Money plays a key role in our lives. They determine our social status, lifestyle, self-confidence and self-esteem, as well as relationships with others.
Financial management is a science that can and should be learned from an early age.
A “healthy” relationship with money will be a successful start to future adulthood, help you avoid financial mistakes and ensure security and prosperity.
How do you start?
Here are some useful tips for parents who want to teach their child financial literacy
- Start by reviewing your “money” habits and showing children how important it is to be able to manage money by example. The Five To Thrive approach will help you objectively assess your current financial habits.
What is the Five To Thrive approach?
This is a method of managing finances, the use of which allows you to improve relationships with money and achieve prosperity. The approach includes the following points:
- Debt control
If you use a credit card, make sure to deposit funds on time. Don't let debts overwhelm you: before taking advantage of the bank's offer, always assess the urgency and importance of purchases, calculate your financial capabilities and keep your spontaneous desires in check. Spending wisely is the key to peace and prosperity.
- Insurance for yourself and your family
Always keep in mind potential emergencies, which, unfortunately, no one is safe from.
- Savings for a “rainy” day
Unfortunately, life is not always predictable, so each of us must make savings that will help us stay afloat in the event of a job loss, for example.
- Long term planning
When you're sure you'll be able to support yourself for a while, start thinking about the future. Take care of your pension.
- Investments
Financial investments are a great way to increase your savings and get passive income. This is the last stage in building financial stability - you can proceed to it after completing the previous four points.
5 steps to remember to build financial protection.
- The sooner you start telling your child about the role of money, the better. Basic financial skills will be an important contribution to his future well-being.
- Open a savings account for your child and tell them how the savings system works for their future needs.
Why is it important to teach children financial literacy?
- The ability to handle money correctly, instilled from early childhood, is the key to wise financial decisions and future security.
- Teaching a child financial literacy means developing responsibility for their financial behavior, the ability to plan spending and save money.
- Telling children about the role of finance means encouraging their autonomy and gradually allowing them to make their own decisions.
The most important points in children's education
Budget planning
Educate children about the importance of planning and setting financial goals. Teach them how to categorize their pocket money: how much they can spend on themselves and gifts for their loved ones, and how much to save.
Savings
Tell your child how important it is to save money for various purposes that they would like to accomplish in the near or far future. Explain to your child what investments are and how they can be used to increase capital.
Making money
Help children understand the relationship between work and income. Encourage him to make money ideas that are appropriate for his age.
Needs versus “wishlists”
Show children the difference between necessary and desirable purchases.
Financial institutions and banks
Tell the children why banks are needed and what opportunities they provide.
Philanthropy
Helping others develops compassion as important in children.
Useful materials on financial literacy
Books
Bodo Schaefer “A Dog Named Mani”
Tatyana Popova “Magic ATM. About the economy for children”
Bailey, Law “Your Money”
Evgenia Bliskavkaya “Children and Money”
Games
Cash Flow for Kids (children's version of Robert Kiyosaki's game)
“The Market”
“A Million Dollar Idea”
Cartoons
“Smeshariki: The ABC of Financial Literacy”
The Fixies
Programmes
“Kids and Money” by Home Credit Bank
