Financial literacy is the understanding and knowledge of financial concepts and principles. It is an essential skill that helps individuals make informed decisions about their money and financial well-being.
Now that we know what it is, what steps can we take toward setting ourselves up for a better future? The goal is to not fall behind. We can get ahead by helping our youth understand what money is, how to manage it, and how it works in our economy. Financial literacy is especially important for children because it lays the foundation for their financial habits and behaviors as adults. Here are some reasons why financial literacy is important for children:
- It helps children develop money management skills: Financial literacy helps children learn how to manage their money effectively. They learn how to save, budget, and spend wisely. These skills are crucial for their financial well-being as adults. Trust me when I say that I have made terrible mistakes with money because of my lack of knowledge on the most responsible ways to manage it.
- It promotes financial independence: Financial literacy enables children to become financially independent and self-sufficient. They learn how to make their own financial decisions and take control of their finances. This independence is crucial for their financial success as adults. I think we can all admit, the more money we have, the more freedom we have to do what we want, therefore promoting more independence.
- Once children turn 18, they are forced into a world to make a lot of financial decisions with no support or education prior to them becoming adults.
- It helps children make informed financial decisions: Financial literacy enables children to make informed decisions about their money. They learn how to evaluate financial products and services and understand the risks and rewards associated with them. They also have the ability to understand assets vs. liabilities which helps them learn more about businesses and how they affect our economy. This knowledge is crucial for their financial success as adults.
Now that you have an idea of how financial literacy can help children, let’s explore engaging ways to teach children.
There are several ways to teach children with creative and fun ideas. Money is such a taboo topic so the more parents talk about it, the easier it is for the youth to comprehend because it’s something they are familiar and comfortable with.
- Lead by example: Children often model their behavior after their parents, so it’s important to demonstrate good financial habits and behaviors. This includes saving money, budgeting, and making informed financial decisions.
- Use real-life experiences: One of the best ways to teach children financial literacy is to use real-life experiences as teachable moments. For example, if your child wants to buy a toy, you can teach them about the concept of saving by helping them set a savings goal and work towards it. This can be a great way to show them how taxes work and educate them on budgeting for an item.
- Use educational resources: There are many educational resources available that can help teach children financial literacy in a fun and engaging way. This includes books, games, podcasts, and online resources.
- Encourage entrepreneurial spirit: Encouraging children to start their own small business, such as a lemonade stand, can teach them valuable financial lessons such as budgeting, pricing, and profit margins. I understand that not everybody wants to be an entrepreneur but because our society heavily relies on small businesses, it’s important to teach our children how they affect our economy.
- Talk about financial concepts: It’s important to have ongoing conversations with your children about financial concepts such as saving, borrowing, and investing. This helps them understand and apply these concepts in their everyday lives.
In conclusion, financial literacy is an essential skill that helps children develop money management skills, promotes financial independence, and enables them to make informed financial decisions. It is important for children to learn about financial concepts and principles at an early age to set them up for financial success as adults. The lack of financial education is a growing problem. It’s time to change that for a better future.
Juwan Rohan is a progressive entrepreneur and business owner from the Bay Area. Juwan is also the author of Money Talks: The Beginner’s Guide To Investing For Kids which debuted #1 in New Releases on Amazon upon his release. In this book, kids will learn the history of money, and how to manage, save, and invest it. It’s for ages 7+ (beginning chapters) but is better suited for kids in middle & high school.
The goal is to educate others on what he has learned in business and in his financial mistakes so that others can build a better future.
The link to purchase is here – Money Talks: The Beginner’s Guide To Investing For Kids
The second book for Money Talks is an activity workbook for kids ages 10+ and will be available in February! Make sure to follow The Misguided Podcast for more information on the second book!