Financial literacy is having the skills and knowledge to manage your financial resources effectively. Most people tend to think that only adults or the working class need financial literacy.
However, research has proven that financial mindsets are developed early, and children learn money management by observing how their parents or guardians handle money. That is why the Financial Literacy Trust incorporates programmes for kids as young as three years of age.
Here are five simple money lessons to give your children:
1. Buy your child a Kiddy Bank
This is one of the best ways to teach a child how to save. Teach them to always save a part of the money you give them. Try this and see how your child will marvel at their little achievement. This is your first step. Your child can do it with your encouragement.
2. Teach them how to budget
The best way to teach children to spend wisely is by letting them manage their own pocket money. Give them a small amount of allowance monthly and let them decide on spending and saving accordingly. If they run out of cash, refrain from giving them more so that they will learn the consequences of overspending firsthand.
3. Train your child to contribute towards home expenses
By doing this, you are being a good parent to them. For example; tell your child that after you open the Kiddy bank at year end, they will decide on how much to contribute towards home upkeep e.g. buy tomatoes or bread. Regardless of how little that is, they learn how to be responsible.
4. Teach them how to earn money
Remember they learn their money management by observing you. Teach them about the value of money by asking them to earn it rather than giving more pocket money.
5. Always reward and reinforce good behavior
Observe your child’s money management skills as they improve. Cheer them up and support them. Ensure continual teaching about more and more money management skills.
Easy right? It’s never too late to start. You can do so today. Remember that consistency is key.