How Financial Literacy Impact Your Kids’ Future

Financial literacy is essential for survival since finances play an important role in our daily lives. Yet, it’s one of the things often taken for granted – in school and at home. While schools offer subjects like math and science, not all schools train their students in financial management.

Learning to manage finances early can help children grow into financially confident and mature individuals. This will also help prepare them for the workforce – when they start to learn the value of making informed money and expenses-related decisions.

Parents and teachers can start teaching and training their kids on financial literacy as early as kindergarten and through high school. You and your kids’ teacher can share ideas and suggestions for making the activities fun and interesting.

In school, it’s easy to make learning fun because your kids will have their classmates with them. Making financial literacy fun might be a little difficult at home, especially if you have an only child. Nevertheless, you can make the experience an adventure for them. For example, you can combine financial literacy with kids chores to teach them about the importance of responsibility and the value of money.

Some parents use household chores to teach their children financial literacy. They use apps to reward their kids for every achievement. Each completed task has a specific monetary reward, and the money goes to their bank account. As such, children develop discipline, learn how to be responsible, and understand the concept of getting paid for hard work. They will begin to realize that money is not easy to come by; that they cannot have it right away when they need it.

Financial has a lot of other benefits that can positively impact your kids’ future. Here are some of them.

1. Financial literacy teaches your kids to save.

Talking about financial literacy means talking about money and how it is spent. They are used to seeing money being spent, such as when you buy clothes for them or things they need for school, so they need to know that spending is not the only thing they can do with money. They can save some of it, too.

Helping them learn about this at a young age is a good way of developing the habit of saving. And saving teaches them the importance of planning, goal-setting, and security.

Start by giving your kids a money jar or piggy bank. Encourage them to put in some cash regularly. You can even reward them using a prepaid debit card for kids if their savings reach a particular amount. This is a good way of teaching them to work hard for what they want.

Saving money is also a preparation for future and unexpected financial setbacks.

2. Financial literacy helps your kids understand how money works.

The earlier you start talking to your children about money, the better it will be for them.

Children below seven years old can be taught money lessons through storybooks. If you choose to read them stories that talk about saving, they will imitate the money habits of their favourite characters.

You can also help them by showing how money works. When you pay for something through cash or credit, let your kids know that you are using the money you own to pay for an item or two you need. Schedule a shopping day with your kids and let them experience buying something with the money they have saved. Once they understand how money works, they’ll understand the value of it as well.

3. Financial literacy teaches your kids to earn money through “hard work.”

No, this is not about letting your kids do manual labour; it’s about teaching them how money is earned. You can assign chores to each of them, set out weekly goals, and offer rewards for the chores they finished by the week’s end. You can deposit the money straight into their savings account or kid’s debit card.

4. Financial literacy helps your kids learn how to budget.

Once your kids are older, sit down with them and start talking about the importance of budgeting. It may sound complicated, but there’s always a simpler way of doing things. One example is allowing your kids to get involved in your family’s weekly or monthly budgeting.

Introduce your children to every category in the list and tell them – in the simplest of terms – how you determine which one you should spend more money on.

Another example applies when you start giving your kids weekly (or monthly) allowance. Illustrate (through situational examples) the difference between wants and needs. Let them understand why their needs are more important than their wants.

5. Financial literacy will help your kids develop a charitable habit.

Charitable giving is beneficial to both the receiver and the giver. Almost 50% of individuals who donate to their favourite charities have a brighter, more positive outlook on life. They’re happy and fulfilled. Teach your kids the importance of sharing and giving to those in need, especially if your family has been blessed abundantly.

To help them start, give each of your children an empty jar labelled “The Giving Jar.” There should be two other jars, with one labelled “The Spending Jar” while the other is called “The Saving Jar.” Encourage them to drop some coins regularly into their giving jar.

 

These are only a few ways financial literacy can impact your kids’ future. You’ll discover more benefits as your kids continue to develop their financial maturity.