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Starting them young: How to teach kids financial literacy
Teaching kids financial literacy is an investment in their future. It’s one of the most important investments you’ll probably make as a parent in their readiness not just to take care of themselves in the future, but also to do well in their work and passions.
Denmark, Norway, and Sweden, are the countries that top global financial literacy rankings. What these countries have in common is that they make sure “that every part of society, but especially children and young people, gains a good understanding of money and financial affairs early on in life,” to quote from Finance Denmark.
In these three countries, financial literacy is part of the mandatory curriculum taught in primary school. Kids already learn about money from subjects like budgeting, saving, investment, and debt management before they even get their first part-time job.
While our educational system in the Philippines has a lot of catching up to do, there are ways to teach our kids financial literacy at home, enough to ensure that they have a good relationship with money and have the skills and knowledge they need to make smart financial decisions. Here’s how you can start.
Talk about money at home
Engage your kids in conversations about money. Start by introducing basic concepts like where money comes from, spending and saving, the difference between “needs” and “wants,” and the rewards and consequences of different financial decisions.
You can use books to help make the experience become more interactive and memorable. Some of the classics for kids 3 to 7 years old are The Berenstain Bears’ Dollar and Sense, the Moneybunny books by Cinders McLeod, and The Four Money Bears by Mac Gardner, who’s a certified financial planner.
Two Filipina moms, Clarissa Seriña de la Paz, a financial literacy expert, and Monique Leonardo Carlos, an early childhood and infant-toddler educator, formed the Saffi Squirrel project and published five financial literacy books made especially for kids.
Introduce them to real-life financial decisions
Teaching them about money is all just words and concepts until they experience it for themselves. Here are example scenarios on how you can start them:
- Give them a weekly allowance that they can budget throughout the week.
- Make the process of saving money exciting by bringing them to the bank to open their own savings account. This is also a good time to teach them about the concept and power of compound interest.
- Take them on shopping trips to show them how to compare prices, look for discounts, and make cost-effective choices.ks made especially for kids.
Encourage entrepreneurship
Encouraging your child’s entrepreneurial spirit is a powerful way to teach them about financial literacy while fostering creativity and independence. Starting and managing a small business, even on a small scale, provides invaluable lessons that go beyond just money.
You can start by identifying your child’s interests and hobbies. What are they passionate about? Whether it’s crafting, baking, gardening, or any other skill, these interests can be transformed into entrepreneurial ventures. The process can help them get first-hand knowledge about earning income, managing expenses, saving and reinvesting, and the value of hard work. It can also teach them valuable skills like problem-solving, customer service, and marketing and sales.
Financial literacy is not a one-time lesson but an ongoing process that evolves with a child’s age and understanding. By taking these steps, you’ll be equipping your child with the tools they need for a secure and financially savvy future.
Learn more about how you can guide your kids’ to prepare for their financial future. To help them start saving up today, check out Metrobank Fun Savers Club here.
