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Teaching Very Young Children About Money And Investing

Biphoo

12 Sep 2017

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Teaching Very Young Children About Money And Investing

Very few parents are willing to discuss how and whether they teach their kids about money. It's a shame because parents can learn so much by speaking to other parents about their child-raising mistakes and successes. With that in mind, here's a short history of our experiences teaching our kid about money.

We decided to give our kid a very early start with this topic, and now that he's older, we're starting to see the results of our decision. Shortly before he was born, I put aside a small amount of stock for him in a trust. Once he was about 3 or 4 years old, I started talking to him about investing using terms that he could appreciate. Our investment lessons consisted of trips to places like McDonald's, Starbucks, and Whole Foods because I had bought him shares of stock in those companies in his trust.

Even as a nursery school student, he could appreciate the idea that he owned a tiny corner of each of these stores, and whenever customers bought something, a tiny piece of the money the customer spent belonged to him. He also grasped the idea that the company would pay him SOME of the money customers spent, but use the rest of the money to open more stores, which means more customers spending more. How much did he really grasp? In his words at the time, he said: "Oh, it's like a spinning top!" I think he grasped 100% of this concept.

Even as a very young child, he quickly became familiar with the idea that saving money is smart, and that he could use the money he saved to buy another tiny corner of McDonald's. I think he was probably about 5 or 6 years old when I started to sit down at the computer with him at the end of each month to see how many dividends he had earned in his trust, and to let him help decide how we should invest that money - on the condition that he could explain why we should pick one company and not another.

Most of the time, he just wanted to buy shares of McDonald's because as he saw it, "they have really good fries." Good enough reason to buy the stock, I suppose. I didn't bother talking to him about stock prices, or how to value a company, or anything like that until he was about 9 or 10 years old. The topic would only hold his interest for about two minutes at most, and his eyes would start to glaze over in less time than that if I said the word "ratio".

Source:- https://seekingalpha.com/article/4105706-teaching-young-children-money-investing

Biphoo

12 Sep 2017

353 Views