Financial literacy for children: rules, mistakes, assistants

Teachers recommend having a conversation about money with the child from the age of 5-6 as financial education has a positive influence on autonomy and discipline. In this article, we will give some advice on how to teach children how to manage money properly.

Where do I start?

Where do adults get their money and where do they disappear to? Tell the child about the family budget structure. Say how much money the parents receive and where the money is spent. Share why it should be spent wisely and not just for entertainment. Use a diagram and a calculator to illustrate.

It is very important to explain that income is generated by the work of parents. Ask the child to list all familiar words related to money and explain how finance works. Tell him what needs, goods, exchanges and barters are.

Useful habits:

• Make shopping lists before shopping
• Explain to the child how much goods are worth, how discounts and sales work
• Show that work can not only make money, but also be interesting

What are the rules?

The child’s first money may come from preschool. How do you approach this process as an adult. A few rules:

1. Ask the child what he is going to buy and tell him that it is not worth buying.

2. Do not accuse the child of first inappropriate purchases. It is important that this money can be disposed of at their own discretion.

3. It is better to give a standard small amount weekly or daily to make it easier for the child to plan expenses.

What should not be allowed to happen?

One should not indulge in large sums of money haphazardly and talk too much about money. Warnings «it’s a stupid purchase», «we have no money for it», «buy yourself when you grow up» nurture greed and pettiness.

The financial behavior of adults varies. Impulse money spending, debts, involvement in unsafe financial schemes can lead to bankruptcy. The child needs to know that, too.

Many parents encourage children to succeed in school or to help their families with money. Psychologists recommend giving gifts aimed at an inner motivator, such as sharing leisure time, going to movies and travelling together.

How to help with understanding?

Thematic games will help to consolidate new knowledge: let the child collect a food basket for a given amount of money, compare goods in terms of utility and value. Ask the child to distribute the family budget as he deems appropriate, consult on the larger acquisitions.

Known fairy tales and cartoons will explain how the economy works. For example, «Jack and the Beanstalk», «The little golden key or the adventures of Burattino», «Kikoriki» «the Fixies» etc. 

Learn to save and set financial goals will help Bankaroo and Alzex Finance applications. It is possible to record the sums received, plan expenditures and receive tips from parents. The older kids will like the teen version of the bestseller Robert Kiyosaki «Rich Dad, Poor Dad».

But the most important rule is to set a good example for children. Try to follow your own financial literacy and teach that to your child. Then he will learn from childhood to treat money properly and spend it rationally.