Want to start your children on a good path towards financial freedom? Start teaching them investing skills now. As soon as they are old enough to talk, they can start getting involved with the basics of money. Once they are in grade school, you can begin to teach them the valuable skills of investing.
Some tips on just how to teach your kids some investment skills are:
1. Start by explaining what investing is. Not exactly sure yourself? Typically most kids understand saving — where you are putting money aside to buy something later, adding to that money as you get more. Investing is like saving, except it is for larger purchases or projects way off in the future – usually even 10 or more years down the road. Investing also involves placing your money in accounts or funds that pay you back for letting them use your cash.
2. Once they understand the basics, help your kids come up with a reasonable investment goal they can truly relate too. It could be a car when they turn 16, a brand new bike, or even their own education. Work with the individual interests and ages of your children to find a goal that is best for them.
3. Then, help your kids find a good investment. This is a great time to explain how a stock owns a piece of a company and if the business does well, the stockholder will do well. Also, talk about the risks involved in investing including how these risks are what lead you to gain money in the end.
4. Let your children take an active role in selecting where their investment money will go. Do a little research together to find a good company. As this is more of a teaching tool, let your children find some businesses they can relate to and are familiar with to spike their interest.
Even if you don’t have any extra cash to start your kids investing, you can still play an investing game. Let the kids pretend to buy some stock and keep track of the “accounts” progress. The key is to get your kids thinking about it at a young age, so it is not so foreign of a concept when they grow older.