Financial Literacy for Kids 101, by fundMyLife
I recall back in primary school as a kid, I would return home every day with empty pockets even though my allowance was more than enough. Bewildered, my mom asked me what I spent on – it turned out that I never stuck around for my change every time I bought food. I remember feeling so silly and wished my mom had taught me to handle money properly before I even started school.
Financial literacy goes a long way, and parents should start as early as possible. Yes, while your kids are still pre-schoolers! Financial literacy doesn’t have to be hard and here are 5 easy ways you can make learning about money a fun journey for (you and) your kids!
1. Play the “needs vs wants” game
When you are out with your kids in a supermarket, consider playing the “needs vs wants” game. It is a simple game where you ask the kid to identify an item as a need, or an item as a want.
Rice? It’s a need – you’d go hungry without rice. Candy? It’s a want – it’s nice to have but you would still survive without it. You’ll have fun quizzing your kids and encouraging them to think if some items are truly needs or wants.
2. Encourage your kids to make choices
We make choices all day, and we get better with practice and time. As such, it’s never too early to ask your kids to make choices, such as whether they want spaghetti or rice for dinner. They are empowered as they can see that their choices lead to real-world outcomes, i.e. they are having spaghetti for dinner because that’s what they chose.
If you’re up for it, agreeing to bad requests made by your kids can teach them the consequences of making such decisions as well. For example, your kids want candy at 5pm and you can agree on the condition that the candy is substitute for dinner and that you spent money on candy instead of dinner. The subsequent hunger will be a good lesson for future decision-making and that resources are finite so they need to consider their options carefully (okay, that’s not so fun after all).
By showing them the consequences of their purchasing decisions, they will be more confident and decisive, be it financial or other aspects in their lives.
3. Let them compare different items
You can teach them how to compare the value of two items with different prices. To make this experience even more fun, you can set up a family experiment by getting one item first, and then getting the second item next so that your kids can objectively assess whether the difference in pricing is worth it.
For example, if you get Brand A milk for one week, get Brand B milk for the subsequent week so you can engage your kids and ask which brand was tastier. If there was no discernible difference in taste, your kids will learn to go for cheapest items and if there was a difference, then your kids will grow to appreciate the concept of “value-for-money”.
4. “Pay” your kids for doing chores in the house
Make chores a game by giving them virtual points for each chore done or real money which you can keep on their behalf for redemption of an item of their choice. Your kids will be motivated to assist you and you get some extra help around the house. Win-win. More importantly, they will be able to appreciate that they must earn their own money to get what they want.
5. Make saving a game
Your kids want toys? Don’t say YES right away!
Instead, encourage your kids to save up for them. Work out a budget together, factoring in their daily allowance, the expected savings per week, and how long it would take to reach that goal. Putting these in an ordered list can be motivational. Don’t be tempted to top up the remainder, as it might reduce the feeling of accomplishment upon completion. The key is empowering your kids and teaching them the benefits of delayed gratification.
Another bonus part of this exercise is that your kids might change their mind regarding the purchase along the way as they realise they don’t want it as badly as they thought – they will learn to stop and think before buying, and avoid impulse purchases in future.
That’s it, folks!
Seeding knowledge early in your kids will yield large returns later in their lives. As such, we hope that these tips will be useful to your parents out there. If we missed out anything or if you would like to share your own tips, feel free to drop a comment or email us at email@example.com! Visit us over at our main site if you want to get good financial advice from our curated pool of advisers!