Managing your finances is a key life skill. It affects almost all aspects of our lives, from our security and health to the opportunities that are available to us. For this reason, it would be great if financial skills were included in your child’s education.
"If you want to be rich, you need to be financially literate."
Here are some of the financial skills that children should learn:
1. Fundamentals of Money
Your child’s education should include learning the nature and function of money. Age-appropriate lessons can be about saving their daily allowance, opening a bank account, and determining how much they need to make a purchase.
Those who are already in primary school are old enough to learn how to create personal budgets. It’s an essential skill especially since their needs and wants are different. They may want to buy a mobile phone. With a budget, they will know how much money is needed to buy it and what they need to do to make it happen.
Their budget should include savings, another essential financial aspect. Nothing beats saving money as early as possible, giving it a lot of time to grow and work for you. Putting away a small amount, but on a regular basis, can significantly help you build your savings. It’s likewise important to set a financial goal that will keep you motivated to improve your finances.
4. Compound Interest
Speaking of letting your money grow and work for you, the concept of compound interest should be learned at school. Once you understand how it works, it’s an effective tool to grow your savings will minimal effort on your part. Knowing how to calculate compound interest will help you better understand your cash flow and savings.
Using a debit card enables you to make cashless transactions, which is convenient for many. It also helps in managing your finances since you can only spend what you have. But it’s a different story with a credit card. It’s essentially borrowing money then paying it back later. If kids learn the effects of paying only the minimum amount every month, or failing to do so, it will have an impact to their understanding of how money should be spent. It will also teach them to be responsible enough to think long and hard before using a credit card.
What other financial skills should be included in your children’s education? Share your ideas in the comments section.