Now more than ever, many families are feeling the stress of a strained economy. Every penny counts, and it’s important that the whole family has an understanding of the value of money. While children under five won’t be able to comprehend more advanced money concepts, there are ways to start small and introduce financial literacy for kids at a young age.
Meaning of Financial Literacy ‘Financial literacy’ sounds complicated – so what does it really mean? At the core, financial literacy is a set of skills that allows people to make smart decisions about their money. Being financially literate means you have an understanding of making, saving, spending (including donating), and investing money. For little ones, starting with the basics of money management might mean helping them learn how to earn money and make small decisions with how to manage it. Importance of Financial Literacy for Kids Teaching kids about money early on instills good financial habits that will follow them into adulthood. It’s important to have these types of conversations and allow children to ask questions, so that eventually they can begin to contribute to their own financial success. Financial Literacy Activities for Kids One key to raising finance-wise kids is experience, and they can gain experience through educational activities. Here are some activities to help your children learn about money in fun, engaging, and age appropriate ways.
Kids’ Money Making Ideas Whether or not you’re a believer in giving kids money for doing household chores, there are plenty of other ways that children can earn an income for themselves.
Giving Back Just as it’s essential to teach children about the value of earning and managing money, it’s also important to discuss ways that your children can give back to others. Donating a portion of lemonade stand sales or yard sale proceeds to a special cause gives children a feeling of purpose, community, and autonomy – and instills an attitude of gratitude as they continue to grow. “My two sons (currently ages 5 & 6, but they’ve done this for a couple of years) save up to adopt an animal through World Wildlife Fund, though lots of other environmental groups, zoos, and farms do the same thing. Getting to pick out their favorite animal to adopt makes the act of giving fun for them, which I think is key for young kids.” – Shannon, Director of College Finance, Bright Horizons College Coach Raising Finance-Wise Kids Conversations about money might feel uncomfortable at first, but breaking the ice with your children early on will help ensure financially literate adults, who feel empowered to ask questions and make smart decisions when it comes to money management for children.
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It is a new year and for many, it may mean getting the children on track and back into study mode for the new school year. As a parent, one of your main priorities is to see that your child receives good education at school and achieves good grades in tests and exams and of course the dream is that your child will continue on to university and earn a degree that will make all the difference in your child’s future later on in life.
Education in the academic sense is extremely important. Education on life skills however to complement the academic side is equally important for your child’s development. TEACH KIDS IMPORTANCE OF MONEY One of the life skills that may or may not be taught at school is financial education for kids and indeed this life skill is very important to every individual whether they are students, working adults, parents or even retirees. It is important for us to teach children how to save and manage money from a young age so that goof financial habits start from early on. As a parent, facilitate the education of the importance of money on a daily basis so that your children understand how important it is to save for their future and be financially independent. It is also important for you as a parent to exercise discipline so that your children will learn by example and what better example to set than at home. START SMALL BUT PRACTISE REGULARLY – EVERYDAY TIPS YOU CAN ADOPT AT HOME WITH YOUR CHILDREN Give your child a coin box The easiest thing you can do is to present your child with a coin box. These are readily available at most shops or you can even fashion one at home from jars or recycled tin cans. Teach your child to put away any spare coins received and make it a commitment that once the coin box is full, you will sit down with your child to count how well she or he has done in saving money. Remember that the money saved should be coming from valid sources and stealing is absolutely not acceptable. It can be spare change from their daily or weekly allowance if any or maybe a small reward from helping with a chore. Open a kid’s account for them It is never too early to start a bank account for your children. Bring them to the bank every time their coin box is full and have them deposit their coins into the account. Praise your child on the progress they make and exercise discipline in not touching your children’s’ savings for any other use other than savings. Save those ‘ang pows’ and monetary gifts Your children will more likely than not receive many monetary gifts until they grow older, be it Chinese New Year ang pows or Hari Raya green packets or birthday gifts. Whether young or old, give the money gift to your children. But you must sit down with them at the end of the day to open their gifts and count how much they have received. This is not to be done in a calculative away but rather in a gracious way, teaching them at the same time not to look a gift horse in the mouth and that any form of gift is a wonderful gift all the same. Once counted, steer their decision towards saving all the money they have received. If they insist that they want to use the money for a particular reason, discuss this option with them. If it is a charitable request, then by all means, support it but within reason, citing that they should not give away all their money but a percentage of it. If it is to purchase a new item, discuss if it is a need or if they can actually perform a chore to earn the money for it instead and so forth. Teach them basic banking Asides from a simple savings account which they can learn to manage themselves, introduce them to slightly more complex banking products if the opportunity arises. If they have sufficient funds in their savings account, suggest to them that this money can earn more interest if it was moved into a fixed deposit instead. Explain to them how a fixed deposit works and have the bank help to explain to your child how it works in a simple, easy to understand way. Your child will eventually make this link when they learn more about economics or commerce in higher school levels. Teaching kids about money is one of the best educational foundations parents can give. And if you’re a money-savvy parent, you may have all the skills to put your children on the path to financial success.
