6 Best Ways on How Parents Teach Financial Literacy to Kids
Financial literacy for kids is all about properly and effectively managing finances. We don’t think about it often, but it is something should learn to secure their future. Financial literacy enables a child to building the habit of saving money, learn about making money and spending it wisely.
Because financial literacy is just as important as other lessons they will learn, it is crucial for every parent to ensure that their kids have adequate knowledge on money matters.
How to teach financial literacy to kids?
Read on and learn about the best ways parents, like you, can teach financial literacy to kids.
Give them piggy banks
It may seem too traditional but this strategy will always work, especially for kids who want to start the habit of saving. Give them something cute and fun to keep their money in. It could be the classic piggy bank or, better yet, a clear jar. When children see their money grow, they will feel even more motivated to fill up their piggy banks.
Set a good example
The money habits children develop are usually based on the examples their parents set. You may not always notice it but your kids’ eyes are following you. Be sure to set a healthy example by exhibiting good money habits.
Avoid buying things on impulse
Children do not completely understand what it takes to earn money. They usually point at things they find interesting and ask you to buy it regardless of the price. Instead of immediately giving in, make your little one use the money they saved for that specific toy. If it is a little costly, encourage them to think about it overnight and decide if they still want it the next day. This will teach them that buying things requires careful decision making, especially when using your own hard-earned money.
Teach them the basics of family budgeting
Budgeting for the family’s expenses seems like a chore, but it is something that kids need to understand at an early age. Explain to them what budgeting is about, how it works, and the things that are involved. Then teach them how they can budget their own money. Help them understand how important budgeting is.
Allow them to work for money
Instead of giving your kids allowances, pay them commissions. Give them simple chores around the house, like cleaning their room, feeding the dog, organizing their toys and so on. This kind of system will not only make children understand that money is earned, it will also help them spend their hard earned money wisely.
Effective financial management involves goal setting. Adults save up for a specific goal. We save because we want to have emergency funds. We save because we want to buy something. We save because we want to travel. We save because we want to achieve long term financial goals. Teach your kids the same. Before they even start saving money in their piggy banks, ask them what specific goal do they want to achieve. Is there anything they want to buy for themselves as soon as the piggy bank is filled up? Is there a gift they are trying to save up for? Perhaps a ticket to an amusement park? Whatever it is, setting a goal is important because it will keep them motivated in their saving habits.
Teaching children about money isn’t always easy. It is a gradual process that requires time and patience. But if you want your little one to know how to properly manage their finances when they get older, now is the best time to use these financial literacy tips for kids.
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