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Introduction
When is the right time to talk about money? Most adults struggle with financial literacy because this is a life skill you don’t pick up from the streets or the four walls of the classroom. It is up to you as the parent to inculcate good financial habits in your child.
Knowing the important role financial literacy play in life, you definitely want to start as early as possible. No, your child is not too young to learn about finance. There are many ways to teach children about money. I summarize some of them below. Keep reading!
- Involve them in financial decisions
Parents typically don’t want to bother their kids with finance. They see it as keeping them away from the worries of adulthood. Well, I get that your heart is in the right place, however, I disagree with this approach. Yes, you don’t have to scare your kids with financial woes, but you can help them learn life-long lessons by involving them in the financial decisions the family makes.
Children learn best by doing. Furthermore, they watch you closely to see what you do and how you do it. Why not use this to your advantage and show them how you handle financial decisions and help them make smart financial decisions too?
It’s simple. Get the entire family involved in savings. Explain why the family has to save and make it a game to see who saved more at the end of the stipulated period. Additionally, ask them their opinion during shopping. Shopping is a great opportunity to teach kids about the value of money. Show them the difference between needs and wants and gently guide them to make smart financial decisions each time you go shopping.
- Put them in charge of some money
As I said earlier, kids learn by doing. They will be in charge of money as adults, so why not start now and nurture their financial behavior now that you can? You have shown them good financial examples. It is time for a test. Get them a piggy bank and give them some pocket money each week. Let them be in total charge of growing and spending the money. Watch how well they manage this task. Show them ways they can grow the money and correct them when they make wrong spending decisions.
- Let them work for it
We all work to earn money. You kids should know that too. As they learn the value of money, it is important to show them where the money comes from. Let them learn that every cent is earned. Give them little chores and pay them for their effort. If they are old enough, you can encourage them to take a part-time job in a local shop. The goal is to introduce them to how people make money. This will help them to appreciate the value of money better. Knowing the effort that goes into making a dollar, they will not be in a hurry to spend it on just about anything. They will also better understand and appreciate your effort to provide all you do for them. Most importantly, it will help them get used to the fact that they have to work to earn money.
- Money games are fun
What other way to get children excited about money than to play games?! There are many games you can use to teach kids the value of money, the need to save, the importance of investment, and how to make smart financial decisions. Monopoly is a great example. I like that it emphasizes the importance of investment and how to grow wealth. My other favorite is pretend-shop. We take turns to be the buyer and seller. One memory that comes to mind is a pretend-shop game I played with a friend’s child. As the seller, the child sold off her goods at a price less than what she bought them for. I repeatedly asked how much she bought the Lego pieces and how much she is willing to sell them for. Then I paid and it was my turn to be the seller. You guessed it, my price was way more than hers. She was surprised and questioned why my price isn’t the same as hers. This gave me the opportunity to explain the concept of profit and loss and how businesses grow. She was smarter on her next turn to be the seller.
Conclusion
Financial literacy is an essential life skill. Many adults are currently struggling with this skill because they didn’t learn about it early enough. Some do not even know they are doing it wrong because they have learned the wrong things about money. As you put in the effort to ensure your child grows up to be a well-functioning adult, you must take the time to teach them about money. Otherwise, you are setting them up for failure.
