Tips on How to Get Your Kid Started with Investing

Tips On How to Get Your Kids Started with Investing
Tips on How to Get Your Kid Started with Investing 3

We all want our kids to have rich, full lives and to take every opportunity that comes their way. We also want them to learn how to seek opportunity and take charge of their financial future. While kids are learning ABC's and 123's, it's not a bad idea to start introducing them to these financial concepts. Investing will lead to more financial stability and freedom later on. If you are looking for ways to get kids to start investing, then these brief tips will help you help them achieve their goals.

Teach The Basics

Whatever you want to get your kid started on, you have to introduce them to the basics. In some cases, it's easier than others. It depends on if your kid is naturally interested in the topic. In the case of investing, it's probably more of an acquired interest, but it all starts with introducing the concepts in a way your kid can connect to. Kids start learning key behavior patterns very early on as they watch you and try to mimic what you do. If you make more of your routine about investing and other financial matters, your kid will attach to those concepts. They will begin using the phrases and imitating what they think you are doing.

Once you have a child showing interest in investing (even if they don't know quite what it is), that is your chance to talk to them and build everything down into simple terms that they can connect with.

Illustrate the Principles

The next thing you need to do to get kids to start investing is show them with illustrations what investing does. For adults, we use graphs and tables to tell a story, but those mediums aren't as helpful to kids. Try and take those illustrations and expand them into a narrative that kids can understand. Create stories with characters that get introduced to investing situations. To help you out there are all kinds of helpful children's books on Amazon from Go! Stock! Go! to Finance 101 for Kids.

Discussing and illuminating the practicality of investing concepts with examples of what happens when you do and don't invest is essential if you want to get kids to start investing.

Use Games for Practice

One piece of advice I can offer is to resist the urge to have them start buying stock too young. Getting in on the market before you are ready is rarely a good idea given if a stock is so-called “safe”. You don't want to throw them to the wolves of Wall Street without a good game plan. That's why simulations are so preferable to actual investing.

If your kids buy a stock and it goes up, they might have unrealistic expectations that will set them up for bad decisions. If the stock falls, it might turn them off completely and all of your hard work will be ruined. That's why using investment based games for children is the best way to get kids to start investing the right way. The things you taught will play out in simulations and your kids will really begin to take hold of the practice of investing.

Break Down Their Paycheck

With the groundwork laid out to get kids to start investing, All that's left is applying knowledge in the field. When they are old enough to start earning money, whether it's for odd jobs or a steady paycheck, start helping them to manage their money. Show them how to divide their checks. Then, set up accounts for them to transfer one percentage of their funds to a savings account and another to a brokerage. Make sure they understand the concept of taking out their investment money right away versus waiting until the end of the month. The pay yourself first rule is an essential practice for investors.