What is Financial Literacy

According to Investopedia, financial literacy is “the ability to use knowledge and skills to make effective and informed money management decisions”. Math is certainly part of financial literacy, but so is the ability to understand one’s credit rating, to avoid and pay down debt, and to understand how financial transactions and products work in order to make informed financial decisions. It the confluence of financial, credit, and debt management knowledge that is necessary to make financially responsible decisions.

Why Teach Financial Literacy to Kids

As children, these life lessons can start at a young age without them even knowing. Exercises such as giving children a weekly allowance and allowing them to either put it in a piggy bank or spend it on an item of their choice teaches individuals from a young age to evaluate their options and make financial decisions. When you inculcate financial literacy in kids at a young age, they end up becoming financially responsible adults. According to a 2015 study by the Financial Industry Regulatory Authority (FINRA), US - teaching financial skills to kids before they enter college or the workforce is crucial to helping them grow into adults who can achieve financial security and success.

Benefits of Financial Literacy

Financial literacy can be taught to students as part of other subjects like math or history, or on its own, through a lot of online courses. Such education needn’t focus on complex economics topics. Rather, it should focus on topics that are easy for students to learn and that have immediate practical application.

  • Start financial literacy as early as kindergarten
  • Include personal finance questions on standardized tests.
  • Provide students with hands-on learning opportunities, so they can use their finance skills.
  • Train teachers in personal finance and offer them incentives for teaching it in their classes.
  • Give parents the tools they need to discuss financial topics at home.

Online courses are a great tool in this respect as kids can get access to experienced teachers who would be able to teach complex concepts in a simpler way and has to geographical restrictions. They can learn things at their own pace and parents can also co-participate in the learning process.

How It Can be Taught

Talking to your kids freely regarding financial matters and decision are the most critical thing for any Indian parents. That’s probably the biggest starting point for any family to educate their kids with financial literacy, to name some of the benefits –

Encourage Your Child To Get A Part-Time Job

Encourage your children to get a part-time job so they’ll not only value their money but also the time it takes to earn it. If they’re too young to start legally working, offer a money incentive for chores such as washing the car or hoovering the house. Depending on the culture of the country, you can decide how you want to implement this, but principally encouraging your child to start earning from a young age, will help.

If They Borrow Money, They Must Repay It

By enforcing this rule, you are showing your children that nothing in life is free & why repayment is important. Depending on the age of your child, you could even bring interest rates into it. This is a very important life lesson as well.

Gift Them Financial Games and Literature

Why does learning about finances have to be boring? Games like Monopoly, Cashflow can yield important lessons about identifying opportunities, counting money, and saving for investment. Books like ‘If You Made a Million’ and ‘How to Turn $100 into $1000000’ are aimed at kids and are really popular.

Talk To Your Children About Financial Difficulties

Having an open and honest conversation with your children about the struggles of managing finances, is brave but beneficial. By talking about your own experiences with money, you’ll be able to guide your children in the right direction and they’ll feel they can approach you for advice.

Remember, every child must start somewhere, and there’s plenty of professional advice out there if you’re finding it particularly hard to reason with your kids. By making it fun, and providing incentives, you can teach this important life lesson without even trying.


Team WondrYears

11-09-2021 11:24 PM

Health & Fitness

#WondrYears #FinancialLiteracyforKids


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