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Therefore, it is recommended that parents start this conversation early, right at the beginning of childhood. With this in mind, below, you will find 8 tips for children’s financial education . Check it out!
How important is financial education for children?
Throughout life, the relationship with money is a constant: dreams, plans and achievements are directly related to purchasing power. Therefore, addressing financial education with children becomes essential to ensure that this relationship is healthy and prosperous.
Fun is one of the benefits that financial education from childhood can provide — and other benefits include:
- Development of a sense of responsibility : a child who understands how to handle resources from the earliest years of life understands responsibility for what is his/hers and also for what belongs to others .
- Recognition of the importance of work : by sharing information about financial education with children, they come to understand the importance of dedication, effort and, of course, work .
- Better to learn than to relearn : it is much better and easier to learn something that is already correct only once than to have to relearn it. And it is no different with financial education! It is worth remembering that changing habits becomes increasingly difficult throughout life .
- Strengthening the relationship between parents and children : talking about money with children , within their capabilities, is a way of strengthening bonds and expanding learning, allowing everyone to win .
But how do you teach financial education to children? Here are some steps and tips that can help you with this process!
8 tips for talking about financial education with children
Addressing financial education from childhood is not just a task for parents, guardians or the school: it is a joint effort that strengthens and creates awareness in children so that they can establish a healthy relationship with money throughout their lives.
1. Start by explaining how money is used.
Explain to the kids: so much costs money. Moreover, one would teach incrementally in totally concrete and simple ways what things are worth. For instance, one may take the kids to the supermarket, get a R$10 bill in hand, and show them that with this amount of money one can buy some items, for example, milk, butter, and bread.
It is also important to emphasize what cannot be purchased with the same amount of money. The idea is for the child to gradually understand that the things we consume and buy have a cost and that it varies. From there, it is possible to introduce concepts such as “expensive” and “cheap”, for example.
2. Teach where the money comes from
The origin of money, for little children, may prove to be rather utopian. Children have proved to be quite common where the credit card, for example is considered an infinite source of money; parents should explain how one earns money by working and that is the only way they can buy things for the house.
At this stage, it would be good to make a small remark: the same money saved in the bank is then withdrawn from that bank. Thus, it is just an intermediary tool to withdraw money from a bank. In this way, it is possible to explain why one cannot spend more money than they earn. In addition, it teaches children the value of work and what their responsibilities are. These are the first — and most elemental — lessons in children’s financial education.
3. Show that using money requires choices
One of the key points for children to understand more about money is to understand that concessions are necessary. In other words, a certain amount of money only allows for a certain purchase. So, if your little one wants to buy a sweet treat, they will have to choose between ice cream or a chocolate bar , for example.
Now, if he or she wants a toy, they will need to save up a certain amount of money. And at this point, the concept of “saving” also comes into play. So, gradually present the options so that children can make their own choices, encouraging them to practice conscious consumption . Also, teach them to plan in order to be able to buy the things they want.
4. Piggy bank helps!
To help children save money and make financial education more tangible, a great idea is to use a small jar or piggy bank. It is even better if this object is transparent, as it helps children see the money accumulating. Then, encourage them to set goals for that amount of money. This way, the child can save money to buy a toy or go on an outing, for example.
So, when the goal is achieved, celebrate the effort . Saving money is not easy, especially for children, who are still developing their sense of time. It is worth highlighting all the effort!
5. What about allowances?
Allowances can be a good opportunity for older children to learn how to save money and spend it responsibly. However, it is important to set an amount that is appropriate for their age. Some professionals recommend giving an allowance only from the age of six or seven, when the child already has a good understanding of numbers and is doing math activities .
However, younger children may have some income, from gifts from family members or a little money during the week, for example. Again, the ideal is to set an amount according to the child’s age, considering the child’s financial maturity.
6. Teach your children to give
With financial responsibility comes social responsibility. Teaching your son or daughter to donate is very important for children to build their social awareness, develop empathy in childhood and teach them to share .
Furthermore, donations can be made in cash or not. After all, one possibility is to donate toys, clothes and books, for example. In any case, every donation also helps children’s financial education .
7. Keep your agreements
Sometimes, it can be hard to see your son or daughter crying because they want a gift, or a piece of candy, for example. However, it is important to follow through on your agreements — after all, teaching children about financial literacy also involves these moments. In other words, if you agreed that the money would be for dessert and your child spent the amount on a toy , follow through on your agreement.
Explain, gently and firmly, that money requires choices. And that, in this case, he won’t be able to buy dessert either, since he’s already spent the money on something else. It may seem harsh, but it’s really important that your child follows through on the agreements. And what’s more: understand that, especially money, is not infinite.
8. Include children in some financial decisions
It is possible to include children in the daily life of the house, by sharing household chores , for example. And how about doing the same in the family’s financial decisions? Include the children in trips to the supermarket, ask their opinion when choosing an outing or even a subscription to a product. The important thing is to include them in the decisions, explaining how the family budget works.
Furthermore, sharing responsibilities is a way for children to feel like an active part of the family. And don’t forget to leave room for questions! Ask what your children think should be included or even removed from the expenses. This way, you encourage active participation from children and stimulate critical thinking , strengthening children’s awareness of financial education.