Money And Finance: Teaching Teenagers About Investing Their Money

A guide, from an adult's point-of-view, on how to teach your teenager, or a young adult, about the advantages of investing young.

Teaching teenagers about investing can be one of the most important lessons learned while in their youth filled years. It is a lesson that can be carried through life and put to great use. As with anything, teaching teenagers about investing may not prove to be the easiest task that could be chosen. You, as the informer, should be commended though for taking on this lesson and trying to better your teenager's life. Learning what their money can do for them at a young age can start them on the road to financial success for the future.

It would be easy to start a fund for them without them even knowing it exists, but that serves no purpose for their financial future. The most important thing teenager's need while learning about investing is the basics. There are many resources available that can handle specifics of investing, so it is not necessary that they know every detail of what investing is all about. In their investing adventure, they should try to find out what, if they invest, will happen to their money and not just be told. Investing interest needs to come from the teenager and not from anyone else.

As an adult it will most likely be you, who introduces them to the investing world. Just as teachers have to have each lesson prepared for their students, so do you. Do your own investigating into the best options for them as they enter into the investing world. Get specifics on different types of investing options. Try to narrow, but not restrict, what their options are. It will be easier to comprehend and they will receive the information better if it seems smaller, like something they can handle.



If you find that their initial reaction to investing is genuinely interested, be there for support and help. Investing can be a cruel experience if not careful, especially to a young adult. It is not that young people do not invest, because they do, but adults largely dominate the investing world. So a young person is sometimes looked at as intruding or not knowledgeable enough to deal with investing. As their supporter, it is imperative that you be the one always behind them telling them it is ok and that it just might take some work.

Discovering that he/she is not particularly interested in investing makes your job as the adult slightly tougher. The most important thing to first do is provide incentive for them so they grow to become interested in it. Teach them if they really want something, for example a car, and they put the money towards a type of investment how it will pay off in both ways for them. Once they become interested in investing, it becomes easier for everyone to grow towards financial success in the future.

During the first stages of learning and investigating, help them create short and long-term goals. Make sure the goals are in the realm of reality, but remember with the right ambition and drive almost anything is possible. Long term investing might be hard to conceive at first, so it might be best to start with short term investing. Try to suggest expensive things that are about to come up like college or a house and set time lines where it might be best to have some extra money to cover expenses. Eventually work your way to long-term investments like IRA's that are primarily set up as long-term investments. It may not be best to begin the IRA at a very young age but that is something else to consider and plan on a more suitable time to establish an IRA.

One step that can help teenagers start out on investing is to speak with a financial/investment advisor. This is a major step that will get them started, because most teenagers wouldn't even know where to begin or with whom. Choose one or more places beforehand that you already believe will willingly work with younger people. Make sure they have a good reputation and are reliable.

Some type of visual representation can help your teenager with their interest level and begin the process of setting goals. Try to find information for them and even set up some kind of graphical representation of the amount of money they have available for investments and potential growth. To create some type of visual representation, use resources such as the many online, free investment calculators and software packages. Another option is to buy an investment program available on the market; although, online programs can be just as useful and without all the cost.

One of the best options, particularly dealing with your teenager, is the specific websites and magazines available that concentrate especially on young investors. This is an excellent source for your teenager if they really are interested in investing. It deals with issues of young investors and provides stories of successful young investors and their tips for others. This type of product might be one of the greatest things for your teenager while learning about investing, because it is on their level and makes it all seem and feel real.

Once things are temporarily planned out, help them prepare a basic financial report of how much money it will take to achieve their goals. Help navigate them towards determining what percent of their paycheck or incoming cash can go into the fund. Make sure it stays reasonable but meets all the guidelines of how much money is permitted per year and how much money is required to keep the account active. Remembering that they are still teenagers, give them room for spending and having fun with some of their income.

Teenagers might not have substantial income or vast amounts of money, but to their advantage, they do have time on their side. With so many years ahead of them there is time to play on the conservative side and look for funds to grow during a long-term period. To make sure that teenagers get a good start for their future it is imperative to start with a solid foundation of the basics. As the adult in the situation, it is important that you be one of their strong building blocks. Be there for support and guidance. Don't push, it will only hinder their involvement and learning capacity, but be there for questions and concerns. It is best to lightly suggest and hold their hand through the tougher financial times', but ultimately, let it be their decision.

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