What is financial literacy and why you should teach your kids?

Financial literacy is the capacity to apply gained skills and experience to handle money/finances in the best possible way throughout one's lifetime.

Why is it important to teach children about money in the early years?

Let us recall a simple childhood experience of possessing a piggy bank! What did it signify to you? What were your feelings like when you stuffed pennies into them?

Let's start with your early financial experiences.

  • When did you first learn about money?
  • Who first exposed you to the idea of finance?
  • How did you deal with money as a child?
  • What is your current perspective on finance?

Here's why these questions, as well as any others that come to mind, are important: They reveal to you how you will teach your kids about money! Experts at a top Daycare, La Palma CA, opine that by the age of seven, children have already formed a fundamental comprehension of finance, which predicts their future financial behavior.

It might be unpleasant and even useless to discuss money with your child. Instead, let us treat this issue as a habit. Understanding money and how it works is critical for your child to develop strong financial habits that will last a lifetime.

It is not necessary to introduce everything all at once. However, you may add to it as your child grows older.

  1. Money awareness: Teachers associated with child care in La Palma, CA has observed that children grow acquainted with the concept of money. They are familiar with numerous financial ideas such as currency notes, coins, spending, earning, and so on.
  2. Need vs. Desire: You may teach your youngster the difference between 'want' and 'need.' This is the foundation of wise spending. A 'need' is a daily need, but a 'desire' is something you can own. For example, you must buy food every day, but you can enjoy your favorite pizza later.
  3. Mindful spending: This is strongly tied to the concepts of 'need' and 'desire.' Budgeting is an important technique for improving one's financial awareness. When your child knows how you establish a budget each month, where you spend money, and how each month's expenditure affects the overall budget, they acquire firsthand experience – attentive spending is a must.
  4. According to childcare experts, teaching your youngster, the importance of giving is beneficial. Giving money is one method to do this. However, it is critical to demonstrate to them that there are alternative options, such as volunteering, giving clothes, and so on.
  5. Saving and investing: Your child will learn how to save and invest. The concept of investing might be given to them depending on their age. They have a real-life comprehension when you describe how you save money in various methods. They also learn about credit cards, debit cards, online banking, loans, and other financial topics.

Most importantly, when your child learns about money, they will attentively monitor you and how you discuss your finances. As a result, you as a parent will be more aware.