Are You Concerned Your Children Won’t be Able to Manage Their Finances When They Grow Up? Don’t Panic! Every parent feels this same way about teaching financial literacy to children. Relax; every parent thinks alike!
Money management and spending is an art that is crucial for holistic development of your children. Many of us were told by our parents, as children, that “Money doesn’t grow on trees”. Every adult must have heard this line repeatedly throughout their childhood years.
Money was always valuable, and spending it on unnecessary things would only serve to waste it. Today there are various methods by which parents can teach their kids financial literacy.
According to research from Cambridge, children begin developing financial habits around seven years of age and it is essential that both school and parents educate children about money and its proper use. Here are six steps parents and schools can use to teach financial literacy to children.
Here are a few techniques that will help your children learn about money and finances.
1. Engage in Sharing Information About Spending Habits
The initial step should be sharing details about your money-related transactions with children. For instance, if you bought groceries using a “card tapping system”, tell the children all about it – they will find it fascinating!
Parents often focus on major issues when communicating with children, while ignoring smaller ones. That needs to change; have your kids total up their grocery items against the bill so they can gain an understanding of both things; this allows them to better explore bills, groceries and how much everything costs.
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For kids over 15, explain why and when you shop at specific stores to maximize discounts; gradually they may take an interest in such topics.
2. Provide Your Children With Monthly or Weekly Allowances
Are You Giving Your Children Pocket Money
Many Canadians give pocket money to their children. Many tend to reward domestic chores with small rewards like $5 for helping with dinner, $5 for loading the dishes into the dishwasher etc – yet many parents lose track of what happens after giving the money!
Checking how your child spends his pocket money is key. Say you gave him $20 every week; visit stores with him to observe how it is being spent; for instance, is he keeping to what he already has or asking for more money? These questions will allow you to teach him about money while simultaneously instilling it within himself.
Some parents believe that giving money as payment for household chores is not the ideal approach, since this would make relationships transactional; but on an optimistic note, giving money could teach children responsibility while helping you make extra cash in return.
3. Help Them Create a Budget With all their spending money on entertainment and other unnecessary purchases, children need help understanding budgets. Teach them how to make and stick to a budget as well as ways to save. Whenever the week starts help them create one together.
Your choices for doing this include laptops, mobiles phones and even paper and pen. Each time you give money out ask the recipient to record how they spent it as well.
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Once on the weekends, sit with them and count up what money is coming in; this exercise will teach them how to properly save and spend it.
4. Motivate Them To Take Advantage of Money-Making Opportunities
It is vital that we teach our children to make independent choices with their finances, rather than telling them where and how to spend it. Allow your children to explore on their own. Through their mistakes they can come back to you for support or adjustments if necessary.
Motivating them to look for opportunities to earn extra money should also be a goal, including garage sales, lemonade stands, bake sales or charity drives. You could even encourage them to work at cafes or fast food joints as part of a fundraising strategy.
As they experience how hard it is to make money, they will naturally learn how to manage and budget it wisely. At home, parents want nothing more than for their child to become financially literate and independent; by encouraging work ethic you are taking one more step in that direction.
5. Foster Social Responsibility If your family values charity and giving, instill these principles with your kids as well. Giving to others develops leadership qualities in children. A simple charity project could do the trick – make it your kid’s job to calculate how much money and other items can be collected.
Let him do the math of calculating how much each family member contributed, encourage him to ask questions, and explain why you chose a certain charity. You could repeat these projects quarterly or annually so it remains exciting.
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6. Make Financial Literacy an Engaging Topic
Children learn best when having fun! So why not turn financial literacy into an enjoyable topic for the class? Bring books related to short financial lessons or play finance trivia board games like Monopoly; there are also apps like PiggyBot, Bankaroo and FamZoo which make learning enjoyable and informative!
Children love using smart cards! Consider purchasing them a virtual smart card which operates similar to a prepaid credit card and linked with Apple Wallet so that you can oversee transactions while also teaching your child how to use it (just be mindful that their use doesn’t exceed the limit! Haha). With such a card in their possession, their limits won’t be exceeded (haha).
Financial Literacy for Kids: Conclusion (Step 2) If you want your kids to develop and succeed academically, financial literacy must become your top priority. By sharing information about money with them and sparking more questions than before.
By employing these techniques, you will be able to spend more time with them while teaching them about finances in later stages of their lives. That sounds wonderful! Your primary goal should be teaching your child the importance of financial education for his or her future success.
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Encourage your kids to participate actively in finance quizzes, workshops, and podcasts for maximum enjoyment.
Why is financial literacy important for children? Tell us your opinion in the comments section.
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