One of my favorite Warren Buffett quotes is, "Do not save what is left after spending; spend what is left after saving." When kids are taught to set aside money to saving before spending it on their latest obsession, they start to build essential habits that will serve them well their whole lives.
But what do they do with their savings? Some of it will be for short term goals - saving up for the new video game or lego set - but some of it should be set aside for the long-term. This long-term savings can introduce kids to many important financial concepts including how to save for things like retirement or a down payment on a home and how to make their money work for them - either by earning compound interest or by appreciating through owning stocks, bonds, real estate or other assets.
The five books listed below cross the spectrum of introducing young kids to the concepts of compound interest and investing, and are the perfect introduction for kids ready to take the next step in their financial literacy journey.
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By Mary Nihn
A perfect book for introducing younger children to the concepts of giving and investing through colorful, fun characters. In the story, Money Ninja shows Unplugged Ninja that they can do so much more than just spend their birthday money. They cover everything from long-term savings to compound interest to starting a business to giving to others in fun, kid-relatable ways.
I'm A Shareholder Kit
By Rick Roman
I'm A Shareholder Kit is more than just a book - it's an invitation for kids to get hands on experience with investing by combining what they learn in the book with a share of stock in a company they are interested in. The purchase of I'm A Shareholder Kit comes with a $20 certificate they can use towards the purchase of a share of stock on giveashare.com (though it's relevant to note that Give-A-Share charges a fee on top of the market price of the stocks they offer to cover the costs of issuing a paper stock certificate - which may help kids feel more engaged - and transfer fees). Kids learn all about the stock market and how to evaluate stocks, including how to read annual reports and other earnings reports from the companies they are invested in. It's a deep dive into the world of investing presented in a way kids can understand and relate to.
If You Made a Million
By David M. Schwartz
If You Made a Million is a fantastic, richly illustrated book that teaches kids both about how different denominations of money relate to each other and how compound interest works. The reader is taken through a series of fun and silly jobs and then shown how their earnings can be represented. As they reach first a dollar, then $100, then $1000, and finally $1,000,000, children are shown how the smaller coins and dollars can be combined to make those amounts and creative illustrations help them to imagine how much money that really is. But it doesn't stop there... the book also shows kids how much interest can be earned on that money if put into the bank for various periods of time (though, to be fair, it's using a 5% interest rate, which no bank is currently paying close to, but the principle is still relevant). It even covers the concept of loans. It's a well-rounded book that kids of all ages can comprehend and appreciate.
How to Turn $100 Into $1,000,000
By James McKenna and Jeannine Glista with Matt Fontaine
A kid-friendly guide on how to become a millionaire, How to Turn $100 into $1,000,000 covers topics from how to earn money - including touching on entrepreneurship, how to make a financial plan, and how to leverage money through compound interest and investing. It's a light-hearted blueprint that not only shows kids how they can chart a course to financial freedom, but also gets them to think about why they might want to. And at 144 pages, including templates for financial and business plans, it's a great value for all the information it contains.
Robert the Real Estate Investor
By P.E. Barnes
Part of the Little Owners series of books, Robert the Real Estate Investor tells the story of a young man who wants to be a real estate mogul. He starts small - going to school for construction and purchasing a multi-unit property that he can both live in and rent out. From there, he continues to grow his portfolio, providing work for his community and business at a local bank. It's a path to generational wealth building that you don't often find in children's books, and is a wonderful way to expose young readers to alternative ways of making their money work for them then simply investing in the market. There's also a glossary of vocabulary words at the end of the book, to help kids become more familiar with the terms a real estate investor might use.
If the thought of owning real estate doesn't excite your child yet, the Little Owners series of books covers all sorts of exciting business options in books like Franklin the Franchise Owner, Sierra the Salon Owner, Ben the Gamer, Valerie the Vendor, and Stephen the Sports Agent.