Financial Focus

Bad habits are hard to break but good habits tend to stick around for a long time, and that's what parents will want to teach young children about the importance of saving and investing. It's almost never too early to start, and the efforts can provide a lifetime of benefits.

By the time most children reach age 5, they have more than enough cognitive skills to understand the basics of saving money. Of course the older they get the better equipped they will be to handle more sophisticated concepts of investing.

When children are young, parents can start them off on the right financial path by taking these steps:

+Set attainable goals. Children will be more motivated to save money if they can see themselves achieving goals. That's why parents don't want to burden them too soon by trying to get them to save for a long-term objective such as college. Such a goal may well be appropriate and even desirable when children are older, but when they are young, have them put money in a simple savings account for things like toys, video games, CDs, etc.

By putting away money regularly and seeing how their efforts are rewarded, children will learn something about financial discipline and delayed gratification and they're likely to be more appreciative of their possessions.

+Reward children's efforts. To help children learn to save and invest, parents may want to offer a helping hand. Consider partially "matching" children's deposits into their savings accounts. If parents were to put in a quarter or 50 cents for every dollar the child deposits, their savings will have an opportunity to grow faster and they will feel they are getting "bonus" payments.

+Make investing fun. Try to get children or grandchildren involved in picking and following a stock for fun. If children are interested in athletic shoes, take a "research trip" to the nearest sporting goods store and study which shoes seem to be most popular. Ask children what types of shoes their friends are wearing.

If children are old enough, parents may also want to go over annual reports and other financial information about the stock, but don't get too bogged down with numbers, especially if a child's eyes glaze over. Do, however, follow the stock's price and discuss the factors that may or may not be causing the price to rise or fall.

+Stress the long-term nature of investing. Teach that stock is not the same as a bank account and educate children that this type of investment is not for impulse purchases or to meet short-term goals. Tell children that stocks are for the long term. Parents might want to share some of their own

brokerage statements that show how many years they have owned some investments.

By following these suggestions, parents can help children develop good savings and investment habits. Talk to them soon.

This story was submitted by Edward Jones financial consult- ants.