Finance for kids and 6 ways to teach the same-
Introducing Kids to Money at the Right Time
Money gives people — both young and old — decision-making opportunities.Educating, motivating, and empowering children to become regular savers and investors will enable them to keep a bigger chunk of the money they earn and do more with the money they spend. Everyday spending decisions can have a far more negative impact on children’s financial futures than any investment decisions they may ever take. Here are 6 simple ways to help educate children about personal finance and managing money:
1. As soon as children can count, introduce them to money. Take an active role in providing them with all the required information. Observation and repetition are two important ways with which children learn.
2. Talk to children as they grow, regarding your values concerning money. Give them tips on how to save money, how to make it grow, and most importantly, how to spend it wisely.
3. Help children learn the differences between needs, wants, and wishes. This will prepare them for making good spending decisions in the future.
4. Setting goals is fundamental to learning the value of money and hence saving it. Young or old, people rarely reach goals they haven’t set. Nearly every toy or other item children ask their parents to buy them can become the object of a goal-setting session. Such goal-setting helps children learn to become responsible for themselves.
5. Introduce children to the value of saving versus spending. Explain and demonstrate the concept of earning interest income on savings. Consider paying interest on money children save at home; children can help calculate the interest and see how fast money accumulates through the power of compound interest.
Later on, they also will realize that the quickest way to a good credit rating is a history of regular, successful savings. Some parents even offer to match what children save on their own.
6.Establish a regular schedule for family discussions about finances. This is especially helpful for younger children. It can be the time when they tote up their savings and receive interest. Other discussion topics should include the difference between cash, cheques, and credit cards; wise spending habits; how to avoid the use of credit; and the advantages of saving and investment growth. With teenagers, it’s also useful to discuss what’s happening with the national and local economies, how to economize at home, and alternatives to spending money.
All of this information will be important as it will enable children to take on more responsibility for their own financial well-being.