Financial literacy is a basic sense of the role of money, credit, savings, and investing in a person’s life. Children should grow up with the idea of using money and credit as tools that lead to success in life. They need to learn the value of delayed gratification by saving and investing money rather than spending every dollar they have. The best reason of all for teaching this to children is that not learning it will have very bad results. There are too many people now who misuse credit and are always in debt, habitually spending more than they make. The fear of financial ruin and the stress of this are bad for their mental health. If children are taught to be responsible about money at a young age, there is a better chance that, as adults, they will live within their means and use their financial assets to better their lives.
Are we educating our kids about financial literacy for the future?
The education of a child begins at home, and I have not seen many parents talk about “money” and “finances” to children from a very tender age. The conversation is limited to what we can buy for them, and vice versa. Conversations around savings, rising costs of living, and goals are largely missing. As children, we did save a portion of our pocket money in our “money box” (a box where children lock away their savings). But we were not really taught about growing that money.
In my view, financial literacy is incomplete without connecting the dots. Asking the child to save his pocket money is just one part of the whole game. It probably only inculcates the habit of putting away a part of what he owns for future consumption. That is indeed a good start. However, explaining the concept of inflation and the fact that inflation will continue to be a reality is not there. A basic understanding of investment products is something children don’t understand until they start working. And this lack of awareness throughout our early years—at home, school, and college—is the reason why financial savings penetration is miniscule.
We have started discussing a lot about making children aware of a lot of things. However, implementation is very low. especially until we do not see this being implemented as a subject in schools. Anything that is incorporated in schools is automatically taught at home too. A simple subject on “money” will prepare the next generation for financial planning in the right way.
How would you teach your kids the value of money?
There is a magical little room. Pink and purple, with a white bed and stars on the walls. This room is a toy kingdom, where my daughter is a princess. No matter how many wonderful toys she has, when we are out in the store, she always sees another one she likes.
Mommy, look at this!
Can I get…
Could you, please?
Mommy, please?
I set boundaries and do not get her everything she wants. She accepts not getting toys all the time and not getting a yes answer to everything she wishes. However, when I say no and talk to her about the value of things—earning money, buying, affording, etc.—she nods, but it never really gets to her. She is so small, and these explanations are just words to her.
She had her birthday a few weeks ago and got many presents from her friends and family. She plays with the toys and loves them. However, lately she talks about that shiny rainbow fish she saw in the toy store. Every now and then, she asks about it. I could easily buy it for her, but I decided not to.
This evening, I drove her home from her karate class and parked in front of our building. We were talking about her training, the new kicks she learned, and her friends there when I saw an old man going through trash next to our car.
How do you teach your child to be social without judgment?
I told my daughter to get her jacket on, and I went outside to say hi to the old man and give him some money. He was very happy to see me and grabbed my hand warmly as he thanked me for helping him. I shook his hand and went back to get my girl. She asked me about the old man, and, as he continued digging through trash, I told her:
Do you see how old he is, honey?
Look at his cane and the plastic bags he is carrying. Look at his clothes and his slow and painful walk. I gave him some money to help him out because he was having a hard time. He is poor, so he is going through trash in search of bottles, food, and anything else he could use. She looked at the old grandpa, and her eyes filled with tears. She said, Mom, he has nothing and has to walk and dig through trash, and we have everything. Can I give him something, please?
How can we teach children about financial literacy in a way that’s fun and engaging?
In my home, we would do chore days when my kids wanted to earn money. If they wanted something, they would come to me and ask to do chores. I’d tell them to get a pen and paper. I would write down everything I could think of that needed to be done, and I would assign an amount. There were always things for the younger kids, and the others knew this. More than one child could do a chore and split the money for that chore equally among them.
I had chores such as mopping floors, vacuuming, dusting bookcases, arranging shoes on the closet floor, hang coats, etc. When I was done with the list, the kids would grab it from me. They would then huddle at the kitchen table, read through the list, and decide who was going to do what. They put their initials after each chore. When they were done, they would bring me the list. I was then supposed to sit in the chair, holding the list and pen.
The kids would take off. They would run to do a chore. They would come back and tell me it was done. I would check-mark the chore to indicate it was done. The kids understood they were earning the money. I found that without my having to instruct them, they quickly decided what they were willing to work for and how important it was if they wanted to spend the money they had earned on something they saw in the store. They also knew if it was expensive, they would have to do more than one chore day to get it.
I don’t know if it is the best way or not, but we didn’t have the nightly arguments over their “chores” being done. I felt that when they were in school, that needed to be their priority—not coming home and doing more work on top of their school work and any extracurricular activities they were involved in through school. I wanted them to still be able to enjoy being kids.
Are there innovative educational tools or games that can make financial literacy enjoyable for kids?
Absolutely, teaching financial literacy to children can be engaging and enjoyable with the use of interactive tools and games. Some innovative educational resources include:
- Mobile apps: There are various mobile apps designed specifically to teach financial literacy to children through interactive games and activities. These apps often simulate real-life financial scenarios in a fun and engaging way.
- Board games: Several board games focus on teaching financial concepts, such as budgeting, saving, and investing. These games can make learning about money management more enjoyable for children.
- Online educational platforms: Some online platforms offer interactive courses and modules that use gamification techniques to make learning about finance more engaging. These platforms often present financial concepts in a simplified and interactive format.
- Virtual reality simulations: Virtual reality simulations can provide an immersive experience for children to learn about financial management in a practical and interactive way, allowing them to make informed decisions in a virtual environment.
Integrating these tools into educational curricula or using them as supplementary resources can help make the learning process more enjoyable and effective for children, cultivating a strong foundation in financial literacy.
In Conclusion!
Imagine that you are taking care of a garden as a metaphor for improving financial literacy for the next generation. Early education is critical to establishing a solid financial and intellectual foundation. In the same way that every plant has its own specific care requirements, each person’s educational experience with money should be tailored to their own interests and requirements. Encourage diversity through means such as a garden with a variety of plant species, and explain the importance of saving money, investing it, and sticking to a budget. In the same way that a garden that has been cared for properly can survive the effects of weather, teach your children the value of having savings set aside for unexpected events. As young minds observe their financial knowledge and riches increase, provide continual mentoring, tend to the financial growth like you would tend to a garden’s growing flowers, and highlight the virtues of patience and delayed satisfaction. Last but not least, teach the concept of leveraging one’s financial expertise for the welfare of society by highlighting the value of giving back, which is similar to the community benefiting from the attraction and abundance of nature.