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Money Lesson 9 Parents Should Teach Kids

by Team Sammy

Invest Early and Often

Parents, teach your kids to invest early and often! It is a great money habit!

Starting to invest early allows for more time for investments to grow through the power of compounding. Even small amounts invested regularly can grow substantially over time due to the compounding effect, where earnings on investments are reinvested to generate more earnings. The longer the time horizon, the greater the potential for growth.

This means the earlier a child learns to invest the better chance they will have to achieve financial security and freedom.

8 Steps to Teach Kids to Invest Early and Often

Parents can take several steps to teach kids to invest early and often. Here are eight suggestions.

  1. Lead by Example: Kids often learn best by observing their parents' actions. So show children that you invest regularly, systematically, and automatically.

  2. Start Early Conversations: Begin talking to children about investing from a young age. Keep the discussions age-appropriate and gradually introduce more complex concepts as they grow older. Reading books, magazines, and blogs together is a great way initiate dialogue.

  3. Use Real-Life Examples: Use everyday situations to explain financial concepts. For example, when shopping, discuss the importance of comparing prices or budgeting for items they want to buy.

  4. Set Up an Investment Account: Open an investment account for your child. Encourage them to deposit a portion of any money they earn or receive, such as allowance or gifts, into the account regularly. Use it as an opportunity to teach them about researching companies, diversification, and long-term investing. Stress the importance of investing regularly rather than trying to time the market.

  5. Introduce Basic Investing Concepts: Teach children about basic investing concepts such as stocks, mutual funds, and real estate. Explain how these investments work and the potential risks and rewards associated with each.

  6. Monitor Progress: Review your child's investments with them regularly and discuss how they are performing. Use any gains or losses as teaching moments to help them understand market fluctuations and the importance of staying invested for the long term.

  7. Celebrate Milestones: Celebrate important investing milestones with your child, such as reaching a certain investment goal. This helps reinforce positive financial habits and encourages continued participation.

  8. Provide Resources and Tools: Offer educational resources and tools to help child learn more about investing. This could include books, online courses, or investment apps designed for kids and teenagers.

Have Keep Kids Learning

Now that you have the financial education ball rolling, keep kids learning and their personal finance knowledge going and growing! Enroll them in Sammy’s Money School. We offer Free, low-cost Premium, and Sponsored Premium memberships.

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