The term ‘financial literacy’ refers to the possession of knowledge and understanding of financial matters that are used to discuss personal finance matters. With this knowledge, you can properly consider your options before making any financial decisions, regarding investments, savings or insurance. While some preschools in Australia, like MindChamps PreSchool, push for the inclusion of financial literacy within an academic curriculum, the responsibility of teaching your children about money falls on the parents or caregivers at home.
Hence it is important to lay a foundation about financial literacy in your child from a young age, which they can build upon to manage their finances better.
Tips To Teach Children About Money
By educating your child about money from the early years, you can help them discover and understand the relationship between earning, spending and saving. Read on as we share some simple tips to help your child understand financial planning.
1. Start With The Basics
Did you know that many of the habits children carry into adulthood are set by the time they turn 7? According to research, budgeting, planning, and even returning borrowed items are financial habits that children develop to carry into adulthood.
Once your child is old enough, you should introduce them to coins and cash, explaining the value of money is and how it is used. Besides teaching them about the concept of money, you can also show them how money works by making purchases with cash instead of by card. When you shop together, you can show your children receipts with your paid amount. By doing it repeatedly it becomes a habit, and as they get older, they will begin to understand
2. Encourage The Habit Of Saving
Most of your children’s early interactions with money will involve spending as they will observe you making purchases. It is essential to teach them that money is not just for spending. It is about saving regularly as well.
Learning to save is not just an essential money habit. Saving teaches your child discipline and delayed gratification. It also teaches them how to set goals and plan. For instance, if they want to buy a toy, they have to set aside a certain amount of money every month to purchase it. As parents, you can help your child get in the habit of saving by giving them a piggy bank or a savings jar in which they can deposit coins or cash.
3. Create Opportunities To Earn Money
Giving them an allowance can help aid in boosting their financial literacy. However, it is recommended that you consider requiring your child to do certain chores at home to earn their allowance since everyone values money that they earn differently than the money they receive.
However, this does not mean that you pay your child for every chore they do. You can set some tasks that are mandatory for them to do without pay as they are expected to help out as part of a family. If they want to get paid, they have to complete additional or specific tasks such as washing the car with you.
Teach Children About Money With MindChamps PreSchool
The ways that you discuss and handle money around them are just as important. For instance, if you tell your child that you love saving money but then take them out on a shopping spree, you are sending mixed messages to them.
Instead, you should model the behaviour around money that you would like your child to adopt. If you want your child to develop better financial literacy, they need to see you make wise spending and saving decisions.
Essentially, you should always practise what you preach consistently. Educating your child about financial matters is a process that can take a lot of time and effort. However, if you put in the effort and continuously communicate a clear message, you will be able to nurture good money management habits that will serve your children well in the future.
Aside from teaching your children about money at home, you can also enrol them into MindChamps PreSchool in Australia. Offering a range of programs like reading and linguistics, we also teach numeracy strategies that involve calculating and experimenting with combinations of money denominations. What sets us apart is that we use The S.M.I.L.E.S.™ Methodology, giving children a nurturing and safe space to learn to the best of their abilities. Contact us today or simply book a tour at any of our preschools to find out more.