cartoons all the aspects of the value of money, saving and investing.

4. Teach them practicing the different aspects of money

Your children are still at school and have no income. It is recommended to give them tasks to earn money; this can be some household tasks, working in the garden, washing the car or some other easy tasks which may help you. It is not wise to reward them for every task they do for you because they will consider it as normal to receive money for every help. You just need to teach them to work for money with the purpose to save this money.

Spending is another aspect of money. It is a good idea to go shopping together and explain them which goods they need to buy. Explain the advantages and disadvantages of these goods and teach them to understand if they really need everything they want to buy. It is necessary they understand that they can't spend all the money they have; a certain percentile needs to go to savings or investing to build up an income for certain goals in the future, for example buying a car, a house, unexpected expenses, an extra income for retirement, medical expenses etc.

You need to teach them it is best to save as much as possible but you don't need to disallow to purchase everything they like for entertainment. They may buy from time to time a CD, a DVD, a book, a game or anything they like but they need to be aware that they have enough money to save or to invest.

5. Teach your teenagers to invest

Once your children become older and earn money through for example part time jobs or vacation jobs you can teach your children the different aspects of investing. It is best you explain first issues like inflation, deflation, demand and supply because it's essential to understand why they need to invest.

You can explain the difference between stocks, bonds and other assets and the risk these financial instruments have. It is maybe not a good idea to teach them practicing buying stocks and bonds because the risks are too high for teenagers. It can be wise to teach them to invest a certain amount in mutual funds through systematic plans for mutual funds. This option is often the safest way of investing and can reach higher returns than savings accounts or buying one mutual fund at once. The advantage is that you don't buy always on a peak price.

Teaching your children about how to make investments is one of the most important things you can teach your children. It is the basic for their future and explained by the words of Ben Franklin:" An investment in knowledge always pays the best interest". You can best answer all the financial questions your children have and it is worth your time to help them and they will be thankful because you gave them the possibility to reap the financial benefits and avoid financial disasters.

Learn more about this author, Erik Van Tongerloo.
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