Einstein once referred to compound interest as one of the most powerful forces in the universe! A great example of the power of compound interest comes from the selling of Manhattan for a handful of beads:

In the early 1600s, the American Indians sold an island, now called Manhattan in New York, for various beads and trinkets worth about $16. Since Manhattan real estate is now some of the most expensive in the world, it would seem at first glance that the American Indians made a terrible deal.  However, had they sold their beads and trinkets, invested their $16 and received 8% compounded annual interest, not only would they have enough money to buy back all of Manhattan, they would still have several hundred million dollars left over. That is the power of compound interest over time.

Warren Buffett, one of the richest men in the world, uses a snowball analogy to explain compound interest:

“Life is like a snowball. The important thing is finding wet snow and a really long hill”

The really long hill referring to the effect of time on the growth of money.

Here is a simple example which highlights the importance of encouraging your child to save. Saving as little as £10 per week over their working lives of 40 years with an interest rate of 5%,  they would accumulate £61,040. However if they started 10 years earlier, that would be £106,740. That’s a difference of over £45,000 from an extra investment of £5,200.

Given that time can play such an important part in the growth of money, the earlier a child starts his or her savings habit, the greater will be their return. Here are 5 top tips how to encourage your child to save.

1. Lead by Example – have a jar or money box where you deposit your spare change. Children learn more by what you do than what you say. By wanting to follow your example your job is half done.
2. Add interest – when your child is old enough to understand the concept of interest you can act like a bank and top up their savings. Keep the numbers simple by adding 1 coin for every 5 or 10 they save. It’s a good opportunity to introduce some simple yet important money lessons.
3. Open an account – go with your child to the bank and open a savings account. Then make an event of going and making a deposit. Your child will make positive associations with the act of paying in money.
4. Save for a purpose – it’s much easier to create an interest in saving (excuse the pun), when there is a strongly desired outcome on the end of it. Encourage your child to save for a holiday, a particular toy or something they value.
5. Consistency – For saving to become a habit it must be done regularly and often. Then gradually, like brushing your teeth it becomes automatic and habitual. If you give an allowance encourage your child to immediately put some money away. If they get extra for chores or birthdays encourage them to allocate a percentage to saving.

In all the above examples it should be emphasised that for the money saving habit to stick it must be enjoyable and rewarding. Just as compound interest will reap rewards over time, so too will the investment in time spent to encourage your child to save.

Daniel Britton is a financial education specialist and author of the  inspirational stories for children Financial Fairy Tales books which make learning about money fun for younger readers.

Visit The Financial Fairy Tales today for a free digital download of Dream Can Come True the first book in the exciting series.

?

Think about your own money lessons from childhood. For example, if your parents or grandparents experienced major economic events such as the Great Depression or the austere years during and after WWII, then these environmental factors will have made a lasting impression on your financial beliefs. There may be “positive” values such as thrift, saving and security or “disempowering” beliefs around scarcity, fear and an aversion to risk.

The question is, are these deep routed beliefs helping or hindering you today and what messages are you passing on to the next generation and teaching your children about money?

In the Industrial age the perceived wisdom was to study hard, get a good job and then try and hang on to it until the gold watch. People spoke freely of the ‘job for life’ and concepts such as downsizing or outsourcing were relatively unknown. The underlying beliefs were one of scarcity and lack. A safety first approach which encouraged the majority to save for their retirements with the comfort of a social security safety net.

In the Information age where the world has become in many ways smaller and flatter, both the job security and the safety net are disappearing. In preparing the next generation and teaching your children about money it is important to consider the skills, attitudes and beliefs that will be necessary to succeed.

Let’s consider an example of two children from the same neighborhood, whose parents are of a similar age and enjoy similar incomes and lifestyles. In the Smith’s household finances are discussed in hushed tones and never in front of the children. The kids witness arguments over credit cards and the stress of unpaid bills. If the child asks for things they are met with replies of “money doesn’t grow on trees” or “we just can’t afford it”.

Compare with the Jones household, here money is discussed more openly, with budgets set and adhered to. Bills are paid on time and a little is saved every month. When the child asks for treats they are encouraged to pay for it themselves out of an allowance, or to consider whether having ‘this ‘is better than ‘that’. They learn to understand the value of things as well as the price. They may be given the opportunity to work around the house or to explore other ways of earning money.

