Every parent wants his / her child to grow as an educated and responsible person. It would be nice if an adult masters a bouquet of skills that could help in his/her journey. iCard believes some proficiencies are good to be obtained. Financial literacy is one of them.
Do you have a friend who makes irresponsible decisions regarding his/her finances?
Money can indeed be used to bring joy and happy moments, however, if this is the only way it is utilized, in the long run, it might cause some negative consequences. This is the reason why we prepared 4 tips that could help your child get introduced and involved in the financial world.
1) Be an example to your kid
The “Monkey sees, monkey does” type of behaviour is very popular among children. You are your kid’s first teacher in life. You can open its eyes to the world and build its understandings. You need to be very careful whenever you sculpture its morals.
Did you know with as little as 20 seconds of television viewing, toddlers as young as 14 months are able to repeat actions observed during videos? If 20 seconds are enough for a baby to copy an act, imagine what can be done during its childhood. You are constantly with him/her and you should be careful about what you are doing around him/her. The same principle applies to financial literacy.
The better example you are to your child, the better results it will achieve when it grows up. Show him/her how your couple and you are saving. Allow your kid to be part of the monthly family discussions about the budget. Explain why you prefer a certain item before another. Don’t be afraid to present the difference between expensive and cheap.
Present to your son/daughter how you track and plan your spending. Take in mind that he/she will live in an era of technology where everything will be digital. You will have to prepare him/her in advance. iCard is the perfect starting point that can visualize the whole process. You can open your digital wallet and analyze your expenditures with the help of your kid. And remember – your kid is always watching.
2) Play educational games with your kid.
The world of adults might be exhausting and tense at some point, we know. We shouldn’t forget about the little members of our society. It is well known that bairns learn faster and easier through games. Following, one of the best methods to introduce your little sweetheart to the world of money is by spending some time playing special board games with him/her.
“What type of game is appropriate?” you will ask. There are plenty of good examples that will increase your child’s financial literacy, depending on its age and maturity. Some of them are:
- Lakeshore Allowance Game (5+ y/o)
- CASHFLOW for Kids® (6+ y/o)
- PayDay (8+ y/o)
- Net Worth (8+ y/o)
- The Game of Life (8+ y/o)
At the end of the day, the game isn’t as important as the effort you put into describing how the world of economics works.
DON’T FORGET: You are playing with a little kid. Think like one whenever explaining the basics. Provide examples. Give some time to understand what you are saying.
3) Set him/her saving goals in four steps.
We all have desired for an item or a vacation that we could not afford unless we started saving for it. Can we translate this kind of feeling to the children’s world? How can we do it? The answer to those questions might be simple yet very effective in the long term.
1) Give pocket money to your kid, depending on the work it does. The amount isn’t important but the overall concept. Your little angel will learn to expect something in return for the job it does. Many adults are afraid to ask for a higher salary for their work done because they were not taught to request it when they were younger.
An important detail is to teach your child there are activities where he/she should not expect remuneration – tidying his/her bedroom, cleaning after the pet, etc. Otherwise, he/she might gеt used to receiving a reward for everything, even if it is an everyday activity.
2) Once your kid receives the reward for the job done, let him/her spend it however he/she wants. Most of the time, if not 100% of it, the amount will disappear in one day and you will have two big eyes in front of you, crying and asking for more money to buy the fluffy teddy bear from the kid store. All you have to do here is to say “No”. We know it might be hard to refuse a beautiful pair of sapphires, however, this is the second step and you need to stay strong.
Let your kid make mistakes and learn from them.
3) When your child finds the desired item, guide him/her through the process of saving. The approach is entirely up to you. We have prepared an example to illustrate in practice what could be done:
If you give €5 per week for the job done, ask your little “businessman” to give you €1 so you can keep it safe for him/her. Then make a deal to give him/her €1 for every €10 he/she has in your “parent bank”.
With this strategy, your son/daughter will experience what saving money and what a compound interest rate is. It might be hard for a toddler to understand this kind of complex activity, however, in the end, he/she will get used to setting goals and saving.
4) Show your child how and where you save money. This is one of the best ways to present to your kid how you invest in your future and your dreams. What if you don’t have an account where you set aside savings? Then you can open several tabs in the iCard Digital Wallet, where you can transfer and storage money from your main iCard account to your “for my future” one instantly and out of charge.
4) Teach your kid to track down his/her finances.
When is the right time to start teaching your kid in tracking his/her finances?
The sooner, the better. Once your child learns to read and write, take a notebook and make five graphs for “Date”, “Earns”, “Saves”, “Spends” and “Amount”. Then ask your child to mark his/her finances wherever is needed. At the end of every month, your couple, your kid and you can sit together and discuss all spending and savings and how they can be managed better.
Kids learn through examples. You can show your son/daughter all the transactions you have made with your iCard Digital Wallet. By presenting this much information in one place, the possibility of arousing interest increases significantly. This activity will teach your child how to track his/her finances and what is the difference between “I want” and “I need”.
At the end of the day, everybody has their approach, understanding, and beliefs. The most important thing is your children’s health. If we agree that they are the future of the world we need to be sure they will know our mistakes and know how to avoid repeating them.