Seven Lessons to Teach Your Teenager About Building Wealth

Now I get to watch those funds grow, while retirement is increasingly less far off.

Here are some essential lessons to impart to your teen about building wealth.

Simply put, compound interest means the interest on an investment grows exponentiallyrather than linearlyover time.

This concept can motivate them to start saving and investing early.

Even small amounts saved from summer jobs during the teen years cangrow into substantial sums by retirement age.

The key is to start early and let compound interest work its magic over many decades.

The basics of budgeting and saving

Help your teencreate a simple budgetto track income and expenses.

Introduce the concept of “paying yourself first” by setting aside savings before spending on wants.

Check out a template for the classic 80/20 (aka “pay yourself first”)budget here.

Teach your teen about not putting all their eggs in one basket.

Heresour guide to buildingan easy set it and forget it investment portfolio.

Not all debts are equal, andnot all debts have to be scary.

Unfortunately,this misconceptionis difficult to reconcile before its too late.

Teach your teen about the importance of insurance in safeguarding assets and income.

Introduce concepts like health insurance, auto insurance, and, eventually, homeowners or renters insurance.

Encourage your teenager to think long-term when it comes to finances.

Again: This is about so much more than dollars and cents.

Encourage your teen to pursue knowledge and skills that can increase their earning potential.