In this simple scenario it is clear which child has the better chance of growing up with empowering beliefs about money.

Children unquestionably pick up many of their values from their parents, either through conscious actions or unconscious awareness. From an early age they learn more from what they see and experience that what you may say. Through a combination of financial education and creating an environment of opportunity, your children will be better equipped for financial success. By setting an example of a positive association with money along with practical approaches I, such as saving and budgeting, you will be teaching your children lifelong money skills.

The Financial Fairy Tales series of books and resources can develop a child’s positive association with money and teaches some of the skills and values that help create a brighter financial future.

You can obtain a free digital copy of Dreams Can Come True from the Financial Fairy Tales website http://www.thefinancialfairytales.com

Daniel Britton is an author, speaker and consultant on the subjects of financial literacy and personal development. His Financial Fairy Tales series teach kids about money through fun and inspirational stories.

1. Q: Who is your primary target audience for the Financial Fairy Tales?  ie: (who would appreciate these books most apart from the children themselves).  Is it mostly parents and teachers or are there others?
2. Q: What got you inspired to develop this Children and Money industry/line of business?
3. Q: How did you come up with this concepts for these childrens’ money books?
4. Q:  What sorts of lessons do your Financial Fairy Tale books impart to children?
5. Q: Why do you think these lessons are important for children between the ages 5-10 years?
6. Q:  Apart from your website http://www.thefinancialfairytales.com/ is there anywhere else people can find your books (libraries, major bookstores, amazon.com etc)
7. Q:  What sort of goodies can one find in your newsletter?

Daniel shared a lot more too!  He’s a fabulous speaker with a brilliant mind about money matters.  We are very proud to associate with him.

You can listen to the Money Fast For Kids / Financial Fairy Tales interview here.

Money for Kids Site Review: The Financial Fairy Tales

Here at money fast for kids we take time out to learn about how others are teaching children about money.  We’re always facinated by how creative people can get and how fantastic their lessons are.  Here’s what you need to know about the Financial FairyTales:

The Financial Fairy Tales are a series of inspirational books and resources which teach children under 10 about money, enterprise and the business of life. Young readers are transported to a mythical land where they gain financial lessons and values by following the adventures of the fairy tale characters.

They have been reviewed by the likes of  Brian Tracy, Terry Cole Whittaker and other media personalities.  (Which you can read more about on the site).  The books themselves were written by a former teacher and banker, these beautifully illustrated stories make learning about money serious fun, whilst sowing the seeds of a brighter financial future.

Our rating for these books is a solid 4 out of 5 simply for their incredible lessons!  The books are very well written and illustrated very much like your classic Golden Books or old school Disney books were!  We were quite impressed!

Visit www.thefinancialfairytales.com to discover more today!

If you want to play a critical role in your child’s future success, parents — this guide is for you!

Our goal is to give you a solid introduction to your role in helping your kids learn about and earn an honest income for themselves.  Whether they are strictly earning allowance or they are going to start designing, creating or doing work for others – this guide will ensure that as a parent you know your responsibilities and how you can provide the most positive experience and education for your children around money.

We are looking forward to helping you be the best parent you can be starting today!

1. Selling Cups of  Distilled Water With Ice
2. Lemonade Stands
3. Ice Tea Stands
4. Snow Cone Sales
5. Misting Stations (water misting on faces and such)
6. Paper Routes
7. Lawn Mowing
8. Lawn Sprinkling
9. Watering Gardens
10. Weeding Gardens
11. Child Minding / Babysitting
12. House Cleaning
13. Dog walking
14. Doggy Bath’s / showers
15. Customized Handmade Cards
16. Designing Scrapbook Pages
17. Custom Artwork / Scanned / Printed / Framed
18. Custom Paintings on Canvas
19. Craft Corners (Teaching others to do crafts)
20. Making / Selling Handmade Jewelry (Beaded / Knotted Bracelets/Necklaces / Hair Clips)
21. Brochure Canvasing (Door to Door)
22. Sales (Door to Door)
23. Writing Poems
24. Writing Stories
25. Blogging (for adsense / advertising)
26. Product Reviews (on blogs)
27. Social Networking / Link Building (making money to talk about businesses/products/services)
28. Setting up blogs for others
29. Setting up social networks (facebook/twitter pages) for others
30. Creating email marketing campaigns for others
31. Writing email marketing messages for others
32. Creating YouTube videos for others
33. Creating music MixTapes for others

Did you get any good ideas on how kids can earn money from these small summer businesses?  Are you excited to start making your own money now too?  We hope so.  We want you to be big success with whatever you do!

