Getting Kids Started With Investing: A Comprehensive Guide

Why Start Early?

The Benefits of Early Financial Education

Investing at a young age instills habits that can set the stage for lifelong financial security. Early financial education promotes:

A strong understanding of money management: Kids learn essential concepts like saving, budgeting, and investing.
Enhanced cognitive development: They'll develop better analytical and decision-making skills.
A mindset shift: Understanding how money works can transform them from consumers to investors.

The Appropriate Age to Begin

While Maya suggests that actual investing might start around age eight, she emphasizes that it’s never too early to introduce the basic concepts of investing. Parents can begin casual conversations about money as early as four or five years old. This normalization removes the taboo around financial discussions.

Simple Ways to Introduce Investing to Young Kids

Use Everyday Situations

One of the best methods to introduce young children to investing is through everyday situations. Maya explains how parents can talk about their investments while checking their accounts online. If children ask questions, it’s a perfect teaching moment.

The Concept of Money Babies

To make it more relatable, you can use concepts like “money babies.” Explain that just like babies grow, money can grow, too. This simplified explanation can pique their interest and lay the groundwork for more complex discussions later.

The Next Steps for Older Kids

Hands-On Learning

For children around eight and older, more hands-on approaches can be effective:

Birthday and Holiday Money: Encourage them to save a portion of their money and explain how it can grow through interest or investments.
Show Them Statements: Demonstrate how money grows in a savings account, even if the growth is minimal. This can naturally lead into discussions about higher-yield options like certificates of deposit (CDs) and stocks.

Teaching Through Stocks

Introduce your children to individual stocks by explaining that they represent ownership in a company. Use brands they recognize and already love, such as Apple or Microsoft. This can make the idea of owning “a piece of the company” more exciting and tangible for them.

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Using Advanced Investment Vehicles

Transition to ETFs and Index Funds

As your kids become more comfortable with the idea of individual stocks, introduce them to more diversified investment options like Exchange-Traded Funds (ETFs) and Index Funds. Explain that these assets allow them to invest in a basket of companies, thereby reducing risk and providing better potential returns over the long term.

Simplifying Complicated Concepts

Maya believes in keeping the explanations straightforward. Instead of diving deep into jargon like expense ratios, frame ETFs and index funds in terms of their benefits—like being a cost-effective way to own pieces of many companies.

Utilizing Educational Resources

Maya Corbic's Book: “From Piggy Banks to Stocks”

Maya’s book is an excellent resource written in a language that children can easily understand. Filled with pictures and simple explanations, it serves as a non-intimidating introduction to investing. According to Maya, even parents find themselves learning valuable lessons while reading it along with their kids.

The Path to Financial Savvy Starts Early

Teaching children about investing is not just about securing their financial future; it’s about equipping them with essential life skills. By normalizing conversations about money, leveraging everyday situations, and using relatable concepts, parents can make financial education an integral part of their child's upbringing.

Start by having those small conversations with your kids today. Use Maya Corbic’s book as a guide, and watch as your children begin to understand and appreciate the value of investing. As Maya and Tiffany highlighted, the earlier you start, the better prepared your children will be to navigate the complex world of finance with confidence and competence.

Frequently Asked Questions (FAQs)

What Age Should You Start Teaching Your Kids About Money?

According to Maya, basic financial concepts can be introduced as early as four or five years old, but structured investing lessons usually start around age eight.

How Do You Explain Stocks to a Child?

Explain stocks as ownership in a company. Use familiar brands they already know and like to make the concept more relatable.

Are There Tools to Help Kids Understand Investing?

Yes, there are various books and online resources. Maya Corbic's “From Piggy Banks to Stocks” is an excellent book that simplifies investing concepts for young readers.

What is a Certificate of Deposit (CD)?

A CD is a type of savings account that holds a fixed amount of money for a fixed period and in return, pays interest. It's a safe investment option ideal for risk-averse individuals.

What's the Difference Between Stocks and ETFs?

Stocks represent ownership in one company, while ETFs are investment funds that own shares in multiple companies. ETFs offer diversification and usually have lower fees.

How Do I Make Financial Education Fun for My Kids?

Make it a game. Use real-life situations and relatable examples. Encourage questions and celebrate their learning milestones.

About Our Guest

From challenging beginnings in shelters and government housing, Maya Corbic is a first-generation immigrant and CPA who draws from her experience of overcoming financial challenges and simplifies money matters to inspire children to pursue financial success.

Maya is the author of a kids’ book, “From Piggy Banks to Stocks: The Ultimate Guide for a Young Investor,” which simplifies investing concepts and equips children with essential investing skills while keeping them engaged.

She founded the Wealthy Kids Investment Club and has a popular Instagram account @teach.kids.money with 128K+ subscribers, through which she inspires parents to raise financially independent kids.