Investing For Your Kids: Introduce ‘Savings’ To Your Toddler’s Vocabulary

Years ago I met a 13-year-old girl who managed her own RRSP account, college savings fund and more. She was a dynamo and, I suspected, totally unique. But then I did a little research and I learned she wasn’t the only kid around with an investment portfolio and a keen interest in her financial future. Go figure.

Those were the heady days of the early millennium. But even in today’s dismal economy I’ll bet you that girl has graduated, with money to spare. The dearth of jobs out there likely isn’t troubling her much, and I’ll be damned if she’s been forced back into her parents’ house. Early investors tend to buck the grim trends of a downturn.

She was lucky to have been squirreling away her cash during the boom. But in fact now is just as good a time for kids to get on the investment ladder by buying low – with a parent’s help, of course. Not that I’ll be much help, mind you. I’m just hoping my mother’s eye for a good investment is a talent that skips a generation.

No, our kids couldn’t have asked for a worse pair of role models in my husband and me, but we’ve tried to pull ourselves together for the sake of future family fortunes. We had some early motivation in the form of a government check. In the UK, where we live, babies are awarded the modest – yet not insignificant – sum of £250 at birth, to be invested in a fund in the child’s name. (We were lucky, it turns out; the new Conservative government recently scrapped the bonus.)

So, after the baby haze faded away, we did the deed and opened an account – and worked on a schedule of regular deposits. Now that our older daughter is beginning to emerge from toddlerhood, we’ve begun to introduce savings talk to her vocabulary. When we shop for clothes and toys, for instance, we’ll put back roughly a third of the items at the till, tally up their value and deposit that amount into her new savings account, shifting it occasionally into her investment fund. So far we’ve had no complaints – all she really understands is that she’ll “soon” have “more.” As long as she remembers “soon” is not “now,” we’ll be okay.

When she enters the first grade we’ll start giving her a monthly allowance, whatever the going rate happens to be, then give a third of that back to the bank, too. Ditto the returns from her first jobs. When times are good for us, financially, we’ll try to match her contributions and watch the account grow together. And grandparents, if you’re listening, you’re more than welcome to add to the stash.

The book Investing for Dummies has a glossary of investment terms even I can’t define (though that’s really no surprise). We’ll start reading that together in time. It’ll be like the blind leading the blind – but that can be fun, no? Maybe eventually, my efforts with my daughter will start knocking some sense into me. I can imagine the lectures she might deliver. “Pull up your socks!” she’ll say. “It’s never too late.” And I’ll have nobody to blame but myself.

Still there’s no better consolation than a pile of cash.

(Photo: Brand X Pictures)