Money management is an essential lesson for all walks of life. It helps us track our purchases and savings to improve future financial status. Financial literacy must be taught from an early stage so that kids are aware of how money changes hands.
What is Financial Literacy for Kids?
Financial literacy is the understanding and application of your finances. It can be your investment, budgeting or personal financing. Now, you might wonder what this has to do with kids. Well, everything!
When your kids have financial knowledge, they will know how the real world works. They will have their own financial goals and actively participate in personal financial management. This will help them to be aware citizens of society.
They will know the value of things. As such, they won’t be so quick to demand extravagant presents or be materialistic. Instead, they can be rooted in life and be happy with what matters the most, love and relationships.
5 Easy Ways to Teach Financial Literacy to Kids
If you are wondering where to start, here are five simple ways to teach financial literacy to your little ones.
Piggy Bank
Giving your kid a piggy bank is one of the oldest forms of money lessons. It is used to store coins by kids to increase their savings. It helps a child to learn about the benefits of savings for the greater good at an early age.
You can offer your child an incentive for all the money saved within a particular period. Thus, your child will find the motivation to keep more for the future.
Monopoly
The classic board game is a favourite pastime for kids. They can learn essential addition and subtraction and the importance of calculating risks.
In addition, the game teaches players to spend money tactfully and avoid borrowing money foolishly, which can lead to more credit.
As such, it is an excellent tool for kids to learn the basic skills of an entrepreneur. They can master the art of earning, spending and investing, leading to future revenues.
The game also teaches you to diversify investments to manage financial assets better. Hence, playing this game will make your kids strategic thinkers and thoughtful spenders.
Pocket Money
Monthly pocket money is a way to show your kids that you are trusting them with cash. They feel grown up and responsible for the money.
I remember the first time my mother gave me pocket money; I was in the seventh heaven. The thrill of purchasing something with my own money was blissful. It made me feel liberated.
Besides, it is a wonderful way to teach financial independence to kids. But you have to guide them to spend the money because they have to learn that with independence comes responsibility.
Ask your children to list the things they can purchase now and save some for later months. It would help them to make sound judgements about spending.
Expenditure Diary
A personal diary means keeping track of all your expenses, dates, month or year. You can make your kids accountable by making them learn about the benefits of an expenditure diary.
They will learn from an early age to spend one-third on expenses, one-third on savings and one-third on future investments.
Furthermore, it will be a hand-me-down to your children. This option is my favourite, and I suggest all mothers do the same. The diary would be the start of their real-life financial lessons.
Personal Account
The sense of ownership creates a euphoria among kids. As such, have a dedicated personal account for your kids. Then, take them to the bank and teach them how to handle the account. You can also supervise them in performing simple tasks like withdrawing money or calculating cash inflow and outflow.
Make Financial Literacy a Priority for Kids
Financial literacy means considering all options to make better asset decisions. The six main objectives of finances are to earn, spend, save, invest, borrow and protect your assets. So, use the five financial literacy hacks to help your kids learn these basics. They will thank you for this valuable lesson forever!
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