The best way to start: Be a role model and lead by example so the financial advice comes naturally. Sometimes it’s important to have specific financial discussions, too. Not sure how to teach kids about money? Here are five lessons to consider. Lesson one: Money is earned, not given.Robert Siuty, a senior financial consultant at TD Ameritrade, explained that parents can structure allowances so they’re tied to chores and other tasks, rather than freely given. “The problem with just being given money is there’s no back end where you have to do something to make it happen,” he said. Make it specific to the child. When giving money, parents should directly explain how the funds are tied to the chores. “You can tell them: ‘You did the right things, you hit your task, met your expectations, and here’s your reward for it,’” Siuty explained. Further, Siuty noted that rewards can be structured so certain tasks have a higher value than others, and compensation can be weekly, monthly, or anytime that’s appropriate. It doesn’t always have to be monetary. “It can be a play date, or maybe they get to see a movie if they complete a number of tasks over the course of a month,” he said. Lesson two: Develop a savings plan.When explaining savings concepts to young children, Siuty suggested using clear jars so they can see the money. “If the money is physically in their hand and if they see the money going in and out of the jars, it’s more impactful and it makes them think twice,” he explained. He also suggested encouraging friends and family to give monetary gifts for birthdays or holidays that can go toward larger goals or experiences to teach the idea of savings targets. “It’s the repetition and getting them into that mindset of ‘this is birthday money,’ or whatever, and instead of spending it, ‘I’m saving it for my first car or buying that iPad,’” he said. As children grow older and understand those concrete money lessons, parents can teach children to save by using apps. Apps allow children to track their savings over the course of time, and they open up conversations about how to spend money and delay gratification for larger purchases. Plan for tomorrow by setting financial goals today.Lesson three: Deciding how to spend money.Those conversations can segue into the third lesson: how to spend money. This is where parents can introduce the concept of money management for kids without having their young eyes glaze over. Siuty explained that spending discussions should start with younger children using money in their glass jars: “I broach it from the standpoint of if they really want something, they can spend their own money for it.” This gives children some autonomy over how they want to spend their money and the perspective of buying now or saving for something larger. “You can talk about the different things they could do with that money, besides spending it on frivolous things,” he said. Greg Hammer, president of Hammer Financial Group, suggested that when kids are old enough to have savings accounts, it’s an opportunity to help them understand what the statements mean and how they change when they use their dollars. Lesson four: Why good credit matters.Teaching the importance of good credit is a key lesson for parents, especially because this isn’t a concept taught in schools. “Teach your kids early on the importance of paying their bills on time, the importance of not overextending themselves, and that they’re building that good credit and how that good credit could impact them later on,” Siuty said. Hammer suggested starting with a small credit card to give kids the experience of using it. Then parents can start to explain the differences in the types of debt: good debt, such as debt used to increase equity, like buying a house; and bad debt, from overspending on unnecessary items put on credit cards. Many students in college will receive credit card offers, so teaching these lessons while kids are still at home could keep them from going into debt later. Also, it may be worthwhile to discuss parents’ own negative experiences with credit card debt as a cautionary tale. A recent study published by the National Bureau of Economic Research found that parents’ attitudes toward debt can significantly influence how children think about and approach borrowing money as adults. For example, parents who fret about debt or show discomfort about it tend to have children with similarly cautious views. Children who grow up in homes that are more comfortable with debt, by contrast, may be more open to borrowing. Lesson five: Be content with what you can afford.In a society where there’s always a latest and greatest item to buy, it can be easy to succumb to overspending. Advertising, marketing, fashion trends, and peer pressure can adversely affect financial