6 Tips for Parents: Teach Your Kids to Manage Money

Build financial literacy from early childhood

Just as we teach children to brush their teeth so that they do not have caries, we need to instill in them a healthy attitude to money from time to time. In the curriculum, the issue of finance is gradually gaining more and more space, but still not enough to adequately prepare schoolchildren for the realities of “adult” life.

Why financial literacy is important for preschoolers and schoolchildren:

1. If a child acquires basic knowledge of finance at an early age, the risk of losing him or her financial difficulties will occur in the future caused by their own mistakes.
2. The child learns that it is not a good idea to spend all the money, but that he should have a share Putting money away for the future This is the first step to investing in the future.
3. Financial literacy will make life much easier for a person already in their youth, whether when looking for a job or looking for housing.
4. With enough knowledge about money, the chances that a person will fall during life become a victim of financial fraud.

It is not necessary to immediately buy professional books and read them to children before bedtime. Just start with the little things from everyday life. We have prepared for you 6 tips on how you can introduce the smallest family members step by step to the world of finance.

‍

1. Set an example for children

Even if your little ones gain a basic grasp at school, handling money, like other common habits, is something we all largely adopt from our parents. When mom and dad spend a lot all their lives, the child considers this behavior correct and with a high probability of imitating him.

The first and best step is clear — follow the branch by example from the first moment they begin to realize that there is money.

When you leave the room, turn off the light behind you and explain to the little curious that this saves money on energy. If you are going out for a family purchase, mention that this time you will not buy two large chocolates, because they have become significantly more expensive and it would not pay off. Did you get a water bill? So tell your daughter or son about him and describe why you need to spend less time in the shower now.

TIP: Do you invest on Investown? Show your child your portfolio. He may not understand him, but at least he will keep the information in his head that you are not spending all your finances and that you are putting some of them somewhere where money becomes even more money.

‍

2. Talk about finances

It is ingrained in us Czechs from the past that money is an intimate affair that does not deserve to be talked about too much. To some extent this may be true, but in the circle of the immediate family it is better to communicate openly about finances. For children, this is doubly true.

Whether you're shopping at the supermarket or planning an exotic holiday, Try to tell your child why you are buying the product or service and what impact it will have on the family budget. Likewise, don't be afraid to have debates about how money is made, what its function is, or why it's not a good idea to throw it all away for sweets.

As you start talking about finances once, it is more than likely that the little curious himself will like to delve into more details.

TYPE: Are your kids older, like 12-14 years old? If you dare, include them in part in the design of the family budget. For example, invite them to plan a vacation and discuss with them how much money and what they would spend on.

‍

3. Engage the game

Preschool children do not understand some things yet so well, but this does not mean that you cannot gradually introduce them to the world of money.

For the little ones, the ideal is to start with gamesin which money appears in any form. Popular is the classic store game, when you, as a parent, fulfill the role of a salesperson, and the child becomes a customer. Various board games based on the principle of trading also work excellently.

‍

4. Build your own budget with your child

While there are great games for five or six-year-olds, for older ones, don't be afraid to venture closer to reality. Maybe you sit down at the table for half an hour and get together simple (even fictitious) son/daughter budget for the following month. It does not matter if he already receives any money, primarily it is about acquiring skills related to income and expenditure planning. For example, the budget might look like this:

‍

‍

5. Start giving pocket money to the child

Planning on paper is important, but you can do even better if you involve practice in the form of allocating small money, or pocket money, at the right time.

Experts wonder whether schoolchildren should receive pocket money as early as first grade in elementary school, or rather, as late as second grade. We leave this decision to you, anyway, at a certain stage of adolescence, the child needs to learn how to properly handle real money.

Initially, you can only allocate a few hundred crowns a month to your son or daughter, on which you can He will see if and how he can work with money.

The first pocket money period is also the perfect time to set up a child's first bank account. Or, if it comes too soon for you, at least a child show the workings of your internet banking. After all, we live in a time when physical money is increasingly replacing online transactions.

‍

6. Motivate to investigate a specific thing or experience

If your child regularly receives money, advise them that they can save for something they have long wanted. It doesn't matter if it's a more expensive toy, a new skateboard or a trip abroad.

Important is the resulting effect: as soon as the child buys a dream thing with the money saved, further saving (and in the future investing) will again become a little easier for him.

‍

Rather slowly but surely

We keep our fingers crossed for the best way to introduce children to the world of finance. And if it doesn't go according to plan? Calmly slow down and dispense both information and experience slowly. Such a solution is still better than not addressing access to money at all.

‍

This article is not financial advice

Investown does not provide financial advice. This is an educational article with basic information about children's financial literacy. For specific advice, we recommend using the services of a financial advisor.

‍