Financial education for children is often taken for granted among the various concepts they learn in their school years. The irony is, however, money is a part of all of our lives. We all, at some point, will be handling our own finances.
‘Teaching kids sound financial habits at an early age gives them an opportunity to be successful when they are an adult,’ says Warren Buffet. With sufficient and early financial education, you can prevent your child from falling into various financial traps.
Financial Literacy simply stands for the ability to understand and effectively use various financial skills (saving, budgeting, etc.) to make responsible financial decisions and effectively manage money.
Many times, the responsibility of effectively teaching the child about finances falls on the parents. It, thus, becomes important to understand why financial education for younger minds is essential. Introducing money, savings, and investments from a young age to children can raise them to be better money managers and slowly step from basic budgeting and saving habits towards more complex concepts of compounding, investing, and long-term planning in the future.
It makes them understand the value of money.
Being financially literate can teach them the value of money and the skill and draw the line between needs and wants by prioritizing their expenses.
It takes them beyond spending for gratification..
Furthermore, they understand that the sole purpose of money isn’t to just invest or spend for personal needs. Rather, it is also about giving back and using it for a good cause.
It reinforces the importance of saving and investing.
By being taught compounding from a young age, they learn to save and give their money time to grow to meet their financial goals and incentives in the long term.
It empowers them to make better, responsible decisions.
Apart from acting as a shield against bad financial decisions, financial literacy encourages making positive and better decisions for the future. For example, long-term plans of buying a house or what to invest in.
Facilitates a lifetime pursuit of financial fitness.
As habits are built best at a young age, building healthy financial habits and awareness of financial risks opens tracks for financially fit decisions. By practicing these habits instead of just learning about them, children can inherit lifetime financial literacy quicker. At a young age, they also have a wider margin to learn from mistakes when the stakes aren’t as high.
Financially-literate individuals make better decisions with activities such as borrowing, credit, or overspending. This is likely to save them from exploiting schemes as well as debt or bankruptcy in the future.
Raising financially-responsible children, therefore, not only secures their future but the future of generations that can inherit the skill and knowledge from their parents. By simply paying attention to one’s own finances as well as demonstrating proper money management, children can be taught financial responsibility and literacy. Sharing personal experiences, of course, is the deal sealed to effectively understand and resonate with its importance!
With the help of the Milestone app, it helps you to teach your kids the importance of budgeting, setting realistic financial goals, and tracking their progress. It even provides a rewards system so they can earn rewards for meeting their savings goals.
The earlier you start teaching your children about money and how to manage it responsibly, the better.