Whether you have a large household or a small family, raising a child is not an easy task. From taking care of their daily needs to helping them develop a decent character, to say you have many responsibilities to fulfill as a parent is an understatement.
To make it more challenging, these requirements are not limited to answering questions about dinosaurs or playing games on a console. Among the less fun parts, your tasks include teaching your children about money, and what it eventually means to be a financially literate adult.
While there are plenty of books written broadly on these topics, there are a few things you can do now to start your kids on the right financial journeys. Here are some tips on how you can start encouraging financial literacy for kids. See more.
Start with a Proper Allowance
The first step towards teaching financial responsibility to your kids starts from a simple thing: their allowance.
You can initiate this approach by deciding a dollar amount for your child’s weekly allowance. Make sure to explain to them that the funds are tied to specific responsibilities, which can be as simple as assisting you with clean up chores after meals. If they don’t fulfill these tasks, they will not get this allowance as a result. Depending on your child’s age, a rewards style chart may be helpful as a visual.
From there, make sure to bring up the allowance whenever your child demands something that is not necessary. This encourages your child to manage, save – and spend – their money responsibly.
Set Goals for Savings and Rewards
In order to boost the influence of the allowance, make sure to raise the concept of saving for rewards. For instance, if your child is asking for high-end entertainment devices such as a smartphone, you can set specific goals. This encourages financial literacy for kids and lets them dive into the concept of long-term savings. It also helps them set their spending priorities from an early age.
In order to practice this responsibility even further, you can offer your kids an additional amount on top of their allowance. These funds can be tied to extra chores that are not a part of their daily tasks.
Teach Them the Basics of Maintaining an Account
Several banking apps are available for kids that establish the experience of opening and maintaining a bank account.
These apps are designed to be intuitive and engaging, which ensures that they can keep even younger children’s interest. By introducing your kid to these apps and their regular maintenance, you can also explain basic concepts such as account deposits, withdrawals, and financial instruments such as payment cards.
This further elevates their financial literacy, and makes kids feel responsible for their finances. As a result, they get more comfortable with foundational savings and expenditures at an early age.
While these concepts seem quite simple to execute, they hold a significant influence with consistent practice. When followed carefully, they can help your children become more financially responsible in just a few easy steps.