Mad Money

Cramer’s tips for teaching children about investing

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As you can imagine, Jim Cramer fell in love with the stock market at a very young age. His love first began as an inquisitive child asking his father what all of the columns of data meant in the stock market section of the newspaper.

His father sat him down and explained what the stock market was, and this left an imprint on him for the rest of his life.

"He sat me down and explained that each of those lines represented the performance of a stock of a company on a different day. It fascinated me," Cramer said.

Cramer has often said that he is dumbfounded that someone can graduate from college with a degree in economics and not even know how to balance a checkbook. That is why he advocates that parents should not worry that kids are too young to learn about the stock market.

As far as Cramer is concerned, it's never too early to get kids interested. These are lessons that will continue to reap benefits for a lifetime.

Lesson No. 1: Save, Save, Save
A good investor always saves, the "Mad Money" host said. He began saving as a child and carried the habit into his adult life.

"That's something my father ingrained into me," said Cramer. "On the advice of my father, I opened an account at Fidelity with the Magellan Fund and would contribute a little every week."

Cramer recollected that even with the twists and turns that life presented and he was forced to live out of his car, he always saved. It is that important. "I never quit saving. How poor was I, yet I still put money away."

Lesson No. 2: Make investing fun!
Cramer thinks that children would absolutely love to learn about investing, especially if it is not introduced as something serious, but as a game.

When the "Mad Money" host was a kid, he took pleasure in playing stock market games. His father's company was the National Gift Wrap and Box Company that represented 3M, and they sold games designed to gain the interest of young investors.

"I loved those games so much," he said. They clearly helped spark the beginnings of what would become a celebrated career. "I have subsequently asked the CEO of 3M to bring the games back," Cramer admitted.

Lesson No. 3: Go with what you know
Investing can be turned into a game for children, where they can pick a few companies and follow them to see how well they do. What companies should they pick?

Go with what they know.

"Simply pick companies that are familiar to your kids and have them track them and guess which will do best over a period of time," said Cramer. "If your kids have an aptitude for investing, they will naturally find the contests fun. And they may stick with it for life."

Even when Cramer worked at Goldman Sachs, this lesson came back to haunt him. He learned quickly that you should only pick a company that is involved in something that you already know.

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"I would do no trade if I couldn't explain exactly what the company did and why I liked it and what I expected to happen," he said.

Does your child like to eat chicken nuggets from McDonalds? Then why not track McDonalds? Or perhaps they like to play video games, so why not track GameStop?

These three simple lessons can be introduced to children, and who knows... maybe they will be the next Jim Cramer in-the-making.

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