I am excited to be part of a new site: www.savvyauntie.com. I wrote this article for them. There are some great suggestions for dealing with kids and money, whether they are your kids or someone you know.
Your niece is turning 10 and you want to give her a gift that will last longer than the latest High School Music DVD. Giving cold hard cash can be impersonal and buying a share of IBM stock is reminiscent of our parents’ generation. So what kind of gift can you give that doesn’t have too many strings attached but also increases their money know-how? Tired of giving a Treasury bond or $10 in an envelope? Read below for a few updated suggestions.
Donating Together Most little kids have a piggy bank or a charity box in their room in their room. They might already be saving coins towards their favorite charity. However, they are probably far removed from the charity itself. You can help them get closer by emptying out the piggy bank, matching their coin stash, buying a toy together (or other needed product) and then bringing the toy to a local shelter, hospital, church or temple. They will feel like they were an active participant in the giving process!
Buy What You Know and Love
While buying a share of GE or IBM sounds like something your father would have done, you can buy your niece a stock share from a company she is interested in. If she loves snowboarding, check out Volcom, Quiksilver or even Nike. Or maybe she loves movies; Disney or Viacom (Nick) is always a safe bet (we are not recommending you buy these individual stocks). These may or may not be the best short-term investments but chances are she will be holding on to them for a long time, thereby implementing the Buy & Hold Strategy. Try and stick to stocks that have been around at least seven years to prevent fly-by-night companies going out of business. You can buy small amounts of stocks at Sharebuilder (www.sharebuilder.com). The next step is you and your niece are learning about P/E ratios together. Who knows - you might be helping rear the next Warren Buffet. Check out “The Wall Street Journal Guide to Understanding Money and Investing, Third Edition by Kenneth M. Morris and Virginia B. Morris.
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