Teaching your children financial literacy is one of the best things you can do as a parent.
In fact, our fundamental analysis tells us that the earlier you teach them, the better!
Why do they need to become financially literate as children?
Because the world is changing rapidly.
It’s becoming more technological and entrepreneurial.
And as we become a cashless society, the way we control and manage our money will change too.
This will apply to everyone and have a huge impact.
There has never been a more important time to introduce young people to this concept and get them ready.
Because stable money management is going to be a skill they need to learn and implement from early age, whether they are working or not.
Money is an essential part of life, so why aren’t they taught this in school along with everything else?
It’s never too early to start teaching children the value of money
Even the youngest children can sort change and understand that coins and notes have different values.
Their knowledge of finances and savings will naturally mature as they get older, but there are things you can do as parents and caregivers to ensure they are set up for financial success in the future.
They can even begin to get used to the idea of cryptocurrencies and digital money.
But for the moment, we are still rooted in paper and coins.
Below are five ways you can start teaching your children financial literacy:
Wants vs. Needs
Even adults have difficulty with this skill.
There is a distinction between items, services, and experiences that we must have to survive… and those we desire because we believe they will improve our lives.
If children learn this at a young age they will have a strong foundation to make better financial decisions as adults.
Create ways for children to earn money
Before they can save, children must first earn some money.
This can be accomplished through things such as:
Simple housework.
Babysitting and lawn mowing (as they get older).
Part-time jobs while in secondary school or college.
Set savings goals
Every child, no matter their age, has a wish list.
Make a list of all the toys and gadgets they have their heart set on.
Then prioritise them, with the most desired item at the top.
Next, involve your child in research.
Get them to look into the price of each item and calculate how much money they would need to save to buy the item for themselves.
You may need to assist them with this, depending on their age.
This will empower them and demonstrate how difficult it is to earn enough money to buy something one desires.
This should also increase their appreciation of you the next time Mum or Dad buys something for them!
Provide a place or account to save
This can be as simple as a piggy bank, but there are better options in today’s world.
You can open an account for your children for free.
You can also deposit as little as £5 to get them started.
Your child can then learn how to manage that account in person at the bank or online or through mobile banking.
So, not only do they have a place to save their money, they get to practise money management too.
Show them how money can grow over time
Make checking your child’s savings account a habit for them.
Regular checks will help them see how money accumulates over time.
You can even introduce them to the compound interest calculator.
This will help them understand how money can make money through interest.
They can check their account online, use a mobile app, or visit the actual bank building.
Ultimately, children who develop this practice will grow into adults who feel in charge of their finances.
Teach them what’s new in money
Being financially literate when it comes to coins and notes is crucial for your child.
But it is also important to teach them about money and currency and how they are evolving.
Cryptocurrency is currently the most significant.
It can be tricky getting one’s head around this concept, but you can help them learn cryptocurrency by simply registering for a free online cryptocurrency course.
A basic lesson on what cryptocurrency is and teaching your child about investment will enable them to be prepared for the future.
This will provide them with a method of creating and building their own wealth over time.
Better still, if you are someone that invests or is learning how to invest you should involve your child in the process.
Talk to them about what happens when the shares or crypto coins go up or down and what that means for the investment.
You can also explain how people can run into financial difficulties if they invest too much of their income.
Plus, the importance of investing sensibly, armed with proven good strategies.
These techniques will significantly enhance your child’s understanding of money and their interaction with it
The Financial Literacy Legacy!
Okay, hands up… how many reading this were taught about money at home?
School?
Not many, probably.
Problem is, when we get older, we can often find ourselves having a difficult relationship with money.
This is because we never truly learned about it in a practical and positive way.
By breaking that generational cycle, you can educate your children to understand and manage money.
They will then be equipped with the right knowledge and skills to be financially literate adults.
Summary
As we move further into digital living and working, money coins and notes will become digital currencies. It inevitable.
Therefore, it is imperative your children understand what digital currency is and how it is utilised.
Who knows, they may even know more about it already than you!
That’s not surprising as technology has seeped into every aspect of modern life.
You can even access a blockchain course these days to get familiar with it all and learn crypto trading.
That should make it easier then to start teaching kids financial literacy.
That way they will be fully prepared to connect technology and finance to ensure they are well-equipped for the future.
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