Kids, Saving is for Suckers! Financial Literacy 101 for Kids Starts NOW! By Noel Scott

Do I have your attention? Financial literacy 101 for kids starts now! The biggest fallacy I too often hear from parents trying to educate their kids on financial prudence and responsibility is that saving is what will keep them from financial struggle! Save and you’ll be ok! Save and it’ll make life easier. Save, save, save….wrong!!! Financial literacy 101 starts now!

Ok, maybe I’m going a tad too far, but I would like to offer that that is only a small part of the equation to financial security, success and ultimately, financial independence. Who doesn’t want that? I say, save to invest is the essential part of building wealth and securing your financial future. We teach our daughter that building wealth is time honored and largely reliant upon thoughtful choices. While saving is important, investing can help you grow your money over time and achieve your long-term financial goals. Empower your child with knowledge about how the financial world works and if you cannot, lean on someone who can. Time is of the essence, you should have a compounding interest in this: see what I did there?! Here are a few reasons to help your kids understand why investing is so important: 

1. Investing can help you beat inflation

Inflation erodes the purchasing power of your money over time. If you only save your money in a bank account, the interest rate may not be enough to keep up with inflation. However, by investing in assets that appreciate in value, such as stocks or real estate, you can potentially earn a return that exceeds the rate of inflation.

    2. Investing can generate passive income

One of the key benefits of investing is that it can generate passive income. If you invest in stocks, for example, you may receive dividend payments on a regular basis. Similarly, if you invest in rental property, you can earn rental income each month. This passive income can help you build wealth over time and achieve financial independence.

     3.  Investing can help you achieve your long-term financial goals

Whether your goal is to save for retirement, buy a house, or pay for your children’s education, investing can help you achieve these goals more quickly. By investing in assets that appreciate in value, you can potentially earn a higher return on your money than you would by simply saving it in a bank account.

    4.  Investing can help you build wealth

Investing can be a powerful tool for building long-term wealth. By investing early and consistently, you can take advantage of compounding returns and potentially grow your wealth over time. This can help you achieve financial security and freedom.

In conclusion, while saving is important, investing is what is needed to secure your financial future. By investing in assets that appreciate in value, generating passive income, achieving long-term financial goals, and building wealth, you can achieve financial security and live a more prosperous life. So kids, don’t just save your money, invest it wisely!

Noel is a serial entrepreneur, attorney trained in wealth preservation and transfer, owner of a multi-unit tax business, former High Net Worth Wealth Manager at UBS Financial in Washington, DC and Morgan Stanley Miami, FL and real estate investor.