How to Teach Financial Literacy to Kids
We should talk to children about financial literacy at an early age. Studies show that 7 years old children can already create financial habits such as saving and self- monitoring. This is a healthy sign that they can properly manage their money in the future.
Tanya Van Court, the founder, and CEO of Goalsetter shared a way on how to teach financial literacy to children. Van Court said that we should keep them engaged to it by keeping everything fun. It will help them realize the impact of what they’re doing.
Why and How You Should Teach Kids About Financial Literacy?
Learning about financial literacy is not something that people can master in a day. It may take some time before you can fully understand how it works. Now, here is the reason why you should teach your kids about financial literacy. It is a special skill that they can use for the rest of their lives. Also, it will put them to advantage if they know how to manage their money.
If you wish to teach them, but don’t know how here’s a quick guide on how you can do it.
Show them how to deal with their wants and needs.
The first step in teaching them about financial literacy is by discussing the difference between wants and needs. It will help them know how to prioritize and know where to allocate most of their funds. You can explain that their needs are those they need to live (e.g. food, shelter, clothes). On the other hand, you can explain that their wants are those that are not urgent or extras. However, let them know that it’s not bad to spend on their wants considering that they can satisfy their needs.
Allow them to earn and keep their money.
You can also teach them financial literacy by giving them practical experiences. You can allow them to earn and keep their own money. An example of this is creating a fundraising activity during summer where they can sell juice and hotdogs. You can also give them an allowance for doing chores, so they can also learn the value of hard work. If they are artistic, you can ask them to sell their artworks to earn money.
Teach them how to set goals.
If you want to teach your kids about financial literacy, you have to show them how to set goals too. Without goals, your kids won’t understand the reason why they save money. For example, their goal can be something they want to buy so they have to save for it. If they do this, they will also understand how long they need to save to achieve their goal/s.
Provide them different means to save.
Your kids also need a safe place to store their money. You can provide them a piggy bank, or open their independent bank account. This will also help them track the amount of their savings.
Teach them how to track their expenses.
You need to teach them how to track their expenses as well. Every time they spend something, ask them to write it down so they can analyze where most of their money goes.
Give rewards or incentives.
If you want to motivate your child to save, you can give them rewards or incentives. You can do this by giving them bonus money if they achieved their goal.
Allow them to fail or make mistakes.
Another way of learning this concept is by going through practical experiences. In life, there are times where we will lose money because of some actions. This will teach them a lesson so that they won’t do it again in the future.
Act as their creditor.
Adults are familiar with how creditors work and you can also do this with your child. If they want something but don’t have enough money for it, you can lend them some funds. However, you should tell them that they have to pay it back.
Facilitate discussions about money.
Talking about money with them will enable them to voice out their thoughts and opinions. They’ll also learn better if you directly tell them about how money works and how they can grow their money.
Be a role model.
Your children will have a hard time understanding what you’re saying if they don’t see you do it as well. By setting a good example, you can show them the importance of being financially literate and how useful it is.
If you wish to learn more about finance, you can listen to these podcasts for more info. Once you understand the concepts and techniques, you can downscale it to your children.
Best Educational Programs for Kids
You can also find education programs that your kids can take even online. Here are the best educational programs that teach about different topics for kids.
Spatulatta: Cooking 4 Kids Online
Spatulatta is a cooking website that has more than 300 videos that your kids can watch. They can learn different recipes that they can follow to raise money. They also have a Parents Page where you can also learn how to make healthy meals for your children.
Curious World has a database that contains licensed ebooks, videos, and educational games. Here, they can learn about literacy, math, language, and more that will be helpful when they attend school.
KidsRead is similar to Curious World. They also have a database of different learning materials that your kids can check. The difference is that they have movies based on books which makes it easier to understand.
It is essential to teach your kids about financial literacy. They can use this knowledge to survive in this world especially that almost everything involves money. Having sufficient knowledge will also save them from being scammed by other people in the future. That is why finance is a life skill that everyone should learn even at an early age.