Financial literacy refers to one’s understanding of managing money and assets and knowing about finance-related practices like investments, budgeting, etc. Having such information is quite imperative in today’s time as it helps you to give a definite structure to your monetary resources and organize them to use it in an optimal manner.
As parents, it becomes necessary for you to impart knowledge about finance and capital to your kids while they’re growing up so that they can have enough information available to avoid financial fraud situations in the coming years. Being financially literate also means that your kid is able to manage his/her pocket money and realizes its importance well in time. Often kids take money and finance casually- just because they are not taught about it. However, it is vital for parents to let their kids know about money management and emphasize its importance.
Importance Of Financial Literacy
Just for the citizens of a country, it is equally important for the youth to be financially literate and act responsibly to take informed decisions in the later years. Learning about financial aspects can later save them from fraud investments and bad decisions that could lead to a possible loss of money. Furthermore, having a strong hold on money management tips empowers your child and assist him/her in using it wisely, that, in future, gets converted to profitable investments and worthy monetary commitments.
Having that said, teaching your kid about money and its efficient usage makes them equipped with financial knowledge when they grow old. This becomes a perfect attribute of their personality which could open numerous doors of professional opportunities and sectors that they can head to.
Here are a few benefits of establishing the financial literacy base for your child –
- Teaching the value of money – As we mentioned, helping your child know and learn about finance, money management and budgets provides them the significant value of money. It is imperative for the kids to know and understand how valuable money is, so they can become financially stable in the near future. This could be done by instilling finance-related habits like saving their pocket money, etc. Parents can impart this knowledge to their kids when they’re five or six- let them start by counting coins and slowly segregating currency values. By the time they’re in their teen years, they’d be making the financial decision on their own.
- Help make smart spending decisions – Nurturing your kids with the much-required education and guidance about monetary components directly affects their decision-making ability. As parents, you would want your child to spend his/her pocket money where it is required, and not recklessly. By introducing them to financial literacy, you can persuade smart purchase and spending decisions of your kids. Generally, such things are instilled into habits by practice- allow your kid to take a self-purchase decision and let them learn from the experiences. Even if they fail to take a profitable decision, it is easier to mold them with the right guidance so they can become better for the future.
- Keep up with the tax policies – Understanding tax has always been a tough task for everyone- be it now or earlier. But, with financial literacy and well-structured information, you can comprehend the complexities of tax policies. Similarly, you can train your kids during their teen years on tax filings, benefits and monetary policies associated with them. Havign a strong grip on tax policies and its concepts helps your child to stick to a fixed budget and plan for other things accordingly, thus making a balance between expenses and income.
- Have fun with numbers – At the end, it is all about learning with a little fun and entertainment. While you pass on your knowledge about finance, make sure that you create such an environment that empowers your child and make theses practices as practical as they could be. Parents can let their kids count the things in their homes, help them recognise bigger numbers and differentiate their value simultaneously. These small fun elements can nurture the minds of the children and enhance their learning potential.
Landon Schertz brings you extensive helping guide to introduce financial literacy to your child so he or she can gain interest in managing the finances. Our aim is to mentor your child with the sheer importance and necessity of money management, how should they make a financial decision, etc. These things are a must-to-know from the very start- so do not wait, give us a call today to book your appointment with our experts!