Enter Janet Bodnar, deputy-editor of Kiplinger’s Personal Finance, mother of three, and writer of the Money Smart Kids column in Kiplinger Magazine. This is not a collection of hard and fast rules to force good finance habits onto kids but a framework within which parents can use good common sense to handle any situation.

The book starts with a quiz to test your money smarts. This quiz is excellent and presents most of the potential situations you are likely to encounter with children and money. The author even includes examples of questions kids ask and how to answer them. One of the insightful sections is one on how kids think about money and how to deal with these concepts from preschool to teenager. Ms. Bodnar even includes a fascinating chapter on questions and answers about money’s history, composition, and dozens of other miscellaneous facts. Prepare your children to know how to deal with money when they are grown. Raising Money Smart Kids is highly recommended.

What is the best ways for teens to make money? I would say the best place to make money for a teen is using the net. You can do a number of different things.

You could sell junk in your house on e-bay to start with then look for whole sale products to sell regular this is a really good way to make money and one of the best ways for teens to make money online.

That’s one way you could go to start making money. The other way is to start your own information publishing business. You can start this business from your spare bedroom and it doesn’t matter what age you start.

In fact the younger the better because you will be making more money then all your family put together when you are just a teenager and people will envy you. It’s a grate feeling when you earn more in a month than most people do in a year.

If you ask me information publishing is by far the best ways for teens to make money because it’s so easy to set up and with in just a few weeks you will be earning good money and the money just keeps growing week by week.

I will go through some of the things you will need with this business so you understand the ways for teens to make money. The first thing you will need setting up your information publishing business is a niche market to go into.

Niche markets are all around you just go to your local corner shop and look at the magazine racks there packed full with different niche markets. Just to give you a few. “weight loss” “fishing”
“weight lifting” I could go on and on but you get the idea.

Next you need to find a product to sell. The good thing is you don’t have to write a book yourself you can get the product free from the public domain and sell it for £97 or more without any problem.

You will also need a web site if your thinking of ways for teens to make money. You need to be able to sell your information product and the best way is through your own mini website.

Things you need to do once you have your product and website set up. You need to be able to capture peoples email addresses as this is were your big money comes from. You also need to get
traffic to your website.

It doesn’t matter if you have the best website in the world if you don’t have any visitors to your site you cannot capture peoples e-mail addresses and then make sales.

Having money is crucial to obtaining the things we need in life, and of course, having extra for the wants is nice too. However, money problems can occur when parents don’t teach money management skills at a young age, usually when the child starts getting an allowance or has a job, such as babysitting or mowing lawns. When credit card offers start arriving in the mail, they are an easy fix when there’s no more money left. Teaching your children about money, as well as credit cards, can be easy, and even a fun experience, but most importantly, a very valuable lesson. Here are a number of ways to teach children about money, so they don’t end up having problems in the future.

Introduce them to money

When they are young enough to count, take an active role in teaching them about currency, such as pennies, nickels, dime and quarters, as well as dollar bills. Have them do simple math including adding and subtracting. When they get older, you can introduce new concepts and issues.

Teach by example

Teaching your children about money becomes a much easier task when you have learned the lessons you are teaching. Children are smart and they know when a parent is a good example. Your kids won’t listen to a word you say if your money management skills aren’t up to par, so learn all you can about budgeting, saving, investing, reducing expenses and cutting out debt. When you’re armed with knowledge, you’re better able to teach your children.

Give them an allowance

Yes, that means give them some money. Even if it’s a few dollars a week, let them take control of their own money and make their own decisions about what they want to do with it. A good example of how much to give them would be a dollar for their age. So, if you have a ten-year-old, give them ten dollars, for either a week or a month, depending on your own budget. If they’re never given any money, they will never learn how to manage it. This way, they can then see first-hand what it’s like to have money. Hopefully, if you have taught them, first by example, and then with the knowledge you have gained, they will think twice on how to spend it, or even if they want to. They may decide to put some away for a rainy day or they may blow it the first chance they get. Whatever choice they make in managing it, will help them be good money managers in adulthood.

