Teaching Generation Z about Money

One of the fun parts about my job is getting clients’ children off to a good financial start. A few times a year, I sit down with someone in their late teens or early twenties to teach them the basics. Since I can’t possibly do this for all my non-client friends’ children and still run a business, I thought I’d share the blueprint for an initial conversation.

Here is the general outline I follow:

  1. Discuss the importance of saving (see Forget You! Money Blog – https://www.cherrytree.com/forget-you-money/)
  2. Explain the different ways to make your money grow – savings account, stocks, and bonds. Explain what a stock and bond are.
    • Stocks = ownership in companies like McDonalds, Amazon, and Netflix. Use companies that appeal to them.
    • Bonds = loans to companies, government, and people.
  3. Stocks usually have higher returns, but have more risk – bigger ups and downs.
  4. Cover why we want to own thousands of companies.
    • Give examples of things that can go wrong with one company – Blockbuster Video, Kodak. I like those examples because young kids can’t imagine a world without streaming movies or digital cameras.
    • Give examples of all the different countries they will be investing in – United States, Great Britain, Spain, China, India, whatever might appeal to them.
  5. Explain why fees matter and that index funds are a great place to start. You can get all your money invested around the world for less than 0.1%.
  6. If needed, explain why Bitcoin isn’t an investment.

That’s a good start anyway. The most important thing is to start small and keep it fun.

Legal Disclaimer: These posts do not constitute an offer or recommendation to buy or sell any securities or instruments or to participate in any particular investment or trading strategy. They are for informational purposes only. CTW gathers its data from sources it considers reliable. However, CTW makes no express or implied warranties regarding the accuracy of this information or any opinions expressed by the author and may update or change them without prior notification.