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Like never before, I’m hearing from parents who want to get their teens involved in stock market investing.

This is not a financial literacy story. It’s much more about a raging bull market for stocks that has attracted hordes of new or re-energized investors. The parents among them are keen to share the good news with their teens, just as baby boomer parents want their adult kids to get into the housing market.

Learning how the stock market works is essential for young people to achieve long-term financial success. Only a lucky minority of this group will have jobs with company pension plans, which means they’ll need to invest for themselves to retire comfortably. Stocks have to be part of the plan.

That said, investing in stocks is not a front-rank financial skill for young people who have yet to graduate and take their place in the work force. Here are five more important financial lessons:

  • Smart banking: Have a no-fee chequing account for daily banking (widely available to youth and students). On turning 18, open a high-rate savings account with an alternative bank paying a decent rate of interest. Use the savings account to park money that won’t be used in the short term and learn to shuttle money back and forth between chequing and savings using banking apps and websites.
  • Saving: Build a habit of diverting a portion of all incoming money from gifts and part-time jobs into a savings account. Understand that the point of savings is not to grow your money, but rather to have money safely parked for emergencies and future use.
  • Long-term planning: Planning to go away to university? The time to start saving and planning for this is probably Grade 10. Estimate how much tuition, supplies, transportation and, if applicable, accommodation will cost and then map out how the bills will be paid.
  • How to use a credit card: Young adults aged 18 and up are eligible to get a credit card. Parents, encourage this if your child is working and has some income. Credit cards are indispensable in modern banking and it’s vital to learn early about the foundational personal finance rule of spending only what you can afford on a card and never carrying a balance.
  • Matching education to job and income prospects: Help a young person make connections between the postsecondary programs that interest them and the job market for people with those skills. Encourage adaptations that help them navigate between the programs of interest and the economic sectors with good jobs.

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