Don't Delay: Consider Making These Money Moves for Your Kids Today

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Every parent aspires to teach their child how to live in the modern world, yet all too often the topic of money is never discussed. We Fools are hoping to change that, as we feel that learning the basics of money management and investing are critical skills that everyone needs to learn, so why not teach your children the basics of money early in life?

We asked our team of Motley Fool contributors to share an idea with our readers to help them give their kids a financial head start in life. Read below to see if you agree with their suggestions.

Brian Feroldi: When I was growing up, my parents taught me the value of savings by helping me open an account at our local bank. I must admit, while it felt like it took forever for us to get an update on our account balance, it always made me smile when I saw that "free money" in the form of interest was being added to my account every 3 months.

While I certainly learned a lot from this lesson, if given a free choice I would have greatly preferred them to teach me more about investing, as if the money that was in my savings account was instead invested in the markets I would have ended up with a whole lot more, and would have likely fallen in love with long-term investing a lot sooner.

I've done just that for each of my three small children, and I've invested a small amount of capital in names that they already know and love. My son loves transformers, so I purchased him a few shares ofHasbro, and when he gets older I'll talk to him about how he owns a tiny bit of the company behind Optimus Prime. My daughter is really intoDisney'sFrozen right now, so I look forward to one day talking to her about how she owns shares in the company behind Elsa and Anna. With a little bit of searching its easy to find an investment on the markets that could make for a great choice tointroduce your kidsto investing.

Of course, I'll also be teaching them about the value of savings and having some money on the side too, but my goal is to get them to love investing in the companies that they love, and I can think of no better way of doing that than gifting them a few shares so we can watch them grow together.

Selena Maranjian:One of the best things you can do for your kids, financially speaking, is to talk with them about money. It's rarely too early to do that, because there are topics appropriate for any age. Most people reach adulthood having learned very little about money, from parents or in school. That's a detriment to their ultimate financial success.

With your kids, discuss your personal finances. Let them see you shopping for good prices and getting good deals. Let them see you paying bills and perhaps balancing your checkbook. They can learn the value of a dollar better if, for example, they come to learn that two pairs of sneakers cost about what a month of electricity does. Discuss topics such as insurance, and how paying, say, $1,000 per year will protect you if you're involved in a car accident, even if the damage is great.

Discuss investing, too. Help them understand the trade-offs between risk and reward how a savings account is quite safe, but won't grow your money briskly, and how investments in stocks can surge or plunge. Open bank accounts for them and even custodial brokerage accounts, when they're old enough to make some investment decisions.

A few shares of stocks in companies they know and admire, such as Apple, Nike, or Starbucks, can help them learn to appreciate how stocks grow. They can enjoy dividends, too.

The Motley Fool's co-founders, David and Tom Gardner,learned about money early, and it served them quite well. They (and I) even wrote a book for young people,The Motley Fool Investment Guide for Teens. It might spark or cultivate an interest in investing. The more money-savvy your kids are, the brighter their financial futures.

The cost of college is rising fast, so it's important to start saving for your child's education as early as possible. And, since tuition and fees at four-year public colleges have increased at an average rate of 4% per yearabove and beyondthe inflation rate, simply stashing money in a bank account isn't going to be enough if you plan to make a serious dent in your kids' college expenses, you're going to have to invest.

Fortunately, there are investment accounts specifically designed to help you save for college costs, the two most common of which are the529 savings plan and Coverdell ESA.

A 529 savings plan allows you to contribute to an investment account that allows you to invest in a selection of funds similar to a 401(k). Contributions are capped, but the limits are rather generous, as the lifetime cap can be in the $300,000-$400,000 range, depending on the state. Unlike a 401(k), however, contributions are not tax-deductible, but withdrawals used to pay qualified higher education expenses are tax-free.

A Coverdell is similar in some ways, such as the tax treatment, but there are a few key differences to be aware of. For starters, with a Coverdell, you can invest in virtually any stock, bond, or mutual fund you want. You aren't limited to a small selection of funds. And, the "qualified expenses" aren't limited to just college any level of education can justify a Coverdell withdrawal. On the downside, Coverdell contributions are limited to just $2,000 annually, so many families use both account types.

Whichever you choose, the point is that the smart move is to save as early and often as possible.

The article Don't Delay: Consider Making These Money Moves for Your Kids Today originally appeared on

Brian Feroldi owns shares of Apple, Hasbro, Starbucks, and Walt Disney. Matthew Frankel has no position in any stocks mentioned. Selena Maranjian owns shares of Apple, Starbucks, and Walt Disney. The Motley Fool owns and recommends Apple, Hasbro, Nike, Starbucks, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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