Although there are many seminars and courses available to teach children about finances and business, they are often not taught as part of the standard school curriculum.
Helping kids and teenagers learn the fundamentals of free markets, business, spending, saving, and investing, according to schools, organisations, and educators around the world, is one of the most crucial yet frequently overlooked aspects of a child’s education.
Your child’s financial habits may be established by the time they are five years old, according to research done at the University of Cambridge. This is a very young age by any measure. Today, knowing financial language is just as vital as knowing how to interact in English; both are key components of a successful, all-encompassing education.
Undoubtedly, all of our children will at some point in their lives have to make basic financial decisions. If we skip the chance to educate them about financial literacy, we are limiting their chances of future success.
Although there are many courses and programs available to teach children about finances and business, they are often not part of the standard school curriculum, and children are rarely educated about the real world applications. In these situations, it is the parent’s duty to take the effort and sign their child up for financial literacy classes.
Here are a few methods that parents can start fostering financial literacy in their children at home!
Distinguish between needs and wants
Children should be taught the distinction between “needs” and “wants,” as doing so will enable them to make more informed decisions regarding future purchases. One of the most important parts of managing one’s finances is understanding when to not spend more money.
Encourage them with opportunities to earn and spend money
Give children the opportunity to complete household chores and “earn” some pocket money. At the same time, provide them with opportunities to “spend” their hard-earned allowance. Giving kids the chance to earn money gives them the chance to understand how to manage it. They realise the worth of their labour when you pay them for home duties with pocket money.
Gradually familiarise topics of financial literacy
One error parents frequently commit is attempting to teach their children all there is to learn about money all at once. Since financial education is broad and involves a wide range of subjects, it is crucial to introduce these subjects to youngsters gradually so that they completely grasp each one prior to actually moving on. Children may become overwhelmed if all the concepts are introduced at once, and they frequently do not retain the majority of what was covered. Therefore, it is best to spread it out over a number of shorter lessons.
Explain the importance of savings
Kids can learn the value of saving by being made to set aside a portion of their allowance each month in order to purchase something they want. Reinforce the idea that taking on any kind of debt is a terrible decision, as well as the importance of being thrifty and the risks of impulsive spending. They will gain a better understanding of the effects of utilising credit cards and quick cash as a result.
Teach them how to keep track of their expenses
Stress the value of keeping track of one’s spending by having kids keep a weekly record of their purchases; when they tabulate this information towards the end of the month, it will undoubtedly come as a surprise to them. Understanding where your money goes is essential to improving your ability to save. Encourage kids to consider their purchasing habits and how changing such habits could help them save money more quickly.
Along with these few strategies, parents should also make an effort to be transparent about their financial choices and bring it up during routine interactions with their children. In order to ensure that their kid is never uninterested in the idea of financial literacy, they should also encourage involvement in finance quizzes and competitions.