If you’ve ever met someone who has difficulty managing their money as an adult, their problems likely started in childhood. Like life habits including nutrition and healthy lifestyles, financial literacy begins at a young age. This doesn’t mean that anyone who wasn’t taught important financial management lessons at a young age will always struggle. It means that it’s a lot easier to maintain financial health when the right tools are developed at a young age.
Why It’s Important for Children to Understand Money
There are a number of effective ways to teach your kids about money. And the lessons they learn in childhood will stay with them as they grow older. One of the most important reasons why children should understand money is so that they can achieve and maintain financial independence. It’s also important that they understand why they need to work and maintain employment.
There’s no reason to deprive children of treats and gifts, but it’s important that they understand the importance of saving money. Young children can benefit from having a piggy bank or coin jar. As their collection of coins grows, they will be better able to grasp the idea that they can then take those coins to the store to buy something they want or save them for a rainy day.
Always paying for your child without explaining the value of money and how it’s earned can make it more difficult for them to achieve financial independence later in life. Older children can learn money by babysitting, mowing lawns, or helping Mom and Dad around the house. These steps are effective in building a strong financial foundation and knowledge base that will serve them well all throughout their lives.
Good Financial Habits Start from a Young Age
It’s important to build good financial habits for your children from a young age. For example, giving them an allowance for doing their chores correctly helps them to better understand the value of money. Many children think that money does grow on trees and that ATMs and bank cards are magical things that provide funds on demand.
Without proper instruction, these beliefs from childhood can affect their ability to remain financially secure as they grow older. Conversely, scaring them into never wanting to spend any money can also have a detrimental effect on their growth. There’s a happy medium that can be taught to them as they gain a better understanding of the concept of money and how it works.
Many parents find it effective to have their children pay for certain treats or things that they want. Or, if they want a big birthday gift, it might make sense for them to pay a portion of the cost. Whatever works for your family, is the best way forward.
Technology Can Help Too
Online banking is now the norm for most families, and services like Ria Money Transfer apps make it even easier to stay on top of personal financial matters. Opening a savings account for your child is a great first step in teaching financial literacy and establishing good financial habits. Using an app to track their savings can help them gain a better understanding of how money works, and that once it’s spent it’s gone.
As your child grows older, they may also be interested in experimenting with online dummy portfolios that teach valuable investment skills. Many schools are including such programs in their curriculum to help students become more financially savvy. All of these skills that are developed in childhood and adolescence can help them become financially stable later in life.