Written by: Malak Tariq
According to a 2020 T. Rowe Price survey, just 49% of adults rate themselves as “excellent” or “very good” when grading their knowledge of personal finance, making the financial literacy of the next generation even more urgent.
Parents do not need financial expertise when it comes to imparting financial literacy. Parents can take examples from their own budget and daily life chores to explain savings, spending, giving and goals.
Here is how to give your kids the head start you wish you had and set them up to win with money at an early age.
1. Piggy banks out, Clear jars in!
Many parents have also been there, putting their clinking coins in a piggy bank, only to wait one day to break it and collect the money. But children need to visualize. It is important that they see how they are putting their money in and how with each coin or bill, it is growing. Thus it is important to give your child a clear jar to put their money in.
2. Set an example for your kids to follow
By the age of seven, the University of Cambridge study found, most children are capable of grasping the value of money, delaying gratification and understanding that some choices are irreversible or will cause them problems in the future. They observe parents keenly. If there is an argument between parents about money, children notice that as well. It is important to set healthy examples.
3. Discuss Wants VS Needs
Children should know the value of money and savings. Parents should help their children distinguish between wants and needs.
Needs are the basics required like food, shelter, basic clothing, health care and education.
Wants are everything extra like a bicycle, smartphone, designer sneakers, video games etc.
Budget can be used to depict how wants must take a back seat to needs in terms of spending.
4. Show them things that cost money
Telling kids “look child this toy car costs Rs. 300” might not be enough. Help your child pick money, take it with them to the store and hand it to the cashier themselves. This will make them realize through action and not just listening to parents just talking about things costing money. If you pay with a contactless card, explain how it works – that although you are not using coins, the money is still coming out of your bank account – and discuss the groceries you buy.
5. Teach your children the importance of giving
Charity shops or thrift stores usually thrift bookstores are particularly good places to take a small child to spend their weekly pocket money. They often find a bargain and you can use the opportunity to discuss the power of their pound: how does it make them feel, knowing they are supporting a good cause as well as getting something for themselves?
Teaching your children about money at any stage is going to take time on your part. It won’t always be easy.
But there are resources and platforms that impart necessary teachings about financial literacy to kids in fun and comprehensive ways.
Kaksha Learning is one such platform! It offers courses for the holistic development of children. “Basics of Financial Literacy” is one such course.
BASICS OF FINANCIAL LITERACY
In this course, Kaksha Learning will be exploring 8 different stories where students learn about the financial systems of the world and practice better financial habits for themselves!
Some skills Kaksha will develop in kids include :
- Spending decisions
- Building a Saving habit
- Understanding Banking
- Understanding Inflation
Taking the time now to teach your children about finance will be worth it!
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