Personal Finance for Kids
As a kid, I always used to fancy working women, even though my mom was always a full time housewife for my sake. While other little girls were busy playing with dolls and kitchen sets, I along with two of my other friends, used to play office-office. We would take old handbags of our moms, and enact working in office, the way we’d see our teachers and other women on television. We would make play-money out of rough notebooks and papers, and would write income on them for our work, which was of checking our old notebooks. It was great fun to work, earn, and then save.
Though, our school used to teach us about loans, credits, stocks, dividends and other very basic and theoretical terms of personal finance in mathematics, the learning never did anything good on practical applications. This is in fact a problem with almost all the schools – no classes for teaching personal finance. The trend so far has made us take it for granted that our kids will learn the way we learnt, by using common sense and by slowly graduating while they grow up seeing the world, learning by themselves.
Role of Family and School
In most of the cases, schools offer some courses related to personal finance like “economics”, but they make it an elective course. Moreover the jargons and extremely theoretical approach doesn’t help much in understanding the realistic norms of personal finance. Many people argue that letting children know about financial basics, is the job of parents. No matter, how justified this fact is, I’ve not seen it working 100% in all the cases. I still have troubles investing properly, and always have to ask my dad for different kinds of investments available and what are best amongst them. But, I am learning better now.
Many families consider discussing money as a taboo. Parents usually don’t feel about sharing any realities, financial details or limitations about their budget with kids. They feel that dealing with money is the job of adults and kids should enjoy their childhood by staying aloof from household financial management. In such families, kids may know about money only when any disagreement or issue arises. This in fact plays quite a derogatory role in the mindset of kids, where they start associating money and financial management with negative emotions.
Tips on educating Personal Finance to Kids
Since kids have to deal with money all their life once they grow up, it becomes even more important to let them understand the practical management of finances in early age. No one is asking you to start reading your investment details to them. But, there are ways in which kids can be taught about the necessities of savings and investment. If you are a parent and raising children then it becomes even more important for you to let your kids understand the important life skills of managing personal finance.
Below are certain tips that can be incorporated in making kids understand personal finance in an efficient and playful manner:
- Education takes place at home, at school and at playgrounds. So, it becomes quite essential that children get taught about managing household budget and stay aware of the importance of savings for their future investments. Similarly, they should know the repercussions of spending beyond limits. Schools should take responsibility of imparting some part of this education to children by including playful games within their teaching routine, where kids are given certain amount of play-money as their “salary”, and are asked to plan the weekly budget including house rent, investment, savings, and other related stuffs.
- In many cases, parents do tend to apply the right approach in letting their kids know about personal finance, but they tend to either overdo it or do it in ways, that may make kids rebellion. For instance, I’ve seen many of my friends buying expensive gifts for themselves, just because they’d seen their parents spending thoughtfully and carefully. If you see that your kids feel declined or act rebelliously about not getting an expensive toy, then try to make the whole activity a fun. Make him enact you in managing the budget. Let him calculate your expenses and make it a fun activity. And don’t forget to reward him for his good job. Appreciation is the best way to get the best out of someone!
- Apart from many issues, another big issue that lies in teaching effective personal finance management to kids is the bad financial management of parents! Parents tend to manage money badly, because of trial and error and pass on the same message to their kids like “grow-rich-quick” ideas or poor investment plans. Such things must be avoided at all costs. The only way to educate your kids to a better financial future is by educating yourself first.
- Buy money management games to your kids like Business or monopoly. I remember at a time I was hugely addicted to Business game and could play it for hours, before my mom threw the play-money and shut the game in our huge family trunk.
If you have kids at home, I am sure you will agree with the fact that they are absolutely amazing, especially when it comes to learning new things. Even though, it is not possible for you to change the educational system and you might think that your parents did or did not teach you about personal finances, you still have the power to figure out and educate the next generation the necessary know-how of managing finances. With internet just one click away, you can get the best financial books for your kids to help them learn better.
Never underestimate their potential. And always ensure to send them out into the world with the best and most important skills that can help them lead a productive and happy life.
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