Everyone has felt the pinch of the Great Recession that began in 2008 and out of which our country is finally pulling, ever so slowly. And families might feel that pinch even tighter during the holiday season or at the time of a child’s birthday. While you want to be generous, it’s still important to live within your means. Rather than overspend or go into debt, the National Financial Educators Council (NFEC) has a better idea: give kids financial literacy.
What they mean by financial literacy for children is simply some practical lessons about how to manage money effectively. Kids learn best by example. If you model proper money habits by spending your money responsibly and with maturity, your children will observe your behavior and learn to budget wisely themselves.
The NFEC recommends setting limits on holiday spending. Choose a spending cap that represents no more than 2%-3% of your net income (not your gross income, but your take-home pay). So if your annual net income is $30,000, that means your upper limit to spend on holiday gifts should be no larger than $900. If your net income is $20,000, your spending limit should be $600 or less. And so on.
It’s a good idea to communicate your decision to your whole family, including extended family and anyone else for whom you’re planning to buy gifts. This communication provides an excellent opportunity to teach kids about money. Some families decide among themselves to set an individual gift limit. For example, you might decide that no single gift will cost more than $50. You can set the limit wherever is most comfortable within your budget.
There’s no shame in spending responsibly and living within your means. If you communicate your decision to your friends and family, there’s a good chance they’ll be relieved—after all, they’ve been feeling the economic pinch too. And you’ll take advantage of a great chance to teach your kids money management.
The NFEC has a full range of kids financial literacy products, services, and programs, including a complete financial literacy curriculum for kids. Find out more at their website, www.FinancialEducatorsCouncil.org.
The Benefits of Financial Literacy for Kids
The advantages of teaching young people some money management skills are many. There are also numerous benefits involved when institutions have considered making them a part of the financial literacy curriculum. Elementary schools as well should not be overlooked. Parents who are against this process are definitely in the wrong. Financial literacy for kids is an important subject that should be explored fully.
It does not however matter whether institutions are teaching the children. Parents should take the initiative and take note of the importance of the subject. Invest in quality financial literacy curriculum and share it with your children. The young ones must get the knowledge from you directly. One of the biggest advantages that you will get at some point is a better life for them. An excellent future for your grown family is what you want of course.
It also means that children will be able to get the knowledge they require in saving. Saving money for a rainy day is an important thing to consider. There is no better lesson to have in mind than this one. You will definitely know the importance of providing money management programs to kids when you understand the consequences of financial illiteracy. You will realize that there is an immense number of individuals who are in debt. Gaining the skills early in age will allow them not to be in such situations in future.
It is important that you have them learn the important lessons with something in their hand. This is a very important thing to consider. You have to make sure that you give them some allowance. The money you give them should be carefully used and they should know about your intentions. This is the only way you will be sure that they are learning. Check on them after sometime and find who has saved the most. You can also check around and see what they have purchased with the money. Take that chance and further your coaching. Financial literacy for kids is an important subject, with a doubt.
Understanding The Benefits Of Financial Literacy for Kids
Do not underestimate the importance financial literacy for kids. Children should be taught how to handle money from the early on. To many young people are in crises situations with debt simply because they never learned basic lessons in money management.
Children should understand how the world of money works from the moment they begin to get an allowance. In the real world no one gives us money for free. We have to earn it and the children should learn this important principle as soon as possible.
Unfortunately, we have got into a habit of spoiling our children. They are rarely required to do chores in the home on any consistent basis. If this is the case in your home you should change it straight away. There are some jobs that need doing regularly that can be done by a child such as taking out the garbage or unloading the dishwasher.
Think about how much you would have to pay someone to come to your house and unload the dishwasher on a daily basis. You can then apply the same or similar amount to your child as their allowance. It must be directly related to the chore. If they do not do it they do not get paid except for holidays and some unintentional sick leave.
Once children are earning their allowance they must also learn other important lessons such as how to save their money and how to save it. A child of any age can have a bank account so you can help yours to get one set up. Through providing financial literacy lessons for students, your kids will learn to manage their account and appreciate the value of seeing savings accrue.
However, as in the real world, some things have to be paid for. It is not to say that you have to offload your parental responsibilities to the child but at the same time the child must understand that he will have to spend some of his earnings on the things he wants. Good financial literacy kids will ensure responsible adults in future. So be sure to teach your kids financial education lessons that will support them as they mature.
The Importance Of Financial Literacy For Kids
Financial literacy for kids is about ensuring that your child is educated on the best way to manage finances. This is a way of securing their future. This is because they will be able to learn how to manage money in all ways possible. This helps them spend wisely at all times.
You can help your kid learn more about making money, saving it and also managing it via interactive games. These games will definitely increase their knowledge on how to handle cash. These games can be found on the internet. They make lessons on money management to children easy and also fun to learn.
Many of these educational WebPages provide basic personal finance for kids material. It is suggested that online education simply will help guide your child; however, the real financial education should be done with a qualified instructor. Some of the material you can find online are basic aspects of money management for kids which can include how to save and spend cash. They also touch on how children should bank their cash.
There are also videos that offers live lesson to children on how money work and how to handle it dependably. These live lessons are offered on stages. The first level deals with importance of money and the right amount of allowance that should be given to the young ones. These lessons can be downloaded.
Recently there have been new games which have been developed to show kids how to deposit and also fill out banks slips. These games also have a section on how to use an automated teller machine. They also have a section of parents to explain some of these activities to their children.
Financial literacy for kids is important as it prepares the toddler for a brighter financial prospect. It is the duty of every parent to make sure that their children have adequate knowledge on cash matters. Good monetary literacy will help your child to have a good understanding and awareness of cash