We often try to shield our children from the realities of life, a big part of this is avoiding to talk about money and personal finances with them. As a result, when these children grow up they get overwhelmed easily when dealing with money matters. It is very important that our children be financially literate before they take on the real world.
Children learn by example, according the book Rich Dad Poor Dad by John Kiyosaki the money beliefs parents have gets passed down to their children. Therefore, it is imperative of adults to educate their children on money management the right way. Familiarizing our children about finances early and help them learn responsible money management techniques.
Below are 6 ways on how you can make your children financially literate:
1. Make Teaching About Finance Fun
Children respond well to play time, according to leading learning theorists such as Lev Vygotsky and Mihaly Csikszentmihalyi, play time increases a child’s reflective thinking and abstract imagination, allowing them to easily grasp the fundamentals of money. A great way to do this is through role play, posing as a shopkeeper and asking children buy certain goods. This normal exchange is still a foreign concept to a child but teaching with the playtime will make it easier for them to grasp the concept. The fun it provides is a bonus!
2. Answer All Their financial literacy questions
Children are highly inquisitive, which means they have lots of questions about everything. When asked about money related questions an adult should provide them with simple but detailed explanations. While they may not understand everything answers to questions like “Why money is important” and “How is it earned?” will provide them with some insights for the future. Additionally, answering these questions in a non dismissive manner may peak their interest in the subject.
3. Encourage the Habit Of Saving
We previously mentioned the importance of playtime, the same act can be introduced when you want to encourage them on habits of saving. Provide your children with an allowance and assign them a task, ask them to only use the money for the task, the one who resists temptations and saves can later be rewarded. This form of reward mechanism is used by many psychologist to teach new behaviors to children. This way the child will associate savings to something fun and positive.
4. Consult Them On Financial Decisions
Even if you may not work according to their financial decisions, consult them on it. Including your child in such conversations will familiarize them with the effort and thought process that goes into making a financial decision. Letting them know that spending money is usually calculative and should not be an impulsive habit to engage in.
5. Use Resources Available To You
There are a lot of materials online and offline that help a child learn about money. You can introduce them to games, books other references that focus on educating them about finances.
6. Teach Them To Earn Money Early
While part-time jobs for teenagers is a common thing elsewhere, in Nepal we still do not practice this. In such scenarios giving them chances to earn money by telling them to help in household chores or some paperwork will be helpful. This instills a sense of accomplishment among the youngsters also educate them on how money making is a use of skill and hard work.
These tips are helpful in making your children financially literate and about the importance finance making them aware of the importance of savings, earning and money management.