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Teach Your Kids How to Save for Retirement

As adults, we know the younger you are when you begin retirement investing the more money you’ll have when it’s time to retire. However, most of us start investing too late to take full advantage of the time we have.

But what about your kids? How different could your kids’ future be if they understood how to build wealth before they even graduate high school? You can teach them by starting with simple concepts and building on them over time.

Start With the Basics

Kids of any age can learn about money—especially the connection between money and work. Even kids as young as three can earn money—and lots of praise—by doing simple jobs like picking up toys.

Older kids are ready for regular chores. When they work, they get paid. It’s as simple as that.

Help them learn to budget money with three simple categories: give, save and spend. With this foundation, they’ll learn how rewarding it is to set a savings goal and regularly put aside money to reach it—the basis for successful retirement investing!

Be a Good Example

From an early age, your kids will pay much more attention to what you do rather than what you say—and that goes for money matters as well. They need to see how living on a budget, avoiding debt, and consistent investing helps you achieve your financial goals, so include them in that process.

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Even when your kids come down with a case of the “gimmes” (give me this, give me that), use the opportunity to talk about the importance of saving for the future. Explain that when you’re focused on reaching a goal like saving for retirement, you sometimes have to put off or even give up things (a new toy, video game or computer, for example).

If your kids can understand that “stuff” should never derail their commitment to a long-term goal, they’ll be way ahead of most adults when it comes to retirement investing.

On to Bigger and Better Things

With their strong saving habits and some experience managing their own money, your kids will soon be ready to learn how to invest for retirement. Involve them in this process by discussing your investing plan and explaining how long-term mutual fund investing is the best way to build wealth for retirement.

This is also the perfect time to introduce your older kids to the Ben and Arthur chart (see chart below) that shows how early investing can have a huge impact on how much money they’ll be able to accumulate over their lifetimes. If your kids have an earned income, they can even begin investing in a Roth IRA with their own money.

Together, you and your kids can change your family tree forever!

Need help getting started? Find an investing professional in your area!

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.