How to Teach Your Kids About Investing:  11 Savvy Parenting Tips

It can seem intimidating at first, but learning how to explain investing to a child doesn’t have to be complicated or difficult.

Children mature at different rates, so you might not start off with complicated financial planning topics like asset allocation, risk mitigation or portfolio management. Instead, explain investing basics to develop your child’s financial education and begin early.

Talking to Kids About Investing

1

You can cover personal finance basics like what it takes to earn money, create a budget, pay bills and prioritize the choices you make for purchase, or even talk about things to save up for.

Include Kids in Financial Conversations

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Start first by explaining the value of a stock can go up and down, and this depends on a number of factors. Most importantly, a stock’s performance depends on its growth prospects and its profitability.

Talk About Stocks and Bonds

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A child’s financial journey begins with saving money, but investment is the next step. You should tell your children the difference between saving and investing, and what risks and rewards to expect from each.

Start with a Savings Account Before an Investment Account

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By involving children in stories, they’ll be more likely to follow your advice. That’s especially true if they understand the reasons behind it as told by characters in a story.

Teaching Your Kids Money Management with Stories

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Children also need to understand the purpose of investing—and it’s not to gamble money at a casino.

Teach Kids the Stock Market Isn’t a Casino

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To keep kids involved in the process of saving for their goals, encourage them to save for activities that interest them, whether that involves a new video game or a trip to Disneyland.

Help Kids Start with Developing a Financial Goal

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