How To Teach Your Kid The Basics Of Investment

Most parents do not share details of their finances with their kids. This is usually because of the assumption that the child will not understand the details, will not be interested or because they simply do not find the need to get them involved. On the contrary, it is never too early for your child to understand money and how it works. Getting your child involved in the economics of your household will arm them with the very vital knowledge of how to handle money; saving, investing and reproducing.

Why Is It Important to Teach Your Child About Investing?

The times demand that your child grows up with an understanding of the world of finance and business. This way, they will be able to recognize and make the best use of the opportunities at large. By starting at such an early age, you can entrench the values of an entrepreneur within them. These, they will find very useful even before they are old enough to take on any serious financial venture.

How then do you go about this?

1. Get Them Used to Saving First

It is never too early to introduce your child to start saving. You can start with the very popular piggy bank concept – get your child familiar with the idea that if you save up enough, you can get great things with your money at the end of it. They can begin paying for certain fun items from their savings, then the child can graduate from a piggy bank to a personal savings account.

2. Teach Your Child The Basic Concepts of Investment

When your child’s understanding of money grows, you may present them with a greater purpose for the money being saved; something you know they will be interested in. This might be a good time to explain concepts such as stocks, interest rates, risks and returns to your child; in a fun and simple way.

Tell them about the companies you have shares in, how you got the shares and how it works. Explain it in such a way that they will be able to relate. You can give them examples of stuff in your home, which you were able to buy from the returns on your investment. It’s a good idea also, to get your child to read books and play games about investment. Monopoly is a good one. There is an endless supply of books and games online that your child can learn from.

3. Investing

The next step should be Introducing your child to cool companies that you think they will be interested in. Video game companies are an example. Target companies that manufacture a product or provide a service that your child has an interest in.

After your child has decided where they want to invest their savings, you can chip in and buy the shares. Teach them about tracking company performance and have fun while at it.

Don’t forget to keep encouraging them to save.

Before your child grows old enough to independently handle their own finances, they will be incredibly savvy investment gurus if you put in the work.