Teaching Generation Z about MoneyOne 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:
- Discuss the importance of saving (see Forget You! Money Blog – https://www.cherrytree.com/forget-you-money/)
- 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.
- Stocks usually have higher returns, but have more risk – bigger ups and downs.
- 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.
- 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%.
- 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.