Friday, May 18, 2012

Financial literacy for children

Should we teach our children about money? Absolutely! The real question is: What should we be teaching our children about money? One post can't possibly cover this subject, however, it can get the ball rolling. 

Like anything else the younger we start the better off we are. I wish I had learned about money/finances as a kid. Most likely, I would have avoided many mistakes as an adult. So with such a broad topic, where do we begin?

After teaching your child how to count money. One very simple action to start with, is to teach children how to divide their money. Anytime money is given for birthdays, holidays, allowances etc. children should designate money to save, spend, and give. These three things are easy to remember and are great habits to start at a young age.

* Save money- Take a percentage and deposit in a piggy bank or bank account. Allow your child to put the money in the piggy bank, this is good hands on and very exciting. Make sure your child goes with you to make the deposit and see you fill out the deposit slip. Make a big deal about it! Let your child know that it's fun to save money.

* Spend money- This is called "paying yourself first" in the adult world. Children should know that it's OK to spend a designated amount of money on yourself. This can lead to great teaching time about sells, percentages, addition and subtraction. They should know that money is made to be enjoyed, after they save some of it.

* Give money- Giving has to be taught, just like sharing. Children are to be taught how to give and help others. Giving is a form of gratitude. There are many people less fortunate and by giving we are helping them and helping our children learn how to think of others.

As children begin to read, we can teach them financial vocabulary. While this list is a partial one, again it can get things started in the right direction.

Here are a few vocabulary words we can teach our children about: currency, asset, liability, capital gain, tax rate, net income/profit, gross income, passive income, revenue, equity, appreciation, depreciation, globalization, intellectual property, real estate, real property, stocks, interest, vesting, entrepreneurship, dividends, percentage, savings, money market, income bracket, bonds, bank, budget, debit, credit.

Again, this list is only a start. There are many good books to invest in for our children. Good habits start now while children are young enough to practice and learn. They will thank you later when they become responsible adults with their money.

Being a good steward involves investing in our children or other children if you don't have any of your own. Teach this to your nieces, nephews, sisters, brothers etc. Of course this should be done with the permission of the parent or guardian.

Children are fast learners and learning about money can be and should be fun!

Remember. "True empowerment comes through stewardship!"

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