Today’s children are fast learners, sharp, tech-savvy, and observant. They pick up habits even faster than we can imagine. At a young age, they begin to perceive their needs, wants, and lifestyle. But they are unaware of the importance of saving and investing money for a stable and happy future.
Financial literacy involves not just knowing the fundamentals of finance but also having the aptitude to become financially wise. As a parent, it is your responsibility to build a strong financial competence in your children.
This blog focuses on defining the basics of financial literacy that you may use to educate kids on this subject. Your kids might understand the basics of finance through these easy-to-do but powerful exercises. This knowledge would go a long way in helping them throughout their lives.
Give them a monthly allowance:
Calculate and give a fixed monthly allowance to your kids. Let them juggle with it. This will be their personal money that they can spend on anything. Let them decide what to buy and how much to spend on it.
Increase the allowance reasonably from time to time if needed. Remember to give them extra in terms of rewards and recognition and maybe a yearly bonus attached to festivals such as Diwali can also be considered. Tell them this is how corporate works as well!
Have a review session on the spending:
Ask your kids to keep a daily journal detailing every rupee they spend. Let them know that where they spend is essential. All they have to do is they must note it and balance it at the end.
At the end of each week, revisit and review your spending. Tell your kids how a single large expense can affect your monthly spending plan. Remember to inspire your kids to do this consistently by doing the same with your finances.
Sets goals and save:
Talking to your kids about their needs and wants is the initial step. Inform them that they must set aside money to purchase expensive toys. Tell them how you are saving money to get the things you want. Later, tell them to give you the amount they decide to save and you shall keep it safe for them. Tell them you used your savings to purchase the home. Children observe their parents very closely and therefore the behavior of parents tends to be the biggest source of learning for them.
Get your kids to open a bank account:
There are several banks that provide choices for kid-friendly accounts with no minimum balance. Enroll your children in one and see their savings increase over time. Tell them about how the banks work. Discuss the concept of interest and how the banks pay us back for saving money.
Play games that involve strategy:
Aim to make learning fun. With the help of board games, introduce ideas and life lessons, such as financial literacy. games on a board, such as Monopoly, Business, or Game of life. Numerous games can be played to teach financial literacy to kids.
These games can be an effective way to teach concepts like using money for emergencies rather than saving and investing.
Here are some links for the books that would be great for your kids to learn financial literacy:
- Heads Up Money
- If You Made a Million
- The Everything Kids’ Money Book: Earn it, save it, and watch it grow!
- How to Turn $100 into $1,000,000: Earn! Save! Invest!
- More Money, Please: The Financial Secrets You Never Learned in School
- The Psychology of Money
- Retire Rich: Invest Rs. 40 A Day
- Let’s Talk Money: You’ve Worked Hard for It, Now Make It Work for You
- If God Was Your Financial Planner
- Piggy Bank To Portfolio: How to Raise Financially Smart Kids
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Happy Parenting ❤️