The key to teaching your children about making investments is to teach them wisdom – unfortunately, that’s something that have to learn for themselves, but you can teach them to save. By establishing a savings account from an early age, you are helping teach your child about the value of money. You can start an UGMA account (one for minors) at just about any bank for a very little amount. It can be as little as $1.00 in some places, others require a $25 minimum but then don’t care if your deposit is a penny or $100.
TODDLERS:
Start them off with a piggy bank. Learning to place spare change into the piggy and shake it will give them a tactile concept of how much money is worth.
ELEMENTARY SCHOOL KIDS:
This is the time to start a real savings account. Today many schools in the USA are implementing voluntary partnerships with local banks to offer student savings accounts where either the bank representatives come to the school once a month for deposits, or the students themselves do a mock bank and take on duties of the tellers with the bank reps help. Having your child participate at school does take some of the control out of your hands, but it also allows them the experience of peer pressure and “keeping up with the Jones” and offers you a way to teach a valuable lesson there too.
TEENAGERS:
Teenagers are the most apt to spend money of any childhood age group, so it’s important to have instilled good money attitudes before this age. They may be reading for a checking account, and how they have handled savings now that they have more perceived expenses (like that to die for pair of sneakers) will be a clue to how ready they are to invest. I don’t feel that children are of a maturity level to learn about investing (unless you’ve birthed an idiot savant financial genius) until they are teenagers.
First steps might be converting their savings into a CD or money market accounts. You can help them select companies that you know are good investments and allow them to choose those based on their personal preferences. Sharing your own experiences is very useful, but ultimately it takes allowing your teen a bit of leeway to take their own risks with their finances. However, you want them learning to invest in their future to be a positive experience so do stay involved, but keep it small investment wise until they get better versed about what a market is and how it all works.
So, teach them to save, instill good money making decisions, give them a heads up on what you’ve done and then gently guide them to good starter decisions. After that, you will have done what parents are suppose to do – teach their kids to make choices on their own.