Want to teach your child more about investing but don’t know where to start? Teaching children about investing their money can help to give them more options when they become an adult. However, where to invest your money is a complex subject that many adults can still find confusing. So, what is the best way to advise your children on this tricky topic?
There are a lot of resources out there that can help you teach your children all things investment-related. In this brief guide, discover some of the best ways to introduce your child to the world of investing.
Make sure your child understands money and its value
Before you start teaching your children how to invest, it’s a good idea to make sure they first understand the value of money. Talk to them about why learning about money is important for their future. Explain its value and how it can be used. There are many fun money activities that can help you with that.
By the time your child is old enough to start investing, you’ll want them to fully understand the value of money. If they don’t, they could waste it on risky or dud investments. If they understand the value, they will typically make much more careful financial decisions.
Talk about how you as a parent make money
While you don’t need to reveal how much you earn if you don’t want to, it can help to talk to your children about how you make money. What does your job entail, and do you have any other lines of income?
Talking about how you earn money shows your children what to expect. You can also use your own experiences to inspire your children to make different decisions. For example, you could let them know that looking into education and training can increase their chances of getting a well-paid job. Whatever route they choose, having a clear focus on their financial future will help to give them a better life further down the line.
From saving to investing
You will want to teach your children that before they can invest, they will need money. For many people, saving is the best way to acquire these funds. All investments require some form of capital. Whether they want to invest in stocks and shares, or in property, they will need money to get them started. You may need to teach your children good saving habits before you teach them about investing.
You can also explain the differences between saving and investing, and why it helps not to put all of your money into one basket.
The defining factor between saving and investing is risk. Saving money is almost entirely risk-free; however, the interest you make on that money is fairly low. By investing your money, you can greatly increase your returns, but this comes with the risk of losing some of that initial investment.
If you wish to save for your child’s future, you could take a look at the GoHenry junior individual savings accounts (Junior ISAs).
Capital in a Stocks & Shares Junior ISA is at risk; the value of your investment can go down as well as up. Tax treatment depends on your individual circumstances and may be subject to change.
Start investing with a game
A great way to introduce children to investments is with a game. There are plenty of investment-based games you can play with your children, both online and offline. Why not start with a board game such as Monopoly? This teaches kids about using money to invest in property and the returns they can make. Most children love Monopoly, and you can purchase a huge range of Monopoly themes to match their interests. For example, there are Harry Potter Monopoly sets or football-related sets you can play.
Or you could look at GoHenry’s very own in-app Money Missions. This collection of interactive games is a fun way for children aged 6-18 to learn financial literacy. Money Missions cover money basics, investing, saving, compound interest, borrowing, giving, and more.
Games teach kids about investments in a fun, easy-to-understand manner. Make sure you choose a game designed for your child’s age range. Also, don’t forget to read reviews to see whether other parents recommend the specific game you are thinking of for your child.
Start with a £20 investment
Once your child is ready to invest, you could give them £20 of actual (or pretend!) money to get them started. What are they going to invest their money in? Think of some non-volatile stocks and shares, and allow them to follow the progress of their initial £20 investment. This will help get your child used to how investing works with real money.
Extra tips to take into consideration
There are a few tips you’ll want to consider when teaching your children about investing. They include:
Keep it simple: Investing can be a complex topic at any age. So, if you want to introduce them to investments you are going to need to keep it simple. Focus on the basics and make sure the lessons you are teaching your child are age-appropriate.
Speak your child’s language: You’ll find it much easier to teach your child about investing if you speak their language. Tailor the lessons to their personality and interests. The more relatable you make investments sound, the easier your child will find it to learn about investing.
Use examples: When teaching your child about investing, don’t forget to use examples. Following on from the tip above, make sure the examples you use are relatable. Try to include a mix of theoretical investments and practical investment scenarios to provide them with the best financial education.
Teach your kids about investing with Money Missions
At GoHenry, we know how difficult it can be to teach your children about investing. That is why we have put together fun, easy to follow Money Missions. Our bite-sized lessons teach your child what investing is and how it works, and introduces them to the concept of stocks and shares.
For just £2.99 per month, you will gain access to our in-app Money Missions, and your child will receive a GoHenry prepaid debit card. Ready to start teaching your children about investments? Sign up for our affordable monthly membership here.
The information provided is not intended to be investment, tax or legal advice – nor does it claim to be comprehensive. Speak to a professional if you’re unsure about whether investing is right for you. We do not endorse any third parties referenced.
Our Junior ISA investment service is provided by GoHenry Family Finance Limited which is an Appointed Representative of Resolution Compliance Limited and is authorised and regulated by the Financial Conduct Authority (FRN: 574048).