Teens and Money: How to Teach Your Teen About Investing

It is never too early to teach young people about the importance of using money wisely. This can start from the moment they start earning an allowance. In fact, whether you know it or not, you are giving them lessons every day as they watch how you handle money. They learn things like holding back on spending money frivolously so that they can save up enough to buy something even bigger and better. 

They learn how not to waste money while also learning the importance of budgeting so that they have enough to meet their needs just like they see you doing month after month. The point being made here is in keeping with that old proverb, “Actions speak louder than words.” With that in mind, what are some other things you can teach your kids about investing and what that can mean for their future?

Let Them Watch While You Make Investment Decisions

Chances are you have been investing for quite some time now. Perhaps you even started before your teen was born! In an effort to grow your wealth enough to at least put them through university, you started investing early enough to make that happen.

One thing you can do is tell them about those stocks you bought all those years ago, and your purpose for doing so. While you may still be holding onto some of them, others you may have sold over time. Show them a free stock comparison tool like the one you personally use when making decisions to buy, sell or hold. Teach them how to read market movement so they understand this concept.

Begin Watching Stock Performance of Companies They Know

The way you might want to approach this is to begin watching stocks of companies they are familiar with. Any publicly traded company would do fine. Set aside time each day to check out the market movement within the past 24 hours. It would be helpful if you chose the same time each day, preferably after the market has closed so they can see movement from the beginning of the day until that final bell rang. You can even use that comparison tool again here so that they can see which stocks performed best and which had the greatest losses, if any. 

Start asking them questions about what they would do given the numbers they are seeing before them. This is as good a time as any to help them understand not to jump into action too hastily. Sometimes waiting it out is the best option if you feel those stocks at a low point are set to rise again. Every strategy you can teach them now helps them to prepare for a successful future in investing.

Show Them How Patience Is an Invaluable Tool

In the end, you will also be teaching them how patience can be an invaluable tool. Instead of quoting platitudes like, “patience is a virtue,” you are showing them what they stand to gain through exhibiting patience. Let them watch as you hold onto stocks that are rising so that when you feel they’ve reached the target high you’ve set, you can sell at a profit. Show them that, had you sold when they were declining, you would have taken a loss. By being patient, you were able to realize a profit and that’s what investing is all about.

However, it will take time and effort and, above all, patience, the operative word for the day. Citing another cliché, show them that, “Rome wasn’t built in a day,” and neither will their ability to invest wisely. Take the time to pave that road with them. Let them learn from your triumphs and sadly, your mistakes. Together you will be paving the road to their future by showing them how investments can be the vehicle to get them where they are going. It’s, again, another quote, but a good one, nonetheless. It’s truly a road well-traveled.

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