How to Introduce Investing to Teens

Mabel over at Girls on the Money won­dered out loud over the week­end:

Recently inter­act­ed with some 5^th and 6^th graders. Asked them if they knew what the stock mar­ket was and was giv­en a blank stare 😆. I can’t say I didn’t expect that but it made me won­der — what is a good age to intro­duce this top­ic? Most impor­tant­ly — HOW can it be intro­duced?

— Mabel N., MBA | Founder GOTM (@GirlsOnTheMoney) May 6, 2018

I’ve often gift­ed stock (Stockpile gift cards are a great) to close friends’ kids so I’ve seen kids as young as 7 or 8 years old real­ize what that means to own part of a com­pa­ny. (It means they’re going to want to shop at “their” com­pa­nies!)

The impli­ca­tion being that one way to intro­duce invest­ing to kids is sim­ply to get them start­ed, and then talk to them about it. That’s a one-on-one effort though.

More broad­ly, by ear­ly teens kids should def­i­nite­ly be exposed to invest­ing in a group/classroom set­ting. And while frac­tion­al stock own­er­ship is a great way to get start­ed, and get­ting start­ed is much bet­ter than talk­ing about get­ting start­ed, stock own­er­ship is just a small por­tion of what it means to learn about invest­ing.

Why Invest?

I’d think you can phrase learn­ing about invest­ing as to the “why’s”:

1. Saving for long terms goals, like own­ing a home
2. Saving for emer­gen­cies, like being out of work
3. (My favorite) The idea that mon­ey makes mon­ey, so if you learn to invest, you’ll earn more than you can just by work­ing

This could make a great dis­cus­sion top­ic because we can teach kids to think long term, to set goals, to reach for their dreams.

Curriculum

Then, I’d walk through the “mon­ey jour­ney” peo­ple expe­ri­ence.

• They earn mon­ey
• They keep mon­ey close at hand to pay for reg­u­lar expens­es
• They cre­ate a bud­get so that they can save (we’ve already giv­en them the “why’s”)
• Options for sav­ing long term; this might include stocks, bonds, real estate, start­ing a busi­ness
• Introduce ideas like liq­uid­i­ty, risk, infla­tion, and tax­es (age depen­dent, but these are some core top­ics); with risk you can intro­duce mutu­al funds, with tax­es — retire­ment sav­ings, with infla­tion you can talk about why just putting it in the bank isn’t a great idea
• Then I’d get them start­ed. I think it’s so impor­tant to actu­al­ly do it rather than just talk about it. These days every­thing is so acces­si­ble. Though, I real­ize even small amounts of invest­ing could be pro­hib­i­tive for many fam­i­lies:
  • They can use Stockpile to get start­ed with stocks for just $5 (and they have a great cus­to­di­al imple­men­ta­tion for par­ents to engage their kids too),
  • They can use peer-to-peer lend­ing for bond-like invest­ing (I don’t know much about this, so not sure what the min­i­mums are),
  • They can run through a busi­ness plan for buy­ing a home and rent­ing it out, and/or
  • They can build their own web­sites and review a book or a toy to see if they can gen­er­ate some affil­i­ate income.

Building Wealth

Money and invest­ing are such big top­ics. It’s real­ly hard to nar­row things down, and explain them sim­ply. There’s always more to say, and more caveats to explain. Money is not as black-and-white as you would think con­sid­er­ing it’s all about num­bers and arith­metic.

That said, I’d also pro­pose using the phrase “build­ing wealth” instead of “invest­ing”. I’d sep­a­rate wealth from income (and the job that earns the income). It’s almost like bal­ance sheet vs income state­ment, though, that com­par­i­son would be too bor­ing though the idea could be inter­est­ing to explore.

Couples fight a lot about mon­ey, and learn­ing to live beyond pay­check-to-pay­check reduces stress. It’s not about the activ­i­ty of invest­ing, but the goal of build­ing wealth, hav­ing “the right amount” of mon­ey so that you can live a life with a lit­tle more qual­i­ty, a lit­tle more safe­ty, than you had in the past. That’s how I’ve always viewed my wealth build­ing activ­i­ty.

And it’s cer­tain­ly worked for me.

I’m curi­ous what you’d change on the above cur­ricu­lum. Let me know in the com­ments if you care to.