Like all parents, we want our children to lead happy lives. One of the critical components to that is giving them the mental tools and experiences so that they can make good economic decisions in their life.
This is challenging because consumer marketing is very effective nowadays. It is also the cultural norm to spend all your income (or more) and save nothing. On the other hand, compound growth is incredibly powerful over time, if you'll only give it the time to take place.
So what this means is that one of the things we want to do to is help our children grow up with a healthy balance of delayed vs immediate gratification. Having the experience of benefiting from compound growth is a critical part of that, a memorable antidote to the pressure to consume now.
So we are looking for examples of compounding and exponential growth that we can experience together with our children over a shorter time frame (up to 1 year). To be clear, the experiences don't have to be financial or economic, they just have to be an experience. What can we do?
As context, are children are 2yo and 4yo - so they're young, but starting young and helping them have the right mindset from the get-go is very important to us.
As examples of things that don't count, and why...
- "You can have 1 cookie now, or 2 cookies tomorrow, or 4 cookies the day after..."
- But it isn't real compound growth, it's just Mummy or Daddy with a funny rule
- Saving money in a bank account with them
- We're doing this for the habit of saving, but UK interest rates are less than inflation so it doesn't demonstrate compound growth
- Sharing our finances with them
- We're doing this, but it's just another lesson and not an experience they're having
- Encouraging them to save their money by reminding them of the benefits of delayed gratification
- We're doing this, but it also doesn't demonstrate compound growth
EDIT:There are many good answers to this question, and others have highlighted other important aspects to good financial literacy. E.g. risk, consumption vs saving, the time required. Thank you everyone for sharing your insights and expertise!