Learning to Earn
May 23, 2012 at 9:18 am in Featured, Featured Personal Finance, Investment and Money Management by mayowa O.
Having a vacation job can be especially important for children as they have so much free time. Are you fed up with prodding and nagging your children to get off the sofa, face book and their I-pods or I-pads for a few hours this holiday? It usually doesn’t work, so you might encourage them to get vacation job during the long vacation.
One of the most precious gifts you can give your children is the true independence they gain when they learn to earn a living. Working some hours a week for at least part of the long vacation provides many benefits; not only does it take some pressure off your finances in these tough economic times, but encouraging them to start to earn, also teaches them how to manage their own money, makes them more mature and dependable and helps them develop a sense of responsibility and self discipline.
The connection between hard work and money
Teaching children about the connection between hard work and the ability to obtain goods and services goes much further than satisfying their every whim and buying them whatever they want. By introducing them to these principles early in life, they may avoid some of the financial pitfalls that so many adults face. These are valuable traits and life skills that will last far longer than any material objects they may purchase.
Children tend to be much more responsible and frugal about money that they worked hard for, than with their “free” pocket money or allowance. What you will find is that when the money comes out of their own pocket they tend to be more selective about their purchases and may be less keen to use their hard earned money to fund an insatiable appetite for technology and gadgets, sports equipment and designer labels.
The value of work experience
Gaining work experience enhances the employability of the majority of students who undertake it. Indeed for many employers those with some degree of practical experience are considered to be more attractive applicants for their job vacancies. Volunteer work and community service teach them chance to add value to their community; it also looks very good in a CV.
The value of networking
By being in a formal working environment, your children will be in a position to form solid business connections and friendships which will be invaluable for their future earning power and their lives in general. If you fortunate enough to have some contacts, assist by making a few calls, not necessarily to get your child a job, but at least to get them a hearing; it is important that they make an effort to make calls, and confidently introduce themselves, so that they don’t feel they must always rely on you for their success.
Encourage them to save and invest
Encourage children to save some of the money they receive from allowances, gifts, or work. The first salary presents an opportunity to teach them the importance of saving and giving. Savings accounts can be opened with relatively low amounts and sometimes offer interesting features such as bonuses or gifts on joining. Whilst such features make saving more exciting, the key concern should be the interest rate and overall performance, whilst ensuring that the funds are placed with a strong and stable institution.
An ATM card is particularly useful for older children, as their ability to physically withdraw money themselves when they need it, makes for a very vivid lesson in money management.
Cash or Stocks?
Help your child establish financial goals and a budget to help meet those goals. As children naturally have the advantage of a long-term time frame, the stock market is a great way to save for future goals. You can introduce children to the stock market by opening a stock mutual fund account that will be funded entirely with their own savings. These pooled investments offer a diversified portfolio and a relatively low entry point.
Children cannot own stocks or open brokerage accounts until they reach the age of 18, but parents can set up custodial accounts for the benefit of a minor; the adult can then sign on the child’s behalf until they come of age. Encourage them to go on line and monitor their investments; from the statements they will learn valuable lessons about dividends or distributions, capital appreciation and so on.
It is not the amount of money your child earns, but the lessons learned that counts. The sense of independence and accomplishment provides a child with a solid foundation for their development and when they leave home, you can be confident that they can step out into the world and fend for themselves.
Photo by: blog.cheetahlearning.com