Most every parent would love to instill in their children the expectation that they will go to college. I have a simple method that will help plant the idea in your child’s head, while exposing them to the financial world in terms that an 11-year-old can understand. Let me explain:
When each of my four children were born, I opened up a custodian account in their name and began saving and investing for their college. For more than a decade, I have managed to sock away about $50 per child twice a month. Though his freshman year of college is still a ways away for my 11-year old, I recently began printing off his Fidelity statement every so often (usually when the market is up) and showing him exactly where his future college tuition money is invested and how it is faring. I also remind him that this money is not for freespending on a Corvette if he ultimately decides college is not his cup of tea.
I do this for him and his younger siblings for three reasons:
1) it puts the idea in his head that his parents are laboring everyday to prepare him to go to college, hopefully raising the probability that he actually will do hold up his end of the bargain when the time comes.
2) get him more interested in his own financial future, and to understand that it is somehow tied to General Electric, Microsoft, and the Chinese state-run oil company, PetroChina. As a result, he spends a little more time than the average rising sixth grader paying attention to news about the stock market and GE commercials on tv.
3) It allows him to see the big picture, namely how doing homework and getting good grades now in elementary school is an integral part of a larger overall plan.
The next step is for him begin making a few of his own make stock picks. I don’t expect him to be an ace stock picker (he’ll probably want to go all-in on Krispy Kreme or Toys-R-US), but I do anticipate that his interest in tracking his finances will increase if he feels more a part of the process. And when he finally packs up and goes to college someday, he will feel that his stock picks–if successful– had a hand in getting him there. My dad–whose parenting strategies are often brilliant and easy to rip off and use on my own kids–did a similar thing for me. I made one great stock pick when I was little and felt pretty good about it, and still remember it to this day.
In this economy where high school diplomas don’t cut it anymore, giving your child both a simple lesson in finance, another reason to get good grades now, and an increased expectation that they will go to college is a smart strategy. And it is well worth the possible stinker stock picks your kids might make along the way.