How Can Parents Teach Financial Literacy To Their Children?3 min. read
Parents provide more than just their basic needs for their children; to set their children on the right path in preparation for adult life, they must also serve as a beacon to their kids and show them the right way. While a lot of parents excel in many aspects, a lot of them neglect one important aspect of preparing them fro the challenges of the real world: financial literacy.
As parents, how can you make sure that your kids know important concepts of money so as they grow up, they will become as good as you–or even better–when it comes to handling money? What are the best ways to teach your kids the value of money and how to make sure that every centavo spent is spent wisely?
Tell them where money comes from
Money doesn’t come from trees, that’s for sure; it doesn’t rain from the sky, either. Money comes from working eight hours a day, five times a week. If you want to create a solid foundation of financial literacy to your children, you need to tell them how a person earns money. Aside from teaching them that money is a result of hard work, it will also allow them to respect money since it comes from time and effort exert by a person.
Keep them in the loop
One colossal mistake often committed by parents is treating their kids too immature enough to be in the know of the family’s financial situation. While it may also not be a good idea to disclose them everything, you must give them a glimpse of what it is like to be handling the family’s budget, how to allocate it, and what happens when you make mistakes in setting your budget. The more they know about the budget, the more interested they will become in the smart way of handling finances.
Include them in the budgeting
Budgeting may be a stressful process for adults, but when you include your kids, it can be a fun-filled activity since you will be teaching your kids the value of good reason behind budgeting. Aside from teaching them how to prioritize some things over others, another important aspect of budgeting is that it will teach them to differentiate between needs and wants. This will leave a strong impact on them that needs always go over wants.
Deferred gratification lasts longer
Mastering the art of deferred gratification is a tricky task when you’re an adult, but when you start early, you can definitely do it without even flinching. While it may be a bit late for you to become skilled at deferring gratification, you can still teach your kids to know how to say “later” when they are confronted by the temptation to spend. They will definitely thank you later for teaching them how to turn their backs from instant gratification.
The habit of spending is something often neglected by parents, and if they do not have the habit of savings as early in their lives, they may not be able to fully incorporate it in their system when they become full-fledged adult. One good way to teach them how to save is to show them something they cannot afford, say a doll or an action figure, and the only way for them to afford it is to save up whenever they can.(Open a time deposit to help your children get a head start on saving)
Teaching your kids financial literacy may be a difficult task, but it can also be a fun way for you and your children to become more aware with of money. If all parents are more than willing to start financial education at home, then we are definitely seeing a financially capable generation in the years to come.