decisions. This is why teaching kids about money is important. Hammer explained that reinforcing the lessons of the value of money, what those dollars mean, and how they’re earned can help children understand the differences between necessities and luxuries. One way to reinforce those lessons is to expose children to the different financial realities for people not in their social groups. Using an example from his own life, Hammer described how during the holiday season his church supports families in need. Hammer’s children will shop for other kids, often using their own money to buy gifts. It’s a chance to explain that access to luxury items is not an entitlement, and that not everyone can afford to buy the latest dress, electronic gadget, or take expensive trips. “It’s really having them understand that, hey, we might go on nice vacations, but not everyone gets to do this,” he said. When it comes to teaching kids about money, the combination of leading by example and explicitly explaining why it’s important to save, have good credit, and be mindful of spending can put children on the path toward financial success. For kids who see food show up in the refrigerator and gifts magically appear under the Christmas tree, it’s easy to think that money grows on trees. Children don’t always know that everything has a price tag. But being money savvy is an incredibly important life skill, so it’s essential to start focusing on how to teach kids about money early on – the sooner, the better.
While the basics – like identifying money and giving change – are taught in school, it’s often left up to parents to teach kids about money behaviour and values – like saving, spending wisely, and giving to charity. Here are some tips for teaching kids money management and smart spending. 1. Give them some The best way for kids to learn how to handle money and spend wisely is to give them practice! A time-tested way to do this is by giving them a weekly allowance. When should kids start getting an allowance? When they start to ask for things, suggests Karen Skinulis, parent coach at Parent Talk, so they will have some money to buy the things they ask for. Make sure you set clear expectations before giving your child an allowance, adds Skinulis. She suggests parents sit down with kids and think about what the child needs the money for and what amount they need so they can actually buy these things. Start out with a small amount for young children, to be used for treats or small toys. As kids get older, think about whether things like electronics, lunch, or clothes should be included, and if a portion of the allowance should be put away for saving or donated to charity. An allowance is a great tool for both kids and parents. Instead of the child asking Mom or Dad for something, says Skinulis, “the question could then be, do you have enough money saved up to buy that? And if the child does, would you want to spend your allowance to buy it?” This gives kids the opportunity to make their own spending decisions, and parents are able to put a limit on their kids’ spending without being nagged or having to say no. 2. Let them make mistakes Once kids have some cash, don’t restrict them. Instead, let them make mistakes – and they probably will. “They might spend it too quickly or run out of money,” says Skinulis, “and those are great learning lessons.” They’ll think, “When I spend and it’s gone, I don’t have it for something else. And that’s really the life lessons that we want them to learn: it’s not unlimited,” says Skinulis. So let them spend their money on candy bars at first. They’ll soon see that if they want that video game, they’re going to have to save up. This will help them learn to delay gratification by saving – an important step in getting kids to really think about their purchases. 3.Take them shopping Doone Estey, principal at Parenting Network Inc., suggests parents start talking to kids about money in the grocery store, “where kids think you can take whatever you want off the shelves.” Get them involved by having them hold the shopping list or coupons. Teach them how to comparison-shop and find the best value. Ask them for their input on how the grocery budget should be spent. While grocery shopping is an important activity for kids to understand, be careful when taking kids to the mall. Try to avoid encouraging kids to shop as a ‘just-for-fun’ leisure activity. 