So, you think your kids are too young to invest? You worry they won’t remember what they invested in or might lose a lot of money. Maybe you fear that they’ll be too aggressive and buy high-risk investments on the first day of their investment career.

If this is you, avoid having such thoughts regarding your kids. Investing is a valuable skill for life, not just for retirement. Teaching children to be investors can help them with their financial education and instill a lifelong habit of saving. It’s a win-win.

Here are five ways you can teach your kids to invest.

Look for investment ideas together

Sit down with your kids and start searching for investments that match their interests. For example, if your child loves Disney characters, you might look for Disney stock; if they love cars, look at car companies like Ford and GM. If they love technology, perhaps an investment in a company like Microsoft would be more appropriate.

Explain the different criteria for good investments. Good companies have products people want to buy and will continue to buy over a long time. They should be growing, either in profit or market share. Make sure the companies you choose have a long history of success and can survive for several years if the economy declines. Talk about how much money your children have to invest and their financial goals. Maybe they want to buy a certain number of toys this year, or perhaps they want to help out with college costs in the future.

Involve your children in conversations about money

Ask your kids what they think about money. Ask them what they would do with extra money if they had it. You can also talk about how much you make and what your family spends on things like air-conditioning or food. Having such conversations with your child will curate an interest in them, making them want to learn more.

It is a good idea to open up a savings account or mutual fund and let them have a small amount of their own money to invest. To understand what they are doing, make sure to involve them in all mutual fund or savings account decisions.

Encourage your kids to save

Encourage your kids to save money. Teach them the importance of saving by demonstrating how you are saving for the future. Show them how you budget your money and explain what happens if you don’t save enough. Make a family budget and show them how to track expenses. Ask them to suggest changes to make it more fun or easier to follow.

If they want something they don’t need, encourage them to save up their own money instead of asking other people for it. Get a debit card for teens that’s linked to a savings account. It will help them learn the importance of budgeting, saving, and spending wisely.

Create a system for managing the money

Your kids might not understand all the details of investments, but they should understand some basics. If you have children spending too much money on entertainment or other expenses, try setting a limit and asking for their input. Talk to your children about how their new savings will grow in the bank, and show them how much more they can save when they add a sum each month. Help them understand how interest works, and encourage them to think about what else could be purchased with that interest.

Summing Up

When you invest, you gain the power and the opportunity to earn more money. That principle is one that you can teach your children at a young age. When they start to see how much their investments can grow, they will be motivated to set aside more money for future use.

As your children learn how to make good spending choices, they will also learn to make wise investing decisions. Setting good examples and explaining the details can help them develop their financial literacy and set a path for the future.