I know it may be awkward, but it may be time to have “the talk” with your teenage child or grandchild. No, not the sex talk. In this digital age, that is a subject they probably know far too much about already. The talk you may need to have with them is regarding investing.
The just released 2022 Fidelity Teens and Money Study, reflects the woeful lack of understanding too many of our young people have about investing and personal finance. This is a subject I have written extensively about in the past, so when it was released, I almost didn’t bother reading it.
I’m glad I did though because inside the study I found an interesting tidbit. While it found 72% of our young people report having “no knowledge about trading stocks and ETF’s” the study also found that teens that talk with their parents about investing are more than twice as likely to feel confident enough about the subject to invest themselves.
While my children are still too young to start talking about the power of compound growth and building diversified portfolios, I do try to incorporate money talks inside of my everyday conversations with my kids, especially my 10-year-old.
This was not something my parents really did with me however. Even now, discussions about money and finance are not something we regularly have, despite the fact I help manage their retirement accounts. Part of that I think is generational. Their parents probably talked even less about money with them than they did with me.
But the subject is just too important to ignore. So, I thought I would share a couple of ideas for how the subject of money could be brought up with teens in your life.
- Consider gifting them shares of companies they personally love. Sometimes greed can be a powerful teaching tool. Having real skin in the game can trigger plenty of engagement as they watch the things they own go up or down in real time.
- Tell them about the big ones that got away. Maybe you bought shares of Apple back in the 80’s when all they did was make computers or held Amazon in the late 90’s when they were simply an online book store. Much like the old baseball cards your mom threw out, you could show them how much more those shares would be worth today if you still had them.
- Point out to them famous people who are both winning and losing with money. This can be another interesting way to teach sound financial principles. For example, from today’s headlines, you might compare how Patrick Mahomes has used his wealth to become partial owner of local businesses such as Whataburger, Sporting KC, and the Royals, while Johnny Depp and Amber Heard have both basically gone broke after the bad financial decisions they have made.
- Last and probably most importantly, share your own financial story. If you are retired, you might tell them about the strategies you used earlier in life to save up enough to have the standard of living you now have. If there are things you wish you had known or done when you were their age, tell them what they are.
There are countless ways to engage the teens in your life about investing. Be creative. Yours might be even better than these. The main thing is to open up a conversation. You might be surprised about how engaged they are or the impact you might have.