Spending in the Right Way: How to give Financial Literacy to Your Children
Children today, are smart, active, and quick learners. They are highly observant and critical thinkers, and hence, a ball of power that needs direction to channelize it in the right way. While there are several areas that are to be looked after, so as to provide the right kind of guidance to the children, the one important area among them is financial literacy. But the question is how to give financial literacy to your children?
As per researches, financial habits and understanding in a child are essentially set by the age of seven. Though it is a very young age to understand finances, yet it is highly important for a child’s holistic development to understand and have the right kind of financial literacy. This can perhaps help in identifying and learning basic and necessary skills like entrepreneurship skills, savings, investments, marketing, and consumer awareness.
So, without wasting time, let’s simply jump on to how can you give financial literacy to your children
1. Give them Monthly Allowance
The best way to teach financial literacy is to give them the freedom to practise it. Give a sum of money as a monthly allowance to your child as their money and let them practise how to spend it in the right manner. Let them feel a sense of responsibility, and ownership with the money, and alongside guide them on how to spend in the right manner.
2. Make them aware of their wants and needs
Children, when getting money, identify it as having a sense of power with which they can buy something. And with that power, they might find it difficult to identify the difference between the want and the need. Hence, as a parent, you should gradually teach them the difference between wants and needs.
3. Set goals for saving
One very big aspect of financial literacy is knowing the importance of saving. Set saving targets for your kids and help save money. Teach them to spend what’s left after saving instead of saving what’s left after spending.
4. Give them small opportunities to earn and spend
To allow your kid to value money, help them have small opportunities for earning and spending. It can be something as interesting and small as setting up a food stall at a fair. But this helps them understand the process of from where the money comes from and they will also understand the value of money.
5. Involve your kids while you shop anything
While you go on shopping, involve your children while making a purchase. Ask them to calculate amounts for you, let them give calculate and pay. Of course, you would be needing to keep a check on them, but make them have this responsibility of calculating things rightly.
6. Teach them how to keep a track of expenditure
Children often spend and forget to keep a track of it. Help them plan to keep a track of their expenditure. Give them a diary where they could note down all of their expenditure, let them calculate their monthly expenditure. This can be an eye-opener for them and they will be able to realize their needs and expenses.
7. Let them have a bank account
Get a bank account created under your child’s name. Most banks have special systems for children accounts. Get your child enrolled for the same. Let them save their money in the bank account and see their money growing gradually. This will help them understand the value of savings.
8. Get them games that involve strategising
Get your child games that can help them in critical thinking. Board games like ‘Monopoly’ are the best example of such games. They help the child developing business strategies which will further help them in managing finances.
So, these are the very basic things you can implement in your child’s daily life to teach them financial literacy. Happy Parenting.
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