4. Model good money behaviour Skinulis warns parents against buying their kids something every time they’re in a store. “You go into a store with the idea we need something, and just because a child sees something they like, doesn’t mean you buy it for them,” advises Skinulis. Make it clear what you’re going to a store to buy beforehand, and remind them why you’re there. “I wouldn’t do a lot of impulse shopping in front of them,” adds Skinulis, “because I think it models the idea that I get whatever I see.” Instead, try to show your kids how you make decisions when it comes to money and buying – and this means thinking and researching your purchases before you make them. 5. Help them make a wish list Once your child has some money, their eyes might be bigger than their piggy bank. Sit down with your child and making a wish list. Then rank the items, encouraging them to research how much each item costs, where they can get it, and how long it will take them to save up for it. This is a great way to help kids learn to make priorities and get them into the habit of planning before they buy something. Having trouble getting kids to think before they buy without nagging them? Check out Gifting Sense, a free online/mobile survey that asks kids questions to help them learn what to consider before making a purchase – like price including taxes and shipping, and how often the purchase will be used. 6. Ask them to chip in Sometimes parents are way too quick to buy things for their kids and not ask the kids to help pay for it out of their allowance,” says Estey. When kids haven’t helped pay for something, they might not appreciate it. And this could lead to a cycle where kids constantly ask for new things that they don’t necessarily take care of. If an older kid with a clothing allowance needs a new pair of sneakers, Estey gives as an example, a parent might say, “’I’m willing to buy you the $75 sneakers, but I’m not willing to buy you the $100 sneakers, so you need to fill in the difference if you really want these cool [brand-name] sneakers.” This type of exercise teaches kids about the difference between needs and wants, and helps them think about how they want to spend their money. 7. Bring them to the bank To a child who just sees you taking money out from the ATM, it may seem like the bank just gives out money, says Estey. In order to teach a child about how the banks works, take them to one and open up a bank account for them – most banks have children’s accounts with no fees and no minimum balance. This is an excellent opportunity to talk to them about saving and interest. Next time they get a cheque for their birthday from Grandma, have them deposit it in their account, says Skinulis. This teaches them how to keep their money safe, not to spend it as soon as they get it, and how to make it grow. 8. Talk about it One of the most important things to remember when teaching your kids about money is to talk about it – frequently and casually. Let kids know that finances are important but also accessible and not scary. Estey suggests being as honest as possible when kids have questions about money. You don’t have to go into complete family finances, but you might want to talk about bills, investments, credit cards, or even your retirement fund. If they’re old enough, you could even discuss current events relating to the economy around the dinner table. It's never too early to focus on teaching kids about money, volunteering, and charitable giving of one's resources. You are your child's best example and as Mary Gordon, the founder of Roots of Empathy, reminds us, "Empathy is caught, not taught.” She goes on further to explain: "Teaching children emotional literacy and developing their capacity to take the perspective of others are key steps towards collaboration and civility; they are indispensable steps towards preventing aggressive and bullying behaviours. As children develop empathy it seems to come ready-made with courage and imagination. Children understand marginalization and issues of social justice in a clear and uncluttered way."Teaching kids about charitable giving and empathy is rewarding for the whole family. Below are four tips to get you started in your lessons. Introduce Empathy at a Young Age When talking about interaction with other people, parents should dicsuss the concept of empathy with their children as soon as possible. Very young children often don't realize that other people have feelings, ideas, and emotions of their own. You can help children along in the following ways:
By the time they turn three, children begin to understand and respect the fact that each and every person has feelings. Knowing that other people have a life and feelings of their own, children can begin to develop and hone a sense of empathy. This capacity for empathy is the very basis for charity. Set a Good Example It's important for parents to create a family environment where giving is natural and encouraged. It's good for children to see their parents donating charitably and, just as important, to see what a privilege it is for their parents to be able to give. Include your children in your own volunteer or charity activities.
