Note From Kalen: Today we have a great post from Lyla Morris on teaching investment concepts to children. See her website for more and her bio below! Since we’re on the topic, don’t forget to check out my new blog, Freedom Sprout, which is dedicated raising money-smart kids as well.
You might have seen your kid imitating you most of the times. This is because they adapt and learn from what they see and hear around them. Hence, it becomes very crucial to teach basic life skills to your children in their early age.
One such important lesson is about saving money and investing it. As investment related decisions cannot be made from what they are taught in school, it is your duty to make them gain knowledge of it. This way they will learn to value money and use it wisely.
If you’re confused about from where to start or what points you need to cover- Don’t worry, this article will provide you a guide about teaching kids about money and investing it.
Read on for insights…
Give Them Daddy’s Interest
To make your child learn about investing, you need to explain to them how your existing money can be fruitful . You don’t need a traditional saving account to illustrate them what simple and compound interest means. Take things slowly and play smart.
You can provide them with pocket money and ask them to invest the money rather than buying candies or toys. Credit this amount in an online virtual bank like FamZoo where you can track your account through the mobile app. This way you can teach your kids about the interest system. They will be intrigued to know more as their own money will be involved.
Teach With Stories
How about a story or a small role play? Kids love to hear stories and such stories tend to have a better impact on them. Take help of fictional stories to educate your child about the investment policies and benefits of investing.
You can engage your child by narrating the ideas of investing in a made up stories. You can also talk with them about your investment policies and its benefits. Explaining them giving your own example about how the investment helped you during bad times will help them understand the gist of it even better.
Moreover, don’t start explaining complicated things like a mutual fund and ETF as this might complicate things for them. Simply make them understand investing is a smart way so that they can use money wisely.
Play Market Games
You can play games on the market by giving them play money and tracking the results. Create competition among your kids or family members of investing and earning money.
Make a dummy bank at home and provide a kids investment account to your child so you can explain the rules of investing. If you want an online platform, SIFMA Foundation offers such stock market games that you can play with the kid through the mobile app.
Let Them Invest
If your kid is over 10 years old, you can up the game by giving them a lump sum of $100-$500 to invest. Let your kids choose where to invest with the condition to keep the money for five years as this is the rough length of time of the full economic cycle.
Make them understand how the stock market works and ask them to learn about their chosen companies. Simultaneously, you can teach them about the retirement plans as well. You might be thinking that retirement is as far as the moon for your teenage kid but you can teach them to invest in the retirement plans once they start earning from summer jobs or part-time jobs.
Use Stock Cards as Gifts
To educate your child about investing, explain it in accordance with their knowledge or level of interest. You can use your child’s favorite food to start the conversation.
For instance, if your child loves Taco Bell, ask them about how the company operates as a business. As their abstract idea grew, ask them to create child investment strategy. You can also ask them to invest in stocks through a dividend reinvestment plan.
The above-mentioned tips will help you to teach your child about money saving and investment. Remember, the more fun and creativity you will add in your learning the more interest will be shown by your kids.
Moreover, the choice of words and activity will be according to your kids’ age and understanding. Use different board games, online portals or role plays to grab attention and interest. So, start your planning with the way you are going to teach the children about investing.
About the Author:
Lyla Morris is a freelance blogger. She loves to enjoy coffee, frugal living, traveling and also love writing about parenting and Health Care tips also.