How to teach your kids about finance

Unfortunately, most parents don’t teach their children how to manage finances from an early age. Adults may think that it’s too early to talk about serious matters like money with their children, so when they grow up, they’re stunned by the amount of information we need to soak up fast in order to stay afloat. 

But there’s a way to give your child a better start with financial matters. Let’s see how we can teach our children these important things and not bore the life out of them. According to World Bank statistics, financial literacy around the world ranges from 13% to 71%, with a global average of 33%. The less developed a country, the less financially literate its population.

The benefit of an early start

Don’t think that financial literacy isn’t for children: it’s as significant as the rules of the road, the alphabet or the multiplication table. Naturally, it’s impossible to live without a monetary system, and everyone has to deal with money one way or another. That’s why, from a young age, a child should understand the importance of financial issues. Moreover, if you teach a child in an entertaining manner, they’ll be interested and will want to learn more.

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The rules of fun learning

First of all, remember that a child of any age still loves to play. And why do kids love games so much? That’s right, because games are interesting and fun. So, let’s make the learning process just as entertaining with these simple rules:

5 simple ways to teach yourself personal finance

1. Don’t complicate learning with difficult terms. 

Children, especially preschool kids, are unlikely to enjoy an hour-long lecture about the financial system. The parent’s main task is to explain how finance works in general (what it is and what it’s based on). 

2. Don’t give them too much information at once. 

The abundance of unnecessary information will tire most adults, and it will discourage a child to even touch on this topic again. What happens to a child’s brain when it receives a bunch of obscure terms and explanations at once? In the worst case, it comes straight out of the other ear a couple of minutes after the boring lecture ends, and the child won’t agree to such a lesson in the future. 

3. Keep things basic.

Start with laying little bricks of knowledge as a foundation. Other details can be added later.

Where do I start?

Diversify your story with interesting details. It is better to start with the following points:

1. The history of an item or an event. How and when did people invent this? Why was it necessary? How has their life changed? History is interesting and relatable when it tells the story of the lives of people from the past.
2. Base your explanations on the things around you. Use real coins of any denomination. Sit down and look at them. What are they made of? What small details do they have? 
3. Also, don’t walk past vending machines and don’t be annoyed with your child for wanting to buy something. Let your kid handle the money. Give them a chance to see everything in real time. He’ll be surprised how quickly a paper bill can turn into a bar of chocolate or a can of delicious juice.

Remember that even an adult cannot know everything in the world. Don’t be ashamed of it! Learning new things with a child is always fun. Demonstrate to your kid that not knowing something isn’t bad, what’s bad is not wanting to know it. If you don’t know what to respond to your child’s question, just say “I don’t know this, but we’ll look for the information together and figure it out.” 

Your little preschooler will have to go to school soon, and it’s very important to teach them to look for the right info on their own. This will form the basis for learning and help them in the education process.

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Learning is a game, too!

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Show your child that learning doesn’t have to be about reading boring texts and monotonous hour-long explanations. By turning this process into a game, you’ll make the kid look forward to the next lesson and discussion. To transform learning into an interesting game, just follow the steps below:

1. Start with something simple. Ask your child to be as attentive as possible, and tell a short story with the most important points.
2. Come up with the simplest point system. Take a blank sheet of paper and draw three red hearts. They can be “game lives.” For every wrong answer, the child will lose one heart.
3. Make up 5 interesting questions about your story. Make them as simple or complex as your child’s age and abilities allow. 
4. Prepare a reward in advance. Don’t give the child something casual (food, free time, etc.), because it’s already a part of their life. The reward should be special and surprise your child prodigy. Organize a movie night and let your child choose the movie. Visit a museum or take them to a puppet theater. Do something interesting and fun! Children are always inspired by quality time spent with their parents. Engage other family members in the game. 
5. Create a schedule of lessons, but don’t overdo it. It’s best to start with one day a week. Increase the number of times only if you see that your child is enthusiastic. 
6. Before starting the lesson, make sure that the child isn’t hungry or tired. Don’t turn learning into something done at gunpoint. Stop the lesson or take a break if the child loses interest. 
7. Talk about why learning about finance is important. Studying for fun is great, but it’s also good to have a convincing reason. Tell your child about why finance is significant in human life. 

Let’s summarize

Discard the silly stereotype that children will automatically learn everything they need to when they grow up. Don’t ignore money-related questions, but talk about them openly. What is our budget? How much does this or that cost? At this stage, there’s no need to talk about complex financial processes, but feel free to explain the basic things and give vivid examples from your own life experience. This topic may not be an easy one to digest at an early age, but it will make the child savvier in the future. After all, someday children will have to face the exciting and complicated world of finance on their own. Let’s help them now!