Mabel over at Girls on the Money wondered out loud over the weekend:
Recently interacted with some 5th and 6th 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?
— Mabelle (@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.
I’d think you can phrase learning about investing as to the “why’s”:
- Saving for long terms goals, like owning a home
- Saving for emergencies, like being out of work
- (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.
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.
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.