The best financial gift you can give your kids – beyond doubt
Every parent I’ve spoken to has a dream of being able to give the children in their life a financial helping hand when they reach adulthood.
Opinion
January 11, 2026 — 5.01am
January 11, 2026 — 5.01am
Whether it’s attending university, travelling the world on a gap year, buying their first home or some other dream, every parent I’ve ever spoken to (or grandparent, aunt or uncle, godparent or guardian) has a shared dream of being able to give the children in their life a financial helping hand when they reach adulthood.
For the vast majority of us, though, having a large lump sum sitting around when our adult children are ready to embark on a big financial step simply isn’t a reality. Which is why investing for your kids when they’re still young is arguably one of the best (and smartest) things you can do.
Investing gives you an opportunity to teach your kids healthy money habits, as well as the value of money, while young.Credit: Aresna Villanueva
The argument for starting early – whether it’s a lump sum or ongoing contributions spread out across the years – is twofold.
The first is what Warren Buffett calls the eighth wonder of the world: compound interest. That is, the more time you give your money to work without interruption, the stronger the returns will be.
Let’s say, for example, you put $100 a month into a savings account for your child with a 5 per cent interest rate for 25 years. Over that time, you’ll put in $30,000, but the total amount available to them will be almost double that – $59,899 to be exact – thanks to compound interest.
Alternatively, you could invest in the sharemarket. With an average annual rate of return near 9 per cent on the ASX, over a 25-year period, that $30,000 has the potential to almost quadruple in value, or grow to $113,053.
The more you talk, and they learn, the more invested (pardon the pun) they become.
The second reason for starting early is the opportunity that investing gives you to teach kids healthy money habits, as well as the value of money, from an early age.
Research from Cambridge University found that most children can grasp the value of money, the concept of delayed gratification and understand the risk involved with decision-making by the ages of seven to 10.
Which means that with the help of parents or guardians, kids can start making age-appropriate financial decisions and think about money challenges such as saving, spending and investing in simple, basic forms.
