5 Gifts That Teach Kids About Money

Parents have been trying to teach kids about money in clever ways for ages. Take the old standby: allowance. I remember doing chores around the house to earn my weekly allowance as a kid. Now that I’m an adult, those early money lessons have come in handy.

But manual labor isn’t the only way to get your kids excited about personal finance. You could dress up those money lessons with a ribbon and bow — or put them in a stocking this Christmas.

Here are a few gift ideas that might teach your little ones the value of a dollar.

1. Give them stocks

When you’re an adult, any stock that performs well is exciting. Kids tend to care more about brands they recognize than return on investment — so when you pick investments for them, pick from companies that make or sell what they’re into. For example:

  • Your kid loves video games? Nintendo (NTDOY) is a publicly traded company.
  • A sports fan? Look into Nike (NKE).
  • Love Disney movies? Give the gift of Walt Disney (DIS) stock.
  • Have an army of Barbies in your house? Think about Mattel (MAT).
  • A fan of Happy Meals? McDonald’s (MCD) could be a good choice.

The bottom line: Whether it is food, a hobby or a clothing brand, your kid will care a lot more if the company makes something they understand and can personally relate to.

2. Help fund a Roth IRA account

A Roth IRA account will earn compound interest your kids can use for college or in their retirement years. As we have explained in the past:

When you contribute to a Roth account, you don’t get a tax deduction. But you don’t have to pay taxes on your withdrawals in retirement. So by skipping the tax break during your working years, you get tax-free money when you take it out.

Just note that your child will need to have earned income in order to qualify to make a Roth contribution.

3. Start a college savings account

It’s never too early to start saving for college. Open a 529 college savings account for your kids and help them understand how the different potential investments work and potentially compound.

If a child is old enough to work, ask him or her to start contributing to the account. Doing so teaches the lesson of saving up for something that will pay off for many years to come.

4. Purchase a bond

When you invest in bonds, you loan money to a private company or government agency. The money you loan earns interest, and after the loan matures you get the money back.

These investments may not have the excitement of stocks, but they tend to be safer and easier to understand. Read more about savings bonds offered by the U.S. government at TreasuryDirect.

5. Buy a board game

Some board games can teach great lessons about money. Monopoly is the obvious choice, and a good one. But you’ll also find other money-related games on the store shelves, including Payday and Money Bags.

While gifts that teach money lessons will never have the same cache as the toys advertised on TV, they can be exciting. And the best part: no batteries or assembly required.

Do you have gift ideas that can teach kids about money? Share them in comments below or on our Facebook page.

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