5 Simple Ways to Introduce Investing to Your Kids

Teaching kids about investing can seem daunting. But introducing the basics of money management and investing doesn’t have to be overwhelming—or boring! In fact, the earlier kids learn about investing, the better prepared they’ll be to make smart financial choices in the future. With a few fun, interactive steps, you can introduce your kids to the world of investing, setting them up with essential life skills.

Here are five simple ways to get started.

1. Start with the Basics – Explaining What Investing Is

Kids often have curious minds. Why not start by answering their big questions in ways they can understand?

Think of investing like planting a tree: You plant a tiny seed, water it, give it sunlight, and watch it grow over time. Explain to them that investing is a way of growing money by putting it somewhere it can increase in value, like a company or a fund. Some investments grow quickly, and others take a bit longer—but with patience, they can flourish!

Use language they can relate to:

• Growth: Describe how their favorite toys or games also started as small ideas and eventually became popular.

• Risk and Reward: Explain how sometimes the value grows (reward), but it’s also normal for it to go down temporarily (risk). A gentle approach can help them get comfortable with the ups and downs of investing.

This early introduction gives kids a foundation they can build on as they grow.

2. Use Stories and Books to Spark Interest

Children love stories! Books are a fantastic way to make financial concepts relatable and fun. By reading age-appropriate stories about money and saving, kids begin to associate these lessons with familiar characters and exciting adventures.

Here are some recommended reads:

• The Berenstain Bears’ Trouble with Money: Perfect for young kids, this classic introduces the basics of earning, saving, and spending.

• The Young Investor by Katherine Bateman: Aimed at slightly older kids, this book explains how investing works in a way they can understand.

• Rock, Brock, and the Savings Shock by Sheila Bair: A story about two brothers with very different saving habits, which teaches the power of saving and growing money.

After storytime, ask your kids questions to make the lessons stick. Try something like, "What would you invest in if you could own part of a company?" or "Why do you think saving is important?" Engaging in these conversations helps reinforce the lessons in a natural, enjoyable way.

3. Create a Mini Investment Experiment

Nothing teaches like hands-on experience. For older children, setting up a “family investment fund” or even just a mock investment can make learning about investing an exciting activity.

Here’s how to set up a mini-experiment:

1. Pick a Few Stocks or Companies: Let your kids choose a few companies they know and love, like Disney or Apple.

2. Set a ‘Starting Fund’: Pretend to invest a small amount in each, or if you're comfortable, invest a small sum for real.

3. Track the Growth Together: Once a week, check how each stock is performing. Use simple graphs to show the rise and fall of their chosen investments.

4. Discuss Gains and Losses: Explain how some days are better than others and why it’s important to think long-term.

Watching their chosen investments change over time introduces the real-world dynamics of investing in a way that feels engaging. Plus, it’s a great bonding activity that brings the family together around a shared goal.

4. Use Apps and Games to Make Learning Fun

These days, there are plenty of financial education apps specifically designed for kids. These tools make investing feel like a game, turning what can be a dry topic into something interactive and fun.

Some popular apps and games include:

• Greenlight: A debit card for kids that includes investing features, allowing them to practice with real money (under parental guidance).

• Stockpile: Offers fractional shares so kids can buy a small part of a company and see their investments grow over time.

• Bankaroo: A virtual bank for kids that teaches budgeting and saving.

Encourage your kids to use these apps regularly, and set aside time each week to review their “investments.” Not only does this make learning fun, but it also creates a habit of checking on investments and learning from results—valuable skills they’ll carry into adulthood.

5. Show How Investing Relates to Their Future Goals

To make investing feel real and relevant, link it to their own goals and dreams. Explain that investing isn’t just about making money—it’s about achieving what matters to them, whether that’s a special toy, a future vacation, or even college.

Talk about the Power of Compounding:
Explain in simple terms that if they invest a small amount regularly, their money will grow faster than if it just sits in a savings jar. For example, "If you save $1 every day, that’s $365 a year. But if you invest it, it might grow to even more over time."

Set a goal they can relate to, such as saving for a big item like a new bike or electronic device. Create a chart where they can track their savings and hypothetical growth if they invested. Showing them this visual can be powerful and help them understand how investing works towards their future dreams.

Conclusion

Teaching kids about investing doesn’t have to involve complicated terms or big amounts of money. By making it interactive, relatable, and fun, you’re giving them the tools they need to feel confident with their finances in the future.

Think of each small lesson as a building block, leading them one step closer to understanding how money works and how to make smart financial decisions.

Ready to try it out? Pick one of these methods and give it a go! Whether you start with a story or set up a family “investment fund,” your kids are sure to benefit from these foundational lessons.

FAQ

Q1: What’s the right age to start teaching kids about investing?
There’s no “perfect” age, but you can start around ages 8 to 10 by introducing simple concepts. Tailor your approach to their age and understanding.

Q2: What if my child isn’t interested in learning about money?
Make it relatable to something they want. For example, if they’re saving for a big toy, show them how investing could help them reach that goal faster.

Q3: How can I simplify stock market concepts for young kids?
Use analogies like “owning a piece of a toy store.” Explain that the stock market is where people buy and sell these pieces, and sometimes they’re worth more, sometimes less.

Q4: What should I do if my child becomes discouraged when they see an investment go down?
Explain that this is normal and part of the investing process. Use this as an opportunity to teach patience and long-term thinking.

Q5: Are there any risks to starting a mock investment fund with kids?
Not if it’s pretend! With a real fund, only use small amounts you’re comfortable with. This is about teaching, not profit.

Key Takeaways

• Start Simple: Begin with basic concepts that kids can understand, like “growing” their money.

• Use Fun Tools: Books, apps, and hands-on activities make learning engaging.

• Encourage Patience: Investing takes time, so teach your kids the importance of thinking long-term.

• Relate to Their Goals: Connect investing with something meaningful to your child, like a toy or savings goal.

• Keep It Interactive: Make it a family activity so kids feel included in the learning process.

By starting these conversations now, you’re giving your kids a valuable head start in understanding money and the world of investing. They’ll thank you one day for teaching them these foundational skills!