Our kids today are fast learners, perceptive, tech-savvy, and observant. They acquire habits even faster than we can imagine. They develop a sense of needs, desires, and lifestyles at an early age. They forget that saving and investing money is vital to a secure and happy future.
Some realize the importance of investing but do not know how and where to invest. Then they seek personal financial advice or make mistakes in their investments.
Financial education is not only about knowing basic financial terms but also about having the necessary skills to develop financial acumen.
As a parent, you have a responsibility to develop strong financial competence in your children.
Most importantly, you don’t have to be a wolf of Wall Street to teach your kids the basics of finance. All you have to do is build a solid foundation by giving them perspective and building habits.
In this article, we will look at the basics of financial education that you could use to educate children in this regard.
These simple yet effective activities can help your child understand the basics of finance. This knowledge will go a long way in helping them throughout their lives.
HAVE REVIEW SESSIONS
Have the children write down everything they spend by keeping a diary. Tell them it doesn’t matter where they spend. They have to write it down and balance it at the end.
discuss and review your expenses at the end of each week. Tell your kids how large expenses can affect your monthly budget. If your child is too small, sit next to him and help him do it. Explain the maths behind this. Remember to inspire your kids to do this by constantly doing the same with their finances.
Help Children Develop Smart Spending Habits
In addition to wanting his children to understand that money is being made, Sheehan introduced a welfare system so they could learn to live within a budget. His two youngest children, aged 16 and 11, were constantly asking for money and “spending money like drunken sailors,” Sheehan says. When he began to pay them an allowance, he told them that this was all the money they would receive and that they should manage it.
“Surprisingly, it worked,” he says. They track how much they have and how much they save with the Greenlight app. According to Sheehan, learning how to budget now will help them when they enter the real world.
Peckham has let her children make decisions about her money ever since they started receiving welfare. He gave them three jugs to spend, save and distribute. Peckham told his children that they should put a portion of their allowance in each jar, but let the decision be theirs.
Peckham also teaches his kids that spending isn’t always about buying the things you want. He wants them to know that they will have to spend money on what they need when they are adults, and they can decide to pay people to do things for them. So if your kids don’t do certain things that are expected of them to help around the house, it will cost them money. Because he believes that personal finance is about decisions.
Instill a Habit of Saving
Your children’s first interaction with money is most likely related to spending. They see that you use it to buy things, including things for them. Therefore, it is important to teach them from an early age that money is needed not only to spend it but also that they should regularly save money.
Learning to save is not just an important money habit. “Economy teaches discipline and reward deferral,” Renick says. “Economy teaches you to set goals and plan. Saving emphasizes readiness. Economy breeds security and independence.”
Parents can also encourage their children to save more by agreeing to increase the amount they save per dollar or by a certain percentage. If your kids are old enough to turn from a piggy bank into a real bank. These prepaid debit cards allow parents to transfer money to their children and pay them interest at the rate they choose on any money the children choose to keep in their savings.
Grocery Shopping Turns Classroom
Make it a habit to go shopping with your kids. This healthy habit is not only fun but also very beneficial in the long run. Before you go shopping, make a list.
This will save you from overspending and even missing out on the essentials. Ask the children to make their list too. At the market, show them the prices of various items.
Also, introduce the children to the different scales and units of measurement. Give them maths problems by asking them to calculate the price of 250 grams of an item. Ask them to count the totals. Make it a regular practice.