Teach them one principal at a time

If you bombard them with everything all at once, they will only be confused. We can’t expect them to be awesome money managers overnight. It takes time. Once a month, teach them one principal about money. For example, this month, you can teach them about budgeting their money. The next month could be about having a savings account, and so forth. If you teach line-by-line, precept-by precept, they will absorb more of the lesson. No one wants to be preached to.

Give them opportunities to earn money

Whether they go beyond completing their chores or do a specific job you need help with, give them extra opportunities to earn money. The more experience they have with money, the better skilled they will become. If they choose to blow it all up front, it will teach them about patience and saving for what they really want. This sets up a great foundation for investing money for the future or putting money away for emergencies.

Teach them about credit

Humans are impatient creatures. We want things and we want them now, even if we don’t have the money. Credit cards have become the staple for many families, often leading to out-of-control debt, but when credit is used wisely, it can be very valuable, such as for credit ratings. When you use credit and you pay it off on time, companies are more willing to offer you more credit to buy things such as a home or a car. Having a good credit score rating can open doors for small business or college loans. Teach children that credit is not a gift; it’s a loan. Tell them that credit has to be paid back, often with high interest rates, and that only when they have a plan to pay it back should they get a credit card.

Teach them about savings accounts

When children save their money for a rainy day or for special things, they feel a certain stewardship over that particular item or service, because they had to save money and patiently wait until they had it. That would be hard for any adult to achieve, let alone a child, but it can be done. Having a savings account is helpful; after all, if the money is “locked” away, it becomes less of a temptation to spend it! Not only that, but depending on their age, bank institutions have special accounts that give back small interest payments, which can be an incentive for a hesitant child to begin saving. When you give allowances, give it to them in denominations that encourage savings. So, if you give a child $5, give out five $1 bills and encourage that at least $1 go to savings. When they have saved the money, pat them on the back for a job well done. Children love praise and just telling them you are proud of their decision gives them more confidence that lasts into adulthood.

Teach them about budgeting their money

Even if they only get a few dollars a week, children can list things they want to do with their money and whether they have the money to get those things. For example, say your child wants to put some money into savings, or buy a toy or a new pair of jeans. Sit down with them and help them a few times to budget, or project how much that particular item will be, and then determine if they have the money, or how much money they need to save in order to get it. Once they know about budgeting their money, it will become easier to manage their money in the future.

Have family discussions about money

Check with them about their money management. Talk with them about any concerns you have and encourage them to talk to you. Having a set time to talk about money issues will also help keep everyone on task. Find out how they’re doing and if they are struggling with saving money. For younger children, you could talk about the difference between cash, checks and credit cards. If you have teenagers, talk with them about the effects of the economy, of inflation verses deflation, how to economize at home and alternatives than spending money, such as borrowing an item, making it yourself, or a one-time rental. Sometimes just opening the door for communication will help with any potential problems or issues that may come up, especially if the child begins a new job or looses one. Talk to your kids about upcoming holiday plans or vacations that require a lot of money. Tell them your plan for saving the money and chances are they will want to save their own money as well.

Stay out of debt

Easier said than done. Debt is a four-letter word for many families and can cause un-needed stress, but if we have our own savings account, occasional spending fund and emergency fund, we are more able to be financially secure, so that when the dishwasher goes out, we have the money to replace it. Having these extra funds will help children learn about the importance of making good financial decisions and insurance against unexpected expenses. Remember, children learn from example and we, as parents, need to try to be good examples of money management.

Don’t bail out your kids

If your children get into financial trouble, the worst thing you can do is bail them out. If they were saving their money for something they needed and they ended up spending it on something different, don’t get it for them. It may be a costly lesson, but if children have consequences resulting from their actions, they will learn, and the next time, they may choose differently. When they are older, teenagers usually need money for car payments, fuel and maintenance. Again, they need to budget their money so they have enough money to pay for those things. If they run out before they are paid again, they may have to walk or ride their bike, or a bus to work. Most likely, they will be more careful with their money next time.

Money is a fun thing to have, as we are all aware, and teaching children at a young age about money will go a long ways to ensuring that their financial future is the best it can be. For more information, contact your local bank institution for brochures to give to your children. They will have account options that will fit best with their age and other tips in spending and saving wisely.