Investing for Kids: Teaching Your Kids About Investing & Earning

Your Children Can Easily Learn To Earn, Save & Invest Their Money. Learn The 7 Steps, We Use With Our Children To Teach Prudent Decision Making

Your Children Can Easily Learn To Earn, Save & Invest Their Money From A Young Age. 

Do your children regularly ask for cash then waste it on garbage? Is their bedroom rammed full of old toys they are no longer playing with?  Do you have to continually clean up after them after a hard day’s work?  Suffer no more; I have the answer.

I am going to lead you through a personal journey my wife, and I have taken with our children.

When I tell our friends and family of how we approach this, they are always amazed, especially in how our children treat their money, their belongings and make considered purchases.

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016 – 7 Steps To Turn Your Kids Into Investing Gurus

Your Children Can Easily Learn To Earn, Save And Invest Their Money. Learn The 7 Steps, My Wife And I Use With Our Children To Teach Them Life Lessons.

  • Mon, 17 Dec 2018 23:00:00 GMT
  • Duration: 00:08:43

Teaching Kids About Investing & Managing Money

1. No Free Money: The Pocket Money Trap

Unlike most children, our children do not get pocket money.The Pocket Money Trap

Pocket money instills a right of entitlement to free income.  If pocket money is given every week, your children will expect it, and if it does not arrive, they will be angry or upset.

Children will have no concept of the value of money unless it is exchanged for something.

What can children exchange for money, well, good behavior and hard labor?  What?  Hard labor, you say.  No, I am not talking about sending them to work in the mines, I simply mean hard work no matter how simple the task might seem hard to them at first, but stick with it.

2. The Earning Money Principle

Only when your child has worked for their money and has earned it, can they genuinely appreciate it.

From when they were young, our children could earn money to spend on whatever they wanted by working around the house, clearing the dining table, vacuum cleaning, or even emptying the dishwasher.

It is a fantastic experience; as you see them work, they start to understand what a good job looks like, and they know what effort it is to maintain the house in good order.

3. The Payment Structure

When your child has completed the job, you can inspect the work, and in the beginning, more often than not, they have done a terrible job.  With words of encouragement and sometimes some help from you, they can complete the task.

You need to discuss what jobs are worth how much money up-front before the job is completed.

When they are young, 50 cents will seem like a considerable amount of cash to them, but by the time they hit their teens, the minimum wage will be the standard to which they negotiate.

4. Children are Expert Asset Buyers

It is so great when you pay them for a job well done, and then you see them weigh up the value of their effort against the candy they are buying.

When they are younger, they think “this chocolate bar is worth three dining table cleans, do I really want to buy it?”

When they are older your children will think “this PC cost me 100 hours of gardening”.

As they get older, they start to really think about what is important to them when making a purchase.

5. The Young Asset Managers

Children are Asset Managers; in fact, we all are.  Most children have a pretty poor approach to managing their assets, which is typical and normal because most children do not value their assets.

The assets that young children have to manage are their toys.  We gift them toys, bikes, and even iPads, but mostly they do not have a concept of the value of the assets and, therefore, are not incentivized to look after them.

6. The Asset Recycling ProcessAll About Commodities

Adopting the No Pocket Money Principle (above) and enabling your child to purchase their assets means they have evaluated the worth of these items and then naturally take better care of them.

Help your kids understand that their assets if taken care of properly, can be resold for money when they no longer need them.  That is, in effect, money they do not have to work for.

I have encouraged and helped my children to sell their toys and games console on eBay or local classified adverts, so they may accumulate the cash to buy their next PlayStation or Smartphone.

Recycling of assets keeps the house free of clutter and removes the burden from me as a parent to sell or recycle their old toys.

If your child wants a gaming PC for $2,000 or an iPhone for $900, when it is coming out of their own pocket, they think twice.  This really helps them begin to understand the value of their possessions (assets).

My son built his own gaming PC from his earnings, birthday money, and gifts from visiting relatives. He has a distinct pride in what he has achieved; he purchased all the different parts of the PC at the best prices and stuck to his budget.

He has earned it, built it himself for the experience and to save money, and he takes great pleasure in sharing what he has achieved with friends and family.

Now that we have instilled a work ethic, we move on to thinking about the future and investing.

7. The Future Investing Conundrum

We have discussed future life goals with our children, and my daughter (11) wants to get her driving license and buy a cute Italian car, a Fiat 500, so that she can always come and visit us while at University.

My son (14) also wants a car.  We have an investment fund set up for the children into which we pay a monthly sum, but they do not know that as it would diminish their motivation to save for their goals.

So, to help our children achieve their goals, we have agreed with their consent that 70% of what they get for Christmas & Birthdays goes into their bank accounts.

Ultimately, the conundrum is our children have one eye on the future potential of their investments and one eye on the best purchases they need right now.

Neither of the children has expensive mountain bikes or iPhones, they have smartphones that cost a third of the price and deliver 80% of the value, and they have bicycles that meet their needs.

Let your child decide within the parameters you have agreed together.


They are invested in their future because they understand the value of working, earning money, spending their money wisely, and planning for the future.  Most of all, they have learned that having a strong work ethic is essential for their future.

If you liked this post, share it with other parents and leave us a comment below.  Do you have a better tip?

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  1. Hi, this is a fantastic article, thank you. I used the same ideas with my children. Now they are grown up and have small children of their own. I have forward a link to this article for them to read and utilise with their children when they are of an age to gain from the knowledge.
    Many thanks


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