Financial Education for Children

Preparing children to manage their money in a fun and effective way will be an excellent tool for them in adulthood.
Financial Education for Children

Last update: 29 October, 2018

Today, it only seems fair that some notions of economics are taught to children at home. That’s what we would call financial education for children.

From a practical point of view, financial education for children will help prevent many unnecessary problems in the future. We only need to find the necessary tools to pass on this knowledge in a fun way so that children feel motivated.

Habits start forming during childhood, which is why it’s the most ideal time for them to learn about finance and economics.

Benefits of financial education for children

Financial education for children helps them lose the fear of money, and also allows them to plan their savings and small expenses better.

As children save and understand the advantages of doing so, they’ll become more motivated to organize their expenses and plan better.

Financial Education for Children

Parents’ role in financial education for children

The first step always belongs to the parents, such as by giving their children an allowance or a reward for good work. It’s also important to teach them how to save.

The effort to earn money must be that of the child’s. As parents it’s our duty to help, but we must always leave the most significant share of responsibility to the child.

We must be clear regarding which tasks or activities will be monetarily rewarded. For example, household chores, good behavior or getting good grades are a part of their responsibilities, so they shouldn’t be rewarded with prizes for them.

The value of saving must be given the importance it deserves. One of the most critical functions of financial education for children is to understand what saving means. You must have a goal; that will make the motivation to save greater.

Learning financial education through games

One of the most effective methods of teaching is through playing games. In the case of financial education for children, the game Monopoly would be the most appropriate.

In this game, children begin to buy places, save, and then have to think about what they need to win. Players strategize individually and have fun in the process.

It’s always good to ask the children questions about the moves they’ve made or plan on making. For example, why do they think it will be okay to buy that house or save up the money to buy something later? Simple questions like these help them think about future earnings.

Children must always take into account their own needs and interests. The game will help then cleverly and responsibly clarify which decisions need to be made.

Set goals and meet them

Knowing that they’re going to have to spend money is very important. It’s essential that children have a clear idea of the destination of their savings. Little ones always want toys. You can use this desire as a goal to promote saving.

The most commonly used tool for saving is the piggy bank method. Every time children get money, they deposit it in the piggy bank and when it’s full, they can buy their desired purchases.

If the money saved up isn’t enough for them to buy what they wanted, you can talk with them to try to help them with the rest. The goal here is to make children feel their parents’ support when it comes to achieving their goals. 

Financial Education for Children

It’s really important to observe children’s behavior and to encourage them to not lose sight of their goals and objectives. This way, children can learn to save and make good decisions when it comes to money.

In many countries, one of the most important aspects of financial education for children is raising awareness about their expenses and how to manage them; which in the future will be part of your daily life as adults.

It’s always good to clarify to children that everything has a cost, hence the importance of saving. It’s easy to instill this idea through small expenses that children can feel safe to take on.

Preparing children to be responsible consumers, teaching them the value of effectively managing their money and forming good habits in them will help them become adults with excellent financial responsibility.

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This text is provided for informational purposes only and does not replace consultation with a professional. If in doubt, consult your specialist.