I was recently asked to speak to my son Clay’s 8th grade class for Career Day. I was excited to get the chance to educate the kids and motivate them to save and invest, but I realized when I arrived that I had my work cut out for me, as I was following a real-life forensic scientist. When it was my turn to speak, I walked to the front of the room with my large bag. I joked that it was going to be tough to follow murder, bloodstains, and real life CSI stories compared with savings and investing, but I proceeded to tell them that, luckily, I came prepared.
As I turned and faced the class, I nonchalantly emptied a bag of several one-pound chocolate bars and jumbo packs of candy. I noticed that the kids had big smiles on their faces and I even received a few cheers. Miraculously, they were paying very close attention!
I had decided to invent a game to teach the students about the stock market. I gave out a list of stocks that they would likely be familiar with (companies like Apple, Abercrombie & Fitch, Facebook, and Best Buy), and we talked about how to buy equity in a company, how to track performance and also the basics of what a mutual fund is.
The kids caught on quickly how to play the imaginary stock market game, and I gave out prizes based on who had picked the best performing stocks from the previous year. We talked about why certain companies performed better than others, and I sent the students home with an article I wrote about kids and investing. Over the next couple of days, I was surprised at how many parents approached me as a result of the kids showing their parents the article and asking questions about my presentation.
These parents wanted to talk more about how to educate their kids about finance, investing, and saving, and were looking for ideas about how to do it. From those conversations, I thought I’d share a few tips on teaching your kids about financial management.
Have the Conversation
Even if your child isn’t particularly interested in the stock market or financial planning, having a sense of how to make financial or investment decisions and knowing the vocabulary will help them as they grow into adults making their own decisions.
My daughter Abby, for example, has completely lost interest in investing for the time being. No matter how hard I try, she just won’t listen — and for any of you that have had a 16 year old daughter, you know not to persist! However, I’m confident that with the lessons she’s gotten over the years she’ll know which questions to ask when she encounters her first 401(k).
To get these basics instilled in your child’s mind, I think the most important thing you can do is to simply share your financial life with your child. Whether it’s showing them your retirement account statement and taking the opportunity to talk about retirement planning, or involving them in major purchases to teach them about interest rates and planning ahead, just getting the concepts in your child’s mind will go a long way.
Of course, I find it helps to keep it simple and stick with the basics. Otherwise you might find their eyes starting to glaze over!
Make it a Game
If your family plays games together, consider creating an investing game, where you invest in particular stocks and see who gets the best performance (based on historical stock prices). Or, have everyone pick one stock and track it for a month or two, with the winner receiving a prize. Or you can invent another game altogether – There are countless resources for creating activities around investment education, and I think this is a great way to teach new skills and concepts, like looking up stock prices, differentiating between stock exchanges, and finding ways to analyze a stock.
Whatever game you choose, make it fun and make it personal. I find that prizes like money, chocolates, candy, etc. really help to keep kids interested and involved. In other words, bribe them. At Career Day, word quickly got out to other classrooms that my presentation came with these treats, and suddenly my speech was in great demand!
Open an Account
One thing I did with both my kids was to open an investment account for each of them and encourage them to set aside part of any earned money or cash gifts. It’s a great experience to show your child how these things work, and seeing the rewards from it as the account grows really helps to drive home the lesson that saving pays off! Of course, at some point, when performance isn’t as good, I sometimes throw a little extra into the account to keep them motivated. Some could construe this as misleading; however, I believe it’s equivalent to my wife, Sally, sprinkling bran powder into their brownies!
Another great thing about this is that you’ll discover important information about your child’s investing personality. For example, Abby prefers to keep more money in cash, while Clay likes to invest as much as he can. I try to help each of them work with their preferences by showing them ways to manage their money that matches their personalities. This way, they learn important lessons about saving and the value of a long term plan, but they also learn the skills to implement those lessons in real life.
In the end, making savings and investment a part of your child’s life, and incorporating fun and rewards, will help you teach them important skills that will last a lifetime. So whether it’s a quick conversation about Google, Apple, or opening a new investment account, take a small step today that will help educate your kids!
For more information about putting together an investment game or advice about investing with your child, don’t hesitate to reach out.
photo credit: Krissy.Venosdale via photopin cc
To learn about retirement savings, download my free eBook, “10 Tips You Need to Know About Your IRA Rollover.” This short book is packed with critical information that will help you make the right decisions about your retirement savings.
Written by Bradford Pine
Bradford Pine Wealth Group – New York City Financial Advisors
The views and opinions expressed in an article or column are the author’s own and not necessarily those of Cantella & Co., Inc. It was prepared for informational purposes only. It is not an official confirmation of terms. It is based on information generally available to the public from sources believed to be reliable but there is no guarantee that the facts cited in the foregoing material are accurate or complete.
Comments may not be representative of the experience of other investors. Investor comments and experiences are not indicative of future performance or results. Views and opinions expressed in the comments section are the author’s own and not those of Cantella & Co., Inc. No one posting a comment has been compensated for their opinions.