Out of all the financial lessons to learn, investing is definitely the most fun and exciting. A little money invested now can turn into lots later– how cool is that?
Although this is a realm of finance that’s rather esoteric even to some adults, it’s not beyond what kids are able to understand. Kids are curious, and they’re bound to ask questions about stocks and how they work sooner or later– as they should!
Don’t let the complex nature of the subject fool you– kids definitely need to understand the basics of investing. By teaching them about it, you can prevent them from making foolish decisions when they gain control of their own investments and start making their own decisions in the market. Smart financial habits start early.
Here are a few tips:
Keep things simple. When you’re first introducing your kid to the stock market, you don’t need to bulk up on bureaucratic Wall Street jargon. As the old saying goes, “If you can’t explain it to a 6-year-old, you could probably work to understand it better yourself.”
Keep it gender neutral. Studies have shown that the few parents who teach their kids about investing are much more likely to teach their sons than their daughters. Our daughter could grow up to be investing powerhouses if you equip them with the same financial wisdom as our sons– money smarts have no gender!
Lead by example. There comes a point where you can hope your kids will do what you tell them, but at the end of the day they’re watching what you’re doing and are much more likely to do the same if you’re setting a good example. Model a growth mindset and teach your young investors what it means to be a lifelong learner. Educate yourself and teach kids the value of doing the same!
Once kids have a grasp on the fundamentals of investing, it can be fun to have discussions about it together and dive into more complex concepts if your kids are interested. Strategizing with your kids about how they’d like to invest is a perfect way to engage with them about a variety of financial topics, and you just might learn something along the way too!