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110 degrees magazine - Index

110 degrees magazine - magazine - Index

GUEST COLUMN
Ideally, our children should learn good behavior
from us. But when it comes to living within
our means, and saving and investing for
the future, we’re not setting such a good
example.
Consider the following:
Savings are low — The personal savings
rate in the U.S. in 2006 and 2005 was negative
— something that hadn’t happened since
the Great Depression. Thus far in 2007, the
savings rate has crept into positive territory,
but it’s still anemic.
Debt is high — Household debt, as measured
by the ratio of debt payments to disposable
personal income, has reached record
highs over the past couple of years.
Of course, your children aren’t responsible
for our discouraging savings and debt trends.
But if you’d like to help them boost their
chances for achieving financial stability in
their adult lives, you can take a number of
steps, which include the following:
• Reward children for saving. Children,
like adults, tend to repeat behavior that
is rewarded in some way. So, if you want
your children to become good savers,
you might want to match their contributions,
either fully or partially, whenever
86 www.110mag.com September/October 2008
ADVERTORIAL
“TEACH YOUR CHILDREN TO BE SAVERS
AND INVESTORS.”
they put money away, whether it’s in a
big jar or a bank account. Once they’ve
saved a certain amount, you may want
to let them withdraw part of it to purchase
something they want.
• Exhibit restraint in spending. When you
want to teach your children an important
lesson, what you do is sometimes
more important than what you say. So, if
you want to stress the importance of
delaying immediate gratification and
avoiding excessive debts, you might
want to talk about something like your
car, if it’s older, and say you wish you
could get a new one. When your child
asks why you don’t, you can respond
that you don’t have the money for it
now, and you don’t want to borrow too
much money to get one, because that
would just mean a big payment later on.
• Explain principles of investing. Even
fairly young children can typically
understand what it means to invest in
stocks, if it’s carefully explained to
them. Use examples of the companies
with which they may be familiar —
Disney, McDonald’s, etc. — and stick to
the basics, such as the ability of anyone
to own small pieces of these businesses.
You might even decide to buy a few
shares of one of these stocks and, along
with your children, follow its returns.
• Give examples of inflation. If you want
your children to become financially literate,
they’ll need to understand the
effects of inflation. Start them out with
simple examples, such as the cost of
candy or milk when you were a child versus
those costs today. Then, explain that
as the cost of virtually everything goes
up over time, you need to put some of
your money in investments that can
potentially grow faster than the rate of
inflation.
By following these basic suggestions, you
can help your children develop financial
behaviors that can serve them well throughout
their lives. °
Susanna Wahl
Financial Advisor
Edward Jones
613 First Street Suite 203
Brentwood, CA 94513
925-240-9985
www.edwardjones.com