Financial Advice Blog

How to teach children about investing

Discover age-appropriate strategies and engaging activities to teach children about investing and financial literacy effectively.

Introducing kids to the world of investing may seem daunting, but it can play an important part in setting them up for financial success. Teaching kids about investing early on will help them develop a healthy relationship with money and equip them to navigate the financial world.  In this blog post, we’ve compiled our top recommendations for getting your children started with investing.

Introducing financial concepts: Age-appropriate strategies

Understanding needs versus wants: Teaching children financial prioritisation

Basic money management concepts for young children include what money looks like and where it comes from. As they get older, you can introduce more complex concepts, such as what money is for (needs and wants) and how to use it wisely through budgeting and saving.

To help your kids develop financial literacy, explain that ‘needs’ are things your family must have to survive, while ‘wants’ are things that are nice to have but your family can live without.

Explaining budgeting basics: Simple approaches for kids of all ages

Understanding budgeting is an essential component of financial literacy for kids. You can introduce this concept by explaining that there is only so much money, which needs to cover the essentials such as food, clothes, and housing. If you have money left after buying these, you can spend it on things you want or you can save it.

Providing pocket money for kids is a route many parents take to teach them about saving, budgeting, and making smart decisions with their money. You can give kids money for doing chores around the house, such as taking out the rubbish, feeding the pets, or helping cook meals. You could encourage young entrepreneurs by offering ‘bonuses’ if they find ways to add value beyond their weekly chores too.

Savings and spending: teaching the value of money management from an early age

Learning to save money is an essential skill that you can practice with kids of all ages. Piggy banks are a fun way to help kids learn about money by visualising notes and coins to easily track progress. For older kids and teens, setting up a savings account will help them learn about responsibility and money management in a practical way while earning interest on their savings.

Starting kids with a savings account young will help them practice healthy money habits, which will be invaluable for those big events in their financial future, such as buying a house. Help them break down the total cost of what they want into manageable increments and create a plan to save a certain amount each week or month.

When you’re looking for the best child savings account in Australia, it’s important to consider factors such as interest rates, fees, and minimum age requirements. Compare the benefits offered by each to determine which children’s bank account best suits their needs.

Providing older kids with a child debit card can also help them learn money management. These work the same as regular debit cards, with some accounts offering parental controls. ANZ, Commbank, NAB, and Westpac offer debit card options for kids, with varying age requirements.

Currently, Commbank and Westpac are the only providers that offer parental controls, allowing you to monitor their transactions, change their weekly spending limit, and lock their cards.

Practical activities: Engaging kids in the world of investing

Simulation games: Making investing fun and educational for children

Teaching kids about money doesn’t have to be boring, and games have impressive potential to teach kids about money management. Even board games like Monopoly can teach some valuable lessons, such as budgeting, investing, and saving.

Although you can play it safe in Monopoly, investing your money in properties, houses, and hotels is key to winning. Overall, Monopoly teaches kids that the right investments can help them make more money in the long run.

There are also many resources online to introduce kids to the world of investing before they jump in. The ASX runs free sharemarket games to get older kids engaged in investing. Players are given $50,000 in virtual cash and have the chance to grow their portfolio while learning about stocks, sectors, and different investment strategies. Using real market conditions, live prices, and brokerage fees, this game allows kids to test various investment strategies.

Over the 26 weeks of the game, they have the opportunity to invest in over 300 ASX-listed companies, including ASX 200 companies, small and mid-cap companies, and ETFs and LICs. Players can place orders to buy or sell shares anytime the market is open and also have access to a dashboard to monitor their shares and analyse performance.

To help them make the most of the game, kids are provided with a wide range of investment resources, including articles, podcasts, and webcasts.

Hands-on experience: Practical exercises to instill financial responsibility

Making investing relatable is one of the best ways to get kids involved. For example, during trips to the supermarket, you can let them know that both Coles and Woolworths are listed on the ASX and you can buy shares in them too. Similarly, if your kids love Apple products, you can explain that they can buy shares in Apple Inc. By encouraging your children’s investments,  you can help keep them engaged in the world of investing.

Alternatively, some parents choose to open brokerage accounts on behalf of their kids.   There are many low-fee investing apps targeting children that allow parents to buy shares for a child and transfer the shares to them once they turn 18. Some parents encourage their kids to contribute by directing a portion of their pocket money.  Look for apps with engaging interfaces where children can watch their money grow. This can be a great motivator and help pave the way for financial success.

Interactive learning tools: Audiovisual tools for introducing kids to investment concepts

The best way to teach your child about investing will also depend on what type of learner they are. If they are visual learners, videos may be the perfect tool to introduce them to investment concepts.

Even just a quick YouTube search for ‘investing for kids’ will bring up a variety of videos that break down investing in easy-to-understand terms. If your child is the type who’s always listening to something, an investing podcast may catch their interest. By nurturing their interest in investing, you’ll help empower them to build a successful financial future.

If you’re looking for more advice on raising money-wise kids, download our eBook. For tailored advice on investing, book a free, no-obligation consultation with one of our financial experts.

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