: Piggy banks are a great way to help teach your young kids to save, but why stop there? Why not take the concept a step further and introduce what can be done with the money that is being saved? That is exactly what the
Money Savvy Pig
does. Instead of a single slot on top that places all the coins into a single chamber, the money savvy pig is divided into four chambers: save, spend, invest and donate. This way you can teach your kids that the money they save can go toward a variety of goals.
For teens who find the piggy bank a little too childish, you can get the
as a gift. It's a personal finance organizer for older children with basic money tips to help young adults make the best use of their money.
A trip to the bank
: Once kids begin to save money in a piggy bank, the next step is to get them their own bank account. One of the best ways to do this is to open a special kids' savings account. These accounts are created by banks and credit unions to encourage kids to save. Many have special features that a normal savings account won't have. For example, they may come with some extra material that will help teach your kids about saving, or they might come with a special interest rate as high as 10%, like
from Ventura, Calif.-based Affinity Bank. Contact you local banks and credit unions to see if they offer a special kids' savings account.
If you find an account that makes sense for your children, don't open it for them. Simply write a small check as the gift, then take them to the bank and have them open up the account themselves and deposit it. The more you let them do, the more they will learn and the more comfortable they will become using banks.
|| Jeffrey Strain suggests giving your kids investments for the holidays. Do you consider that a gift?
: If any of the money that your children receives is earned income, opening a Roth IRA in their name is a great way for them to learn about long-term investing and compound interest. Roth IRAs can be opened with as little as $100, and even small amounts deposited by your kids can add up to a nice retirement nest egg over time.
One problem, however, is that your kids will probably be as excited about investing their money in a retirement account as they would be about having you tag along on a date. One way around this obstacle is to create a parent-financed 401(k) plan. Just like a company-sponsored plan that matches a certain percentage of your 401(k) contributions, promise to match every dollar that your children put into the Roth IRA. Getting this extra money should help encourage them to save part of their earnings. It will also teach them the value of participating in their company's 401(k) when they get their first job.
: Another investing option is to have your children pick out some of their favorite companies and purchase stock. Since it is a business they are interested in, your children are more likely to follow it. This will give them training on how the stock market works and give you plenty of opportunities to teach them along the way.
Donate to micro loans
: While teaching your children about the benefits of giving away money may not seem like a way to help them become rich, there is a connection. Aside from the obvious benefits to society, charitable giving is part of tax planning for most wealthy individuals.
Getting your kids into the habit of sharing their money with the less fortunate or with other charitable causes will give them a lesson that will serve them well down the road.
|Best Savings Rates for Selected Metro Areas
--includes banks and credit unions
--not including Internet banks
--based on $2,500 investment
--For more rates, see bankingmyway.com
While there are a lot of great charities out there that you can help your children choose from when it comes to donating a portion of their savings, donating doesn't mean they have to give the money entirely away.
allows you to give money that will be used for micro loans for individuals in poorer countries and even earn a small amount of interest on the loans given. This is a great way to donate, because the money will come back, and the child can choose whether to donate the money again or use it for something else.
For those who want to make micro loans on a more personal level,
lets you choose a specific individual to lend to, although there is no interest earned on the loan. This allows your children to give over and over again.
The last thing you need to teach your child about is spending -- which your child will likely have no problem learning in today's society. If you teach your kids the other three areas, however, the spending will likely be a lot less impulsive and more well-thought-out, better preparing them to go out into the world on their own.