Financial Skills are as important as Communication Skills, Social Skills, Thinking Skills, Writing Skills and Reading Skills, but sadly most schools do not teach children about money. What children learn about money is from examples set by their parents. However, some families either think children are too young to discuss money or don’t think it’s important to talk to children about money at all.
Unfortunately, a lot of kids grow up with little or no knowledge about finance. They grow up without knowing how to pay bills, how to save money or budget and they make poor financial decisions as adults. Therefore, it is very important to teach children all about money.
Children are never too young to learn and you can start teaching them financial skills from a very young age. You can start with the basics like talking to them about where money comes from, how everybody has to work in order to earn money and why we need money. Also, how money comes in different sizes and shapes and forms (metal and paper).
How we discuss money, handle it and our attitude towards money makes a lasting impression on our children. Once children are a little older, it is a good idea to involve them in making financial decisions, like planning a holiday trip, a birthday party, buying a new television or the basics of family economy. This is also a good time to teach them the difference between a credit card and debit card or opening accounts, loans and bank interest. Kids, as young as eight, can be taught to budget.
A good way to start teaching children about budgeting is by giving them a weekly allowance, the amount can depend on what you would expect your child to spend it on. The first rule to teach them good budgeting is to teach them the difference between wants and need. For example, before you go shopping with your child, you can start by making a list of wants versus needs. Once that is done, you can teach them to read the price labels of the products you need and compare them with a different brand, keeping in mind the quality. Then, you can ask your child to help you decide whether the brand name is worth the extra price.
While it’s important to teach them budgeting, it’s equally important to teach them how to save, invest and use credit cards responsibly. It’s important to teach children to spend less than they have or earn and the different ways to invest money by either putting it in their piggy banks or in the bank if they have an account. Older children can be taught how an investment compounds over time.
It’s very important to raise kids with a healthy attitude towards money and also their ability to use it wisely. Here’s how you can turn your daily activities into financial learning experiences for your children:
- Take your children along on your trips to the ATM, bank, grocery shopping etc.
- Play imaginary games with them like pretend shop, restaurant, toy store, stationary store and make some pretend money. Exchange the pretend money for goods; this is a good way to teach them the basics of money.
- Open a savings account for your older children and encourage them to make regular deposits. Talk to them about investments and the concept of interest. Many banks these days have children’s accounts with no added fee and no minimum balance.
- When you hand out money to your older children, for them to buy something, try and avoid giving them exact change, because it does not help them learn to calculate how much they have spent and what they should be getting back.
- Allow them to make their own choices when they spend their pocket money on something. That way they learn to budget and become responsible shoppers.
- Teach your children how to write a cheque and how to pay bills. Let them help you by putting in the details while paying bills either online or physically.
- Let your child earn his own money by giving them age appropriate chores to do and paying them for it, by creating something (paintings, bookmarks, handmade greeting cards. ) and selling them to friends and relatives, by holding garage sales etc. Let them decide what they want to do with their hard earned money! It also helps kids learn how long it takes to earn money or how hard one must work to earn money.
- Make a priority list with your child about what he/she really needs and wants. Teach your children to first buy the needs and then save for the wants.
Children learn what they see, so as parents set a good example by showing them positive money lessons!
BOOKS THAT TEACH THE VALUE OF MONEY, FOR CHILDREN:
The Rupaiya Paisa Series by Mala Kumar
A Chair for My Mother by Vera Williams
If You Made a Million by David Schwartz
Alexander, Who Used to Be Rich Last Saturday by Judith Viorst