There’s no doubt about it when it comes to financial literacy in the schools; the numbers are not good. According to the Council for Economic Education, only 21 states require students to take a financial literacy course. It has been studied thoroughly that obtaining financial literacy education can lead to a more security when they grow up. According to the Urban Institute, saving just $250 to $795 can help families overcome life emergencies such as car troubles or pay the rent. This is why it is so important to teach your child financial literacy. So, how do you go about it?
Even teenagers still don’t understand the importance of saving and how money quickly decreases during emergencies. This is why it is so important to use visuals when you teach them. A great example is the piggy bank. Using a clear piggy bank will allow them to see how quickly money can decrease and how quickly it can grow when they begin to save.
Set the Example
Children are always watching you, even if you don’t think they are. Therefore, when out in the grocery store or at a shop, make sure you are setting an excellent example for them. Swiping that plastic is not a good visual for them to see continuously.
Perhaps the biggest reason why people get into debt is that they purchase items that they don’t need and then don’t have enough to pay for essential things such as rent or medicine. Demonstrate to your kids what opportunity cost is. For example, show them that if they buy this candy right now, they won’t have enough in savings to purchase that backpack they always wanted later on.
Make Them Work for It
Giving your children an allowance is merely showing them they can get something for nothing. Although it might seem harmless, it can play with their minds later on in their adult lives. Expecting to get money out of nowhere is a bad mindset to have. This doesn’t mean you shouldn’t still provide them with funds if you have the means for it, but they should work for it. Small chores, like picking up their toys or taking out the trash, are good ways to apply this strategy.