How to Invest Money: 10 Lessons for Kids

by Briana Marie
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Studies show that there is a significant portion of children in the United States who don’t know how to invest in stocks, what stocks are, or even the basics of money.

As children begin to learn more about money- whether it’s by working or through a regular allowance – it’s vital that you teach them how to invest money to benefit them in the long run. 

This is the knowledge that will last them a lifetime.

Your children need to understand risk and reward, and they should learn quite early that risk is the possibility that the investment will lose some of its value, and the reward is what the investment earns over time.

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When you gradually introduce financial responsibility lessons into your children’s lives, it can make your experience teaching and learning about finances with your children much easier and more fun .

They may learn quite a bit through your own investment portfolio when you choose to go through a house sale for familya home upgrade, or when you’re studying stocks online.

So, with all of that in mind, here are ten investment lessons you should teach your children to help them develop good financial habits early on. It doesn’t have to be hard, just start talking and teaching, and it will come.

Investment Lessons for Kids

Here are ten investment lessons that you need to teach your children young, so that your children adapt to good financial habits early on.


Start Early

One of the best things that you can do for your children is to open a savings account with them and get them started early.

You can let their cash work for them and teach them the basics of saving money. For example: if you are giving your children $5 a week, teaching them to put aside ⅓ for the things they want, ⅓ for the things they need, and ⅓ for savings can get them into such good money habits early on.



Don’t Try to Beat The Market

When it comes to investments, it is critical that you exercise patience. Embracing the market instead of racing to beat it can be the best thing that you can teach the kids.

Indexing – or passive management – is an approach that matches market performance rather than trying to race ahead and beat it.



Invest In Low-Cost Index Funds

Past performance is not an indication of the returns that you may get in the future, but the most accurate predictor of the future is low fees. Funds that are actively managed have a full percentage point expense ratio, and it’s something you should teach your children to invest in.


Think Long Term

An annual return for the average investor can be in the range of 4% and this is because most of the time, we invest with our emotions and not with logic.

It’s what makes us buy high and sell low, instead of the opposite. Teaching your children not to invest with their emotions is important because it’s the long-term plan and not the daily swings in the market that they should be concentrating on.

This all goes back to being patient as I mentioned earlier. Patience is key when investing in the stock market.




One of the smartest strategies that you can teach to your children is not to put all their eggs in one basket when it comes to making their investments.

Diversification allows an investor to reduce their risk, and it limits the losses without the risk of sacrificing the gain. Teach your children that it’s a good idea to look beyond what they know and spread their investment over a range of assets. The overall risk is then lowered, and being able to diversify within each asset type is important.

If you are a beginner, you can also look into getting an Acorn Kids account set up for your child to get started. Acorns also has great learning resources available for beginners.

Piggy Bank


Learn From Others

Your children are watching your behavior, so if they see you making careful financial planning decisions, they will model this behavior.

It shouldn’t surprise you that their saving and investment behavior will follow yours, which means that any opportunity that you have to involve them in what you’re doing with your investments should be taken.

When done correctly, this can help them to form healthy habits with their own finances.



Plan Goals Together

Children love a chart. They especially love a chart if it comes with rewards and stickers.

If you encourage them to write down their savings goals and what they hope to get out of their own investments, you get your teaching moment to help them to budget. When they are old enough to start receiving money, whatever the occasion or reason, start a chart outlining their hopes and dreams about what they want to do with their cash.

If you teach them to write down their savings goals, they get something to aim for and they are more likely to hit those targets that they have set for themselves.



Learn By Doing

Whatever you do that involves money, try to get your children involved, too. These are teaching opportunities for you to work together and for them to learn from you. Here are some of the ways that you can get your children to be more involved in everyday finances.

  • When you go out to eat, get the kids to help out with figuring the bill along with the tip. Ask them questions about how they came to their results and get them to help pay the tip, too.
  • When their piggy bank is fit to burst, make an appointment with the bank to open and/or put money in their savings account. They can deposit their funds and receive their own debit card. Of course, you can hold onto this for other future funds that they want to deposit.
  • If you have an item to be returned to a store and you need a refund, get your children to take the lead on it. Allow them to speak to customer services in your place and talk to them about returning the product and getting the refund needed and why. It’s a good way to teach them to be more confident when speaking to people in the service industry.
  • I also highly recommend checking out this Simple Startup Challenge for Kids to get kids started with investing in their own business ideas.



Give Them Some Control

If you want your children to learn anything about finances, you have to let them learn.

As they get older, young adults (think teens!) should be given access to their finances. Yes, it’s a risk that they could want to splurge their cash, but the idea is that they can come to you with what they’d like to buy and you get the final say on the purchase itself. Then, they can make mistakes that aren’t going to blow their savings and they get a little wiggle room to make those mistakes.



Teach Rules Of Thumb

Money rules that affect money behaviors are important lessons to learn. Your children need to know these basic rules. Always provide an actionable takeaway, allowing your child to learn why they should start early or follow certain investment habits.

Once you provide them with the right takeaways, they will be able to succeed financially and you’ll be able to be a big part of setting them up for success.

As part of your parenting journey, you need to teach your children everything that you know about investment and let them be a part of the journey that you are taking. It’s an excellent bonding tool and they can learn so much from you.


  • Briana Marie

    Briana Marie is a mental health and financial literacy advocate, and founder of Major League Mommy. In her spare time, Briana enjoys yoga, travel, and spending time with her Husband and two daughters.

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