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The ABCs of Finance: Tips and Tools for Raising a Smart Investor

By introducing sound financial habits at an early age, you'll give your child a head start on the path to becoming an informed investor. Here are some creative ideas, as well as book and website suggestions, for raising a financially savvy kid.

Lessons for every age

  • Toddler: Toys that incorporate counting are a great way to introduce mathematical skills. Building blocks, number magnets, interactive musical instruments with songs about numbers, and stuffed animals that aid in counting are all good options for this age group.
  • Age 5-plus: Board games can make learning about financial matters fun. Try Monopoly, The Game of Life, Billionaire Tycoon, Moneywise Kids, or Pay Day.
  • Age 8 to preteen: At this stage, children often begin building their own personal income from allowances, gifts, or even small jobs, such as shoveling driveways. Since many kids in this age group are Internet experts, online games can be an effective teaching tool.
  • Teenage years: Take your teenager to the local bank and help him or her set up personal savings and checking accounts. This will give your child a sense of responsibility and familiarize him or her with different banking transactions. Plus, banks often offer useful resources geared toward young customers.
  • Off to college: The transition to college typically comes with a whirlwind of credit card offers. Be sure to talk to your child about the pros and cons of using credit. Prepaid credit cards can be a good way to help college students build credit responsibly.
  • Young adulthood: As your child embarks on a career, remind him or her of the benefits of opening a retirement account early. At this point, you may wish to pass the baton to your financial advisor, who can address any money management questions your son or daughter encounters on the road to financial independence.

More resources: books and online games

  • For kids ages 7–12, Neale S. Godfrey's Ultimate Kids' Money Book is full of engaging drawings that help children understand financial concepts through real-life scenarios.
  • Growing Money: A Complete (and Completely Updated!) Investing Guide for Kids by Gail Karlitz and Debbie Honig focuses on investing, so it's most appropriate for ages 13 and up.
  • Written for parents, Yes, You Can . . . Raise Financially Aware Kids by Jack Jonathan features activities that you can do with your child to put financial concepts into practice.
  • One of the best websites for teaching kids about money is, presented by the Monetta Young Investor Fund. The site offers a collection of free online games organized by age group. But remember: although the Internet can be a valuable tool, it's no substitute for one-on-one communication and your own good example.

Start early!
As with many financial matters, the best advice is to start early. The sooner children are introduced to financial fundamentals, the more likely they are to become informed investors later in life. You may even benefit from learning alongside your child!

If there are areas where you could use a refresher, take the time to review those topics as you approach them with your son or daughter. Leading by example makes good sense, no matter what the lesson at hand may be. A financial advisor can help you set the right example for your child and may even join you in fostering his or her financial literacy.

2012 Commonwealth Financial Network