By Amy Levin-Epstein, Ballooning Nest Eggs

Some kids get thrilled when their piggy bank gets full. Others would rather play with Barbies or video games. Even if you don’t have a little Alex P. Keaton who aspires to be rich, involving your nieces and nephews in the process of starting their savings accounts and developing investment portfolios can be fun. Here are five ways to get them excited about growing their wealth:

1. Share Memories of College

Tell your nieces and nephews about how you and your friends sled down the big hill on campus on cafeteria trays. Or how you met their godmother and your best friend sitting next to you in Psych 101. Share your fun, wacky and mildly wild college stories. Then, discuss how your parents (or their grandparents) invested or saved money to get you there.

“Explaining the purpose of financial gifts and supports, like a college or educational fund, can help children understand the importance of managing money,” says child psychologist Frank Zelinger. “Personal examples and family stories are always carefully listened to by grandchildren.”

You can also share lessons you’ve learned about finances since then – including recent rough times. “Adults should not be afraid to discuss their mistakes and possible misgivings regarding their own missed opportunities,” says Zelinger. “Don’t be afraid to answer questions honestly (using language appropriate for the child’s age and understanding).”

2. Let Kids Contribute

You may be spearheading the development of your niece’s or nephew’s nest egg alongside the parents. Unless he or she becomes the next Justin Bieber or Dakota Fanning, the earlier they start saving money, the better. Youngsters should contribute an amount that is appropriate for their age. For instance, a pre-teen might put $1 from a $5 per week allowance into a savings or college fund. Or a teenager might put 10 percent of their summer job earnings into their account. This can create a feeling of ownership, and for older teens, it can have an almost immediate positive impact, says Neale Godfrey, chairman and CEO at Children’s Financial Network, Inc.

“If [college students] have contributed to a [college fund], there they will figure out each time they skip a class it costs them X amount of money,” says Godfrey, adding that the money should be from funds they earned, not from gifts.

3. Invest in Companies Kids Can Relate To

Many of us invest in companies that interest us, like Chipotle or Apple. Kids are no different. They develop a connection with certain toys and books. “A little kid might want to invest in the company that makes their favorite toy, like Hasbro or Mattel. Or they might want to invest in Disney,” says Godfrey, author of Money Doesn’t Grow On Trees. If your nephew is obsessed with his iPod or iTouch, for example, talk about Apple and how the company’s products are designed to improve our lives. You can look up the stock history together, let them follow it on their own, and then discuss why it may or may not be a good choice. If it is, let them contribute a little money with you in the stock.

4. Save for a Big Dream

If you have a niece under the age of 12, there’s a good chance she’ll get an American Girl doll this holiday season. And as many of us aunts know, young girls love to dress up their dolls, and they can glam them up at the American Girl Salon. Besides the cost of the trip to the nearest major city that has one, it might cost your niece six months of allowance to get her doll’s hair cut and styled and ears pierced. Budget it out. Is that worth saving for? Help her make that happen (with either a piggy bank or a savings account), and she’ll remember not only the experience but the practice of saving that got her there.

If your Little Leaguer gets a new glove this year, he might start talking about the next baseball season and Spring Training. If you’re also interested in a warm weather trip, suggest he save for tickets for his favorite team – and then incorporate those excursion savings into the budget for a vacation for the whole family.

5. Reach for the Stars

Talk to your teen and pre-teen nieces and nephews about their favorite stars who set great examples of how to manage money. For instance, Hilary Duff has donated both money and time to Blessings In A Backpack, part of Harvest USA, a charity that fights childhood hunger. After Hurricane Katrina, she helped provide two million meals to children affected.

Talk to the kids about how much money that would cost – and how great it is that Duff donated part of her earnings to do that. You can also talk about Selena Gomez buying her mom a house, and Justin Bieber buying himself a $200,000 car. What are responsible choices? What are big splurges, or even wastes of money? If your nieces and nephews start saving money early and make smart spending decisions, they can be stars too.

Discuss this:

How do you get your nieces and nephews excited about money and building wealth? What does money mean to them? What memories do you share with the kids about how you learned the value of money?

The Ballooning Nest Eggs website seeks to disrupt the notion that building youngsters’ nest eggs is strictly a close family affair and connecting kids to their money—and broader economic and global world—is more akin to homework than play time. Our site is full of practical yet “out of the nest” ideas to grow youngsters’ wealth and encourage them to dive into investing, entrepreneurship, charitable giving and their broader economic world. It brings much-needed fun and imagination to these topics, making them relevant to kids' lives (as well as yours).

Photo: junpinzon
Published: September 17, 2013