The wealth gap continues to increase as many people stop investing due to fear. If you are worried your children aren’t going to become investors, it’s best to start teaching kids to invest right away.
When your kids develop good habits, they often carry those good habits into adulthood. Continue reading this article to learn how to teach kids more about investing.
Start With Saving
Everyone needs to learn how to save before they can do anything else. Without learning how to save money, your kids don’t understand why savings is important and how to make it work for them.
You can show kids how to manage their money by having them put their money in different jars. You can have a jar for spending, savings, and giving. Once they learn how to do those things, you can add a growth jar later for investing.
Pay Yourself First
You might have heard that you should pay yourself first, but you don’t quite understand it. The way it works is that if you don’t pay yourself first, you won’t pay yourself at all.
Anything that you want to be done or paid throughout the month, you need to budget for it. If you don’t put money aside for savings and investing in your budget, you won’t have anything left over for it.
Putting money aside yourself is a good way to set an example for kids and show them how to be smart with money.
Help Kids Understand Compound Interest
One of the most powerful things you can show your kids is how compound interest works. When your kids understand compound interest, it won’t seem like magic, but instead, it will make sense to them, and they will want to make it work for them as much as possible.
No matter how much more money you put into your investments later on, it is never going to match up to letting compound interest work for you over the long-term.
As your kids get older, you can teach them lessons from books like the Compound Effect by Darren Hardy to allow them to get a deeper understanding of how it works.
Keep It Simple
When it comes to investing, you don’t need to confuse your kids. Gen z investing looks different than generations before, but you don’t have to complicate investing when you’re talking to your kids.
Show them how they can pay themselves first, buy index funds, and allow time to do its work.
Teaching Kids to Invest for a Bright Future
Investing allows people to create income outside of what they work for day in and day out. Teaching kids to invest allows them to tap into a totally different type of income than income earned at their jobs, and now you have the information to help them.
Do you want to learn more about personal finance, investing, and other important topics? Keep reading our blog to get the help you need.