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Dear Parents, This is What Your Kids Want to Learn About Money

October 13, 2020

By

George Altawil
“The greatest gifts you can give your children are the roots of responsibility and the wings of independence” - Denis Waitley

The “American Dream” is changing for Gen Z. It's a generation of frugal, motivated, intelligent hustlers eager to tackle the world, They don’t want to sit in school and learn basic skills, they want to become entrepreneurs, and create solutions for any problem society faces today. Information and education move faster. Middle schoolers crave information that previous generations learned in college. Your kids don’t want to struggle when they become independent, so your job is to prepare them for their upcoming future. Gen Zers want to learn, and here’s how we can help:

Investing

Why are people investing when they are 30 or 40? Why did it take them more than a third of their life to start saving for retirement? Kids want to learn about  Roth IRAs, and have their parents set up accounts for them as soon as they’re born! Investing early and often in a custodial brokerage account with your child and teaching them about the power of investing creates large opportunities for your child leading into the future as well as gives them the skills to succeed financially long term.

For example, if you created a ROTH IRA for your newborn baby, invested the full $6,000 into the account every year, with an average annual growth of 8%, and your kid would continue to invest the $6,000 once they turned 18, your kid would approximately hold over $11 million dollars in their portfolio by the age of 65. 

If your child decided to create a ROTH IRA for themself at the age of 30 because they were just taught about investing, depositing the full $6000 into the account every year with the 8% average annual growth, your kid would approximately hold a little over $1 million dollars in their portfolio by the age of 65. Your kid is potentially losing over $10 million based on your actions.

Your kids are relying on you. Teach them the power of compound interest.

Credit and Debit Cards

As parents, you understand the risks that come with credit and holding heavy balances. When you teach your kid the importance of smart spending, they’ll be better prepared for when they go shopping for their first credit card. Teach them the basics of credit scores and how debt works, which will then provide them a ton of support in the long run when they try to buy their first house.

Taxes

Most kids up to the age of 20 still don’t understand how taxes work. As something that’s considered annoying and inevitable, it’s best to teach your children about taxes so they won’t have to run into any potholes in the future. The majority of schools won’t teach your kids, so it’s best to sit down with your kids and have a casual discussion on the importance of taxes and how the different types of taxes work. If it involves money and helping their future, Gen Zers are ready and eager to learn.

Mortgaging and Loans

As parents, you probably pay the mortgage for your current home, and for some of you, are still paying off your student loans. Teach kids that the liabilities and risks of holding any kind of debt can be highly volatile, so its best to help them understand how loans work.

Proper Banking

Do your kids understand how checking and savings accounts work? Does your bank require any minimums and charge heavy fees? The more your kid understands their bank, the more your kid will put their money into. Research the best banks to issue your child’s first debit card, and continue to research for when your child becomes old enough to shop for their first credit card.

Overall, the more your kids understand how money works, the more it’ll incentivize them to start saving and investing. Avoiding to discuss these important financial topics can promote the idea of impulsive buying and could create heavy balances in the future. Gen Z is relying on you, so be the person that helps create success for this generation.

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