Parents are not confident they can teach kids about investing. Here’s how advisors say to get started

The vast majority of parents agree it’s critical that their children learn about investing, but few feel completely confident in their ability to teach their kids how to do it, according to a new survey conducted for the SIFMA Foundation, a non-profit focused on financial education.

Only 22% of parents are “completely confident” in their ability to teach their children the basics of investing, the survey found, and they’re looking to their kids’ schools for help. All else being equal, 74% of parents said they would move their children to a different school if it offered financial education and investment courses.

The SIFMA Foundation with Wakefield Research polled 1,000 U.S. parents of students in grades K-12.

Only 26 states now require a personal finance course for high school graduation, according to the non-profit NextGen Personal Finance — and experts are concerned that without financial education, social media and “meme stock mania” may drive younger investors’ decisions. 

“In this era when you can go online and start an investment account with just a quick sign in, how are we directing young people to navigate that?” said Melanie Mortimer, president of the SIFMA Foundation. The organization sponsors “The Stock Market Game,” an online simulation of the capital markets aimed at teaching students the basics of investing. 

Students who recently completed the program say it taught them more about the companies behind the products they buy, the importance of diversification and using investments to build generational wealth. 

“What really I’ve taken away is that you shouldn’t just buy the product, but buy the company,” said Lance Robert, a high school junior at Harbor Teacher Preparation Academy in Los Angeles. “It has opened my family to considerations of investing as a means of generating wealth.”

Financial advisors can also be a resource for starting and broadening these conversations to teach young people about investing, especially in times when economic stress and anxiety are high.

“One of the most important things you can do also during this time of anxiety is to educate yourself about finances and also educate your children,” said certified financial planner Stacy Francis, president and CEO of Francis Financial in New York. “Whenever I know I’m concerned about what’s going on, understanding more and educating myself gives me that peace of mind, and this is a great opportunity to do just that.”

Make these lessons into informal and fun family discussions, said Francis, who is a member of the CNBC Financial Advisor Council.

“Make sure that money can be talked about, that there’s no taboos,” she said, “so that your children are learning those really good financial literacy skills that they need to set themselves up for success for the rest of their life.”

Getting your child hands-on experience with investing is also a smart strategy, advisors say.

Boston-based CFP and enrolled agent Catherine Valega is the founder of Green Bee Advisory and the mother of four.

She opened custodial Roth IRAs for her children and encourages her clients with minor children with earned income to do the same. In these accounts parents act as guardians and the children are the beneficiaries until the child reaches the age of majority (usually 18, but sometimes 21) in their state.

Children can watch their earnings in these investment accounts grow over time.

“You really can look year after year after year, and have them realize that they already have money saved in the markets, and it’s working and growing for them,” Valega said.

Hands-on experience also gives children a chance to discuss with parents what investing means to them, she said.

“That’s my preferred strategy, to get them thinking about what it means for saving for the future and investing,” Valega said. “Time in the market is really the key to a successful long term financial plan.”

Although, “these are sort of the boring strategies, as opposed to what they’re seeing on Tiktok,” she added.

Still, for 8th grade student Celicia Haynes, learning about stocks opened up conversations with her family about diversification and risk tolerance. She participated in the SIFMA Foundation’s Stock Market Game through her school, Parkside Preparatory Academy in Brooklyn. 

“Instead of just keeping their money in a bank,” she said, “you can go and invest it so you can have some type of interest and gain your money.”

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