– Swoyan Satyendu, COO, ODM Educational Group
We have all experienced the consequences of poor money management at some point in our life, and definitely don’t want our kids to fall into the same pitfalls. Teaching investment, saving, budgeting and paying bills on time are a few essential skills that children need to be taught sooner rather than later. This way, we can laying a strong foundation for their future success by teaching them money management. In addition, emphasising the importance of financial literacy from an early age will also encourage kids to develop healthier attitudes about money, save and spend thoughtfully.
A study shows that more than 86 percent of American adults believe that financial literacy for kids should be mandatory in K-12 schools, where students are required to attend classes on personal finance in high school. Unfortunately, there is a combination of issues that shows up in the same research related to how the current generation is managing finance. For instance, another survey by CNN shows nearly 54 percent of youngsters aged between 18 to 25 years are spending more than what they are earning every month. There is no denying that the youth today are not being properly guided or prepared to manage finances.
By promoting financial education from an early age, we can definitely lay a strong foundation for children’s success in the future. Parents who emphasised the importance of financial literacy early and encouraged their children to save and spend thoughtfully say that their children have developed a positive attitude towards money. While it isn’t wise to expose children to grave financial situations, involving them in everyday money matters will open their minds to the essential aspects of money management and gradually prepare them for dealing with more complex financial matters ahead of time. Though financial literacy is not a simple conversation to have with your children, you don’t have to do it alone if it starts early at school.
At ODM Educational Group, we strongly believe that students who receive a 360-degree learning curriculum supplemented with financial literacy can grow up into adults who are better equipped with knowledge and wisdom to live independently, make good financial decisions for themselves as well as organisations, avoid debt, plan proper investment, maintain savings, and more. As the first CBSE school in Odisha with a 360-degree learning curriculum, ODM Global School offers special life skills and personal skills classes to its students, alongside a carefully designed academic and co-academic curriculum to ensure holistic growth of the student.
Everyday Activities to Teach Financial Literacy to Your Children
Encourage Them to Earn Their Allowance
Regardless of the age of your child, teaching them the lesson of the finite nature of money can be extremely crucial. As they eventually grow to their adult selves and work for their money, they will use it more carefully. Parents should provide their kids weekly allowances, which can help teach them some budgeting skills early in life. Make them earn money by completing certain milestones related to their studies or simply by doing chores. This will eventually create a lasting mental link between personal effort and income for your child which will prove to be useful in their adult life.
Teach Them to Track Expenditure
Teaching children to keep track of their expenditures will undoubtedly be an eye-opener for them. Make them understand expenditure of money is going to be an important part of them becoming better savers and money-makers in future. Parents should encourage their children to keep a weekly account of where they spend and the value of those spent, tabulating the same at the end of every month. Without overburdening them with too much financial knowledge, help them consider how they should spend their money and how they can achieve their savings goal faster if they change their spending habits.
They Borrow It, Then They Must Repay It
By enforcing the above rule, make your child understand that nothing in life is free. It may sound harsh to some but believe it; this is going to be one of the best pieces of advice that you’re ever going to give your child. By applying the above rule, they will truly understand the consequences of unnecessary debts and other financial difficulties. In addition, by understanding the struggles of financial management from an early age, your child will have proficiency in debt management and the right approach to avoid unnecessary financial difficulties later in life.
Earn Today, Save for Tomorrow & Enjoy Forever
Help your kids to get into the habit of saving money, even before they’re old enough for their own bank accounts. Learning to save from a very early age is a highly essential life skill that will help your child build discipline and make them understand the virtues of delaying gratification. Starting early with saving will also help them acknowledge the value of goal settings and micromanage their spending while controlling their desire and necessity.
Final Thoughts
No doubt, it’s important for parents and teachers to take an active part in preparing children for an increasingly complex financial world. Financial literacy can be easily integrated into subjects such as mathematics and history, through special life skills and personal skill classes, or simply on its own. Financial literacy at the school level doesn’t need to focus on complex financial structures or economic topics; rather, it should focus on topics easy for students to understand and which they can apply in real life situations.
Other articles by Swoyan:
