A Few Benefits of Teaching Your Children about Finance at an Early Age

A Few Benefits of Teaching Your Children about Finance at an Early Age - money tree image

Image via Pixabay

Teaching their kids about financial management and financial concepts isn’t really a priority for many parents. In fact, it often doesn’t figure in any meaningful way at all, beyond perhaps issuing an allowance and giving the child a piggy bank to proudly store their savings in.

Of course, The Financial Fairy Tales are based around the premise that there is real value in introducing your children to the world of finance at a young age, while also acknowledging that the best way to teach children is frequently through metaphor and story, such as by weaving financial messages into a fairytale structure that everyone can understand on an intuitive level.

Unfortunately, however, some people believe that teaching their children about finances will have a detrimental on them in some way or another. Perhaps by making them more cynical, greedy, or less imaginative.

Here are a just a few benefits of teaching your children about finance at a young age, to offset any such potential concerns.

It can open their eyes to financial opportunities down the line

There are a lot of ways in which someone can make their fortune through interacting with the world of finance, but the vast majority of these avenues remain closed to those who haven’t been trained to spot them, and who aren’t armed with the confidence and basic know-how required to get involved.

Forex trading is one of the most potentially lucrative and rewarding financial fields to get involved in, but it requires a good degree of confidence and financial understanding to participate in fruitfully.

Getting your child comfortable with financial thinking, and getting them to consider the financial dimensions of things from an early age, can increase the odds that they will be able to successfully navigate realms such as Forex one day, with the help of tools such as those found at FX-List.

It can help them to avoid developing a fear or dislike of financial thinking

Many people have a somewhat pathological fear, or dislike, of financial thinking or financial management, well into adulthood. This often stems both from a sense of insecurity and also from a sense that there is something inherently uncouth or threatening about dealing with financial topics.

Yet whatever we do in life, financial considerations must be given their due. By getting your child comfortable with financial thinking at an early age, you help to ensure that they practice better money-management down the line, and are more responsible in their financial dealings.

It can help them to develop an entrepreneurial mindset from an early age

Children tend to be naturally enthusiastic about the world, and if something is presented to them as a game or a challenge, they will typically be keen to get involved.

When your child is introduced to financial concepts at an early age, it is more likely that they will seek to apply those concepts. In the short term, this may start as “investing” pocket money. Over time, however, it can develop into a genuine entrepreneurial streak, of the sort that can transform their destinies for the better.

Using Financial Fairy Tales to Teach Children About Money

Eighty percent of parents in the UK agree that early financial education translates to better money management in adulthood but feel that they are ill-equipped to teach their children themselves. Children are increasingly exposed to household finance complexities in an era where four out of 10 adults in England and Northern Ireland struggle with basic arithmetic and only 36% of those ages 18 to 34 understand common financial terms. Aside from the fact that many parents are struggling with finances themselves, finance counselor and researcher Martha Henn McCormick notes that the relationship between early financial education and financial savvy in adulthood has not been thoroughly studied.

Using Financial Fairy Tales to Teach Children About Money - kids books image

Photo by Robyn Budlender on Unsplash

The gap in knowledge is a serious concern, according to the English Department of Education, and the All Party Parliamentary Group on Financial Education for Young People (APPG) agrees. An APPG report in 2016 states that the financial literacy crisis is reflected in the UK’s adult population and that there is a need for schools to teach financial skills to reverse this trend. Research done by finance firm M&G encourages financial education at home as well and suggests parents should be the first to teach their children about money.

Financial Literacy Crisis

With children aged 11 to 17 now exposed to financial issues that they cannot understand or solve, the Department of Education is worried that the financial literacy crisis in the country will get worse. Representatives of the department feel that parents need to be more proactive in their children’s education and that financial education must start as early as age two. While it is still not compulsory for students to take up coursework on finance, it is not enough. The APPG reports that the debt to income ratio of 17 to 24 year olds in the UK is now at 70%, indicating a lack of financial education among the youth.

