“An investment in knowledge pays the best interest.” – Benjamin Franklin
Bringing up financially literate children is highly important for parents as well as children. But parents most often find it difficult to figure out the right moments to teach their children the importance of money, resulting in them becoming financially illiterate. Children who are financially illiterate end up making poor financial decisions in the long run.
What is financial literacy? Financial literacy is the ability to understand and effectively use financial skills, including personal financial management, budgeting and investing.
Sometimes, as parents, you might pamper your children and provide them with new toys, clothes and electronic gadgets very often. While it is definitely a great way to showcase the love you have for your children, you are unknowingly doing more harm than good. Wondering how?
Young children aren’t aware of the efforts that you have put towards purchasing them gifts. Instead, they start expecting more and more without understanding your financial situation. Even if parents are financially well to do, it is important for them to keep checks on the things they offer their children. While you shower your children with toys and clothes, make sure you teach them about the cost of each one of them. Even though as young children they won’t be able to get a strong hold of what you are trying to imply, eventually they will understand.
If you want to play a key role in shaping your children’s thoughts and feelings about money, you need to educate them about finances right from an early age. What better time than the present?
Creating financial awareness
Earlier in 2022, it was reported that an 18 year old teenage girl made 89 transactions for online in-game purchases over a period of six weeks through an e-wallet which was linked to her father’s credit card, which ended up with more than $20,000 in credit card debt. Lack of financial awareness has led to this adverse situation.
Experts advise parents to make their children aware of what money is for, how to save and spend wisely from a young age. As a parent, it is vital you share your household’s financial realities with your children. You can make them understand by comparing the prices of two similar products and discussing why they should pick one over the other. This lesson is very important and will guide them when they become more independent, go out on their own and make their own buying decisions.
The best way for your children to realise the value of money is by making small mistakes and learning from them. For example, you could have a joint account with your children so that you can observe their purchasing behaviour. If they are spending their money rashly or impulsively you can discuss with your children how soon their allowances vanished and you can educate them on how they can spend their money more wisely.
Distinguishing between ‘wants’ vs ‘needs’
Continuing with the example of having a joint account with your children, ensure that you analyse what they spent their money for – whether it was a need or a want for them. If they used most of their money for example, on online games, educate them that these are unnecessary expenses and they would rather use it for something they really want in their daily lives.
Teach your kids that online games persuade the users to buy coins from their in-game stores through attractive promotions. Remind them that these coins cannot be changed back to real currency and that they cannot buy anything tangible in the real world.
One fine day your children will definitely appreciate you for this important lesson of being able to identify their needs from wants.
Showing the real world
Children should not grow up aloof from the reality of the world we live in. Make them aware of the gloomy global and local economic situation that prevails in the nation, which will help them realise the value of money. Tell your children that some families are fortunate enough to be not affected by a downturn while some families are.
Set an example for your children to be more sensitive to the people around them. Make them understand that even some of their friends’ families will find themselves in more difficult circumstances than the rest. The main lesson here is for you to help your children understand that not all of us are in the same boat and sometimes not all of us can afford the same things.
Developing empathy
A recent survey conducted by HSBC reported that around 30 percent of people in Singapore are losing sleep over worries that they do not have enough money. The survey also reported that some people have encountered severe anxiety that affects their health and mental wellness due to stress related to their income and finances. The point here is to make your children understand that there are families who are less fortunate than others and that they show a little empathy towards other people.
Some teenagers are excited that K-pop girl group Blackpink are coming to perform in Singapore very soon. Usually concert tickets are expensive and you can use this as an example to start a conversation about finances with your children.
Assure your kids that it’s alright to be excited about wanting to go to the concert but they shouldn’t feel disappointed or frustrated if they are not able to get good tickets or no tickets at all, as it is not the end of the world.
Always encourage your children to spend their money wisely on the things they need first rather than the things they desire. All the best! 🙂
Exam Smart Tips
Exam Smart Tip #1 – How to Encourage Our Kids to Speak Better?
Exam Smart Tip #2 – How to avoid carelessness?
Exam Smart Tip #3 – Establishing Routines!
Exam Smart Tip #4 – Let’s Read Carefully!
Exam Smart Tip #5 – Beating the Exam Fever!
Exam Smart Tip #6 – How to Eat Right for the Exams?
Exam Smart Tip #7 – How to Avoid a Meltdown?
Exam Smart Tip #8 – Taking Stress out of Tests
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