In my humble opinion, there have been few periods in history in which investing and taxation have been more complex. Tax brackets, deductions, credits, exemptions, stocks, bonds, mutual funds, Exchange Traded Funds (ETF), options, derivatives, and on and on it goes. Heck, most adults don’t even understand this stuff, so how are we supposed to teach our children?

I believe the answer is just like you teach children almost anything else: by keeping it simple and focusing on the fundamentals.

Below are three principles that can help your children master managing their money.

1. “Watch the pennies and the dollars will take care of themselves.” ~Benjamin Franklin.
   This quote is all about being mindful of how you spend your money. Helping your children develop a habit of receiving “value” for what they spend is key. For example, my daughter started college this fall and needed a particular textbook. New, on Amazon, the book was $100, but with a little research we found the same book in very good condition (used) for $6.99. Now, she has extra funds for savings, activities with friends, and lattes… in other words, items she values.
2. “Simplicity is the ultimate sophistication.” ~Leonardo da Vinci.
   When it comes to saving and investing, the most important thing to do is actually just start. With the vast array of options out there it is very easy to get overwhelmed. Start by helping your children just open an investment account and get it funded (anything that can be on “autopilot” is best). Do you currently have an advisor or online investment company you like? And, there is no need for whiz-bang convoluted strategies. Usually, low-cost diversified funds are a great place to start.
3. “Money is a terrible master but an excellent servant.” ~P.T. Barnum.
   Don’t forget to emphasize that money is only a tool to achieve goals and pursue passions, not an end to itself. Many people have spent years climbing “the ladder” only to realize it was leaning against the wrong building. Additionally, teaching children how to give responsibly, particularly to causes they find meaningful, can bring them great joy and help usher them into adulthood.

In our ever changing complex world, there has never been a better time for parents to emphasize the fundamentals of basic money management.  This can give your children a leg up on the underlying principles that they need know to be financially successful.