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                                                                                     age six and older. When you show a child on a monthly
     From Pocket Change to                                                           statement how much they have earned in interest – all that



Fortune                                                                              FREE money that the financial institution is giving them
                                                                                     just for keeping their money there – I promise you, they
                                                                                     flip!

                                                                                     Let your children know that they have a gift in abundance
                                                                                     that adults no longer do (kids love hearing that they have
                                                                                     something adults don’t have) - the gift is TIME. As a
                                                                                     child, by not touching the money in their savings account
                                                                                     for a very long time, they earn interest on their money,
                                                                                     PLUS INTEREST on the “FREE” money that has
                                                                                     accumulated, and then MORE interest, and MORE, and
                                                                                     MORE… voila! Time is their advantage.

                                                                                     The two key components to building wealth - earning
                                                                                     interest and compounding - are defined instantly for your
                                                                                     child as they learn in very real terms and by their own
                                                                                     experiences that there is a concrete reward for them that
                                                                                     will benefit them now and in the future. Even if your
                                                                                     kids are too young to understand the stock market or grain
                                                                                     futures, in this real life way, they can and do understand
                                                                                     that the answer to the “how do I get more” question is to
                                                                                     invest their money in an account that grows over time.
                                                                                     They also learn that they must start when they are young
                                                                                     and leave their savings alone.

                                                                                     The power of having your money compound over years and
                                                                                     years can be illustrated by many online calculators where
                                                                                     you enter monthly deposits and check out how it will
                                                                                     multiply. One of my favorites is http://www.moneychimp.
                                                                                     com, which has a visual graph for you to see how money
                                                                                     will multiply over time.

                                                                                     Create the habit of saving money and set your child on the
                                                                                     road to wealth. Remind your child that no matter how
                                                                                     much or how little they have to work with, saving a dime
                                                                                     from every dollar they earn or are given as a gift is a good
                                                                                     plan (saving 10% of even modest earnings and allowing it
                                                                                     to compound over an entire lifetime will almost certainly
                                                                                     build a path to relative wealth). Time is on their side!



                                                                                         Brain teaser:
                                                                                         How many doublings of a dollar
                  The secret is time.                                                    does it take to get to a million
 by Megan O’Neil-Haight
                                                                                         dollars?
 “H
             ow do I get more money?” This the number one question kids have
             for someone who tells them that they teach about money.

                Kids want more money so they can spend more money. When you              [Ex. 1 to 2 (one doubling), 2 to 4, 4 to
 tell a child that the way to have and get more money is by SAVING , they are            8, 8 to 16 (four doublings), 16 to 32,
 normally dumbfounded. This is not the answer they expect to hear. However,
 when you show children how much money they can have down the road, the                  32 to 64, 64 to 128, 128 to 256 (eight
 excitement builds!
                                                                                         doublings)]
 The two most important concepts in creating wealth are investing and                    find answer on page 50.
 compounding. Most kids, and a lot of adults, do not know what investing and
 compounding can mean to them. If we take a little time and explain these two
 concepts, our children will become more interested in saving their money.
                                                                                     Megan O’Neil-Haight is Family, Youth & Communities Finance
 Explain that banks, credit unions, or online savings accounts actually PAY you to   Educator for Maryland Cooperative Extension and serves Wicomico
 allow them to keep your money safe. This is truly an awesome notion for anyone      and Somerset Counties. To contact Ms. O’Neil-Haight, e-mail her
                                                                                     at oneil@umd.edu


18   january / february 2007

				
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