The holiday season is fast approaching and parents are considering the kinds of gifts to put into their children's stockings. While giving financial tips to kids may not seem like the most appreciated of gestures, there are negotiable instruments that make good investments and worthwhile presents, such as stocks and bonds.
Long term financial plans should start as young as infancy, with some parents buying life insurance even for youngsters to ensure they have this valuable asset later in life. Other things that are becoming more essential for financial fitness include opening an account for youth savings, teaching children the value of a dollar and learning to live with less. Despite the rebound from the recession, it is valuable for parents to continue teaching their children these lessons.
The gift of preparation
It may not seem like much to open an account and make a nominal deposit right now, but this is one of the easiest ways of showing children how to start building an economic future. As Forbes wrote, fostering the importance of saving money as much as possible in children will help them carry that mentality into adulthood.
As the source stated, saving at least 10 percent or more of all income is one of the best ways of ensuring ongoing financial health in 20-somethings. This may seem like a lot to those in the modern economy, where jobs are still somewhat uncertain and the holiday season could make money tight. Starting with kids, though, it would be wise to encourage them to put as much of their allowance toward their savings accounts instead of toys or treats.
Investment strategies
If parents are worried about the longevity of these kinds of accounts, there are plenty of other options. Since a child will be able to roll over a student saver or similar account when he or she hits 18, these accounts also won't accrue as much as other more aggressive financial plans.
As The Wall Street Journal pointed out, the variety of financial instruments that make good stocking stuffers are as sound as the economic systems they're backed by. Some funds are more stable for long term investments, while others tend to be more mercurial. This is what makes bonds such good gifts, especially for children and young adults, as they have no immediate financial needs to fulfill that could short circuit these investment gifts.