Northwestern Mutual: 5 Gifts for Children That Build Their Financial Knowledge
NEW YORK, November 23, 2021 (Newswire.com) - Northwestern Mutual: Many people's feelings toward money develop in childhood. It's no secret that kids are heavily influenced by how adults talk (or don't talk) about financial topics.
That means parents looking to raise financially savvy little ones may be looking for ways to teach kids about money without breaking out the whiteboard to explain compound interest. Gifts are a great way to do that. Here are 5 gifts for children that help build their financial knowledge.
#1 - A Share of Stock
There's no better way to teach kids about investing than to bring them in on the action. Gifting an individual share of stock can teach a child about the stock market in ways that only a true investor knows. Kids can get familiar with what it means to own stock, how to check the price, when to sell, and so much more.
#2 - Books
Knowledge is powerful, especially for young children who are absorbing the information around them like a sponge. That's why books about basic personal finance concepts can be so valuable. Be sure to find books that are age-appropriate and break down concepts simply for young ones. Then, as children get older, they can be introduced to books that get into higher-level concepts built on the foundation they've already established.
#3 - Contributions to an Investment Account
Starting a college savings plan or taxable brokerage account for kids is a great way to build financial knowledge without outwardly putting money in their hands. These types of investments can help kids learn concepts like delayed gratification and the impact of compound interest when they're old enough to use the money.
#4 - A Life Insurance Policy
A whole life insurance policy for a child is a gift that can keep on giving through adulthood. Since whole life insurance builds cash value and establishes permanent coverage, it presents an opportunity to teach children about the value of planning for the long term. This gift also affords the security of already having a life insurance policy in place, even if health issues arise later.
#5 - Gift Cards
While gift cards might seem like a way for kids to buy things they don't need, they actually afford a unique opportunity to teach kids about personal finance. Children will be faced with the concept of opportunity cost as they realize buying one thing means they can't buy another. Kids will also need to do simple math to determine if their gift card has enough to cover the items they want to buy. If possible, accompany the gift card recipient to the store to explain those important life lessons in person.
The Bottom Line
There are plenty of opportunities to help kids build their financial knowledge. And giving a finance-focused gift is a great way to do that. Consider options like stock, books, gift cards, or look at opening an investment account or life insurance policy to get children thinking about the long-term.
With limited financial information provided in schools, giving kids the opportunity to learn about money at home through receiving gifts is sure to pay dividends as they enter adulthood.
Source: Northwestern Mutual