Parents carefully choose schools to ensure a right start in their children’s lives. Unfortunately, most of the school system teaches kids subjects like science, math, geography, and many other subjects except financial literacy, which is of utmost importance than any other subject in life. It may later on causes problems in their life in the form of financial traps. Many families and parents still avoid their kids in discussions related to financial planning, thinking they are too young to get them involved. But kids need to learn money management and its flow. It’s high time to give kids the right tools to thrive in financial decisions so that they learn how to be smart with the money they possess and avoid the mismanagement of money. Educate your kids about financial literacy with GravyStack.
Financial literacy is one of many skills that growing children need to be taught to be financially literate to succeed. The financial skills that we teach kids to include budgeting, saving, giving, and investing.
Our kids need to know budgeting at a very early stage. Budget is the amount you have earned, termed income, and the money you spend is called expenses. The budget can be for a week, month, or year. To find a proper budget, you can make a budget sheet for yourself, which helps you to identify the flow of money. Make a date, source, amount, and balance column to do that. Earning money can be done in many ways. For instance, a kid cleans his room, and as a reward, his parents give them about $5, which is their income. The next day, the kid buys a bar of chocolate for about $3, which is the expense. Next is the balance, the remaining amount they have, say $5-$3=$2, and $2 is the balance.
Similarly, children receive money from their parents and grandparents on their birthdays. It is also an income directly added to their balance. Balance can be positive, negative, or zero. A positive balance means you have more income than expenses. A negative balance means you have more expenses than income. And when you have a zero balance, it shows you have the same income and expenses. Overall, a positive balance shows that you have more money.
Concepts related to budgeting will be elaborated fun to kids so that they apply it in their practical life profoundly.
It is necessary to cultivate the concept of saving in kids using good financial practices. For instance, kids often get money in the form of presents like cash gifts from elders, birthday money, and more. Kids usually need to be aware of how they can be efficient with money, and as soon as they get it, they spend it.
To make them understand better, encourage the kids to have kid-saving accounts by explaining that if they could save their money, they could withdraw it to get the desired item. Further, if they save, they will get a bonus amount that helps them get the extra things they need. It will help the kids understand the banking concept, which also helps them set some long-term goals.
One key skill in financial literacy, we help kids to learn is the idea of investment. It is necessary if we want to have more money; investing is the step. Investing is a way where you place your money so that it can grow and make more money. You can invest your saving money in the stock market, real estate, or bonds to grow more money. It secures the future.
Knowledge about money and its management at an early stage is crucial so that you avoid bigger mistakes in later life.