Get Started…

Convincing children to do anything is challenging, much less convincing them to do so regularly. Developing a saving habit may be difficult for children because they may not understand why there is a need to save since their parents take care of all their needs. Here’s an approach to think about. Just as you save for big ticket items, help your children to set and achieve savings goals. You could make a deal with them for special “nice to have” purchases – for every portion they save, you will match it. That encourages saving and regularity!

Then, Find the Money to Save…

You may be thinking where do children get money to save? Well, as it turns out there are lots of sources. First, cash gifts for birthdays or special occasions can be saved in whole or in part. Second, encourage them to save some of their allowance and lunch money. Perhaps you can tie increases to their ability to demonstrate disciplined savings! Third, other than standard chores, maybe you can offer to pay them for special tasks and then encourage them to save all or part of those earnings. Think creatively, apply some discipline, and your children will easily develop the saving habit.

And Now, Decide Where to Save…

A “piggy bank” is always a good starting place because it develops the habit of putting money aside. Experts say use a clear glass jar so children can see the money “growing” with every “deposit”.

The real benefit to your children will come when they begin to understand the power of compound interest, which is what you can get from a savings account. Don’t forget also that long term saving is rewarded; therefore, it is good to start as early as possible.

Stocks and bonds are two great options that allow you to make investments now that will put you in a position to benefit from huge returns later.

Stocks
A stock is ownership of a percentage of shares in publicly traded company. By owning stocks in companies, you have the right to vote on important company matters such as selection of the Board of Directors. Additionally, stocks allow you to receive a portion of the profits distributed by the company.

There are two types of stocks:

• Preferred Stock – with these types of stocks, companies usually distribute a percentage of dividends each year based on the profits of the company.

• Common Stock – this is usually held by individuals within the public domain. With this type of stock, owners receive dividends based on the remainder of the profits after the preferred stockholders have been paid theirs.

Investing is technically making your money work for you; that is, investing money to make more money. With stocks, as the value of the company increases so will your investment. Stock shares are bought, sold and traded on stock exchanges.

Stocks are usually available through a stockbroker, who will purchase the stock on your behalf, or through mutual funds, which is an investment company that offers and buys shares at the request of the share holder.

Bonds
Bonds are certificates of debt that are issued by the government or a particular corporation, promising payment of the original amount invested at a fixed interest rate, usually by a specific date. They are therefore loans to the government or a corporation, and bond owners are usually paid for providing this loan to the institution. Bonds are one way the government uses to make money.

Bonds are usually bought and sold using institutions such as bond funds, banks, insurance companies or pension funds. Bonds come with a number of advantages that make them attractive to many persons. It is fairly easy to sell bonds and the rate of interest is usually higher than those associated with stocks. Bondholders also enjoy a certain level of legal protection, since it is the law in many countries that if a company goes bankrupt, the bondholder is entitled to receive some of his/her money back.

Ultimately though, both stocks and bonds are risky investments and while they have the potential to produce significant wealth, the investor can also lose a huge amount of his/her investment.

If you decide to invest in either stocks or bonds, it is important for you to seek advice from professional who will be able to advise you about those assets with the greatest possibility for success and those that may be too risky for your pocket. Equip yourself with information to minimize your chances of making bad financial decisions.