Kids Aren’t Learning Company Fundamentals
Or Investment Basics.
Instead, young investors are being taught to pay attention to stock prices. Of course, focusing on the price of a security is much simpler than considering things like the fundamentals of a company or the share structure of a stock.
A study of more than 50 financial literacy programs in the U.S. found that children were provided with very little information about financial concepts other than stock prices.
Most financial educational programs are designed to make investments less intimidating by teaching kids about stocks. That’s great, and an important step on the road to understanding stocks. But in doing so, they’re neglecting other important financial concepts.
Young investors need to be taught about the fundamentals and structure of stocks in order to fully understand the investments that they’re making.
It’s easy to teach kids about stocks. What is difficult is teaching them about stocks and company fundamentals. That’s because it’s a lot more complicated.
There’s a reason why the U.S. Department of Education’s mandatory Financial Literacy Program for students in junior high and high school doesn’t require a discussion of the fundamentals of a company or its balance sheet.
Kids Are Learning the Wrong Lesson About the Investing Timeframe
Many of the common errors in the education systems today can be traced back to a lack of information. Teaching kids about certain topics is a challenge. These kids need to be taught things like math, science, and history, but there’s also a lack of decent lesson plans when it comes to things like finance. This is why you hear so many myths about investing when you talk to younger people.
I remember when I was much younger, I went to a computer training school class to learn about computers and how to properly use them. The instructor had taught me all about using a computer, but I quickly realized that I didn’t know how to do things like file my taxes. The teacher had never covered that particular piece of information, and a simple oversight was the root of the problem.
The same thing can be said for the many investing myths that are being taught in today’s schools. While some kids will have parents that can show them the right way to use their money, others may not. The financial education taught in schools is spreading a lot of bad information, and the media is trying to tell them the opposite.
How Can We Teach Our Kids Better?
The young investor has an especially hard time when it comes to money because they are constantly bombarded with financial advice and investing myths. As a parent, one of the ways that you can help your kids avoid these types of mistakes is to teach them the right lessons you have learned from your mistakes. However, your children may be exposed to certain myths that might not be so easy to dispel.
Here are some of the most common myths that parents should try to avoid teaching their children. Teaching these myths can lead to bad money habits and even a lifetime of financial mistakes. While these myths may seem harmless, they only leave your child under prepared for their financial future.