How to Teach Your Kid to Start Investing

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It’s important for parents to learn how to teach your kid to start investing.

Personal finance is a huge dilemma for many consumers (aka people) in contemporary society. Debt has become normal. Furthermore, student loans do more to lead to a financial crisis than they do to secure a financially stable future. The reason so many of us have gotten so bad with money is that we haven’t been taught the basics. Worse than that, most of us have been encouraged our whole lives to make poor financial decisions. Bad habits keep us from ever successfully building wealth.

Solid financial footing starts with good training, and kids can start learning the basics as early as three years old. If you have a child, you want to protect their future. One way to do this is to prepare them to be financially savvy and teach them to save and invest their money. For you parents out there teaching your kids about money, here are some tips on how to get your kid to start investing.

How to Get Your Kid to Start Investing

Cover the Basics

Before you dive right into investing, it’s important that you drive home the concept of basic principles of money. You can earn it, spend it, save it, and give it. The concept of making money is easy to teach but crucial. You should also stress that it’s best to spend less than you earn. That helps you explain the importance of saving money that can later be invested to make it grow. Finally, there is a giving component to money management that is often overlooked .It helps move your kids in the right direction as opposed to fostering greed, which can become an unfortunate side effect of putting so much focus on financial health. When your child understands money and the three things you can do with it, it’s time to expand on saving and teach them more about investing.

Use Narrative to Drive Home the Concept of Investing

The best way to teach a child anything is through stories. Narratives like their favorite TV show or bedtime storybooks are the way children connect to a subject and process information. Teaching through story illustrates important principles. It can also teach ethical and moral standards as well when it comes to how you can and should deal with money. Even before your child understands about money, storytelling is a good entry point into how to get your kid to start investing.

Play at Investing

If stories are a tool of knowledge, play is a tool of behavior. Children learn how to act through play and they use play to develop skills that later become either basic functions of life or potential job qualifications. Children make-believe and play dress up, all as a way to try on different possibilities for what kind of adult they are going to become. They pay close attention to mom and dad and copy their actions in the same way. Teaching how to invest through play is a way to drive action. It’s also the key to getting kids to think more regularly about investing and how to do it well.

Get them Interested

Once your child has the basic principles of money management in mind and they are used to practicing the concepts, introducing the concept of compound interest is no longer confusing, it’s exciting. Teaching about compound interest is where the rubber meets the road when it comes to firing up your kid’s imagination. demonstrate how a small sum of money can grow over time and what that can mean for them when they grow up.

Omit Credit Card Discussion

In all of the talk about money and how to handle it, it’s important to avoid discussing credit and loans. You can answer questions, but you should avoid introducing topics that deviate from the best practices in money management. Establishing creditworthiness is not how to get your kid to start investing. It’s how to get them into the consumer mindset and it obliterates any interest in saving and investing.

 

Have you already started teaching your child about personal finance and how to save?

 

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