Managing money should not be limited to adults alone. It is a life skill that each child should learn to master, right from school. Financing for kids should not be limited to just making calculations correctly. They should be familiar with various financial concepts, including budgeting, saving, and investing. Start your child’s journey to financial literacy in school, and they will thank you for it years later and always. Top schools in Gurgaon emphasise teaching such soft skills to prepare students for the real world.
According to the study on “Parental influence, financial literacy and investment behaviour of young adults“, the perceived parental financial behaviour significantly impacts the financial literacy of young adults, which in turn influences their investment behaviour. Let’s delve into the details of why building financial literacy is important for children.
3 Benefits of Building Financial Literacy for Children
- 1. Personal Financial Management: Financial literacy eqips students to make informed financial decisions. It teaches children about budgeting, saving, investing, and managing debt, enabling them to make informed choices and achieve their goals.
- Avoiding Future Financial Pitfalls: A poor grasp of financial matters often leads to risky financial decisions, which can sometimes be very costly. Understanding the concepts of interest rates, credit ratings, and compound interest encourages responsible borrowing and helps students make educated decisions.
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- Financial Independence: Financial education empowers students to take control of their finances. It reduces dependency on financial advisers or institutions by equipping them with the capacity and knowledge to manage their money autonomously.
This is your sign to teach your child about managing finances. Here are some simple and effective ways to build financial literacy for children.
Teaching Kids About Money: 5 Effective Methods
- Thoughtful Spending
The primary purpose of money is to meet our basic needs, such as clothing, food, and shelter. Occasionally, we go above and beyond our basic needs, spending money on items we don’t need but want. To ensure that children don’t overspend, help them understand the difference between necessities and wants. This approach will help them develop and maintain prudent spending habits, thereby avoiding rash decisions.
- Learning The Value of Earning
One can only make sound judgments if one understands the actual worth of money. To educate your child about the value of money, show them how it feels to earn it for themselves. Encourage children to earn their own pocket money rather than handing it to them immediately. Assign them daily domestic responsibilities and obligations, and at the end of each month, give them pocket money as a reward for their efforts. Such financial literacy exercises for students will make them more accountable and aware of how they spend their hard-earned money.
- Budgeting Together
Individuals who understand the art of budgeting know how to strike the appropriate balance between income and spending. Anyone who spends more than they make might wind up in debt. Engage your children in household budgeting to teach them the valuable skill of budgeting. Plan a family picnic, set a budget, and ask them to allocate the funds among different categories, such as meals, activities, and transportation.
- Playing The Way to Financial Literacy
Financial literacy may look complex, but it is not as difficult as it seems. It can be exciting for children if you know how to teach correctly. Top schools in Gurgaon utilise interactive activities to simplify complex ideas into engaging and enjoyable games. Get your kids a business game kit, such as Monopoly, which contains various cash notes and coins. It will provide kids with real-world experiences, such as budgeting, spending, and exchanging money. These interactive games are among the most effective methods for teaching mathematical concepts.
- Reading & Watching Financial Tales
Books and shows are effective tools for promoting financial education in children. We’re not talking about long books or dull shows. There are many engaging books and interesting shows that will keep your kid engaged and driven to finish them. We suggest Daniel Britton’s Financial Fairy Tales series, which is a collection of stories that explore various financial concepts and ideas. Shark Tank, for example, teaches pitching ideas and promotes entrepreneurship.
The earlier you start educating youngsters about money management, the better. A research titled “Early Childhood Financial Literacy” emphasises the importance of early financial literacy for future healthy financial habits in young children.
The Blue Bells School for Integrated Learning, one of the top schools in Gurgaon, takes the initiative in teaching students life skills via experiential learning. They educate youngsters for the outside world by teaching them responsibility, independence, and financial literacy. Now it’s your turn to play your part in your child’s journey to financial literacy.
