Why is financial literacy very important for children?

Young children don’t learn the important things until you tell them they are essential. Especially in the case of money, they should know from an early age how to handle money. With the dynamics of the world changing so rapidly, financial literacy for young children is becoming an essential aspect of life. Teenagers are always very eager to have a lavish lifestyle on their income, and they are eager to stand up and use their money to have a luxurious standard of living.

Financial literacy for kids doesn’t just mean spending it wisely, but it also suggests the habit of saving or investing.

Schools nowadays are inculcating many exciting programs to teach money management skills to students apart from academics. To better understand their finances and how the economy works, schools also added financial literacy to the list. Outside of school, as parents, one of your top priorities should be teaching children the importance of money and how to use it wisely.

Now, we all know the difficulties of teaching children or helping to instil habits in them. So to make this task more accessible, we have listed some points that would help your kids understand money management easily.

Talk directly about money

Times of financial crisis teach us about money management and the effective use of money. Giving teens financial literacy is essential to help them use their hard-earned money wisely and be aware of money matters. Money is central to our daily lives, we transact not only for education, but also for what we eat, the clothes we wear, the technology we use and much more. Even if you don’t talk about money in front of your teens, they’re still watching you.

Tell them about the difficulty of earning money and managing expenses. Help them understand that the wisest use of funds is to use existing funds to get more, by saving or investing.

Help them understand invoices and purchase receipts

We deal with money-related issues on a daily basis. It’s all around us. Therefore, financial literacy can be taught anywhere. For example, when shopping, you can teach your children the difference between wants and needs. You can also take this opportunity to help them understand what credit or debit cards are and/or how cash works and is used when making a purchase. You can also help them understand purchase receipts that contain the cost per item received and other important details.

Make them understand the importance of saving money

Help your children understand expenses and the fact that income and savings play an important role in it. Teach them that it is essential to save first and adjust spending accordingly. Help them develop the habit of keeping some of their pocket money as savings in their piggy bank and set a goal. For example, in case they need a new novel to read, you can teach them how to set aside money each week to meet the cost of the novel and then pick them up. This will not only help them realize the value of saving, but also feel a sense of independence when it comes to money management.

Help them understand that money is made

It is essential to help your children realize that earning money is not so easy but requires hard work like working for a living, going to the office or more. You can start by teaching them how you earn as a family and helping them understand what a salary means. This way you can help them understand the importance of money which in turn would help them realize that money should be used wisely as it should be earned.

(By Mandar Marathe, CEO, Koppr)

About Shirley L. Kreger

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