Foundations To Set Up Prior To Your Kids Earning Money

Before looking at ways for kids to earn money, consider creating a great foundation for your child's financial security. This can be attained by opening up a Wealth Account (also known as a Money Magnet - long term account) and regularly depositing money into it. While you are at it, open up two more accounts; one for Education and another for Savings (which is to be used for short term savings).

The primary reason for setting up a Wealth Account for your kids is to get them on their way to achieving their 'financial freedom day' or being 'financially free'. Financial freedom is where you've got your money working for you instead of you working for it. Your lifestyle is funded by the income generated by the assets within this account and you no longer have to work. You are then able to decide if and when you work for money!

One of the first things that may be going through your mind right now as you read this article is "Is this woman crazy? Why should I do this now? If I haven't talked to my kids about ways they can earn money, how will I talk to them about financial freedom?" The answer is straightforward, and the reason is to take advantage of compound interest.

Ideally, the sooner you set this account up the better off your child will be. It'd be great to do that as soon as you've made the choice to have a child, however it truly doesn't matter when you start; now is the perfect time to help them.

Providing your child with the gift of having the choice to live their life and not be controlled by having to work for money can far outweigh the pleasure of a new toy or gadget that only lasts a short while, so why not deposit the money you would normally spend on toys into their Wealth Account?

Having a Wealth Account for your kid also enforces the pay-yourself-first concept that the wealthy have followed for many years. This means that regardless of what happens, you are constantly making a payment every month to the Wealth Account. If you have not already done so, read the 'Richest Man in Babylon'. It's a superb story to enforce this principal. Eventually over time the funds amassed within the Wealth account can be used for purchasing investments, with all the returns generated being reinvested back into the fund and continuing to compound.

Whilst your child is really young, you will obviously contribute to and manage this account for them. When you feel they are mature enough to be responsible of the account themselves, you can transfer the ownership over to them. You should decide when this occurs based on the results you see your child achieving in earning and handling their other money.

About the Author:
Nicole Clemow has been involved in finance since 1999 and is one of the authors of "Teach Your Kids the Value of Money". Check out "Teaching kids money making skills and business ideas" for more articles on this subject.

Article Originally Published On: http://www.articlesnatch.com

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