IMPORTANCE OF TEACHING KIDS FINANCIAL LITERACY By GUIDING GURU... Mrs.Nandini Sareen (PGT COMMERCE)

 IMPORTANCE OF TEACHING KIDS FINANCIAL LITERACY

                             

It involves understanding basic concepts such as budgeting, saving, investing, borrowing money responsibly, managing debt and using credit wisely. Teaching kids about financial literacy helps them develop skills that will help them throughout their lives

By providing students with the skills and experience to become financially literate before they reach adulthood, you can improve their future experiences with loans, credit cards, savings accounts, interest rates, and more. Bring financial education to your school, and start its lessons at a young age.

When you inculcate financial literacy in kids at a young age, they end up becoming financially responsible adults. For example, children should be taught at an early age that there is power in saving. They should be taught to avoid borrowing or living beyond their means.


Key takeaways

  • Normalize money conversations with your children from a young age to create opportunities for honest questions as they age.

  • Don’t be afraid to admit your past mistakes and help your children learn from them.

  • Use everyday situations and keep the conversations fun to help create a healthy environment around financial conversations.

If you’re a parent, it’s likely you wish nothing but success for your child as they grow up, including how they manage their finances. The reality, though, is that unless you take steps early on to prepare your kids for future financial decisions, there’s a good chance they end up like many American adults today.  

Why have money conversations with your children early?

Talking about money with young children may seem too early or a waste of time and energy, but kids often pay attention more than we think. They watch us and mimic our actions and attitudes. The more money conversations we have with our children early on, the more chances they have to learn how to manage their money properly. Here are some reasons to start talking to your kids about money when they are young.

It normalizes money conversations

For many parents today, money was a taboo topic when they were growing up. It simply wasn’t something casually discussed around the dinner table. Many of us didn’t know how much money our parents made or spent, how much they were saving and investing or how much money they had socked away for retirement. I could tell my parents made enough to take care of our family and take us kids on family vacations every year, but I had no clue of where they stood financially. Maybe, more importantly, I didn’t know what I didn’t know once I became old enough to have a job and earn money.

By frequently having age-appropriate money conversations with your children early on, you can create a more open environment for learning and asking questions about finances. Just because money wasn’t openly discussed with your family doesn’t mean you need to create a similar environment for your kids.

2.It can help them make better financial choices

Teaching kids the basics of money management can help them develop the skills necessary to achieve financial success later in life. From saving and investing to creating and sticking to a budget, early money lessons can give your kids a leg up when it’s time for them to make more significant financial decisions.

3. It can help them learn from past money mistakes

Chances are you’ve made mistakes managing your money in the past. I know I’ve made a few I’m not proud to admit. The good news is that we can turn those mistakes into a positive by sharing our struggles with our kids, and helping them make better choices. Young kids may not face life-altering financial decisions, but they will as they get older — including paying for college or a house, learning to use credit cards responsibly and avoiding debt.

Talking about your financial missteps with your kids may help them avoid making them too.

4. They may not learn any other way

If you think school will prepare your children for the many financial decisions they will face as young adults, think again. The Council for Economic Education 2022 Survey of the States revealed that only 23 states require high school students to take a personal finance course to graduate.

Young adults make some of the most important financial decisions of their lives in their late teens and early twenties, yet feel unprepared to make them. According to a recent Junior Achievement survey, 54 percent of teens say they feel unprepared to finance their future plans. Don’t wait for someone else to educate your kids on how to manage their money.

Tips for talking with your kids about money

Having money conversations early on can go a long way in fostering a healthier environment in your home for financial success. Here are some tips to get you started talking about money with your kids.

  • Use everyday situations: Take advantage of ordinary opportunities to talk about money with your kids. Whether paying your water bill or planning your monthly budget, use common tasks as opportunities to share insights, ask questions or even get input on how to spend your money.

  • Take advantage of technology: Several mobile apps and other resources help teach financial literacy to all ages. We live in a digital world, so why not use it to your advantage to teach your kids about money?

  • Make a game of it: Turn real-life scenarios into games with your children. The next time you’re at the grocery store, give your child a small budget and let them plan and shop for an entire family meal. Let them help decide what activities to plan on your next family vacation. Let them compare costs and find the best deal. You don’t need to give them full access to your budget or have the final say, but letting them participate in smaller family financial decisions gives them a sense of ownership.

  • Open a kid’s bank account: Many banks offer savings and checking accounts specifically geared toward children and teens. Most of these joint or custodial accounts come with parental controls and tools that teach financial education. Use a kid’s savings account to help your children set and reach savings goals.

The bottom line

Having money conversations early on will not only help your children feel more comfortable discussing finances, it can play a pivotal role in helping them become successful, financially responsible adults. Find ways to incorporate money talks into everyday conversations with your children. Provide a safe and open environment for asking questions, making mistakes and learning now, to help prepare them for the future.


Having money conversations early on will not only help your children feel more comfortable discussing finances, it can play a pivotal role in helping them become successful, financially responsible adults. Find ways to incorporate money talks into everyday conversations with your children. Provide a safe and open environment for asking questions, making mistakes and learning now, to help prepare them for the future.

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