Teaching Kids About the Stock Market

Learning about smart investment decisions is a daunting task. Even for an adult. So how can we easily teach our kids about the stock market as part of an overall personal finance plan?

For many, this may feel overwhelming. But there are so many great resources available, which can help simplify the process – for us and for our kids. While it’s best to consult your own financial planner for professional advice on the stock market, here are some basics we’ve compiled for advice on and tips on navigating the stock market for kids.

Explaining the Stock Market to Your Kids the Easy Way

In its most basic form, the stock market is where regular people are investors – and they make money by buying and selling shares of companies. There are things like individual stocks, mutual funds, and so much more. And there are so many legal rules and regulations – as well as ways to make trades, and brokerage accounts to facilitate trades.

It all can feel – as we said – overwhelming. Where do you even start for this type of financial advice? And if you aren’t truly interested in the stock market, then it can feel like even more of a burden to learn and to teach to your kids. We get it – we’ve been there, too.

The stock market can be very rocky. It refects the state of the general economy, as well as the health of a company’s fnancials, or the quality of its management. In watching how the stock exchange tracks daily, there are high highs, and there are low lows. In many people’s experience, it’s hard to fnd a middle ground.

But learning the stock market for kids is a valuable skill and body of knowledge for them to have. Learning the stock market is part of being financially literate. According to Dane County Credit Union in Madison, Wisconsin, “learning the stock market requires learning concepts such as assessing reward vs. risk, supply and demand, and the similarities and differences between investing and saving.”

As with any skill, break it down into the simplest conversation. By paying attention to things that drive businesses to become successful – like how much money they make, how qualified their management team is, and what consumer needs they meet – we can make smart choices on which companies’ stock to buy and when to sell it. And learning the stock market is a valuable tool to add to your wheelhouse.

Why Teach Kids How to Invest?

Kiplinger recently stated that “not even half of U.S. states offer financial literacy classes in high schools, so parents have to pick up the slack.” It’s ever imperative that we as parents remain vigilant in teach our kids the keys to success – and that includes teaching kids how to invest as part of their overall financial goals.

When I started my frst job after college, my father told me over and over to take 10% of my paycheck and put it into an investment account of some sort. It was unsolicited fnancial advice, but still, I chose a Roth IRA, and I did pretty well for myself. It was a conservative pick, but one I was comfortable with at the time.

My only regret is that I hadn’t started sooner, and that I didn’t put even more money into that first investment. This is why I’m so adamant about teaching my kids about money.

One thing we can help our kids do is learn about – and practice – investing from a young age. The more time they have to grow their investments, the more money they can make over their lifetime.

The State of Florida recently became the first state in the union to require high schoolers to learn about financial literacy. Florida Governor Ron DeSantis signed the Dorothy L. Hukill Financial Literacy Act, requiring students to take a class in financial literacy and money management in order to graduate. Now there’s a novel idea! And yet – in 2022 – this is the FIRST state to enact this type of legislation! We can only hope all other states follow suit.

Parents, you can help supplement what your kids learn in school – whether they’re learning basic money skills or taking a deeper dive into their fnances.

Books to Help Teach Your Kids About the Stock Market

There are plenty of great books for kids. We’re sharing 10 books you can buy on Amazon for some solid financial advice on learning the stock market for kids (and hey – maybe you can get your kid to use their Amazon gift card we talked about here. (The Best Gift Cards for Kids to Learn Good Spending Habits)

• Investing for Kids: How to Save, Invest and Grow Money
• Teaching Kids to Buy Stocks: Stories and Lessons for Grown-Ups
• Blue Chip Kids: What Every Child (and Parent) Should Know About Money, Investing, and the Stock Market
• I’m A Shareholder Kit: The Basics About Stocks – For Kids/Teens
• Stock Market Investing For Beginners: Learn The Basics Of Stock Market Investing And Strategies In 5 Days And Learn It Well (Business And Money Series)
• Investing for Teens: How To Invest and Grow Your Money!
• Make Your Kid A Money Genius (Even If You’re Not): A Parents’ Guide for Kids 3 to 23
• Kid’s Activity Book on Money and Finance: Teach Children about Saving, Borrowing, and Planning for the Future—40+ Quizzes, Puzzles, and Activities
• Go! Stock! Go!: A Stock Market Guide for Enterprising Children and their Curious Parents
• Money Talks: The Beginners Guide To Investing For Kids

The Bottom Line

Learning the stock market for kids is a valuable tool that has lifelong positive effects. Kids who learn about making smart investment decisions at a young age will be set up for financial literacy and financial success better than their peers. It’s never too early to start teaching kids about saving, spending, and investing. Choose one of the books above and get started today – and check out another great article from BankMom.com on investing.