How to explain investing to children

Investing is not just for adults. You can begin teaching your children basic investment concepts so he or she will be more confident in handling financial matters in the future. Michelle Marquez shares some tips how you can easily explain investing to kids.

Explain that you have to have savings first before you invest. To easily explain investing to children, they need to know how to create a savings account. Michelle says that kids need to grasp the concept of savings before introducing investment ideas.

Tell them that they should set financial goals. As parents or elders, you should communicate that the money that your children save should be for a purpose. Without a goal, all savings become hoarding, and explaining goals could help kids stay on track with the money they save.

Introduce basic investment concepts. Even if children are too young to understand deep and complex investment concepts, they should be able to understand simpler ideas, such as interest rates, risk, returns, and stocks, notes Michelle Marquez. Avoid using heavy jargon that might confuse them and do your best to compare the concepts with simple, more relatable situations.

My name is Michelle Marquez, and I’ve always found my way around numbers. I’m currently at UCLA studying accounting. My goal is to help others have all the right information whenever they need to make a financial decision. For more articles like this, visit this page .