Saving and Investing: The Art of Planting Seeds for Financial Success

Graphic of stacks of coins growing taller superimposed with a growing seedling

On the hunt for kid friendly finance lessons? Even if you’re not in search of supplemental learning activities now, these evergreen ideas are ready to pull off the shelf whenever you think it’s feasible. Remember, you’re planting seeds -- see how I tied that to my title? — for a successful financial future.

Let’s dig into saving and investing. With this lesson, you’ll explore basic savings and investing techniques, along with the miracle that is the power of compounding. OK, it’s a lot for one course, but the season of learning never ends.

Start with classroom work focused on income -- and what happens to yours each month: housing, utilities, household expenses, transportation, and ultimately, the importance of carving out a slice for saving and investing. Don’t forget to mention and share examples of how you make your saving automatic.

This is a great follow-up to your budgeting exercise and a wonderful time to bring up the concept of an emergency fund. Hopefully, you can highlight the need with a real-life example of how having some cash set aside has kept you out of financial hot water.

Then, demonstrate how your kids can divide their money into “now” (charity/fun), “near-term” (savings account) and “later” (investments) buckets of money. Encourage the later bucket by matching their contributions from allowance, gifts or work. We generated some enthusiasm for saving by matching all our kids’ savings right up until they left the house.

To help these principles stick, make it fun. Give them an imaginary $1,000, and let the games begin. Explain the basics of investments (stocks, bonds and cash). Remind them when you discuss investing, you’re discussing the “later” bucket of money described above. You may do a little online research yourself, so it can be mutually beneficial. And no class on saving and investing would be complete without an in-depth study of compound returns. Again, there are plenty of online tools and calculators to help you illustrate how a little bit of savings can compound into a big strong tree!

Through these discussions, I hope your children will start to form savings habits — as well as the understanding that there’s beauty in treating yourself, stashing for tomorrow, and investing for the future, even at an early age. Play money or not, it’s never too early to start learning about risk.

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