Explore All the Different Ways to Give There are over 1.5 million non-profit organizations in the U.S. alone. CharityWatch.com provides a user-friendly way to sort and browse charities that may interest you. Some of their top charity categories include:
There are many ways a child can learn the value of giving and plenty of volunteer ideas for kids. Setting up a charity box in the home can show how even a little bit of money can make a difference when given with a good heart. Encourage the donation of old toys, school supplies, and clothing to other needy children. It's also a good idea to teach your little ones that donating time is often just as powerful as donating money and things. Take the whole family for an outing serving dinner at a local soup kitchen or make a habit of keeping a basket of fruit or snacks in the car to give to hungry people in need. Involve Children in Volunteer and Charitable Activities It's easier for younger children to understand more direct and concrete examples of charitable giving. They know they love their favorite toys, so you can explain to them that not everyone is fortunate to have toys to play with. Likewise, you can help them set up a charity box to which they can contribute part of their allowance or loose change. Making philanthropic donations a regular activity around the house will reinforce charitable values in your children's lives. Key Takeaway: It's especially important to teach youth that they are part of a larger community and that everyone is responsible for those around them. By giving the value of charity a central role in the family dynamic, you encourage your child to grow up with a healthy sense of compassion and a strong charitable spirit. Board games are a great go-to when families are looking for a rainy day activity. But they can do much more than provide your family with a night of entertainment.
In fact, while your kids are having fun, you could focus on teaching financial education for kids without even realizing it. Looking for a game that’ll show your child money doesn’t grow on trees? Check out these seven games designed to teach your kids about money management and the value of a dollar. 1. Cashflow 101 This game’s financial lessons include teaching players how to take charge of their personal finances, understand cash flow and learn about the importance of investing. Cashflow 101 delves into some of finance’s more complicated topics, so play this with kids ages 14 and older. There’s also Cashflow for Kids, which can be played by kids as young as 6 years old, according to Money Crashers. What can you expect your kids to learn while playing this game? They’ll start to learn about the basics of investing, the difference between assets and liabilities, the importance of understanding a financial statement, basic personal accounting, and advanced investment techniques, including real estate investment strategies and short-selling stocks. 2. Monopoly The ultimate Monopoly goal is to accumulate properties and become the richest player. How do you get to that point? Similar to real life, you can only win if you invest right, budget and spend smart. The Simple Dollar writes that it teaches kids about investments, emphasizing investments earn income. In order to win, players must spend money on a property. As the game progresses, they witness that property generating income, allowing them to continue purchasing more properties. It also forces them to plan. They can’t spend all of their money on properties, because they can easily land on a spot that requires they pay taxes or some other expense. It’s a great way to start instilling in your kids the importance of an emergency fund. 3. The Allowance Game The Allowance Game by Lakeshore Learning Materials teaches kids the basics of counting, earning, and spending money, according to Answers.com. It’s designed for kids between the ages of 5 and 10. As the kids play, they’re able to earn money when they land on spaces that say “mow the lawn” or “walk the dog.” It then teaches responsibility with scenarios such as “I forgot to do my homework,” which causes the player to lose a turn. It also teaches kids just how quickly their hard-earned money can go when they’re forced to spend some of it buying a gift or paying for an overdue library book. 4. The Game of Life If you think your kids need a lesson in real life finances, this game will educate them on the various expenses that pop up throughout life, per U.S. News & World Report. Players witness life’s expenses first hand as the game walks them through major life events such as going to college, getting married, having kids, working, and retirement. Ally Bank writes that this is a great way to teach kids about the importance of planning for the future. At every turn, the board game forces players to make decisions that directly impact their route and the outcome of the game. For example, at the beginning of the game, players can choose between taking the business route or going to college. Kids are then forced to weigh the pros, cons, and long-term impacts of each choice. There are also many opportunities to discuss insurance throughout the game. Your child will have to choose whether they want auto, fire, and life insurance. Have them carefully consider the benefits and risks of each while playing, using it as an opportunity to educate them on insurance. 