Kids today are starting to understand the power of investing earlier than previous generations. The wide availability of financial apps has put information about how to build a financial portfolio directly into kids’ hands, and kids are more likely to get interested in investing when they can skip the difficulties involved with having to work with a traditional stockbroker.
While you might already plan to teach your kids about the basics of saving money and investing in their future, you might not be prepared for your kid to start asking about crypto. Since most crypto exchanges require someone over the age of 18 to set up the account, you’ll want to know the essential facts about trading digital currency.
Start By Making Sure They Know How Crypto Works
Your kids might start tossing the word crypto around without fully understanding what it means. Even an elementary-aged child can grasp the concept of crypto if you explain that it works much like a video game token.
For instance, you can discuss how they can buy crypto using regular money, but that it can increase in value based upon what other people want to pay to purchase it from them in the future. You’ll also want to make sure that your child understands that crypto exists solely in digital form, which means that it has value but won’t be something they can hold in their hands.
Prepare to Set Up an Account
Your kid can provide you with money that they want to use to purchase crypto, or you could decide to start investing for your child with your personal funds. Either way, you’ll need to be prepared to be the primary account holder until your child reaches the age of 18.
You have several options for purchasing crypto, and the simplest and most popular one is to go through a cryptocurrency exchange. There, you can buy and trade crypto while having handy information regarding digital currency pricing at your fingertips.
Know How to Transfer Funds to Your Kid
Although you may be the primary account holder, you might prefer to be able to ensure that your kid has some level of control over the funds. When it comes to gifting crypto, you also have several options such as setting up a custodial account that allows you to name your kid as the beneficiary of the funds once they reach the age to take it over.
There is also the option of setting up a digital wallet that gives you full control over the funds until you decide that the time is right to transfer them to your child after they reach adulthood. While this option works well for parents, you’ll want to be cautious not to dip into the funds if you find yourself faced with temptation. Setting up another digital wallet for yourself can make it easier to resist taking money out of your kid’s account since you’ll also be able to watch your funds grow.
There’s no easy way around the fact that kids tend to need to rely on an adult to help them get into investing in crypto. However, most kids quickly increase their financial knowledge the moment that someone gives them the key that lets them get their foot into the door of the digital currency world. With your help, your kid can start increasing their savings while also learning valuable skills that will help them invest in a financially secure future.