How to Teach Kids about Investing

Facebook
Twitter
LinkedIn

Teaching kids about investing, stock, shares, etc., is not a walk in the park, and we know it! Even a large proportion of adults still can’t figure out how and where to invest their money. 

However, “Firm determination, it is said, can move heaven and earth.”

As we always say, the earlier children learn, the better! Teaching them the principles of investing has a significant impact on their financial future.

But remember, you don’t have to come out strong and try to create the next William Gross or Warren Buffet in one night!

If we blend financial concepts into our children’s daily routine, they grow up having a better understanding of money than us. That proves that even telling them short money stories, playing money-related games, keeping their attention, etc., goes a long way. 

vitality of talking about investing to kids

Why Is it essential to Teach Kids About Investing?

Your lovey doves are mentally ready to learn about financial literacy when they are 10 years old or even in some kids younger.

Sadly, Financial skills and investing principles are not taught to children at schools the way it’s meant to be. As a result, parents play a vital role in showing kids the potential ways of making money to help them have a better future.

When we are sending off our children to the real world, we need to give them a few tools to help them kick-start their independent life. Investing is one of the essential tools that if they learn how to use, they can easily make their money work for them!

What is Money Investment?

To put it in simple words, when we work, we earn money, and as a result we can buy goods and essentials. However, when we invest our money in something, we are doing the opposite; we are making our invested money work for us.

There are various methods for investing our money, such as opening an account or even purchasing what we think would be worth more than what it is now in the future.

How Can We Teach Our Children About Investing?

It’s not that big a deal if you’re not an investing expert and don’t know all the details about investing yourself. The ultimate goal here is to familiarize your kids with the concept and improve their financial mindsets.

Here in YounGo Money, we have gathered a guide for those who’d like to take a huge step for their children’s financial future.

Bring Money Talk to the Dinner Table!

Try to keep the following statement in mind “Children Understand More than what it Appears!”

So don’t avoid talking about money in front of your kids. Instead, you can have your casual money talks at the dinner table or whenever you think they are partly paying attention. In addition, you can even calculate your spending, taxes, savings, and bills where they can see. However, avoid making it a tedious topic for them. In simple terms, talk about other ways of investing, like buying stocks. To begin with, you can make up stories to talk about investing. Use their favourite toy or animation companies to illustrate how selling stocks and investing could make them what they are. 

talking to kids about investing

Help them Set a Goal

We all need a dream, goal, or motivation for saving and investing our money, and so does our child. Ask them what they care about the most and what is their target in the next five years. Then show how investing their pocket money (or, in future salary) can take them one step closer to their goal. Consider yourself an advisor and help them decide how much of their money should go into a piggy bank or a saving account and how much should be invested. 

Use Simple Methods to Let Them Know about Compounding

It can be without a doubt, a vital yet complicated subject to cover. Nevertheless, there is always an easier way! Illustrate the concept of compounding by putting a 20p in front of your kids. Then ask them what happens if it doubles every day for one month. After lots of calculations, they may finally figure out and be surprised by the magic of compounding. 

Investing Story Begins with a Saving Account

As mentioned earlier, you don’t have to rush it! Kids need to learn the vitality of saving before starting to think about investing. Make sure you’ve taught them about saving their money using this article. If you think your children are ready, you can even talk about the interest rate. After they’ve gotten into saving habits, you can consider opening them a real investing account. 

Investing Is not A magic Wand

After you’ve made sure that they know the basics, try to make it clear that money investment is a time-consuming process. So many people believe that by investing all they have, it’s possible to get rich in one night! It’s an essential factor to explain how investing works, and in order for them to reach their goal with investing, they have to do it patiently over time. 

Wrap Up 

It’s never enough to tell our children the importance of Investing. Most of us have at least once considered that our lives would be so different if we knew the basics of investing sooner.

The only solution is to prevent that from happening to our children. Needless to mention, the sooner children learn about money investment, the faster they’ll learn to change their financial future.

In future, we’ll discuss other investing terms and methods.

It's Free Forever!

No payment details required.

popup