The Power of Bedtime Stories

Children love stories and parents should take advantage of this by including financial fairy tales during story time. The right stories can teach children about the basics of commerce, the value of money, and the importance of savings and investments. This is a good start for ages 2 to 11 because it is a fun approach to teaching financial knowledge that will come in handy in adulthood. Bedtime stories can also teach children how to grow their wealth and keep their expenses lower than their pocket money. There are a number of financial fairy tales that tackle money wasters, budgeting, and fundamental investment concepts that can give them insight on how to handle the money they have.

The Magic Magpie, a financial fairy tale about a girl who wants to get rich quick offers lessons on financial decisions and their consequences. The Toll Bridge is another good bedtime story for parents struggling to teach their children about money. The book teaches children about taxes, supply and demand, and trade and public spending. The Last Gold Coin is also a good option because it tackles issues on scarcity and what people can do to save the day. You can find out more about the Financial Fairy Tales books here

Knowledge is Power

A child’s brain is like a sponge, according to the International Journal of Science. This means that he or she will be able to master the fundamentals of money management if it is taught early on. Teaching your child about finances through financial fairy tales would later translate to financial literacy in adulthood and can save your child from the burden of financial troubles.

Spending Habits That Your Kids Must Never Pick Up

Children are easily influenced during their early years. This is mainly because they don’t know better and they draw inspiration from the things around them. They’ll look at their parents and friends to learn how they should interact with the world, and it’s important that you instil good habits into your children from an early age.

With technological advances and the internet being more open and accessible, spending habits are a major concern among children. There are many horror stories of children spending thousands on smartphone and tablet games and apps because they don’t know better. It doesn’t help that apps now make it easy for you to make multiple back-to-back purchases and there’s virtually no protection unless you enable the child locks. Even then, it’s easy to make mistakes and your children need to be protected from these types of bad spending habits. To help you out, we’ve put together some useful advice that will help you teach your children better spending habits.

Spending Habits That Your Kids Must Never Pick Up - kids toys image

Image: Pexels

Teach your children about finances as early as possible

You could run some games or exercises with your children that teach them about money and debt. It might be a difficult concept for them to understand, but with a bit of teaching and patience, it’s possible to teach kids good financial habits from an early age. However, this does mean that you need to be firm and vigilant with how you spend on them.

No more spoiling

Don’t use your kids as an excuse to make large purchases because this will only spoil them. Many parents don’t realize that spoiling your children is a quick way to teach them poor financial habits. It doesn’t matter if it’s sweets, a soft toy or the latest electronic gadgets–you need to be firm with them and stop them from coercing you into buying them extra things. Instead, encourage spending on meaningful things such as extracurricular activities, classroom equipment or extra study material. Teach your kids the difference between good and bad spending and you’ll be surprised at how mature they can be at a young age.

Spending Habits That Your Kids Must Never Pick Up - girl in toy car image

Image: Pexels

Taking money too lightly

If possible, teach your children early on about what it takes to make money. Whether it’s applying for loans online or digging into your bank account with the auto-saved details, your children may start to take money lightly because they can see how easily you obtain it. While getting an online loan can be positive and beneficial, it’s still important to teach your children that money is not easy to obtain and it doesn’t grow on trees. It takes a lot of dedication and hard work to obtain and it’s important they understand this at an early age.

Some final words

As mentioned at the beginning, children are easy to influence. What you teach them at an early age will stick with them forever, so instil some good financial habits into them from an early age and balance how you spoil them so that it doesn’t become the norm.

How To Set A Good Example Of Handling Money For Your Children

Becoming a parent is one of the most rewarding experiences in life. However, the pressure to set your children up for the best start in adult life can seem like a monumental task. Teaching your child to cook, do their own laundry, and clean the bathroom all takes time. However, the most strenuous of lessons can be handling money. Money stress has the ability to keep you up at night, and can even be the main reason for relationship problems and family feuds – something everyone wants to protect their children from. Below are a few ways you can best educate your child on dealing with money and give them their best chance in life.

