Most young children crave almost everything that passes by without blinking an eye. The onus now lies on the parents to initiate proper control to prevent impulsive spending and introduce financial education.
The home remains the best and most convenient place for young children to learn financial literacy. Children have a short attention span, and therefore, the process of learning should be easy and fun, with parents having the bulk responsibility of teaching them how to handle and manage money.
Meanwhile, teaching children about moral values, culture, history, ethics and household chores is important but they should also be exposed to financial education.
Financial education means the ability to use knowledge and skills to make well-informed money management decisions. This is a basic life skill that boils down to an understanding of basic financial concepts such as; money management, savings, investing, and debt.
Learning how to make sound money decisions from a tender age will help lay a strong foundation for money habits and give them the confidence to make better decisions tomorrow.
The following are reasons why financial education is very important for children
- Helps them prioritize their needs: Financial education helps children see the striking difference between needs and wants. It helps them to always make wise decisions that will not subject them to borrowing.
- Teaches them the value of money: Teaching children about financial literacy will expose them to value money and know better ways to manage money.
- It prepares them towards financial independence: Knowing how to handle and manage money from a tender age helps children to become financially independent and stable adults in the future.
- It prevents fraud and scams: It will help them to be more attentive to fraud risks and reduce their ignorance of fraudulent scams.
- Avoidance of debt and bankruptcy: Learning about financial risks helps children to avoid making decisions that will lead to a high level of debt that might result in bankruptcy.
- Teaches them how to save and invest: Financial education helps children to cultivate the habit of saving and investing.
Four ways to practice financial literacy at home
- Make them earn their allowance.
- Gift them a saving container.
- Make sure they repay money whenever they borrow.
- Help them understand bills and purchase receipts.
In addition, it might not be wise to involve children in grave financial problems but letting them know about everyday household expenses is a good way to open their minds towards money management.
Raising financially smart children will not only teach them how to handle and manage money but also serve them throughout their life.