Schools value skills such as learning Latin, Geometry, and even Home Economics, but there’s more to life than just textbooks. Basic life skills are what keeps the fabrics of society together, and the very reason why people can succeed in life. One of these basic life skills includes personal finance, which essentially allows an individual to live a healthy, happy, and secure financial life.
When taught to children, personal finance sheds the light on the impacts of budgeting and saving, as well as the traps of debt and the power of investments. While learning to compute for the area of a trapezoid can indeed be helpful, nothing quite compares to learning about how money works early on.
To fully understand the extent to which personal finance can help children grow into more responsible adults, here are three undeniable reasons:
Reason #1: They learn how to discern their needs from wants
Discerning needs from wants is how a good financial foundation begins. Learning this important life skill allows them to make better decisions later on, especially when they begin earning an income. Knowing how to separate their necessities from desires enables them to live a more satisfying life, especially since they now hold the capacity to achieve a crucial fact: living with things that make them happy, but knowing where to draw the line about it.
A sportscar may perhaps be a dream of theirs, but they’ll easily find that other brands can get them to destinations just as well. For now, however, let them understand that having a few toys can be just as good, and it’s better to spend on food, shelter, and other essential items.
Reason #2: Money drives the world—the earlier they know, the better
As soon as your child turns 18, understand that they will be thrust into an unfamiliar world. They’ll be forced to deal with adulthood, one that needs a good financial and management skill set. Independence is necessary, and they need all the help they can get up until retirement, especially when it comes to money—rent, utility bills, and groceries are just touching the surface!
Your children will also need to dive into career decisions, marriage, homeownership, and of course, creating a family. All these are financial decisions, including everything in between. Without proper financial literacy, their bank accounts can quickly become a cesspool of debt. All life decisions, big or small, need the support of good financial management.
Reason #3: They learn how to set and achieve goals
Every single decision in their young lives thus far involves the use of goals. You may not know it, but their desire to snag at least one more cookie is driven by their need to achieve. As they grow older, you can harness this drive and turn them into actual goal-setting capabilities. To further support this, however, you also need to help them achieve their goals—and financial literacy allows you just that. If they wish to purchase a new game, for instance, teach them how to save up for it.
By helping them understand how money works, you allow your children to pay better attention to opportunities. There’s always the opportunity to do better to get what you want, but this also means making certain sacrifices. Saving up, for example, could mean more chores and less playtime. By the end of it, you will have taught them the value of things—and not just in the monetary aspect.
Teaching Financial Literacy In Better And More Innovative Ways
Although the importance of persona finance is undeniable, bear in mind that teaching it doesn’t come in one-size-fits-all methods. It cannot be taught through textbooks, much less be tested through paper and pen exams. Teaching your children basic financial knowledge relies on experience and patience. It will be difficult in the beginning, but the rewards are always worth it.
To help you begin your children’s financial journey, Kiddie Kredit is here to help! We offer you a mobile application, designed specifically for educating children on the credit system. It works by encouraging them to complete chores, eventually rewarding them for their efforts. Download it today!