Finance for kids, Do you know that as a parent you have to teach your kid or children about finance.
This content will guide and help you more concerning finance for kids and all you need to know for the betterment of your child’s financial status.
One of the best ways of setting up a finance legacy for your kids is simply by introducing them to the world of finance, which I believe will help them a long way to plan and manage finances properly.
As a parent, coming across this super content will help you set your child on the right track of financial planning, saving, and budgeting. etc.
What is finance for kids?
The words finance for kids are all about introducing children between the age of 3-13 years to the world of financial management.
It is also known as inculcating good financial practices into the young ones so that they can be able to learn it at the early stage of their life.
Some schools are not teaching kids about financial management, you can leave your
As the saying goes “Catch them young” so you have to start at the early stage to draw your kid’s attention to the world of finance, don’t be shy to do this, and don’t believe your kids are too little to teach about money management.
Just start from those basic steps then as time goes on you will be increasing their knowledge more concerning finances.
The Aim of kids’ finance
Kids Finance aims very high in helping to help children understand finances at the early stage of their lives and make them stay independent of money.
Kids finance aims the follow the good values of your child.
- Develop a Good motive towards money: it helps kids to develop a good motive towards money, they will start to visualize and have great value for money.
This aims at making kids understand that money is just one of the powerful tools they need to excel and do better in this life.
Also, it will make them understand that when money is properly handled it will be useful to them and yield more positivity in them.
- Respecting efforts: Kids Finance aims at making children understand and have respect for those efforts used in getting money.
- Financial Independence: this helps kids to have the right skills to manage their money Effectively so that they will become independent of money, provide some of their basic needs, and avoid requesting money from parents for any little expenses.
- Different between needs & wants: indeed, most children don’t know the difference between what they need and what they want, but with the help of finance for kids they will have a deep understanding of it.
which can help them to distinguish their needs and wants when spending their money.
- Generosity: generosity is one of those values of Kidd Finance, it helps them to understand how the world will become a better place if they give some of their money to the less privileged and homeless ones around them. etc.
Generally, this kid’s finance aims at helping children to develop good skills towards money.
Making them realize the importance of properly managing money for their future’s betterment.
How to teach and introduce finance to a child
Are wondering where and how to start teaching your children about finance? There are steps you should follow to effectively achieve this
- Take your kids with you to go shopping: when you are going shopping don’t go alone by yourself, try going with your kids.
As you are selecting items, tell them about your preference, and also describe the value of things for them.
You can go ahead to tell them how to choose the right item and go for the ones they can easily afford to pay.
By showing them these practical Examples they will be able to understand finances.
- Teach them the financial terminologies: take time and explain to them some financial terminologies and their meanings so that they will be fully aware of them and how each of them works.
You can teach your kids the following financial terminologies.
Cashback: tell them how Cashback works and how useful it can be for them.
Loan: explain to your kids the meaning of a loan, and tell them the cons and pros of getting a loan. You can also tell them the implications of not paying off loans on time
As a parent, you can teach your kids how they can avoid falling into debt.
Liability: teach your kids all about liability and how they can prepare for it shortly
Credit card: You can your credit card as an example then explain it to your kids and show them how it works.
You can explain to them the different types of credit cards and their functions.
Credit score: Teach your kids what credit score is the types of credit scores, and how to maintain a good credit score.
Also, explain to them the implications and consequences
of having a bad credit score
Compound interest: explain to your kids what compound interest is all about.
Budgeting: Don’t forget to teach your kids about budgeting, this aspect is very important.
You can show those examples by allowing yourself to stay where you are budgeting for your monthly expenses or budgeting for the foodstuff of the month.
After allowing them to see how you make your budget for what the family needs, they will also see how the budget was actualized this helps them more to understand what budgeting is all about.
Talk to them about the Advantages of budgeting wisely and the disadvantages of not budgeting at all.
FICO score: explain the meaning of the FICO score to your kids and the vital roles it plays.
Mortgage: Talk to your kids about mortgages and how they can make use of them when they grow up.
Income: As a parent explain to your kids how income works and those legit ways they can use to make income as they advance in age.
Profit: Tell your children the meaning of profits plus how to calculate profit. eg if you are a business person as you are calculating your profit call your child so that he/she will be watching you as you calculate your profit.
Expenses: help them realize how to make expenses without overspending their money.
Saving accounts: tell them the importance of saving account
Loss: Explain to them what loss means
Taking your time to teach your kids these basics and terminologies of finance is one of the ways of getting them prepared.
Thoroughly explain all these deeply to them.
- Reward them with money: whenever they do a particular task or run an errand for you reward them with money and tell them to be saving it in a piggy vest.
If you don’t have any available piggy vest you can get one made for kids from the market.
As they are saving it you can tell them to make a budget of what they will like to buy with it.
You can tell them to open their piggy bank at the end of the year so that they can be able to buy the item they budgeted with the money they have saved so far.
They may even decide to leave the saved money and keep on saving it so that it will help them buy their first car.
This is one of the core vital ways of introducing finance to kids.
This will help them to know how to save money, how to make a good budget, how to work for their money, and become independent.
Overall, it will help your kids to have great value for work and money.
- Set up custodial investment accounts for your kids: this is another way of helping your kids to be finally able and independent in the future, you can start this account for them even when they are a few months old then when they reach their age you can handle it for them.
But before you handle this account to them inculcate in them how to effectively manage finances so that they can be able to utilize it properly.
- Make different saving boxes for your kids: get up to 2-3 saving boxes eg first saving box for emergency spending second saving box for expenses, third saving box for future savings.
Anytime they receive reward or gift money from people they may divide the money into many parts and save them in different saving boxes
this will instill saving methods inside them.
- Give them quality education: yes, this can not be left out when thinking about finance for kids, enroll your children in quality education where they will be enlightened.
Also, make sure your child doesn’t associate with kids that spend extravagantly.
- Involve your kids in family budgeting and expenses, when you are discussing this with your spouse just involve your kids in the conversation so that they will practically learn how it was done.
If you follow up with any of the mentioned steps you will surely be happy that you did.
How to explain finance to a child
In explaining finance for your child you have to make it simple so that they can easily understand you. Live by example for them to easily emulate your ways of carrying out planning and expenses.
You can explain finance to your child by also making use of some materials or videos.
How to teach kids money management.
As a parent teaching money management to your kids is one of the ways to help those kids develop financial skills and become responsible for themselves and the society at large.
There are several options to do this
- By practically showing those kids examples of how it is done eg show involve them in making money management decisions and plans.
- Get them some resources that will help them learn quickly, it can be a financial game or some tutorial videos for kids regarding finance management. etc.
level of kids are suited for kid’s finance
You can start teaching your about finance from the early stage at least from the age of 2-13 years.
Start from so simple ways and basics as they are growing and adding more years keep on increasing the level of your financial teaches.
Advantages of kids’ finance
The Advantages of kids’ finances are numerous, they impact positively the lives of kids
Below are a few of the advantages
Become useful: kids’ finance helps children to become responsible in life instead of spending money carelessly they will know how to Utilize funds that will be useful for them because they started practicing it in their childhood.
Help them think creatively: no matter their age you will be surely amazed at how your child will plan and make some financial decisions rightly.
Totally Independence: with kids’ finance your child will be able to financially stand on its own, even after he is grown up he won’t be coming to his parents to ask for money.