Financial literacy and children? I’m pretty much sure that many of you think I’m sounding nonsense. Let us take a look at the real picture and statistics does not tell a lie. According to a survey conducted by Gallop Poll nearly a couple of years ago suggests that the children, who are taught how to manage personal finance, grow more responsible and do better in future.
Education starts at home. As a parent, you need to take the responsibility to teach your children financial literacy. Earlier you start, better the result will be.
The inevitable question is how to guide them. The basic purpose is to make them understand the importance of every penny. But how to achieve the goal? Here are some important tips on my end.
You earn money for your hard work: Explain to your child that you need to go to work in order to earn. Money pays for everything – rent, power bill, food, education, and entertainment. Earning money is a priority for everyone’s life and you are doing hard work to keep your child and others in the family happy and fulfill their needs.
Explain the importance of budgeting: Many people are not master at money management. This is simply because they were not taught how to spend money sensibly in their childhood. And they do the same mistake when they become parents. Give your child a small allowance every month. Guide him how to spend it on items that are more important.
Take your child to a shopping mall and allow him to figure out what he actually needs. Tell him that he can easily buy less expensive things with cash right now but for costly items, they need long-time saving. You should explain why delaying gratification is important as it will help him enjoy the fruits of sacrifice.
Tell him money is finite: Even if your child was born with a silver spoon in his mouth, you should make it clear that money is limited for everyone. Clarify that money spent on every purchase has an alternative use. If he buys one, he cannot get another.
Use a grocery store to help your child learn the lesson quickly. Involve him in an everyday purchase decision. A grocery store could be a great place to start teaching. Ask him to choose between two items. Explain if he buys one, he must drop the idea of buying another, as the budget is limited.
Teach them money management: Earning money is not enough; saving is more important. The skill of money management cannot be mastered in one day. Your child should be taught it earlier in his life so that he gets enough time to master the art before he grows up and starts earning.
Tell him to buy pen, pencils and papers from his monthly allowance. Take a note of how much he manages to save at the end of the month after buying all of his necessities. If he can manage it well, give him a treat as a reward.
One does not need to be frugal in order to learn the art of money management. It is all about cutting the coat according to clothes.