5 Engaging Ways to Teach Financial Literacy for Kids
Financial literacy is an essential skill that people should know at a young age. Knowing how to manage money at a young age can positively shape the way they handle money in adulthood.
Unfortunately, not all states are implementing financial education - and the everyday American is paying the price. A survey conducted by the National Financial Educators Council (NFEC) revealed that the lack of financial knowledge cost U.S. adults over $415 billion in 2020.
If you have a child, you'll want to teach financial lessons at home. This way, you'll equip them with the personal finance skills they need to manage money effectively.
Here are a few interesting ways to impart financial education to your kids:
Introduce Engaging Money Games to Children
Some children learn best by doing. Given this, games are an excellent way to teach your kids about money. The online world has tons of personal finance or money games that you could download.
Alternatively, you could come up with a digital financial literacy game that's suitable for all ages. You could, for instance, work with a professional game art company to produce something that will test a child's money management or budgeting skills.
Show How the Money You Save Grows Over Time
Piggy banks are nice and colorful, but your children may not know how much they've saved up over time. Instead, use a clear glass jar or empty plastic bottle to collect the savings of your kids. This way, they can see how the cash they set aside increases over time.
You don't have to set a minimum amount in the jar or bottle. Whether they save a few dollars or a single quarter a day is completely up to your kids. The important thing is that your little ones realize the value of saving.
Do the Needs Versus Wants Activity
Another important aspect of making solid financial decisions is the ability to distinguish what's nice to have and what's required at home. Before starting this activity, start with a brief explanation of wants and needs.
"Wants" refer to things, such as stuffed toys, gaming PCs and tasty treats. Kids can only have them once they've satisfied all their needs.
On the other hand, the term "needs" refer to the basics - food, water, shelter, medicine and education. Let your children know that they can't survive or live a decent life without these needs.
After your explanation, ask your children to grab a piece of paper. Have them label one side as "needs" and the other as "wants." Then, go around your home together and point to different items. Ask your child to determine if the object you're pointing to is a need or a want.
Demonstrate the Concept of Opportunity Cost on Purchases
Children should learn early on that the cash you earn at work or in your business is limited. Showing opportunity cost means explaining that your hard-earned dollars used to buy an item won't be available to purchase something else.
Start by driving your kids to the nearest grocery store or supermarket chain in your area. When you're at the food aisle, grab two similar but expensive items on the shelf. Ask them to get only one item. Once they've decided, explain the concept of opportunity cost by letting them know that your grocery or shopping budget doesn't allow you to buy two items.
Encourage Them to Earn Money
Buying stuff that your children need is necessary. Purchasing "wants" for them all the time, however, isn't advisable, as you don't want them to grow up spoiled.
If your child wants to buy a toy they saw on TV or other wants, show them how to earn the money necessary to purchase the items themselves.
A few fun ways for kids to earn some dollars are the following:
Extra Chores - Doing the chores all by yourself can get tiring. If you need help, come up with a list of household tasks that your children can do to earn cash. This could be anything from cleaning the room to washing the dishes after dinner.
Babysitting - This is suitable for older kids. You could pay them to take care of their younger brother or sister while you're out of town or on a business trip.
Garage Sale - Your child may have old toys that are gathering dust on the shelves or inside the toy chest. Rather than throw them in the garbage bin, ask your kid to clean out these toys and put them in a garage sale.
If your kid's school isn't teaching financial literacy, be a responsible parent by teaching them personal finance at home. The skills you impart will help them manage their money effectively for the rest of their lives.