Millions of Kids Are Crypto-Curious. Here Are 3 Key Lessons to Teach Yours

A father and son looking at a laptop and a credit card.

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Young teens and preteens know more about cryptocurrencies than their parents, but not everything they know is correct.

Key points

  • T. Rowe Price published the results of its 14th annual Parents, Kids, and Money Survey, which interviewed parents and their kids aged 8 to 14.
  • A key finding of the research was that 57% of the sampled teens/preteens said they were familiar with crypto, compared to 47% of the surveyed parents.
  • The researchers said while crypto has been a useful catalyst for financial discussions between parents and their kids, misinformation regarding digital assets seems to be distorting sound investment practices among the younger generation.   

Earlier this month, global asset management firm T. Rowe Price, published the results of its 2020 annual Parents, Kids, and Money Survey, which sampled more than 2,000 parents and their kids aged 8 to 14, spanning Latinx, Asian, Black, and White ethnicities.

A key finding of the research was that 57% of the sampled teens/preteens said they were familiar with crypto, compared to 47% of the surveyed parents. Specifically, the kids on average said they were familiar with the following financial technology -- also known as fintech:

  • Crypto or cryptocurrencies (57%)
  • Traditional stocks (49%)
  • Investing apps or cryptocurrency exchanges (40%)
  • Meme stocks (34%)
  • Non-fungible tokens (NFTs) (31%)

The percentages above total more than 100% because respondents were allowed more than one answer.

The research uncovered positive and negative effects of crypto

One of the most positive findings from the research was that crypto assets are triggering money conversations between parents and kids. The study uncovered that 42% of parents familiar with cryptocurrency agreed with the statement, "My kids and I have regular conversations about finances because of cryptocurrency." And 48% of parents familiar with cryptocurrency said they were "excited" to talk to their kids about crypto and various digital assets. However, fewer than half of parents said they do not discuss the risks associated with investing in cryptocurrency with their kids.

"It's great to see kids taking an interest in investing, but parents need to talk to their kids about the risks associated with investing in cryptocurrencies," stated Roger Young, Thought Leadership Director at T. Rowe Price and father of three, in the statement announcing the study results.

That is a potential problem and a missed opportunity, because the research also found that kids have some misperceptions regarding crypto investing. Many of the children in the survey mistakenly believe cryptocurrency is the primary way to invest in the future. The study results showed that 40% of kids agreed with the statement "cryptocurrency is the future of investing." Among kids who are familiar with cryptocurrency, 51% agree with the statement.

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Those are troubling numbers because while the sampled kids may have a basic understanding of fintech, they seem to lack fundamental insights regarding the principles of investing.

Three tips to keep in mind regarding crypto investing

According to the researchers, it's the responsibility of parents to be informed and engage with their kids about all topics related to finance but especially when it comes to cryptocurrencies.

Here are three common sense tips from Young that all investors need to keep in mind, regardless of their age.

  1. Families who put money into cryptocurrency should do their research and be prepared for a wide range of possible outcomes. 
  2. Crypto assets are extremely volatile and speculative investments, so they should not represent a large portion of the assets you need to achieve important financial goals. 
  3. Although past performance is not a guarantee of future results, history has shown time and again that investing based on fundamental principles in a diversified portfolio of stocks, bonds, and cash is a sound strategy.

It's also a good idea to help your kids learn to do their own research, and understand they should not invest more than they can comfortably afford to lose.

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