Start ‘Em Young: 5 Wealth Building Tools For Tots
It’s never too early to start teaching your kids about money. In fact, it is even advisable to start as early as possible. Take stocks, for example. If you invest P25,000 when you’re 25, (and invest the same amount annually hereafter), and managed to grow it by 4% per year, by nature of compounding interest, you’d have earned a million (on interest alone) by age 60. How much more earnings could your kids have if they start investing at 7 or 8 years old?
You can teach the little ones the whys and hows of putting away a portion of money they’re receiving from their baon, gifts from their ninongs and ninangs during their birthdays and Christmas, and from the coins they’ve earned from doing chores. Making them understand the value of money is essential in keeping them grounded as they grow older. As a parent, who always wants the best for your children, you can do so much more than just putting these little savings in a porcelain piggy.
You’d be surprised by how many financial products and services are available made especially for young Pinoys. Here are 5 tools to help your child kickstart building their wealth.
1. Open their own deposit accounts
Majority of banks have a savings account dedicated to children which you can take advantage of: BDO Junior Savers, BPI Jumpstart Savings, Metrobank Fun Savers Club, UCPB Kiddie Max savings account, Eastwest Bank Cool Savers Kiddie Account, RCBC Wise Savings account, and more. Some of these accounts even allow children from 0 years to apply, with a guardian in tow, of course. You teach them how to be responsible for their finances, and at the same time, save for their future!
2. Dream job role-play
Aside from board games such as Monopoly or Praxis where children can learn about taxes, expenses, savings and the like, a newly-opened play city called KidZania takes learning to another level by letting kids be grownups for a day and run a city (complete with paved streets, a transport system, and a functioning economy). Kids can learn how to handle money and appreciate its value using KidZania’s currency called kidZo, which they can earn by working jobs around the play city. And much like in a real economy, kids will be able to spend their kidZos to pay for products and services, or save it in banks.
“Each establishment is sponsored by a leading industry partner that provides technical expertise and know-how to each activity. The industry partners help guide the content with real life business practices – making the activities as authentic as possible,” KidZania said. To learn more about KidZania, visit http://manila.kidzania.com/en-ph/
3. Start and run a business
Yes, your child can do it and more (with your blessing and guidance). Small business ideas like a juice stand or selling ice to your neighbors, which your child can prepare and sell themselves can be a good starting point to instill the entrepreneurial spirit in them. Go further by introducing them to bazaars. Occurring during summer and the Christmas season, Kiddo-preneur, for example, is a bazaar held exclusively for bizkids. Here children can peddle knick knacks, snacks and other items in exchange for real cash. Another bazaar, this time for moms called ExpoMom (formerly Mommy Mundo Bazaar) also feature booths and small businesses which are ran by children.
4. Open a mutual fund account
Investment companies Sun Life and First Metro Asset Management allows you to open a mutual fund account for your children. Because they’re under legal age (18 years old), the account would be under your name and considered “in trust for” (ITF) your child until they reach maturity. You can teach them how each type of fund differs from one another and help them choose which one they’d like to apply for. You can place your child’s profits (from their mini business) here instead of a savings account to let it earn more.
5. Trade stocks
Yes, you read right, your children can start trading stocks. To quote AB Capital Securities, “anybody can open an account… even a child.” For a minimum of P10,000 and P5,000, you can open a trading account for your children at AB Capital Securities and COL Financial respectively. Similar to mutual funds, you’ll handle your child’s account which will be opened ITF and under your name until they reach legal age. You can start teaching them about public ownership and that they too can be part-owner to their favorite companies. As we mentioned at the beginning of the article, your children can reap higher returns the earlier they start investing.
Of course you’ll need to guide them very closely so they’ll understand what exactly goes into share trading. They’ll definitely learn the importance of understanding people and companies as well as the value of patience.
You can also enroll them at seminars or classes similar to The Philippine Stock Market School’s Stock Market for Children which teaches children to appreciate and how to save and invest in the stock market. You can learn more about the seminar at http://www.stockmarketschool.com.ph.
Time is your child’s most valuable asset, so make them aware of this advantage as soon as possible. It’s never too early to teach investing when it comes to their future. So start them early, and young.