Most people don’t know about the importance of letting their children know about “Financial Education” at an early age. Like all other subjects i.e. Math’s, Science and Learning Mother tongue , having extensive knowledge about money is a must for every student. Parents and teachers should consider this as one of the most important “Life Lessons” and they should patiently induce the concept of money in young minds.
Having a strong and trenchant financial skill helps in addressing the issues related to money like money management, needs vs want, and handling the stress related to financial issues. In today’s world, Money is the ultimate ruling factor so having a good knowledge on money is a necessity. Whether it’s a business or personal life, money plays a crucial role and people having it in good amounts enjoy some privileges in our society like getting respect etc.
We all know that Children curious about everything around them. If they observe their parents using credit cards, cash and electronic payments that may trigger a curiosity among kids to know more about them. But without proper guidance it is not possible for kids to know about money and the basic queries related to it like earning money, saving, charity and spending. Financial literacy provides children with the necessary skills on budgeting, saving and investing for the future.
Why is Financial Education so crucial ?
a) Children who are taught about money in the early years establish better saving and spending habits. These habits help them in maintaining financial discipline in their adulthood.
b) In the real world everything directly or indirectly depends on Money. With proper financial education we are preparing children to face real-world financial challenges. This knowledge about money will help kids to stay out of debt traps later on in life.
c) It is the responsibility of parents and teachers to make children know about the difference between needs and wants. With good financial knowledge they don’t need anyone’s help in spending money on “needs vs wants”. They can make decisions independently and this boosts their confidence in money Management.
How to Teach Kids about the Basics of “Money” ?
First and most important step is to let the children know the “meaning of money and how it’s earned”. Without knowing these basics, they may not understand the terms like savings, spendings etc.
It is the parents responsibility to make children understand the fundamentals of money. Later on this knowledge can help you in making responsible financial decisions among the superfluous available.
Explain to kids about different types of cash like coins, notes, credit cards and Debit cards and later ask them to identify and compare. Explain how the cash can be used to buy things.
How Money is Earned ?
Make sure children understand that “Money has to be earned”. Explain to them in simple words that to earn money they have to do a job [ doctor, engineer, Teacher] or business or any other hustle. [ Don’t complicate it by explaining with examples they don’t understand].
To make children practically know about money and work, Parents could give children a small amount of money for completing tasks, such as doing their own laundry or helping with the garden.
Now comes the actual part “Saving”.. Till now they have learned what cash is and what they have to do to get it.
Money Management :
Earning money is important but handling it responsibly is even more important. Again it is teachers and parents responsibility to teach Kids on how to manage money earned effectively.
Explain children to divide their earnings into 2 parts a) Savings b) Spendings
Explain to them about Savings and Spendings in simple language, so that these things get etched in their minds.
a) Saving
Saving means keeping a part of the earned money for future use without spending them at once. They may not understand at first but with time they will come to know the importance of saving.
Explain to them about “piggy banks or a savings jar” in which they can keep the remaining cash after spending.
b) Spending
Spending is nothing but using money to purchase things that we need / want . Again here comes another subject, the difference between “needs” and “wants”.
Again as a parent you should play your role in making Kids understand the difference between “needs” in contrast to “wants”.
You can use basic examples to make them understand like food, books come under needs whereas toys come under wants.
Conclusion : Financial Education is a very important life skill every child/ Kid should learn at an early age and it is their parents responsibility. In this blog post we have covered basics about financial education for kids like “importance of money”, “importance of spending and saving money”. In our upcoming blog posts we will cover more about Savings and Money Management related topics for Children and for students.
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