A bit of inspired forward thinking by my grandfather sparked my interest in the financial services field and stayed with me into adulthood, even leading to a career. He gave me my first subscription to Kiplinger's Personal Finance magazine when I was a boy. He also bought mutual funds for my brother and me, figuring that these investment vehicles would give us a good hands-on lesson in how the market works.
Sadly, those mutual funds performed incredibly poorly, and fees pretty well ate up the account. Bummer, I know.
But here's the thing. Despite that less-than-stirring initiation into finances, I was intrigued by what I learned reading the newspaper each day to see how my investment was doing.
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I think a lot of children today would be just as fascinated as I was. I also believe that, if you want your children or grandchildren to handle their money wisely when they reach adulthood, now is the time to instill the right money-management lessons in them. If you wait until they're ready to leave for college, then you may be too late.
This doesn't have to mean lengthy, complex lectures that will leave fidgety 7-year-olds wondering when they can get back to the Cartoon Network. You can even make it fun and somewhat informal. Here are a few suggestions on how to get started:
1. Tell your story.
It seems simple, but one of the best things you can do is make it personal. Sit down and talk with your children or grandchildren about your investments and how you make investment decisions. People think kids don't understand this sort of thing, but, if you put in the time to explain it in simple terms, you'd be surprised at what they can understand.
2. Introduce them to online resources.
Show them how to use platforms such as Yahoo Finance or Fidelity.com. They can get a wealth of information from such sites.
3. Encourage them to buy stock in a favorite company.
I've done this with my 10-year-old son, who chose to invest in Disney (symbol DIS) right before the last Star Wars movie came out. He's shown great interest in what's happening with the stock and already understands yield. My 8-year-old daughter, who's a fan of My Little Pony, wants to buy stock in Hasbro (HAS). If the stock matches something children already are excited about, it's much easier to keep their interest in what could be, in their view, a dull subject.
4. Read with them.
Recently, I read a book titled The Richest Man in Babylon, by George Clason, and now I am sharing the audio version with my four children. The book is a series of parables about money, and though the book is set in ancient Babylon, the lessons in those parables apply just as well today as they did thousands of years ago.
Think about that. We have a better chance of avoiding a lot of money mistakes if we take heed of the financial lessons our ancestors learned long before we arrived on the Earth. Better yet, we can pass those lessons on to the next generation so they don't make the same mistakes we did.
Eric Mattinson is an Investment Adviser Representative with Semmax Financial Group Inc. in North Carolina. He is a licensed insurance agent, holds his Series 65 securities license and has earned the Registered Financial Consultant (RFC) industry designation.
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