3 Steps to Help Your Children Become Active Stock Market Investors
One of the most important lessons that parents teach and model for their children is how to manage money responsibly. I have had so many parents tell me that they know that they need to help their children understand the concept of investing better but it’s still an area where they themselves struggle to fully understand. The good news is that you don’t have to be an expert investor to teach your children the basics of stock market investing. Follow the four steps described below and your child will be investing in no time!
Make Learning About Investing a Priority
The most important place to start is with education an there are so many kid-friendly resources like books, movies and games that you can access online. If you have young children under the age of 10 then small books like Wesley Learns to Invest and Rock Brock and the Savings Shock are great books to read and discuss with your children. Books like How to Turn $100 into $1,000,000 and Rich Dad Poor Dad for Teens are great for children ages 11 and up.
Movies are also a great resource. Consider watching movies like The Pursuit of Happiness, Joy and The Ultimate Gift and then discussing the principles from the book to understand the type of character that is needed to be a successful investor.
Don’t forget to keep the learning experience FUN! Games like Monopoly and Cashflow 101 are great games that you can play as a family while learning valuable investment lessons.
Open a Custodial Account
In order for your child to be able to invest in the stock market, they’re going to need a brokerage account. Since you can’t buy stocks directly from your personal checking account, think of a brokerage account as a “checking account” for investing in the stock market. You deposit money into the brokerage account and when you are ready to buy stocks you use it to make your investment purchases. You will have to open one of these accounts on your child’s behalf since they are minors. The type of account is called a Custodial Account and it’s easy to set up.
We recommend Stockpile or Stash because they are both very user friendly for beginner investors.
Invest Consistently
Time and consistency are the two factors that determine how quickly money grows in the stock market. Work with your child to set a monthly investment goal that they can commit to on a monthly basis. It doesn’t matter how small the amount, what matters most is that they are consistently contributing.
If you follow these steps with your children not only will you empower them with the knowledge and tools they need to start to take ownership of their personal economy, you’ll also learn a few things about investing that you can implement in your own financial portfolio. This is one lesson I can guarantee that your children will thank you for many years over. Who knows…maybe they too will teach the same lesson to their children. Sounds like the beginning of a generational wealth blessing in your family!
