Reasons to Start Discussing Finance With Your Kids
- February 3, 2022
- by Angela
Financial literacy is a concept that we often overlook in the realm of education. Most people do not learn about the basics of money until they begin earning or they make major mistakes early in life. However, this is not advisable as learning to handle money is arguable more imperative than making money.
Ideally an individual should learn about the foundations of finance from childhood. This step will aid them in making correct decisions concerning handling money. The different methods by which you can begin incorporating this measure are given below in detail.
When Should I Start?
The most general question regarding children handling finance is the appropriate age to begin. It is never too soon to begin entrusting kids with financial responsibilities.
As soon as your kids become familiar with numbers and basic arithmetic operations, you can begin introducing them to money. Simple, easy-to-understand calculations will imbibe an interest in them towards monetary transactions.
Why Is Finance Important For Kids?
Kids grow up surrounded by financial decisions on a day-to-day basis. Most of these decisions impact them directly. Hence, it is important to clue them in regarding the developments in this sector.
Although it might seem unnecessary, it will impact them in the long run. As an adult, you may face multiple roadblocks in your finance management. However, this should not hinder you from teaching your kids about money as early as possible.
Wisely handling money is one of the most vital lessons to teach your kids in their formative years. This lesson will prove to be of use to them in more ways than one. Kids will learn to become accountable for their actions through these small activities.
Prepares Them For Setbacks
Financial setbacks can be increasingly common for the youth in general. According to several trustworthy sources, it has been found that most university-goers have a hard time managing their financial resources.
As a result, they are prone to facing a shortage of money and other associated pitfalls. When kids are introduced to financial concepts early, they receive enough training to deal with their issues confidently.
Awareness About Financial Concepts
Finance involves several important concepts such as:
- Short term saving
- Long term saving
- Retirement Planning
These concepts might seem too composite to teach your kids initially. However, it will simplify their learning curve immensely and come to their aid in the long haul. It will also give them a significant edge over their counterparts who may not be aware of it.
Makes Them Socially Responsible
Kids will learn about the income disparities in society and the predicament of those below the poverty line. It will instill a sense of empathy in them and motivate them to be mindful of the welfare of others.
You can encourage kids to save their pocket money and make small donations to those in need. As a result, kids will learn about the positive impact that money can bring in people's lives. They will grow up to become responsible individuals as well!
One of the best ways to keep your kids engaged in money matters is to involve them in related conversations. Allow your kids to give inputs when you talk about money with other adults. Respect their opinions and appreciate them when they understand coherently.
Kids often tend to stay away from financial matters as they consider it too tough to comprehend. It is important to remove this limiting notion from their mind to proceed with money discussions successfully.
Children-Friendly Methods Of Comprehension
In order to make your kids understand the importance of money to the maximum possible extent, the right manner of presentation is crucial. Visual learning will help kids grasp complex concepts easily.
The different methods by which you can achieve comprehension of financial concepts by children is by:
- Presenting them with coins of different denominations to improve their identification skills
- Helping them to associate value to money with comparison charts
- Teach them about the basic working of banks and other financial institutions
- Introduce them to stock markets and investments in a simple, understandable way
Several games have been designed specifically to educate children financially. When kids participate in these games with enthusiasm, they'll automatically find themselves interested in money-related topics. Some of the games that you can play with them include:
- Exact Change Card Game
- Buy It Right
- Money Matters
- Net Worth
- The Game Of Life
- Crypto When Lambo
- I'm The Boss
There is no better way to learn about money than letting your kids deal with real-time money directly. The most common and efficient way to achieve this is by providing them with a stipulated allowance.
Your children will understand the value of money and become well-equipped to make smart financial transactions. Gently encourage them to keep track of their expenditure meticulously and to save as much as they can. You can also reward them for saving up their allowance.
Model Wise Money Habits
It is widely known that children observe their parents closely and try to replicate all of their actions. Therefore, you can use this method to set a good example for your kids. Some of the important ways through which you can achieve this include:
- Letting them accompany you while shopping and encourage them to have a say
- Teaching them about the perks of discounts and coupons
- Allowing them to make wrong decisions and then explaining the demerits to them patiently
- Staying away from 'retail therapy' and other practices that encourage unnecessary splurging
Wrapping It Up
Discussing finance with your kids is a non-negotiable practice that you should not push to the backseat. Teaching your children about money and its importance is a gradual process that cannot be completed overnight. Hence, a step-by-step approach works best.
Most teenagers and young adults lack insightful guidance regarding the management of funds early on. It affects them in the most crucial periods of their life and creates major regressions. You can avert this plight entirely by making kids financially literate!