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In the world of credit cards, online banking, tax codes, investments, and pension funds, it’s easy for adults, let alone kids, to get confused. Many parents would like to teach their child the basics of financial and economic literacy, but do not know where to start. Here’s what financial experts think about it.
Do not hide financial matters from children
Chris Whitlow, chief executive of financial advisory firm Edukate, calls money “a very emotional issue” and likens finance to tough, contact sports. “It’s one thing to read about American football, and quite another to play it,” he explains.
Therefore, it is important to discuss finances as often as possible with the whole family, encouraging children to ask any questions. So you will begin to prepare them in advance for adulthood with all its economic difficulties. If you pay in front of your child with a bank card, take the time to explain to him that this piece of plastic in your wallet is not an endless source of money.
The expert believes that it is also worth talking to children about the difference between the minimum funds they need for a normal life and the amounts they need to realize their desires and dreams.
Give your kids small amounts to teach them about financial planning
The easiest way to teach kids about money is to just give them money, cash to start with. “Bills and coins are something tangible. Here they are, here we spend them, and they are gone,” explains Gwen Thulin, founder and creative director of Brain Arts Production, a company that organizes financial literacy events.
She advises parents, even if they do not use cash, to withdraw a small amount from an ATM specifically to pay with bills in the presence of children: “It will help them understand the very idea of uXNUMXbuXNUMXbmoney and spending. Then you can explain more abstract concepts to them.”
There are also special applications that help children earn pocket money and learn financial literacy.
If you’re still hesitant about trusting your child with real money, get creative. Chris Whitlow recalls how he made toy bills for his daughter (with her portrait), which she could earn by completing various tasks: “It motivated her to fulfill our requests. Some of the requests dealt with emotional topics, such as her relationship with her siblings. The toy money she received gave her a very real benefit.
There are also special applications that help children earn pocket money and learn financial literacy.
How not to get confused in financial terms
Tanya Van Court, creator of the Goalsetter project, which helps children set and achieve financial goals for themselves, understands why many parents are afraid to start talking about money with their children: “Modern financial terms are like a foreign language. How can you expect the average person to understand tax code terminology?” When talking about money, try to simplify the basic concepts as much as possible (at the same time, this will help you understand them yourself).
Explain to the children that money makes it possible to help those in need.
When talking about finances with your child, be sure to tell him that some people are much less fortunate in life. “It is important not only to teach children how to properly allocate funds to achieve their own goals, but also to explain how important it is to allocate money to help those in need,” recalls Tanya Van Court.
“There is no single ideal way to teach children how to properly manage money,” says Chris Whitlow. – The main thing is to instill in them vigilance in financial matters. This quality will be useful to them in adult life.
Source: The Huffington Post.