We need to talk about financial literacy: things your kids should know

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We live in a strange world where, unfortunately, not many people have learned to master the skill to properly manage their own finances. Personal financial literacy encompasses a range of money topics, from everyday skills such as balancing a checkbook – to long-term planning for retirement. Although there is a movement to include more finance-related coursework in elementary, middle and high school settings – parents and guardians are the primary educators when it comes to teaching children to be financially competent.

Teaching children about financial stability and responsibilities can not only help them in their future when they lead their own personal lives, it is a great potential to change the country’s financial situation. When a generation comes along which has been properly educated about money, it means that the economy can get a very much needed boost.

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The important thing to remember is: don’t shy away from talking to kids about money. Even if you lack in confidence in how you handle your own finances, you still possess invaluable experience and perspective that you can bestow on your children. In fact, you can get to work them in order by taking advice from bookkeepers in Ultimo which can help you solve those problems, and become a positive role model for them. Children as young as 3-years-old can begin to grasp the concept of saving and spending money by simply turning your day-to-day activities into learning experiences. Every trip to the bank, store or the ATM machine can be turned into a valuable lesson.

Your children can learn to save money from a very young age if you have the right approach. They’re not usually keen on spending all the money the same moment they get it, so that’s an incredible opportunity to teach them about what they could do with the money if they saved it. The important aspect of this lesson is that they get the sense of gratification for something they bought after some time has passed (while they were saving). It’s also a good way of preventing your child of becoming an impulse buyer – try not to let them spend all their money at once, no matter how much they wanted that.

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Another example of teaching children to have a realistic approach to money is to avoid telling them you can’t afford something. Children don’t usually grasp where money is coming from; therefore they won’t understand the reasons behind that statement. Instead, tell them exactly what the money is for: for example, it has been set aside for groceries, and groceries only, and if you buy a toy or candy – then you won’t be able to cook them their favorite lunch. With that comes the talk about priorities – what comes first, and what things come as a luxury or a treat that needs to be well-deserved.

Don’t let your children become misled by what they hear from outside their home or from peers – many children often spread misinformation that can be detrimental to your teachings. Some might even say that rich people are lucky for example – which can be harmful to their opinion. If your child believes that wealth is a result of luck, then they won’t have the right motivations to handle money responsibly. Teach them that only hard work and making smart decisions make people wealthy.

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As your child matures into a teenager, you should have already established the basic principles of saving money and being financially responsible. At this point, you can open them a bank account, and it may be a good idea to give your teen a basic credit card. Teach your teenager about saving long term and how interest affects them both with their savings and their spending. It may also be a good idea to let them take some accounting lessons. It won’t be long before your child ventures into the adult world and leaves the nest, so they should be all set when it comes to being financially responsible.

We need to talk about financial literacy: things your kids should know - financially savvy teen image

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By teaching your children about money, you help them discover the relationships between earning, spending and saving. In doing this, children also begin to understand the value of money. Don’t wait too long to teach your child the basics of managing money, because it will thank you later in the future.

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