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The Importance of teaching Financial Literacy to Children

by Kim Cordell (3510 views)
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Walk into any school, anywhere in the world, and the emphasis is generally placed on three key subjects: English, Maths and Science, which are fundamental to a child’s academic development, yet rarely is any focus placed on learning key life skills such as how to write a good CV, how to change a tyre, or something which is able to be taught at a much younger age: financial literacy.

What is Financial Literacy?

According to Investopedia, ‘financial literacy’ is “the possession of knowledge and understanding of financial matters” which normally is used to discuss personal finance matters, and allows a person to properly consider their options before making decisions about insurance, investing, saving and so on. While some education providers push for an inclusion of studying of financial literacy within an academic environment, all too often, the notion of teaching a child about how to use money correctly falls to the parents or care-givers at home. However, some parents admit that they avoid teaching their children about how to use money, simply because they lack the confidence, but if you ever find yourself in this position, remember that you have the experience and perspective necessary to instil a good sense of financial literacy into your child, enabling them to learn a lifelong skill which could be key to success in their later life.

Ideas for Teaching Financial Literacy

1. By starting young, and teaching your child about money, you can help them discover the relationship between earning money, spending it and saving it, giving them knowledge about the value currency holds. Why not start this foundation for financial literacy at home, by helping younger children to count coins, or even by playing shop – using real money to buy items around the house, thus teaching children about the value of different objects, and working on their mathematical skills by practising addition and subtraction.

2. Another idea is to have your little one pay for the items from your purse the next time you go to the store, again showing them the value of the items you need to buy, and letting them work out what each coin’s value is and how many you need to pay. Okay, so it may be a little long if this is your child’s first few attempts, so we wouldn’t recommend doing this if there is an extremely long queue, but be patient, and you’ll find yourself reaping the rewards of their financial understanding soon!

With marketing targeting children through smartphones, gaming, computers, magazines and so on, children are spending more money than any generation that has come before them, which is why it is so fundamental they are taught the basics from an earlier age. As your child walks through life, the importance of money will always be there for them to question whether they’ve made the right decision or not, so make sure you start their financial literacy course at home, in order for them to succeed and have a comfortable future.