Money management is not taught in school, but this skill is a crucial part of adulthood. And if it emerged on its own, there would be no scammers and financial pyramids left in the world. In this material, we understand how to teach a child financial education and protect them from mistakes.
Why financial literacy is needed
You can earn a lot and still not understand why there is no money. After all, it is not just about quantity, but also about the way we handle money: we spend, invest, and save.
The proper attitude to funds and the ability to cope with your wants and think about the next buying are laid in childhood. And no educational organization can assist in this as successfully as a family.
When correctly taught in childhood an individual is more likely to launch a successful start-up no matter in which area, either a restaurant or a marketing agency, or a rental service offering customers from all over the world the best hiring options and allowing luxury car rentals.
If you know how to manage finances properly you will be effective both in providing luxury vehicles for hire or particular services.
The basics of financial education for children include:
- Knowledge of where the money originates from, how and for what time it is earned.
- The ability to manage your pocket amount, and save for large purchases.
- General ideas about the economy and what a loan, deposit, investment, and taxes are.
- Establishment of accountability for their financial decision-making, as well as the capacity to spend money wisely.
It is too early to explain to a preschool-age child how the economics and loans work, but it is time to give a general idea of money. If you go shopping together, do not forget to explain why you chose these products, how much they cost and what is the budget for purchases. Discuss how much money you need to spend on food for the whole family and what amount will remain for sweets.
Tell them where you work and how much one hour of your work costs. For example, you can tell how much you will need to work to buy a new toy. This is the beginning of teaching financial literacy to children.
With the beginning of school life, pocket money becomes essential. And this is a great reason to teach children to prepare their spending plans. Initially, you start giving them a minimal quantity every day, but then progressively increase issuing money once a week. This is the first step to ensure that the child begins to manage the funds independently.
Discuss with your child the fact that it is not necessary to spend all of the funds instantly – part can be saved for an interesting toy or entertainment.
During this period, financial literacy is especially important for children and teenagers –from the age of 14-16 they can start earning money on their own: walk dogs or distribute leaflets.
Parents can help teenagers earn their first money: find a part-time job with friends or suggest freelance exchanges that have one-time paid tasks. Even minimal independent earnings will teach you to respect work faster than 1.000 lectures.
How to teach a child financial literacy
- Show a good example. Take note of how well-balanced your financial choices are. It is pointless to teach your child to budget if the parents do not always realize where the income went so rapidly.
- Do not be afraid to give out pocket money. Even if the children have not yet gone to school, they can already make small expenses themselves. For example, in your presence, but at your discretion. This is an important step in raising children and teaching them financial literacy.
- Do not scold for unreasonable spending. Let the child make mistakes and get their own experience. And do not rush to immediately make up for the money spent: it is better to feel the consequences of spending a little amount in vain now than a larger amount in adulthood.
- Instruct your child on how to keep track of their spending, and record and analyze all expenses. This is the most straightforward method of assisting children’s development in attitude toward money and the development of financial education.
- Involve your child in the financial issues of adult life. Let the children learn to buy groceries, pay in cafes, choose clothes and household appliances, and study banking services. If you do not know how to tell children about financial literacy, start with these household skills.
Financial literacy development enables a person to effectively interact in society, and establish and achieve goals.
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