How To Talk To Your Teen About Investing

In the list of most popular regrets, the “if only my parents had taught me that” one usually ranks pretty high, which is why we’re glad to have found this post titled “How to talk to your teenager about personal finance.” It offers ten steps to help you pass along the basics of investing and saving, so your kid’s better prepared for the decades to come.

1. Open a custodial account using your state’s Uniform Gift to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA).
2. Put some dollars in it.
3. Contribute a certain amount in lieu of gifts.
4. Sit down and explain the basics—you need to understand what a share is, why dividends are paid, what unrealized and realized gains and losses are. If you don’t understand these terms, study.
5. Don’t just buy a “how to” book, though—read about investing, not “how to” invest.
6. Choose investments together; involve them.
7. Go over it every month or quarter or year to review what went right and wrong.
8. If your teen makes some money, ask them to reinvest at least 10% of it, even it’s a single dollar.
9. Teach them not to touch principal.
10. Consider alternative ways of investing.

“how to talk to your teenager about personal finance” [brip blap]
(Photo: Getty)

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.