Understanding finances is one of the most important skills that should be taught early on. Many of us take a while to understand how to manage our finances and invest the money as many schools and educational institutions do not teach basic finances.
Now that times are changing, it is best to teach young children at least basic money-management so that with time, they learn how to invest it and make appropriate financial decisions.
- Help them understand the concept of money. You don’t have to jump into the complexities of it but explain how the transaction works.
- Take them to ATM and Bank with you. Tell them what the ATM machine does and where is the cash coming from.
- Allow them to manage money. You can give them pocket money which will give them a chance to make decisions about it themselves.
- Help them understand how compounding works and how having a savings account can help them.
- If the process seems to be too overwhelming for them, use games and fun ways to make them understand what is happening.
- After they have grasped the concept of money and transaction, encourage them to make money by doing little activities. This will help them understand how they can make money themselves.
- If your children make mistakes with money, let them understand this themselves as it is one way to grow and learn.
- Introduce them to taxes and explain how it affects their income.
- It is better to understand how the concept of investment works, early on. Teach them different ways to invest their money.
Here are some tips that will help your children learn financing. We are not asking you to teach all this to your toddler but do introduce them to the concept.
Do share at what age were you introduced to concept of financing?