Top 10 Ways to Teach Your Child About Investing 

Most people don’t start learning about investing until they get that first “real” job with a 401k. And even then, there’s a lot to Google. From the basics of the stock market to figuring out what to invest in, the process can be a little overwhelming. 

Now imagine you started learning as a kid. With plenty of extra time, you’d have been able to learn at your own pace and set yourself up for financial success, all before you even knew what the word “retirement” meant. 

Teaching your children about investing is one of the best gifts you can give them. And you don’t have to be an expert, either! You can learn together, as a family. Here are 10 tips for starting the conversation:

1. Start with the basics

82% of parents are scared to talk to their kids about money, and it’s pretty tough to teach kids about investing if you’ve never talked about money in the first place.

Bring money into your family conversations. Talk about what you spend your money on, why you save and what you’re saving for, and bring your kids into talks about the family budget. Just try your best to keep things positive: money can be an emotional thing, and everyone has a different background, but a positive money mindset can go a long way for kids and help them feel like anything is possible. 

When you’re ready to have the investing conversation, start with the basics. Explain that investing is a way for companies to raise money to grow, and that your money can also grow in the process. 

2. Get started early

As a parent, you probably have a lot of things on your mind, and teaching your kids about investing might feel like a problem for “future you.” Yet, the earlier you get started, the better. Set up an investing account for your kids as soon as you can (even if they’re not walking or talking yet). If you invested $8/day into the S&P 500 for the next 18 years for your child, assuming an average annual return of 7%, your investment could grow to over $100,000.

That’s enough money for them to get a head start on their dreams, go to college without stressing about the cost, or even put a down payment on a house someday. Plus, according to a study conducted at Stockpile, over 60% of parents learned something new about managing money and investing because they set up an account for their kids.

When your kids are a little bit older, you might be able to use their account to highlight the power of investing and show them how much their money has grown already.

3. Make it a family thing 

Families that learn together, grow together. If you’re new to investing, open an account for yourself, too! That way, your family can learn about investing, together. Talk about why you’re deciding to invest, or start a conversation about stocks you’re interested in buying and do some research together. 

4. Use saving as a jumping-off point

Most people wait to start investing because they don’t think they have enough money. But the truth is, it doesn’t take thousands of dollars to get started. You can think of investing like transferring money to your savings: it’s a way to put a little something aside for the future, and every dollar counts. 

Start by teaching your kids about budgeting basics. You can talk about wants vs. needs and explain the different “jobs” you give your money. Some of it should go to spending (which includes needs and wants), and some of it should also go to saving. But instead of putting all that money into a savings account, they can invest a little bit. Have your kids start by investing small amounts, like $5. This can come from their allowance, birthday money, or the money they earn from that first summer job. 

 5. Make investing a habit

After you’ve had the budgeting conversation, teach kids to allocate a percentage (like 10%) of their allowance or earnings to investing every week. You can even use an app to automatically divide their money between savings, investing, and spending. This helps create a habit so kids learn to invest without even thinking about it! 

6. Teach lessons in ways they can understand

Rather than talk about yields and compounding (big words some adults don’t even understand), it’s better to give your kids clear and concrete examples. Whether you use Legos, gardening, sports, or even pennies in a piggy bank, use something they’re interested in and excited about to explain money concepts. 

7. Let them choose 

When it comes time to invest the money they’ve set aside, let kids research and pick the stocks they want to invest in. Maybe your 8-year-old is a huge Disney fan and wants to invest in Disney stock, or maybe your 12-year-old would rather invest in their favorite sports brand. Kids are more likely to stay involved and engaged if they are making the decisions. 

8. Teach them that stock ownership is company ownership 

When you own shares in a company, you actually own a small part of that company. So if your kids own shares in Target, they can feel a little sense of pride walking into Target, knowing that they own a small part of the company. If they own shares in Nike, they’ll look at their Air Jordans just a little bit differently. 

9. Let them experience the ups and downs of the stock market

The thing about investing is that it’s not a straight climb. The market will go up and down, and so will the money your family has invested. Teach your kids that this is a normal part of investing (you can even show them the history of the S&P 500, pointing out the big dips and periods of growth to illustrate this point). Teaching kids financial patience and resilience will help them make smarter, less emotional decisions.

10. Give them a gift that lasts

For their next birthday or holiday gift, consider giving the gift of stocks instead of toys. After all, toys only last so long, and most kids stop playing with them after a few months. A year later, they’ll still have the stocks, and they may have even increased in value. This is a great way to teach kids about investing, and tie valuable lessons to life’s different chapters. 

As you teach your kids about investing, remember: it doesn’t matter if you’ve never invested a dime or if you’re a stock market pro; starting the conversation is what matters. Every little thing kids learn today can set them up for success in the future. As we like to say at Stockpile, starting is everything. 

Victor Wang is the CEO of Stockpile, an innovative platform making hands-on investing education accessible to youth and families.