Teaching kids about money? Start with Dow jones and financial education

financial education

Financial literacy is rarely taught adequately in schools. That makes it imperative for parents to provide practical financial education for their kids from a young age. Learning concepts like budgeting, saving, investing, and charitable giving set them up for financial success. Surprisingly, teaching financial basics starts with something as simple as the Dow Jones stock index. Here’s how Dow Jones provides an engaging entry point to get kids invested in lifelong financial education:

Start by explaining what the Dow Jones Industrial Average represents in simple terms – a combination of 30 major company stocks that reflects the broader market. Use age-appropriate analogies like a straw poll of popular kids’ opinions. Share how ups and downs in the index correlate to events impacting companies. Pique their interest in how businesses drive economic growth.

Track index performance together

Check the Dow’s performance together periodically and note when it hits new highs or milestones. Online investing games allow kids to pick stocks in a virtual portfolio and track performance. Monitoring the index introduces concepts like points, percentages, and volatility. Use charts to visualize performance over time. Make following the markets a regular shared activity.

Learn through current events

Tie Dow’s performance to current events kids recognize, like how a snowstorm might impact travel stocks or an iPhone release could benefit Apple. Relating index moves to real-world happenings makes market dynamics more tangible.

Research major index companies

Studying the 30 companies constituting the Dow index provides an overview of leading American industries. Look up what each company does and discuss their products or services. Examining real brands kids recognize retains their interest. Research together how innovations and performance impact stock price. Introduce stock market vocabularies like shares, dividends, earnings reports, IPOs, and price-to-earnings ratios. Use Dow stocks to explain how daily trading works. Define terms like volume, open price, intraday highs and lows, closing price, and after-hours trading. Make market mechanics understandable.

Highlight long-term growth

While stocks fluctuate daily, show how the Dow demonstrates long-term growth over decades despite downturns. Point out bull and bear runs. The upward trajectory over long periods illustrates why patience pays off for investors in depth review on StocksReviewed time in the market trumps timing the market.

Learn from historic Dow milestones

Studying past Dow milestones like first breaking 1,000 in 1972 or the impacts of Black Monday in 1987 provides historic context. Discuss famous market crashes, recoveries, bull runs, and how the Dow has evolved. Understanding past trends informs future investing decisions. Let kids choose a few stocks aligned with their interests to “hypothetically” track and add to a mock portfolio. Monitoring brands they know retain engagement. Share company news relevant to young audiences, like new videogame releases impacting gaming stocks. Make following investments fun.

Consider youth investing accounts

When age-appropriate, consider opening custodial investing accounts for kids to manage small amounts with guidance. Practice researching and selecting stocks together. Experience drives learning. Ensure accounts are age-restricted so kids liquidate holdings until 18. Developing financial skills from a young age sets kids up to manage money wisely for life.