Financial Literacy And Teaching Kids About Money – How Important Is It?
I remember getting $1 every single day of my primary school, and I had to fulfill all my desires & dreams within that single dollar bill. So in case I wanted something that would cost more than my daily allowance, I had to save.
When I look back now over the years spent during my childhood, it becomes pretty clear that it was a way of my parents teaching me the importance of financial prudence early in life. And by following the “learning by doing” way of doing it, it got ingrained in me pretty early. It held me in good stead over the years when I was in college and had to allocate my monthly allowance towards my various expenses.
It is very important that kids learn very early in life about managing money, else someone else will manage it for them or mismanage it. There are innumerable examples of very famous people who earned a lot, but squandered all of it for lack of financial literacy. Only if they knew better, or to say only if they were taught better, they would not be in a financial ruin even after earning the kind of money a normal person can only dream of But kids can’t be dealt in the manner you would deal with a grown up. So you need to teach them. And no need to hire a professional banker for that (in fact they are sometimes the worst offenders).
Empower your kid, give him or her a daily allowance or a weekly allowance. Expose the kids in a subtle manner, handing over just the right amount of money. And kids being as creative as they are will learn how to spend that money judiciously and in time would be great money managers, at least of their personal finances.
Parents also need to teach kids the right way to use it, help them prioritize their expenditure. By telling them essentials from wishful, it is parent’s duty to empower the kids with the right information regarding their purchases, but leaving the decision to the kids. This will help the kids as they would feel responsible for the money in their pockets, even if they learn the hard way. Another lesson from childhood that I would like harp upon is “Buy your kid a piggy bank”. Trust me, they will learn banking early in life, recognizing the value of saving money in the long run. They will see their money multiplying, not yours mind you, their own money.
In fact if you want to be more creative, you can put an incentive of an extra dollar for every 25 dollars saved. Who knows, maybe you will not have to shell out money from your own pocket for your kids bicycle or that latest game DVD. These are just few of the ways to help initiate your kid into a practicing a life governed by financial prudence. There can be several other ways of doing it, some even better than what I have listed here, but it is never enough to stress on the importance of being wise when it comes to spending money. And sooner a person learns and practices it in life, better. Having a CSA contact can help you financially support your child.