I'm a financial writer, but I'm not teaching my teenagers about investing. It's hard to get excited about stocks before you have an income.
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- I'm a financial writer, but I'm not teaching my kids how to invest yet.
- They aren't making an income, so I don't think teaching them about investing is practical right now.
- I'm more focused on teaching them financial values that will serve them long-term.
There's a lot of chatter about when parents should start teaching their kids about saving, investing, and building wealth for the future. I'm a longtime finance writer, and I love saving and investing, but I'm not teaching my kids to invest.
Here are a few reasons I'm not trying to get my kids started with their own brokerage accounts.
My kids are only 16 and 14 — they don't have income yet
Other than their paltry allowances and occasional birthday and holiday cash gifts from relatives, my kids don't earn income. They don't have part-time jobs. When people don't have any income, it's hard to get too excited about investing.
And even if my kids did have part-time jobs right now, they likely wouldn't be getting a 401(k) plan or company match. Instead of investing in stocks, I would encourage my kids to just save extra cash from their part-time jobs in a high-yield savings account instead of worrying about locking up their money in longer-term investments like stocks. Young people who are just getting started in life might not want to bother with the volatility and risks of the stock market; just build up your emergency savings fund first.
People tend to learn financial literacy on an 'as-needed' basis
In a 2022 National Endowment for Financial Education survey of American adults, 80% of respondents said they wished they had been required to take a financial education class in high school. But do you remember what it was like to be a high school student?
I doubt that most practical "adult life" advice about personal finance will feel relevant to teenagers, and a 2013 analysis of research backs this up, finding that 20 months or more after the time of intervention, financial education had "negligible effects on behavior." If you try to teach high school students about 401(k) plans and diversified asset allocations, it goes in one ear and out the other. Kids are unlikely to understand things like credit card debt when they're too young to have a credit card; I didn't either when I was that age.
The idea of buying stock exchange-traded funds (ETFs) or opening a Roth IRA account probably feels bizarre and out-of-touch with my teenage children's reality. I believe my kids will be ready to learn more about investing when the time is right — when they're actually ready to start saving for retirement at their first job. My kids already know some of the basics of saving and investing, but they're not worried about picking stocks. And speaking of picking stocks…
I don't want my kids to be day traders
I often worry that today's young generation is too comfortable taking big risks with investments. I don't want my kids learning to invest by losing money on a trading app. Many day traders lose money. And even many professional stock pickers don't beat the market for long.
The best way for most people to invest for the future isn't picking stocks, trading options, or buying memecoins. It's to earn a steady, comfortable income. Save and invest 10% (or more) of that income in a diversified portfolio of mostly stocks and some bonds. Then, let the magic of compound interest grow your money for many years.
I'm teaching financial 'values' instead of giving them stock tips
Instead of teaching my kids how to invest as teenagers, I'm trying to teach them fundamental values about finances. I want my kids to live within their means, avoid excessive risks with their money, and build stable, long-lasting careers. I want my kids to invest in education, in their own careers and productive skills, in their personal health and wellness, and in healthy, happy relationships with people who love them.
Someday, when my kids are grown up, have their first "real job" and paycheck, and are ready to start choosing investment funds for their 401(k), I'll be happy to help. But until then, my kids don't need to worry too much about learning to invest.