5 Simple Investing Rules You Should Teach Your Kids Before They Graduate High School

Financial literacy is a gift that pays dividends for life. While most kids learn math and science in school, they rarely learn how to grow their money. That’s why it’s essential to start teaching your kids basic investing principles before they graduate high school.

You don’t need to be a financial expert. These 5 rules are simple, practical, and powerful enough to help your kids build strong financial habits early.

1. Know the Difference Between Saving and Investing

Before your child can invest wisely, they need to understand why investing is different from saving.

We explain it this way:

“Saving is putting your money somewhere safe for short-term needs. Investing is using money to help it grow over time.”

Teach them that both are important—saving is for buying a new bike, while investing is for the future.

Kid-friendly tool: Try books like “The Four Money Bears” to explain the difference through fun stories.

2. Start Early, Even with Small Amounts

This is one of the most powerful investing lessons:

“The earlier you start, the more time your money has to grow.”

You can show them how investing $10–$20 a month from age 10 can grow into thousands by the time they’re 30. Use real-world examples or even a simple compound interest calculator online to show the numbers.

Action step: Consider opening a custodial investment account and let them “own” shares in a company they know (like Apple, LEGO, or Nike).

3. Never Put All Your Eggs in One Basket

Diversification is a big word, but the concept is simple. We explain it with a real basket of eggs:

“If you drop one basket with all your eggs, you lose everything. But if you spread them out, one fall doesn’t break them all.”

Teach kids to invest in different companies, industries, or index funds, so they’re not relying on one investment to do all the work.

Fun idea: Let them “build” a pretend portfolio using colorful index cards and track them over time.

4. Investing Is a Long Game

Pre-teens and teens live in a world of instant results. Investing teaches patience and discipline.

Make it clear: investing isn't about getting rich quick—it’s about letting your money grow over years, not days.

Help them:

• Understand market ups and downs

• Resist the urge to panic when things drop

• Appreciate the magic of compound growth

Metaphor: Growing money is like growing a tree—it takes time, but the roots grow deep.

5. Know What You’re Investing In

Teach your kids to ask smart questions like:

• What does this company do?

• Is it something I believe in?

• Will people still use it in 10 years?

  
  

This rule helps them avoid fads and think like long-term investors. It’s a lesson in research, curiosity, and confidence.

Book tip: “Investing for Kids” by Dylin Redling is a great beginner's guide for tweens and teens.

📚 Bonus Tools to Support Their Learning

These tools make money lessons stick:

• Greenlight or GoHenry – debit cards with investing features

• BusyKid – earn, save, invest, and donate in one app

• Custodial Roth IRA – great for teens with part-time jobs

• Compound interest calculators – let them see growth in real time

  
  

Final Thoughts: Teach Early, Grow Confident Investors

You don’t have to teach your kids how to pick stocks or time the market. Just focus on these 5 core investing principles before high school, and you’ll give them a head start on building wealth, responsibility, and independence.

The best part? You’re not just teaching them about money—you’re teaching them how to make smart decisions for life.

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*the book recommendations in this article are affiliate links, and also great books!