Financial habits develop from a very young age- between 7 to 9 years old. And those who are not taught how to manage, value, and work for money, lack the skills required to be self-sufficient. This impacts the child’s future finances, self-esteem, relationships, and overall enjoyment of life as they mature into adulthood.
Parents, schools, and third-party providers are the first line to ensure our children receive the best possible financial education. Sound knowledge of finance encourages students to use high-level thinking skills. It is designed to help them develop systems and behaviours that lay the foundation for sound management of their money.
Financial literacy is as essential as learning communication in English. It is an important aspect of effective holistic education.
Today, several programs and courses are available for kids to learn about money and business; typically, these are not included in schools' regular curriculum, and children seldom learn practical applications. In these cases, the onus is on parents to take the initiative and enrol their children in financial literacy programs.
We have fun solutions for those seeking to teach kids financial literacy.
The term 'Financial literacy is about being financially literate. Simply put, it is to have proper knowledge about money and have the set of financial skills to understand and apply to make the right financial decisions, big or small.
Financially literate people have various financial skills, including personal financial management, budgeting, saving, and investing. They develop self-sufficiency, which allows them to achieve financial stability.
Fun activities to teach financial literacy to kids
Make them track their expenditure
First, make it clear to children how important it is to keep track of their spending and have them record expenses every week.
Compiling them at the month's end will give them some insight. Knowing where the money is going is critical for better savings. Encourage kids to think about how they spend and how fast they can meet their savings goals if they change their spending habits.
Parents should also be open about their financial decisions and raise them in regular discussions with their children. They could also promote participation in quizzes and economic contests to ensure their child never gets bored from a financial literacy perspective!
Open a Bank Account
Piggybank is a popular savings vehicle for younger children, but it's better to consider opening a bank account at an actual bank for kids when they hit elementary school. It's a great way to instill the importance of gradually building their balance and introducing them to the banking industry.
Another modern approach is to get a kid-friendly debit card, such as Greenlight and GoHenry offer. Through that card, kids can earn money by doing chores or an allowance and using debit or credit cards for purchases. With usage, they'll sooner or later realize how quickly their account balance dwindles when they overdo managing their expenses. Both products emphasize transparency, allowing parents to control where kids can use their cards and send notifications after each purchase.
Make Them Earn Their Allowance
Another best activity is to make kids earn their allowance. It is essential to make kids understand that money is a finite resource. This can be done by making them earn their allowance- as you likely do-they'll learn to use it more carefully.
Also, many parents are in the habit of supplying their kids with a weekly allowance, which can help teach budgeting skills. However, it would be better to allow them to earn that money by doing chores. This activity will not only help draw a mental connection between income and personal effort, but they will reap huge rewards when they grow up and fly.
Nowadays, there is no need to carry a huge amount of money in your wallet for the little jobs they do around the house. Family-based applications like BusyKid and Greenlight let you allocate money to each task and send funds to their account with a few quick clicks on your phone.
Encourage Part-Time Gigs
For young kids in high school, it's challenging to get time out of their homework and extracurricular activities. This consumes a significant portion of their week. However, it will probably be better if they can only devote a couple of hours to part-time work. They will be less likely to waste their money on frivolous things when they have to put into serious work to get it.
They won't need to wait until they're old enough for formal employment and can earn some extra bucks. Observing the Covid-19 period, they can find work-from opportunities online and earn extra bucks. And this is a great opportunity to introduce the concept of the time value of money.
Make a Trip to Store
We already know that, and we were there when our parents took us shopping; we were inundated with various toys or video game requests. Perhaps that should come as no surprise. Young children, in particular, do not yet understand that there is a limit on the amount of money you have each month for discretionary purchases.
One great way to get the point across is to make them contribute toward these nonessential items. If it's not their birthday or special event, inform them they must pay half the cost for whatever they choose. It may seem odd, but certainly, your children will have a better idea of what things actually cost. This will also help them learn that they need to save money to make larger purchases, and they need to prioritize, as do you. You can also talk to them about how you make money to buy things. Speak about how you make purchasing decisions, including the difference between expensive and cheap and desires and needs. Pay in front of them so they can see how money works in real life. Play along to reinforce what you're saying.
Make it a Game
Another fun way is to turn finance management into a game.
Payday is one of the best to teach children invaluable money management skills.
With the next salary a month from now, players must make their money last.
They can wisely choose what items to purchase, i.e., what can make a profit and even help make out loans, but getting in over one's head can create problems, especially when there are other bills to pay.
Even Monopoly can provide a few important lessons. Participants can choose the properties or buying strategies that will pay the most and measure risk relative to performance at each move.
Make Them Invest in Stocks
One of the keys to long-term financial strength is knowing how to invest wisely in equities and bonds. They will do great if you get your kids to learn some of those tools well before their first full-time job. You can begin with opening a small custodial account at a brokerage, for which they get to help direct the investments. It requires no first-hand experience to teach them about the volatility of different investments. At the end of the day, these assets will be in their control once they reach the age of majority.
You can also decorate piggy banks together (or use an old jar as a piggy bank to save a few extra bucks. Encourage your kids to do the same. You can ask them to make a saving plan and use stripes of colors to represent different levels of savings that they aim to achieve.
Get your kids to draw pictures of items or experiences they want, then put the images up on your mirror or refrigerator to remind them of goals they have to save for. Demonstrate budgeting with household items like plastic cups and nuts- start with a set amount of nuts and label each cup a spending category to show how little money goes around.
Encourage the kids to do work that entails: writing menus and figuring out the price. Also, teach them about advertising and how not every item they see in a commercial or online is as good as it sounds. Create advertisements with drawings or smartphone videos for goofy products with wild claims.
For more fun learning, you can play these games:
Suitable for ages: 3-6
Cash Puzzler is a memory puzzle that draws on visualization cues. It is one of the first games for young kids to play. Your job is to combine scrambled puzzle pieces to form a complete bill. Choose between different denominations of bills — from $1 to $100 — and learn fun facts about the presidents whose faces are printed on our money.
Suitable for ages: 5-10
The U.S. Mint's website offers a variety of educational games, including Counting with Coins. The goal is for children to learn how to manage their money effectively. This game happens at a grocery store. Players must do some quick addition and subtraction to determine the cost of groceries.
Suitable for ages: 14-18
With balance in your checking account, it's time for a fun and informative simulation game. Simply fill in a blank record and follow the instructions. Record your new balance every time you enter. The correct balance will be displayed when you have correctly calculated the expenditures. An incorrect calculation will take you back to the beginning. Practice makes perfect
Suitable for ages: 11-18
Chair the Fed is one game that allows players to control a simulated economy as the head of the central bank. Their task is to reach a high level of employment and a low level of inflation. And they have just four virtual years to get there.
Suitable for ages: 14-18
A perfect credit score is a final accomplishment. With Credit Clash, children can see how difficult it is to get one. They will fight to get the ideal score while learning what actions will help or detract from your credit. Scenarios include taking multiple loans, trading a lower interest rate, and repaying debts.