How Can You Start Teaching Your Children Financial Literacy?

2. Have Review Sessions

Ask your children to write down everything that they spend by making a daily diary. Tell them that it doesn’t matter where they spend. They must note it and balance it at the end.

Discuss and review the expenses at the end of each week. Tell your children how one high expenditure can impact your monthly budget.

If your child is too young, then sit down with him/her and help them do this. Explain the math that goes behind it.

Remember to inspire your kids to do this consistently by doing the same with your finances.

3. Set Goals and Save

Firstly and most importantly, discuss wants vs needs with your children. Tell them that they need to save to buy that expensive toy.

Tell them about how we save money right now to buy things we desire later. Ask your children to set aside these desires in terms of saving goals.

Tell them to give you the amount they decide to save, and you shall keep it safe for them.

Let them know that you saved to buy the car. Children observe parents very closely, and therefore the behaviour of parents tends to be the biggest source of learning for them.

4. Get Your Kids Involved

For true financial understanding, you need to get your kids involved. Tell them about how you set your monthly budgets and keep aside savings to run the household.

Instead of numbers, you can talk in percentages if you are not very comfortable sharing the information.

5. The Real World

You need to tell your children about how money works in the real world. Teach them about living within one’s means and chewing only as much as one can bite. Remind them that the budget helps you do that.

Take your kids out to the market and discuss various occupations. Tell them about wage rates and how the pay is attached to various occupations.

Most importantly, the more active a learning experience is, the greater the learning gains and retention.

How does this work with really small kids? Start by teaching them the difference between the different kinds of denominations.

You can ask them to differentiate between the various notes and give you the change for two thousand rupees in various denominations.

6. Grocery Shopping Turns Classroom

Make taking your children grocery shopping a habit. This healthy habit is not only fun but also very beneficial in the long run. Before going shopping, make a list.

This prevents you from overspending and even missing out on the essentials. Ask your children to make their list too. At the market, introduce them to the rates of various items.

Also, introduce your kids to the various measuring scales and units. Throw them math problems by asking them to calculate the price of 250 grams of an item. Ask them to do the totals. Make this a regular practice. Providing financial literacy for students and kids in an interesting way can help them organize their funds and expenses better.

7. Lessons At The Mall

Do not give in to your kids’ whims and wishes at the mall. Talk through purchases with your kids and help them weigh all factors that go into a purchase decision.

Remember the grocery store lessons at the shopping mall too. Do not indulge in immediate gratification. Wait for the sale, search for discounts, save for items and pay with cash instead of credit. Teach your children how to swipe the cards and hide the pin.

Ask your kids to compare two items keeping in mind that money is finite. A method to keep in mind is to read the store’s price labels, look at the size and price, and compare the bulk amount per cent. You must remember not to hoard and waste just to get the extra discount.

8. Get Your Kids To Open A Bank Account

Many a bank have the option of a child-friendly, zero minimum balance account. Enrol your kids, for one, and help them see their money grow over time.

Tell them about how a bank works. Discuss the concept of interest and how the banks pay us back for saving money.

9. Be the Bank for Them

Introducing your child to the concept of money can help you earn more money. Give them the incentive to take only 90% of their allowance only to earn an extra 10% the next week.

This will teach them the virtue of patience. It will also make them learn how to plan expenses and income and put money to the best use.

10. Play Games that Involve Strategy

Try to make learning fun. Introduce concepts and life lessons, including financial literacy, through and with the help of board games.

Board games like Monopoly, Game of Life, Business, Payday, and the stock exchange impart a variety of tips on money management, financial planning, negotiation, and career planning.

These games can be an effective way to teach concepts like using money for emergencies rather than hoarding, saving and investing in stocks, real estate, and banks, and using money sensibly.

Strategy board games such as Settlers Of Catan, Splendor, and Cacao teach skills for investing.

Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.