Why financial Literacy is important for Kids
Teaching personal financial literacy to children is as important as teaching them the WiFi code for the T.V.
It’s essential for complete efficiency and ease in daily life. These money skills that you teach the children in your care, will stay with them for the rest of their lives. How we as adults behave with our money has a direct impact on our children’s attitude and management of their own money, now and in the future.
Teaching great personal financial literacy skills early to kids is fundamental in developing financially aware and confident adults.
See my Financial Literacy Resources here!
financial literacy importance.
My 9 year old son just received a delivery. He had ordered a very special Lego set that is ‘so rare’. He had saved some of his birthday money in order to buy it.
The set in total cost $20.99 but delivery was $34.00. Crazy.
He was adamant that this was his ‘dream’ to own this pack, so, who am I to trample on his dreams? So, I let him order it.
The parcel arrived this morning, feeling pretty light. An empty box of Lego was inside. No Lego. Just the box.
Complete devastation ensued.
A tough lesson to learn; use your money wisely. Don’t overpay for anything. Invest as often as you can and very importantly read the eBay description carefully and fully!
So why is financial literacy important? Because without it you have an empty box of nothing, a crying, inconsolable child who keeps wiping his snoot on your leg and your mother in law arriving in ten minutes for dinner with the house looks like something out of Armageddon.
Ain’t nobody got time for that.
My son learned an important lesson today. He knows what it feels like to loose money that he had saved. He learned to take better care of it, he learned its value. In some way, today’s events might stay with him into adulthood, helping him to respect the money he has both earned and invested, not taking any unnecessary risks.
Compound interest 8th wonder of the world.
To rub salt into the wound, I showed him using a compound interest calculator how much his birthday money would have grown to if he had invested it into his investment account. His $54.99 mistake would have grown to $6238.21 over the next 50 years. Like Albert Einstein said, the 8th wonder of the world.
My mother in law thought I was cruel.
He didn’t like what he saw, but a bit of tough love never hurt anybody. Teaching the power of compound interest to kids is a sure fire way to help them become much more savvy with their money in future years. And by starting their investing journey young, they avoid having to take much risk, as they have a lifetime to ride out the inevitable corrections, crashes and recessions to come.
Don’t get me wrong though, I do like my kids to have some ‘fun’ money as we call it. Life is for living and enjoyment after all, and money can go a long way in helping you enjoy it. But his spending was impulsive and a little reckless.
So I made sure he knew it.
Developing Personal Financial Literacy.
Using these real life experiences and taking these teaching moments when they arise is so useful in developing children’s personal financial literacy. I use financial literacy activities, worksheets and projects both at school and at home to help develop these life skills in a fun and engaging way.
These financial literacy resources have helped empower the children of my class and my own children at home with the knowledge they need to have successful money management skills and in turn a heightened financial literacy for their future.
‘EMS Shop’ has a few of the resources that I have used to help with delivering these skills.
Read more on Developing Financial Literacy in young people here!
What is financial Literacy?
Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing. (Investopedia)
I found this fun little quiz to see if your financial literacy is up to speed, because remember what you know, or don’t know will be passed onto your children or students! Enjoy!
