Yahoo Finance I’m a Stock Broker: 5 Ways I Taught My Own Kids How To Invest
Money makes the world go-round and the sooner someone learns that, the sooner they can apply the best practices of investing, diversifying and saving for themselves.
Lots of professionals in the financial world had to go to schools and universities to start their journey of financial education, but their kids have a leg up. That’s because stock brokers, bankers and financial planners are instructing their children on how to invest when they are still little so the skills become lifelong.
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“One of the most powerful things that parents can do for their children is talk to them about money on a regular basis, which can build good money habits from a young age,” said Justine dela Rosa of Empower Personal Wealth.
“More than half of American adults never talked about finances growing up,” dela Rosa said, citing the Money Talks report, which reveals that many people would rather discuss politics (43%) and death (32%) than their finances (24%).
There is so much to learn, so GOBankingRates decided to get schooled and ask those in the money world ways they taught their own kids some tricks of the trade.
Also here are five simple ways to teach your kids how to handle money.
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Start With Real Investments
Angele Latham, Reynoldsburg City Schools‘ Treasurer in Reynoldsburg, Ohio, with over 15 years of experience in accounting and finance, shared the following tips that she taught her daughter, Kamari, who is currently 14 years old. However, Kamari was around seven years old when Latham purchased her daughter her very first stock.
“I often gift stocks to my friends’ children because it teaches them a host of things like passive income, investing and how the stock market works. I wanted to show Kamari that investing is a long-term strategy towards financial security. It also taught her patience because when the stocks performed well, she wanted the immediate gratification of getting the money, but had to see the long-term plan,” Latham said.
“Now that Kamari is older and has her first job, she really looks at how she spends her money,” Latham said. “It’s easy for mom to order something for delivery, but when it’s your own money that you work hard to earn, you tend not to spend frivolously.”
Create an Income Stream For Them
“As a financial advisor for over 20 years, I’ve learned that teaching my own kids about money early on was critical,” said David Blain, chartered financial analyst (CFA) and CEO at BlueSky Wealth Advisors.
“When my oldest son was 8, I started giving him an allowance and had him do chores to earn it,” he said. “Each week, I’d sit down with him and have him put aside a portion for savings before he could spend the rest.
“When my daughter turned 10, I opened a brokerage account for her and let her pick a few stocks to invest in so she could see how the market works,” Blain said. “She chose Disney, Nike and Chipotle — brands she knew and loved. Watching those accounts rise and fall over time taught her patience and risk in a very tangible way.”
Demonstrate Financial Literacy Openly
The biggest lessons, however, came from leading by example, Blain said.
“My kids saw my wife and I sit down each month to pay bills, review insurance and budget for the family,” he said. “They knew if we wanted something big, we had to save up to pay for it in cash.
“Now in their 20s, my kids have learned to spend responsibly, invest for the long run, and plan their financial lives in a way that will set them up for success. The habits we teach our children about money when they’re young will stay with them for life.”
Reverse Engineer Money Lessons
David Delise, a financial expert and author of the kid-friendly graphic novels about money called the Golden Quest, shared a unique and unconventional methodology: “Surprisingly, I try not to talk too much about money and financial literacy with my kids because that will have the opposite effect and they will learn to be anxious and worried and always thinking about money.”
“The main lesson is the value of money,” Delise said. “And this is basically what money can buy and more importantly, what it can buy instead. And you can teach this at almost any age. When my boys were really little their currency was chocolate bars and Lego [sic].
“So any time they wanted something, I would describe it in terms of chocolate bars and Lego [sic]. A teddy bear might be 10 chocolate bars and a bike might me 3 large Lego sets. And if the thing they wanted wasn’t better than chocolate bars or Lego [sic], they didn’t want it anymore,” Delise said.
Make Money a Joy
Delise went on to describe that the next lesson is what he called “The Awesome Stuff.”
As Delise explained, “The Awesome Stuff” are “The [things] that brings you the most joy. I always ask my kids, ‘Is that your awesome stuff?’ And if the answer is no, they don’t buy it. The answer itself doesn’t matter. It’s the fact that they pause and reflect and ask the question. This money mindfulness will change your relationship with money and is the best way to avoid the trap of endlessly chasing more and keeping up with the [Joneses].
“If I was to teach one more thing it would be the habit of saving first,” Delise said. “This single habit will have the greatest impact on your financial freedom. It helps to avoid lifestyle inflation and ensures that your making saving and financial freedom your [number one] priority.
“And make sure that [you’re not saving a bit simply to] buy something more expensive. You’re saving so that your money can earn money for you and create that freedom,” Delise said. “This is money that should never be spent and allowed to grow. You can spend the money it earns but not the principal. This is how wealth is created and how your kids can create a legacy that they can pass down to their kids.”
Ben Klesinger, CEO of Reliant Insurance Group and Helping Hand Financial, summed up the instruction plan for financial literacy to kids. “The key is starting financial education early using experiences and examples in daily life. Let kids make choices and see the results. Teach patience and risk in a hands-on way. Lead by example through your own financial behavior and decisions,” he said.
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This article originally appeared on GOBankingRates.com: I’m a Stock Broker: 5 Ways I Taught My Own Kids How To Invest
