Money is no longer regarded to be entirely the domain of grownups. Money management is now considered a vital life skill, and youngsters are encouraged to learn it.

Children nowadays must be more informed about how money works since the world has changed considerably in the previous decade. This goes beyond simply purchasing a few candies for a few pence.

What is Financial Literacy for Kids?

As the term indicates, financial literacy is being financially literate. Simply defined, it is to have sufficient money knowledge as well as a set of financial abilities to comprehend and implement in order to make the right financial decisions, big or little.

People that are financially literate have a wide variety of financial abilities, such as personal financial management, budgeting, saving, and investing. They gain self-sufficiency, allowing them to achieve financial security.

Similarly, financial literacy for children entails teaching children about finance from an early age. This involves instructing students on financial planning, time worth of money, and investing.

 

How to Teach Financial Literacy to Kids

Step 1: Earning

The first step in teaching your child about money is to show them how to individuals earn money.

This can be accomplished by delegating minor jobs or errands in exchange for monetary remuneration.

This exercise will assist children in comprehending the earning process. If this practice is introduced to youngsters as early as seven, they will quickly learn about earning.

Step 2: Budgeting

You may imagine that teaching children about money is the next step, but this is not the case because youngsters may already have a rudimentary grasp of spending even if they haven’t done it personally.

Budgeting is one of the most crucial components of financial management, thus you must first educate them on how to do it.

We are all aware that poor or non-existent budgeting leads to financial troubles.

So, sit down with your children and educate them on how to split their money for different uses in order to achieve financial independence.

Step 3: Saving

Saving is an essential component of sound financial management and financial knowledge.

We cannot overestimate the significance of saving when it comes to protecting our financial future.

As a result, we must impart this lesson to our children. Teach children to set away a percentage of their money for savings while budgeting.

You may even serve as their bank, collecting interest on their deposits. You may teach children about bank savings accounts this way.

Step 4: Investing

Investing, like budgeting and saving, is an important part of personal financial management. We must invest if we want a financially secure future.

Though children cannot physically invest, you may prepare for them to do so at home so that they grasp how it works on a fundamental level.

Step 5: Spending

When it comes to financial literacy, it is essentially the last thing you should educate your children.

Because they may already have a foggy sense of how the money will be spent or how it would operate.

However, the final stage in teaching financial literacy at home is to educate children on how to spend their money sensibly and how irresponsible spending leads to financial troubles.

 

Article by

Rose .A. Milani,

Parent Coach and Registered Mental Health Counsellor

Based in Melbourne, Australia

Rose.A.Milani@gmail.com

www.Milani.net.au

 

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