6 Ways Kids Can Learn About Investing – 2024 Guide

While many people believe finances and the stock market are only “adult topics”, that doesn’t have to be the case. Your children can grasp these concepts easily, and starting early can help them become successful in the future. It’s also a great way to have them become interested in developing investing skills once they’re older. You shouldn’t underestimate your child, but you’ll still need to simplify the process to make it interesting and understandable for your child.

Well, where do you begin?

In this article, we’ll try to help you find a way to teach your kids about investing, so you can give them a head-start in life!

So, without further ado, let’s get to the bottom of it!

Number one: Teach them how to save first

Before you starting teaching your kids about stocks, you should help them understand the concept of saving. A good way to go about it is by purchasing save jars or piggy banks. Once they’re able to see how money grows over time, you’ll be able to explain how interest works much easier. It also teaches them patience and the importance of saving some money on the side.

Try to make it as entertaining as possible, and reward your kids for their patience! It will help them realize that being patient pays off, which is key to a successful investing career.

All in all, money management is a skill that lasts a lifetime if taught in early childhood. We all know how many adults struggle with it, and that’s mostly because they had to learn it all from scratch after becoming financially independent.

Number two: Teach them about risk and profit

The higher the risk, the higher the potential profit. Many adults have a problem with finding the right balance: some are too afraid to take ANY risks, and some risk what they can’t afford to lose.

Now, this is not a complicated concept to learn, but it might require some creativity to teach. Keep your children interested by making up stories that explain the concept in a simple, yet entertaining way. You’re the one who knows them the best, so try to include their interests in the learning process.

Whatever you do, remember to focus on the basic concepts first, and make sure to keep it fun. Let them engage, and be patient when answering their questions.

Number three: Teach them to invest reasonably

While your kids don’t have to deal with bills and grocery shopping as of yet, they must learn to be mindful of their investing and spending habits. They must develop this mindset as early as possible. It takes a lot of discipline and effort to implement it into our daily lives, and it’s much harder to do when we’re already adults.

So teach your children to pay themselves before investing or reinvesting. Risking more than you can afford to lose is how you get into debt. Having your children grow up with the right mindset on investing can make them become responsible adults later on. Whatever you do, remember to teach them the importance of being responsible with finances, and to think carefully before investing. Of course, let them know that losing some money isn’t the end of the world, as bad investments happen even to the best investors in the world.

Number four: Get books

Believe it or not, there’s a plethora of educational material on investing made specifically for children. Books like “I’m a $hareholder Kit” or “The Young Investor” will make your children enjoy learning. They’re made to be fun and educational and your children will love it! What’s more, getting your kids to develop reading habits when they’re young will help them academically in the future.

So, browse your local library or get on Amazon to find some investment books you deem appropriate for your child’s age and interests. It also puts the pressure away from you, and it can be extremely helpful if you live on a busy schedule. Of course, make sure to get involved in the reading too, and talk to your children about it to ensure they’ve understood everything properly. Be prepared for many questions and be as patient as you can! The goal is to awake and support your child’s inner curiosity!

Number five: Let them invest

While abstract learning is important, nothing beats real-life practice. So, how can your children become investors too?

Well, your children probably do not have their own money they can use for investing. What you can do is to open up a custodial account so both you and your children can invest together. Many online platforms, such as loved.com, can help you achieve this in no time.

So, yes, letting your children invest will help them learn the process effectively. They’ll be more aware of the risks and they’ll learn how to deal with losses properly. Don’t be afraid to spend some money, look at it as an investment towards your child’s future. There’s nothing more important than that.

Number six: Consider your child’s interests

As young as your child is, they already have some preferences. You’re more likely to pique their interest if you tell them about the stocks emitted by Disney or Facebook for example. Talk to them about it and find out what their preferences are. Then, you can monitor the stocks market together, which is an incredible learning experience. Remember, you are your child’s first role model, so they’ll probably be excited to do the same things you enjoy doing.

Overall, taking note of your child’s special interests will keep them interested and happy. So, discuss these things with your child and treat them as an adult.

The bottom line

Teaching your kids investment skills early on can be incredibly beneficial for their future. It teaches them to manage their finances responsibly, and it teaches them self-discipline and patience, which are all valuable life skills. In this article, we listed some of the best ways to go about it, in the hopes of making the entire process easier for you and your child both.