There’s no perfect time to start teaching your kids about money, so it’s best to jump right in.
When it comes to teaching investing, impact in particular, it can feel especially daunting – this may be a subject you’ve only just begun to grasp yourself. No one expects you to be an expert, and you don’t have to teach everything right away. No matter the stage of life your children are in, there’s a way to approach the topic of investing in a manner they’ll understand.
There really isn’t too much you can impress upon a baby, but you can use this time to create habits for yourself – after all, leading by example is the most profound way of educating. Have you got all of your investment ducks in a row? Long hours spent feeding or shushing a baby to sleep are a great chance to catch up on where you stand, financially. Opening a 529 account is a no-brainer, and chances are that you received a few savings bonds from well-meaning relatives. Now’s the time to read up on these investment vehicles and learn about your other options.
Reading The Ant and the Grasshopper, planting seeds, and baking – all excellent activities to enjoy with a toddler, and also great examples of delayed gratification. Investing is essentially just that: Postponing the immediate enjoyment of your money by putting it aside in hopes that you may enjoy more later. By stressing these themes through your play, you’re setting the stage for intentional choices down the road.
Kids are ready to learn more about the world around them, take advantage! Real world examples of business and investing logic are all around us. For example, a trip to the toy store could spark a conversation about supply and demand. What if 10 people wanted to buy a truck and they only had 3? Would they raise the price or lower it? Likewise, a trip to the ice cream shop could turn into a chat about diversification. What if this shop only sold chocolate cones? Would people just go to another shop that has more to offer?
Many kids start working during the summer of their junior or senior years of high school; this is a great time to talk IRAs and other long-term investment options. The idea of earning and investing can be such an abstract thing – until you get your first paycheck. This is also when a kid’s world opens up a little bit more, exposing them to new ideas and experiences. Capitalize on the ideals of youth and explain how investing their hard-earned money in companies that are making a difference is a way that they can meaningfully contribute to causes they care about.