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Children need to learn investment lessons

It is a travesty that we spend time educating our children to undertake mathematical tasks and to read and write well but teach them nothing about money.

It is a failure of our education system that places our children in the invidious position of entering the workforce with no knowledge of budgeting, saving and investing.

The onus of teaching our kids has fallen squarely on the shoulders of their parents. So what do we need to teach them?

Lesson 1: Discipline

An important learning tool for children is to link the receipt of their pocket money with the performance of certain household chores e.g. washing the car could become a money-spinner for the children.

This also teaches them the value of money and could be an important lesson for later in life. It is also important that while children are at home they pay board when they can afford to do so.

Lesson 2: Spending wisely

Having taught them discipline, it is then necessary for them to understand that their spending needs to be controlled. This is very important for them to learn.

It is perhaps self-evident to say that children will learn best about spending habits by example.

It is therefore imperative that we set the example for them to follow.

The responsible use of credit is a critical lesson in this age when access to money is so easy and cheap.

Lesson 3: Investing

While it is admirable that some children have a goal to save and actually undertake this, the current environment of low interest rates is unlikely to make any of them wealthy simply by saving.

It is therefore necessary for them to look beyond this and invest their money. The use of managed funds and public unit trusts allow investors with a small amount of money to start off slowly and invest money periodically.

Access to the Australian stockmarket in this way will mean that, from a very young age, children can understand and appreciate the market rather than be fearful of it.

Hopefully, these simple lessons will place our children in a far better financial position than we were as they start their journey through the workforce.

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