Making your children learn about money is a critical aspect of their development. Saving for your child at an appropriate age shows focus on your responsibilities for them. Piggy banks and allowances are some traditional ways that help you to have support for your child’s education.
In today’s digital life take us to use credit cards, debit cards or phone payments, rather than cash payments. This will have an impact on your kids, as they are likely to see the use.
And these digital options can prove to be an effective, useful and engaging way to support your child’s financial education during their tween and teen years.
As your children grow up, the first lesson you teach should be TRUE when the topic is about money. But you might feel uncomfortable discussing finances, where to start or how to convey complex concepts. Opening a bank account helps your kid learn about savings and opening simple investment accounts for teens can teach them the basics of investing.
Make a shortlist of stocks or other investments you’re comfortable with and help your kid research among them and choose their favorite.
Then open a low-cost trading account and help them buy stocks. Or open a custodial brokerage account that will be a great start in investment growth. If they’re willing to have patience in invested money for several years, they can get a nice return on their initial investment. Watching their money grow can encourage them to become better investors when adults.
Things to consider during your Kid’s Investment
Choosing account type for your children
To start your kid’s investment, you should first select the suitable brokerage account as per their earned income.
- If your child doesn’t have taxable income: You can open a custodial brokerage account for your kid, under the Uniform Gift to Minors Act. initially the account will be in your name, but as your child turns 18 or 21, depending on state laws, they will have full control over it.
- If your child has taxable income: You can open a custodial IRA, if your child is older and started earning. The contribution your child makes will grow tax-free and can be pulled out at any time. The investment growth can be tapped for retirement and education too.
Choosing the right broker –
You will need to start investing for your kid by finding them the right broker. Look for an online broker that charges no account fees and initiate with no minimum deposit. It will lead your child to start investing with a small amount of money.
To open the account –
You can open both a standard brokerage account and Roth IRA custodial account in just 15 minutes for your child. The entire process of opening the account is completed online.
To speed up things, keep all the necessary information ready beside you. The broker will ask for both you and your child’s information about social security, date of birth and contact. You may have to give your employment details and should be ready to link your brokerage account to your new account, so as to transfer money to fund your new account.