5. Millionaire Maker Board Game For kids 10 and up, this game teaches kids (and adults) about real world wealth-building skills. This game boasts it can make players a millionaire in three to five years, per Kasasa. You don’t need to play it in hopes your child will become rich overnight, but you can use it to teach them about being an entrepreneur and making sound financial decisions. The game describes itself as an opportunity to live as the wealthy do. According to its description, “You can kiss your W-2 job goodbye and live the life you want to live, not have to live. Model your dream business after a successful mentor’s. Buy a six-unit apartment building. Purchase a share of an oil well. Get sued by a disgruntled employee. Like real life for an entrepreneur, the game is filled with opportunities and challenges.” 6. Payday This is a great way to teach your kids the low-down on budgeting and monthly expenses. The board is set up like a 31-day calendar, and players move around it, all while dealing with loan payments, bills, unexpected expenses, cash windfalls, and other financial issues that pop up on any given month, writes Money Crashers. Made for kids ages 8 and older, this game can be played for as many “months” as you’d like. The player with the highest net worth wins. While playing, kids begin to understand the importance of evaluating cash flow, totaling expenses, making payments, budgeting, and the importance of establishing an emergency fund. Who knows? Maybe after a round or two, you’ll see them budgeting out their weekly allowance. 7. Puerto Rico For ages 12 and up, the goal is to collect the most assets before the island runs out of workers, the capital is civilized, or the market has geared up to full capacity, according to The Simple Dollar. The game is set up so each player is a capitalist on the island nation of Puerto Rico, back when it was first discovered by Europeans. What will your child learn? First, they’ll begin to understand that a successful business always has some cash on hand. In order to develop the city, you have to invest. But if you invest in everything, there are sure to be some failures along the way. It’s their job to figure out if an investment is worth the risk, while ensuring they still have some back-up cash. The Simple Dollar writes that it also teaches players a successful business invests in itself at the right time. For example, early in the game you may need buildings that will support farms. But later on, you may need to purchase buildings that will serve an entirely different purpose. Basically, it teaches everyone how to manage changes in the marketplace. Through it all, your child will gain a sense of what it takes to get a full economy up and running. While your teen may think it's fine to wait until the last possible second to complete her high school science lab or her math project, procrastination can be a big problem later in life. She may find that waiting until the last second means an unexpected illness, emergency, or problem will prevent her from getting her work done. Her future boss or college professors aren't likely to accept late work—or the excuses that accompany delayed projects.
Teens who don't learn time management skills are at risk of becoming lifelong procrastinators. And waiting until the last possible minute to get things could cause problems ranging from high-stress levels to relationship trouble. It's important to teach your teen how to behave responsibly. That means managing her time wisely without requiring constant reminders or assistance from you to get her work done. Benefits of Time Management Skills High school can be very busy. But the adult world can be even busier. So it's important to start teaching your teen how to manage his time now. The perks of good time management include:
Steps Parents Can Take to Teach Time Management Skills Teens usually have fairly structured schedules. Their school day and their after-school activities are planned out for them. As a result, many of them don't learn how to manage their time wisely when they have some downtime. Here are some steps you can take to teach your teen essential time management skills:
Encourage your teen to practice time management skills. There will be times that she's going to miscalculate how long a project will take or days when she forgets a deadline. Help her learn from those mistakes, and remember, Rome wasn't built in a day. With time management skills you should also focus on how to teach kids about money as it will benefit them for the better future. |
AuthorHi! I am Tim Connolly and I am providing help to parents to bring up their children in a healthy environment. I am working in this profession from last 5 years, if you have any query regarding this please contact me. Archives
June 2021
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