Guilt-Free Ways To Teach Financial Literacy
Let me share one personal story …
My friend had a conversation with his son. His son was in his last year of secondary education and about to decide the course he will take for college. They were having an argument. My friend wanted his son to take a more practical course that will prepare him for life. In his reply, his son quoted Robert Kiyosaki, “Dad, education just teaches facts, life’s lessons give wisdom.”
This discussion led me to realize that learning is not confined within the four walls of the school. Life, itself, can be an extension of the classroom. Lessons in life start at home.
One such lesson is about financial literacy. From age ten onwards, your child is ready to take in lessons that will help him have a financially secure future.
Here are some of the things your child can learn about financial management at an early age:
Explain how these shares of stock or fund work. Relate it with things they like. This will open their minds into the world of investing. Introducing your children to the importance of a financially secure future teaches them perseverance and concepts of delayed gratification by holding on to their fund while watching it grow.
Be open about the family budget. Invite them to sit with you and show them how the family budget is worked out. This will make them conscious about their expenses, and invite their willing cooperation on how to save and reduce costs. It also teaches them to be prudent in their expenses. They can carry this one trait with them into adulthood until they raise a family of their own.
Teach the kids about the wise use of the credit card, so that they will be aware of its advantages and disadvantages when they get one in the future. Teach them the convenience it brings and the discipline it requires. Be careful about unnecessary shopping. Advice them to limit credit card purchases for necessary and emergency items.
Differentiate “wants” from “needs”. A want is not a need. There is a big difference between the two. Be sure to get the children involved in this.
For example, you might explain that home cooking helps minimize food expenses of the family, which is why you conscientiously prepare dinner. This is more economical than going out for dinner on an expensive restaurant. But of course, eating out is acceptable once in a while.
You can also explain that they can have savings if they try to minimize their weekly trips to video arcades and movies. Instead of spending money for weekly entertainment, the kids might be amenable to twice a month amusement visits.
The savings earned can be re-channeled to savings for the kids, which they will surely like.
It is part of our responsibility to educate our kids on financial literacy. It is our task to prepare them to face life’s challenges. Lessons in life start at home. Start early.