Parents can help teenagers build lasting wealth beyond traditional piggy banks, according to financial experts who say starting early creates significant long-term benefits.
Jon Maroni, financial engagement manager at Numerica, believes parents should involve teens in financial discussions.
“Most kids are really aware of what’s going on, even if you’re not talking about it,” Maroni said. “So bring them into the conversation and help them get a positive association with money.”
Savings accounts represent the easiest starting point. Teens who earn taxable income from babysitting or side hustles can start investing through custodial IRA accounts.
“So like if you have a daughter who’s babysitting, she can actually begin to invest in something like a custodial IRA account, an individual retirement account, because she’s paid taxes on that income,” Maroni explained.
Parents can also explore 529 college savings accounts. “That can actually become their first retirement account,” Maroni said. “The funds in that can be rolled over, over a couple of years, into a Roth IRA fund.”
With an 8% annual return, every dollar a teen invests at age 18 could grow to $75 or $100 by retirement age.
“So help them get their first dollar invested, whether it’s through a custodial IRA or an investing app of some nature,” he said. “Just help them break through that barrier of seeing that investing is something that is for me.”
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