(Source)

How To Set A Good Example Of Handling Money For Your Children - growing money image

Teach Your Child The Time Value Of Money

Earning pocket money is a given in many households with young children, however helping them to understand the time value of the money they receive may not be. Everyday life really does revolve around money. The tap turns on because your water bill is paid, and you get up every morning for work to ensure you have the money in order to pay that bill. Simply sitting down with your child, whilst playing a game of shop, to explain why the cashier is at work every day can help your child to comprehend the process of money, and why they have to earn it through doing chores.

Allow Your Child To Gain Experience Purchasing

Depending on the age of your child, you may think it is too early to allow them to go up to the counter themselves and purchase the fidget spinner they wanted so badly. However, giving them the experience of asking a shop assistant for help and advice on a purchase could start to build a good foundation for their spending habits. Encouraging your child to really think about and research their purchases to ensure they are getting the best price available, and highest quality. Just like you would seek advice on investments and pensions from wealth management services – you can educate your child on seeking advice on their purchases – no matter how small they may be.  This will help to set in a place a healthy and intelligent habit that will continue into their adult life.

Teach Them About Waste

Opening your child’s eyes to food waste and the cost of breakages could help them to understand the value – and the privilege – of money a little better. Accidents, of course, happen, and even more so when you have children. However, you can help your child to be more careful by explaining to them that what they have broken cost money, which is now having to be thrown away. It’s the same process with food. The rule “no sweets before dinner” is important to reduce the amount of food wasted in your household – explain that food also costs money and throwing it away is not only a waste of food but money too.

Hopefully, this has given you a few ideas on how best to prepare your children for their independent, working life. It is never too early to start instilling good habits, and they will certainly thank you for it later on in life.

Preparing Your Children for the World of Accounting

Accounting is a hugely important factor of life — and it’s not just important in the world of business. You see, accounting is basically the management of money, and everybody has to manage their money whether they are an accountant or not! Everybody — whether they are a student, a part time worker, a stay-at-home parent or a big business boss — has to manage their money by tracking their income and saving it when and where they can in order to cover their future expenses. And your children, as they grow, will be no different — they’ll have to do this sort of thing too. And the best way to get them prepared for doing it is to actually prepare them! For advice on how to do so, make sure to read on.

 admin@wiserpet.com Preparing Your Children for the World of Accounting - play money image

Image source

Teach them about recording and tracking

The recording and tracking of expenses is the most important thing that is done in the world of accounting, so it is apt that we begin with it. And, when it comes to teaching your children about it, no it doesn’t mean that you have to teach them how to become an accountant or a bookkeeper or send them off to do a an MBA Accounting online course as soon as they are old enough. In fact, when you teach your children about recording and tracking you don’t even have to use money to do it. You can just have them write a list of their toys and where they have been put when tidied away. You could play a shopping simulation game with them where they record what it is they have bought and how much fake money they have spent on it. Or you could provide them with a sheet that includes all their chores and pieces of homework, have them tick off what they do, and note down what their prize was for doing them.

When things are written down, they stay written down. And because they remain written down, they can be studied, summarised and analysed in the future. So, try to instil into your children the importance of writing down and recording everything that is of importance to them. By doing so, not only will they be well versed in the management of money in the future, but they will be far more organised in their general way of living.

Teach them about budgeting and the stretching of money

The biggest pitfall when it comes to the saving of money is spending it. Yes, it’s good to spend money and buy things that bring happiness. And yes, it’s good not to let money rule your life. But, in order to live a happy, care-free life, money must be saved and your financial future must be covered. And your children must know this.

Your children must know how to stretch their spend and most importantly what should be given precedence with what they spend. A simple and effective way to teach this is to give them a small amount of change to work with in a shop, and for them to buy whatever they want within the price range they have been given. They should also be taught that if they save the little money they are given in the for of pocket money, then it will eventually grow to be a big pile of money. To do this, you could inform that instead of buying a few sweets every week, they could save up for a number of weeks or months and instead buy themselves a brand new Playstation or Xbox game.

When money is spent wisely it can be the centre of one’s happiness rather than being the root of all evil. And it is imperative that your children know this as they grow. For more advice on how to prepare your children for the world of accounting when they reach adulthood, make sure to check out this guide.