Ask an adult, what is one thing that they wished they had learned sooner? Most adults say that they wished they had learned about finances sooner. Finance is quite a prominent subject. The usual way a person learns about finances is by making mistakes. However, the mistakes that you make in your teenage years and the mistakes you make in your 30s impact your life differently.
As many finance experts say, the sooner you start, the better. As a kid, your mistakes will be limited and won’t be hard on your pocket. However, in the later stages of life, your one mistake can hit you and your family hard. That’s why you need to avoid, or rather, cannot afford to take risks.
So, the best time to learn about finance is right now. You may have learned about finances the hard way, but that shouldn’t be the case for your kids. So in this article, let us provide you with some simple, practical tips to help teach your kids about finances. Of course, you are free to customize it according to your needs and preferences.
What is financial literacy?
Financial literacy is different from being literate. You may be literate but not necessarily financially literate. Financial literacy is a greater understanding of financial matters, such as e-transfer loans with no credit check, credit cards, investing, budgeting, and making smart decisions to avoid financial problems.
A financially sound person never runs short of money and can manage money efficiently, regardless of the amount they possess. But achieving such a level of financial literacy is no easy game. It takes a long time and a lot of mistakes to understand how money work.
Why is financial literacy important?
Poor financial literacy is the reason why young adults struggle with money unless they come from a strong financial background.
Financial literacy is important:
- To keep you from going broke.
- To never run out of money.
- For a secure future and easy retirement.
As an adult, you must have also made some financial mistakes that you must tell your children so that they can avoid making them. But teaching finances to a child is not easy, especially if your child hates math. Because for them, numbers mean math.
So teaching children and young minds about finances is difficult but not impossible. However, there are certain ways to make it more fun and enjoyable. Let’s have a look at some of these ideas.
How to educate young minds on finances?
Explain fundamentals of money with practicality
- Ask yourself, will you remember the word “Football” better by word or physically, seeing, touching and by playing with it? You got the gist, right?
- Teaching doesn’t necessarily have to be theoretical. If finances were all theory, the school curriculum had probably already included it in the studies. But as most of it is practical, teach your children by showing them practical examples of handling finances and letting them feel the power of money.
- Show them what all things it can buy. Giving them pocket money is another important step that you can start to teach them about finances.
Show them how to save money
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- After the power of money, teach them how to save it. Life is unpredictable, and you may require money to deal with some unwanted situations. And unless you have some portion of your money saved, facing immediate issues can be difficult.
- Of course, they won’t save money in younger times, but teaching them the discipline of saving will reap your children’s life-long benefits.
Involve them in finance-related matters
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- Children learn better when they see their parents handle money matters. So often, there’s a belief that says children should not be involved in money matters when they are young because you may risk spoiling them. But it isn’t true. Children are the product of their environment. You should teach them the right and the wrong way before they learn it from some other unreliable source.
- Real-life experiences are the best way to teach children about finance. Involve your children while making a budget for the home. Explain to them how you manage money and budget everything.
Make talking about money normal
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- Many people don’t like talking about money as if it were taboo. This behavior often leaves children thinking and believing talking about money is wrong in public.
- Talk to them about money openly and make it normal to talk about money, so that later on they can converse with other people about money comfortably and put their opinion with confidence.
Let them earn money
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- There’s one saying that goes like, “don’t let them earn money,” and when you ask them why, you will hear numerous lame excuses. The world is not in books, finance is a subject that people learn practically and not by theory.
- So let your children earn money. This will teach them how money is exchanged for any valuable item or service. In addition, this will slowly prepare them for the upcoming adulthood.
Address their mistake, but don’t scold
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- They will make mistakes when learning about finances. But don’t scold them because they lost money over something. Instead, help them understand why it happened and let them work through it.
- Losing $10, $20, $50, or even $100 is no big deal in learning. Money comes and goes, but make sure you help them see why the money went away.
Be transparent with your finances
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- Often parents hide their income or the total income of the house from their children. Yes! You guessed it right. It’s because of the same ridiculous reasons. But you don’t have to be like that.
- Tell them how you manage finances and what problems you face. If you are struggling with finances, let them know.
- If you are applying for an e transfer loan with no credit check, let them know and show them how you do it. Tell them the pros and cons of the loan so that later when they are adults, they have a pretty good idea of how to take loans.
Finance is one of the most important parts of a person’s life, and practical financial habits will determine the security a person will have in their life. So for the safety of your children’s future, ensure you teach them about finances and important matters such as loans, budget, credit score, and no credit check e transfer loans to prepare them for the upcoming life.