| We learn at an early age how to spend and how to be consumers, but it's not always clear how those purchases are made.
I believe one of the great disconnects of American society is that we send our children out into the real world without a true understanding of how finances actually work.
It's obvious that money has a major impact on the many choices we make as adults. That's why it's so important to instill good money habits early in your children's lives. By introducing financial literacy at a young age, they will end up becoming more financially responsible adults.
And since most children in this country don't receive personal finance lessons in school, it's really up to parents to teach good money habits at home.
It's for that reason I was intrigued that Fidelity is expanding its no-fee investing accounts to teens.
Relax and exhale — it can all be set up and handled with parental permission and guidance. The Fidelity Youth Account is a brokerage account specifically designed to help kids ages 13 to 17 invest, save and spend.
Since it's concerning that many young people are entering adulthood without adequate financial capabilities, I believe this type of initiative is a step in the right direction.
As my good friend, certified financial planner Tom Henske, said: "Anything that inspires your kids to talk about [money] or be interested in it only bodes well for the long-term."
Of course, there are possible downsides to letting your children trade in the stock market, writes CNBC reporter Carmen Reinicke. While exposure to risk assets can grow wealth over time, it also opens investors to the possibility of losses.
Henske says his one fear is that Fidelity's platform will lead to more young investors focusing on buying and selling individual stocks.
However, even if teens do get caught up in stock picking, it may be better for them to make some financial mistakes early and in this kind of account, Henske says.
The bottom line is that parents who work with their kids to better understand the importance of financial literacy can flatten that curve. They can introduce basic knowledge on how to manage money at an early age. These lessons will follow them through life and they will become financially savvy adults, which can lead to a more successful life.
For more cool stuff like this, please follow me on Twitter @jimpavia and check out CNBC's Financial Advisor Hub and CNBC + Acorns Invest in You: Ready. Set. Grow. |
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