Are you worried your kids will never be able to manage their finances when they grow up? Is Financial literacy a tough thing to teach kids? Don’t worry because every parent thinks the same.
Money making and spending is an art, that is important for the holistic development of your kids. Wasn’t it our parents who taught us that “Money doesn’t grow on trees.“? Everyone must have heard this line again and again since childhood.
It was a simple way of teaching us that money is valuable and spending it on unnecessary things is a waste. Apart from this conventional method, there are many more ways now in which you can teach your kids about financial literacy.
Teach Your Kids About Financial Literacy & Money – 6 Ways to Follow
According to the University of Cambridge, “Kids develop financial habits by the time they reach 7 years of age.” Obviously, they are young and their mind is tender. Therefore, the school and parents must teach kids about money.
Here are some techniques that will help you teach your kids your money and finances.
1. Indulge in Sharing Information like Spending Habits
The first and foremost thing is to tell kids about your day-to-day money-related transactions. For example- if you bought groceries and paid using a “card tapping system” then tell kids about it. They will find it cool and interesting.
Most of the time, parents tell children bigger issues and ignore the basic ones. That is what needs to be changed. Ask your kids to tally the grocery items with the bill. This way they will explore the bill, groceries, and how much everything is for.
Similarly, for kids above 15, share why you shop at a particular store and when you get the maximum discounts. You will notice that gradually, kids are starting to take an interest in such things.
2. Give them Monthly or Weekly Allowances
Do you give your children pocket money? Most people in Canada tend to reward their kids for domestic chores. Like they will pay $5 for helping with dinner, $5 for putting the plates in the washer, etc. Parents forget what happens after they give the money.
The key is to check how your kid spends his pocket money. Suppose you gave him $20 in a week. You must visit the store with him and see how judiciously he is using it. Is he sticking to the money he has? Is he asking for more money? These questions will help you teach him about money.
Some parents believe that giving money for household chores is not the right way because it makes the relationship transactional. But on a far-sighted view, it is believed to inculcate responsibility among kids. They will help you to earn extra money.
3. Help them in Creating a Budget
Since all kids do is spend money, it is time you introduce them to budgets. Tell them how to make a budget, how to stick to a budget, and how to save money. When the week starts, help them make a budget.
You can use laptops, mobiles, even paper and pen for it. Whenever you give them money ask them to write it. Along with that tell them to write how much they have spent.
Once the weekends, sit with them and tally it. This exercise will teach them how to spend and properly save money.
4. Motivate them to take Money-making Opportunities
The most important thing is to teach your children to make their own choices about money. Never tell them where to spend it. Let them explore and learn on their own. By making mistakes they will come to you and make adjustments.
The next thing to focus on is motivating them to take little opportunities to make money. Help them organize some garage sales, lemonade stands, bake sales, or maybe a charity. You can also encourage them to work in a cafe or a fast food joint.
When they learn how tough it is to make money, they will automatically learn to use it wisely. As parents, you want nothing more than to make your child financially literate and independent. By motivating them to work, you are doing exactly that.
5. Inculcate Social Responsibility among them
If your family believes in charity and giving then share such values with your kids too. The concept of giving to others will bring a leadership quality in children. Here is how: Start a simple charity project. Make it your kid’s duty to calculate how much money and other items will be collected.
Let him do the math of computing the money pitched in by different family members. Encourage him to ask questions. Tell him why you have chosen a particular charity. You can do these projects quarterly or annually to keep it all fresh.
6. Make Financial Literacy a Fun Topic
Children learn a lot through games and while playing. So why not gamify financial literacy? You can bring books related to short financial lessons or play finance trivia board games. Who hasn’t heard of Monopoly? You can also try apps like PiggyBot, Bankaroo, and FamZoo.
Moreover, kids love to use a smart card. Get them a virtual smart card. It works like a prepaid credit card. Such cards can be linked to Apple Wallet as well. You can supervise the transactions and your child can learn how to use it. (Just the basics, you don’t want them to exceed the limit! Haha)
Financial Literacy for Kids: Final Thoughts
If you want your kids to learn, you must make Financial literacy your priority. Just by sharing some details on money, you will encourage the kids to learn and ask more questions about it.
By following the techniques given above, you will be able to spend more time with them and teach them at the same time. Wonderful, right? The main goal should be to teach them about the importance of learning about finances in the later stages of their life.
Also, discover How to pass Cognitive Abilities Test or CogAT Test?
Encourage your kids to actively participate in finance quizzes, workshops, and podcasts to make this even more fun.
Why is financial literacy important for kids? Share your views in the comments below.
I always teach my kind how to manage their finances. Thanks for the topic.