How To Teach Financial Literacy To Your Child?

Children are fast learners and habits formed in an early age are likely to last a lifetime

Financial literacy is necessary not only for you, but also for your kids. People who learn to manage their money are usually in a better frame of mind to live a happy and meaningful life. To teach financial literacy to your kids, here are some options you can consider.

Give pocket money – Practical lessons work best, which is why giving pocket money can be a good idea. You can decide the amount, which can be based on the age of the child and the location where you live. For kids who are 11 to 14 years of age, pocket money of around Rs 1,000 per month would be suitable. But you can adjust based on what you feel is right. You can ask your child to use the money in a responsible manner, without sounding too harsh. You can also announce special bonuses and gifts if they manage to save some money from their monthly allowance.

Review spending habits – Try to assess your child’s spending habits. Do they splurge and run out of money within days, or do they manage to make their pocket money last the entire month. When you properly understand your child’s nature, you will know exactly what type of financial literacy they need. You can then interact with them and direct them accordingly.

Teach them budgeting – Ask your kid to note down all the things they buy with the pocket money. Tell them that they are free to spend on their own personal choices. But they have to write down the details of the expenses. When this becomes a habit, it will be quite useful for your kid when they reach adulthood. Keeping track of expenses is a great way to spend money in a responsible manner.

Lessons at the grocery store – A lot of financial literacy teaching can be a fun learning experience for your kid. For example, you can involve them in preparing the grocery list and buying various items at the store. You can teach them how to identify products that offer an optimal balance of quality and pricing. You can show them how certain items are not even necessary or how they can be replaced with cheaper alternatives.

Open child’s bank account – You can open a bank account in the name of your child. Most banks have this facility for children below 18 years of age. This will be an enriching experience for your child, as they will gain a better understanding of how things work in the financial world.

With the above tips and suggestions, you can improve your child’s financial literacy. You can also use board games like Payday, Game of Life, Monopoly, etc. to make financial literacy lessons a lot more engaging and fun for your kids.