Importance Of Financial Literacy For Children
Teaching independence
If you can teach your children to understand the value of money and the importance of spending it wisely, they will be more likely to grow up with financial independence and have the skills to maintain a positive financial situation.
Teaching gratitude
If a child is aware of the hard work and sacrifice that is needed to earn a stable income, they will learn to be grateful for what they have and to appreciate things more. This is an important part of developing their character and it will help them to be able to experience joy from simple things. Having understanding and gratitude often plays a key role in the ability for a person to be truly happy and content.
A positive attitude about work life balance
It is important to teach children about having a work life balance. It is good for children to be aware that money doesn’t grow on trees and that it takes hard work to maintain a strong financial situation. However, it is also important not to glamorize excessive working to the extent where self care is neglected. This can be learned through the process of budgeting, it helps to teach that there can be time and money left over for enjoyment and pleasure once the monthly necessities have been paid.
Growing up and setting goals
If your children can grow up knowing how personal finance works, they will be able to think about various things in a very mature manner. They will be able to assess the pros and cons of different career options and decide on goals for the future.
The earlier children have an understanding of personal finance, the more developed and clued-up they will be in later life stages that can be challenging for some people, such as buying their first home.
Understanding finance and the responsibilities of adulthood can also encourage determination and motivation within your child because they will think about their future from an early age and start to become excited about the opportunities that they can work towards.
Tips On Teaching Your Children About Finance And Money Management
Separate concepts into age groups
Children go through various stages throughout their childhood and have different ways of viewing the world. If you want to teach your children effectively, you should split things into relevant stages of childhood to ensure they can process the information properly.
For example, if you talk about their own future while they are still in very early stages of childhood, it is likely that they will still be getting to grips with the world around them and will struggle to process the concept of thinking about themselves.
Let children learn through observation
Psychology shows that children learn various behaviors and concepts through the observation of caregivers. Even when it doesn’t seem that your children are paying attention, they are often listening to your conversations and learning different concepts.
You should talk about your personal finances in a way that you would like your children to think about the topic. If you are engaged in budgeting or financial planning, you can start to introduce your children to the concepts by getting them involved. You should ensure that your children are aware of the key areas of a budget; assessing income, assessing expenditure, making savings and planning for the future.
Children could learn to copy your approach
It is common for children to adopt a similar mindset and approach as you, it is important to try to ensure that this is a positive influence. One way to teach children about money is to be a smart shopper rather than an impulse shopper, you could practice price comparison shopping and apples to apples comparison shopping.