Stock for Kids – The Secret Formula

When I was a kid, my parents helped me buy my very own stock – Topps Chewing Gum Inc. – the perfect choice for an avid sports card collector and voracious gum-chewer. My parents did not realize it then but that one event would have a profound effect on my life!

I couldn’t wait to get home from school to check the newspaper to see how my stock was doing – this was waaaaaay before internet stock quotes were available :). I started asking questions and learning more and more about MY company. I received annual reports and took pride in receiving invitations to the shareholder meetings, each of which taught me things as well as spurred my curiosity.

The sense of ownership and the experiences that came with actual stock ownership was a game changer and whet my appetite to learn more.

Fast forward to these tough financial times which points out that not only are kids lacking the necessary skills to manage money, but many adults do too. In the JumpStart Coalition’s latest biennial financial literacy survey of high school seniors, the average score was a dismal 48%. Add in the fact that tight school budgets have stripped financial literacy from the curriculum and that many parents lack the financial literacy skills to teach their kids and you have a bleak picture for our financial future.

How do we grab kids' attention away from video games and TV? How do we give parents tools to teach their kids the basics about money and stocks?

The answer is buy stock for kids! It turns out that CNBC’s Jim Cramer of Mad Money agrees – he has been a clear advocate that buying stock for kids is the best way to teach them about finance. Here is the secret formula:

1. TRUE STOCK OWNERSHIP – Buy your kid/teen stock in a company that they love. Think about their favorite games, food, hobbies, clothes etc. It doesn’t matter whether it is one share or 100 shares, the key is that it is a company that your kid/teen is interested in. At this point you are not necessarily concerned about the investment value as much as its attention value.
2. EXPERIENTIAL LEARNING – Once they are an owner, use every opportunity to discuss, teach, and motivate them to learn more. Each mailing from THEIR company becomes a learning opportunity like dividend checks, annual reports, invitations to shareholder meetings, etc.

Now, how does a parent make this happen?

Do you have to buy stocks at GiveAshare.com? No, there are various ways to buy stock for kids including through stock brokers, or in some cases, even direct from the company if they have such a plan. But the easiest way is right here at GiveAshare.com because 1) it only takes 2 minutes, 2) you can use a credit card, and 3) you get the additional benefit of getting the actual registered stock certificate which helps grab kids' attention. On the experiential learning side, parents can do this themselves but if they need any help, our I’m A Shareholder KIT explains what it means to be a shareholder and some of the basics about money and stocks.