Becoming responsible for your finances as a young adult can be scary. It was indeed a huge step for me, even though I was studying for my degree in Economics and considered myself pretty well prepared. My parents placed emphasis on teaching me financial skills back in the ’90s: they opened a kid’s account for me in a local bank (I got a little book where all my deposits and withdrawals were written), and they also taught me how to save and use my little money wisely.
Due to this training, I always had a knack for managing money, according to my brother, every single time we played Monopoly, I could pull out some more cash from under the table. But despite all my exposure to financial education as a kid, I found managing adult life and finances to be a little bit more complicated.
Financial literacy is crucial for everyone in the complex world of personal finance and this is not something you can skip (or at least not advisable). Financial Literacy empowers us to manage our money wisely, make informed decisions about credit, and plan for a secure future.
The best we can do is start preparing our little ones and teenagers with the right tools to help them navigate their finances when they get older. There are engaging and fun ways to teach kids, and I am happy to share with you some of my best practices that might help you on this journey to financial literacy for your kids.
Why do you need to start teaching your little ones financial skills from a young age?
Teaching basic financial literacy and budgeting skills to our kids from a young age is crucial for their future well-being. As I shared above, even when you are pretty well prepared, the responsibility can be overwhelming when a young person is first faced with making financial decisions alone for the first time. Learning about money management, budgeting, and saving from an early age builds a natural sense of financial awareness and responsibility in kids. These foundational skills empower children to make informed decisions about their finances as they get older, fostering a habit of thoughtful spending and saving.
Practical hints on how to teach your tweens and teens basic budgeting skills
Teaching basic financial skills to tweens and teens can be both educational and enjoyable. Pick some of these and try to build them into your daily routines! 😊
Allowance Management
You can start it as soon as the kids can count money with a small amount. We first tried it during a vacation. Well, I did not want to spend all the time negotiating about presents and sweets my little one would like to get. So, I decided to give her a daily allowance for each day of our vacation, and she could use it to buy whatever she wanted (I had to remind myself from time to time not to interfere!). She could decide to spend her money that day or decide to keep it and buy a bigger item the next day. It worked wonders! She stopped “begging” for things, and instead started to think about what she preferred more, and how she could reach it from her allowance.
Open a Bank Account
As my parents did decades ago, you can also open a bank account for your kids. I would advise doing it when they are a bit older, and able to understand the concept of the money that they do not actually see. You can introduce them to the basics of banking by helping them open a savings account. And teach them how to deposit money, monitor balances, and understand simple bank statements.
Credit Education
Honestly, before my higher education studies, I did not care about debt and credit. But as we learned a lot about worldwide financial crises, and how debt can affect families negatively for generations, I see now how important it is to understand the ways to use credit and debts. I would suggest educating your tweens and teens about credit cards, interest rates, and the importance of paying bills on time by using some everyday examples. This will help them to make wise financial decisions later in their lives.
Financial Apps and Games
I am not a huge fan of allowing too much screen time for the kids, but undeniably there are games and apps, that can be helpful and make the younger ones understand complicated financial concepts in an engaging and fun way. So, you can also utilize educational apps and games designed to teach financial literacy.
Part-Time Jobs or Entrepreneurial Ventures
I was 16 when I had my first summer job. And I have to admit, it changed my way of thinking about money. I was a receptionist at a local hotel – basically standing hours behind the reception desk. After this experience, when I wanted to buy another – fully unnecessary – pair of shoes, I tended to make the calculations of how many hours would I need to work for that and is it really worth that price. You can encourage your children to take on part-time jobs or engage in entrepreneurial ventures. Earning their money fosters a sense of responsibility and a firsthand understanding of the effort required to generate income.
Role Modeling
Be a positive financial role model. Demonstrate responsible financial behavior and decision-making, as children often learn by observing the habits of those around them.
About Sophia Munnich
I am Sophia, an economist and project manager by profession and I’m also the founder of The Organized Family Blog . I love thinking in structures and figuring out smart solutions to whatever challenges I need to face.
I am a working mom of a fantastic little girl. Balancing family life and managing various parenting situations are part of our daily challenges.
And I am happy to share with you what we have figured out so far!
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