Focus on Family: Kids and Money

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Marc Horner, a certified financial planner, and the founder and president of Fairhaven Wealth Management in Wheaton

Fairhaven Wealth Management

104 East Roosevelt Rd

Wheaton, IL


For summertime jobs

  • Summer vacation has already started for lots of kids and that means some will be getting jobs. It’s a great time to start teaching them some money smarts because It’s all about developing good habits early.
  • Once kids are earning a paycheck it’s the ideal time to teach lessons about spending vs saving. A standard rule for adults is 50.30.20: 50% on needs, 30% on wants, and 20% to savings. Marc recommends a 50.50 rule for kids – saving 50% with the remaining 50% for spending.
  • Consider a Custodial ROTH IRA. A relatively new savings tool, the custodial ROTH IRA is a particularly effective method of setting kids up early for retirement. Any minor with earned income can acquire one when a parent or guardian acts as a custodian of the account. This allows a minor to get a great jump on compound interest – everyone’s biggest ally and best friend when it comes to saving for retirement! FUN FACT: Marc was the FIRST person to set up a custodial ROTH IRA at his local Fidelity outfit.
  • Introduce kids to the idea of “matching.” Parents should consider matching any monies saved by their young worker. Much like a workplace 401k, this teaches the value of “a penny saved is a penny earned.”
  • For slightly older kids, parents may want to consider getting them a debit card linked to a joint checking account shared with parents. That way parents can monitor spending and kids won’t be able to spend more than is in the account. This introduces them to the idea of “plastic” before they get their hands on a credit card.
  • Money smarts is all about developing good habits EARLY and learning how spending, saving and budgeting work. Most kids aren’t taught any financial literacy skills in school and no one is born with these skills! They have to be learned and the earlier the better
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