5 Tips to Teach Kids About Finances
Most kids hear about money and the stock market all the time, but they don't fully grasp what it all means. They make the association that more money is good and less money is bad, but they need to know more than that. Fidelity has posted an article that gives 5 tips for teaching your children about finances in a way that will help them actually learn the information, and this is my take on why it is important. To see the original article, go to https://www.fidelity.com/learning-center/personal-finance/wont-learn-in-school?ccsource=email_weekly-06-24-S04.
Tip #1: Tell a story to teach the basics. Kids love a good story, so putting the information in that format captures their attention.
Tip #2: Make the world your classroom. If you encounter a situation that would be a perfect teaching moment then use it. Children will make connections to where they learned something, so if you teach them about stocks while shopping at the supermarket then they will make that association and are more likely to remember it.
Tip #3: Teach them about supply and demand. Many price changes are because of these two concepts, so teaching this to your children early will help them better understand fluctuations in prices for goods and the stock market.
Tip #4: Introduce research with a supermarket challenge. Have them find various products that are all owned by the same company. They will think of it like a scavenger hunt, but they are learning how to research before investing.
Tip #5: Make the abstract real. If you've invested in the stock market, show them your investments and point out things you did and things you wish you would have done. This helps them really see the connection.
All of these tips are great, but most of them focus on concepts related to the stock market. Why should kids be learning this early? These concepts can be used for investing in general, and investing early is always a good idea. I personally opened a bank account as early as 12 so that I could save up money. All of the above tips are useful for bank accounts too; interest rates need to be researched to find the best one and if the supply and demand balance is shifted the bank is likely to change their rates. People learn more easily at younger ages, so don't delay!