January 28th, 2009
Financial Literacy For Children
As parents take a look at the current economic crisis, many are wondering about what kind of future their children will be facing. While there are no financial guarantees in this world, parents can give their children a boost in the right direction by providing them with sound financial guidance and education now, while they are still young. There are several programs being promoted right now to increase financial literacy in children, and parents can put several techniques to use to start teaching their children the value of a dollar right now.
1. Start when they are young, but not too young.
Very young children are probably not ready to handle the basic concepts of financial management, so it is best to wait until they are old enough to start receiving an allowance. By the time a child is around seven to eight years old, they should be able to start on the basics of proper money management and understanding how the system works.
2. Start small but lay the groundwork well.
Once a child is old enough, you can start teaching them some basic skills with their allowance. Help them to understand that performing work earns them money. If they don’t do it well, or if they don’t do it all, then they don’t get any money for that week. It is best to set up an allowance system that is actually based on real chores, rather than just given to the child. Otherwise, you are missing out on an opportunity to teach your child about the value of hard work.
3. Treat their allowance like a paycheck.
Expanding on the point above, if you treat your child’s allowance like a paycheck, this will give them a good foundation that will carry them throughout the rest of their lives. Set up a system where they will be paid a certain amount of money for doing certain tasks. Help them to understand that if they don’t get the job done, they won’t get their allowance. This simple message will get across loud and clear.
4. Teach them to spend and how to save.
Now that your child has an allowance, it’s time to teach how to spend it and how to put some aside. Try to work on getting them to put half of their money aside each week. For the other half, take them to a dollar store and have them pick out whatever they want. Then, put back the things that they cannot afford. This will teach them the value of a dollar and just how far it will and won’t go. If they want something they cannot afford, focus on teaching them about putting aside money until they can afford it.
5. Keep reinforcing these lessons.
Until the child reaches their teenage years, you can keep reinforcing these lesson. Once they get to around thirteen or fourteen, you can start to introduce more complicated lessons. For now however, getting the basics down about earning, spending and saving, will provide them with the knowledge they need to get started on a prosperous future.
Photo Credits: 1
