6 tips on how to teach your children about investment

We teach our kids how to behave in public, how to have manners and the importance of working hard at school.

But why don't more of us teach our kids how to invest?

We spend our lives investing.

We invest in our homes, in our businesses and in our relationships with others.

Almost everything we do is built around investments and whether or not we succeed in those investments has a huge impact on our lives.

It determines our happiness levels, our sense of pride and how we view the world.

It also has a big impact on our bottom line.

It's time to start teaching our kids about the fundamentals of investing.

But how do we go about it?

Here are five tips on how to start.

1. Keep it simple

The best way to teach children is to get them interested in the topic.

That means speaking their language.

Start with the basics of investing.

Don't bamboozle them with information on equities markets, negative gearing and the capital gains tax.

They'll be bored.

Even I sometimes find that stuff boring.

If you break down the fundamentals of, say, compound interest by explaining simply and clearly how money grows, while keeping clear of complicated terms, they'll be all ears.

2. Use stories

Depending on the age of the children, you may wish to use personal anecdotes, pictures and stories to help you convey the basics of money.

You can create a fictitious company with a business model and staff members and really have fun with it.

Invent problems and show your young students how the investor can overcome them.

This is not only teaching kids the fundamentals of money and investing, but also the importance of resilience when problems arise, one of the greatest life lessons.

3. Monopoly

Why not play Monopoly with them - it teaches them basic principles of buying and selling, negotiation, rent loans etc.

And it's fun!

4. Play the stock market with them

If you're comfortable with the stock market and you've had some success in shares, then why not get your children involved?

Pick some popular companies that the kids would have heard of and invest in a broad range of shares.

Track the performances of the various shares with the kids and explain to them how some performed better than others and why.

5. Teach them about practice

Money can be a daunting prospect for kids, but it's important to teach them that it's okay to make mistakes.

Perhaps share some life lessons you have learned about money and how these changed your approach to investing.

Most importantly, let them know that money is something they can practice being good at.

Being good with money is a skill they can develop over many years and something they will become better at over time if they pay attention to what their mistakes are telling them.

6. Teach them about giving back

One of the most important things children can learn about money is how NOT to spend it and the importance of enjoying their successes, while putting some aside.

Teach your kids about how to spend an investment dividend by designating some of the money for themselves, another portion for their savings and future investments and a final portion to give back.

It's so important for kids to learn how to give back and how to identify where their money could be put to good use by helping others less fortunate.

This is the true mark of success.

These are just a handful of approaches you can take when teaching your kids about investing.

It doesn't matter the method that you choose, the main point is to just get the discussion going with your kids.

The head start you'll give them is invaluable.

About Michael Yardney Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.