How Financial Literacy Help Kids Lead A Better Life?
A survey conducted- 15years old in the U.S. established that 18.0% of respondents did not learn basic financial skills that are often implemented in everyday events, such as formulating a simple budget, shopping comparison & uptake an invoice.
Documentation on the outcomes of a financial literacy exam cited that high school seniors scored on average 48% correct, reflecting a firm need for more extensive financial education for youth in high school.
According to the 2008 swing of the - National Longitudinal Survey of Youth, only 27.0% of youth could tell what inflation was & how to compute simple interest rate calculations. Hence this cites the need for kids to get educated with financial literacy.
The Importance of Financial Literacy for Kids:
The term - “Financial literacy for kids” can seem fearsome, especially if it’s a capability you don’t feel outfitted with yourself. While the socioeconomic backdrops of children can influence opportunities they may confront, aiding them to feel prepared about money can impact their entire relationship with it.
Kids who comprehend to organize their finances early often grow up as adults who are better geared to live independently. By educating kids to make good financial conclusions, they understand to pay down debt or dodge it altogether.
Benefits of financial literacy:
The key benefit of financial literacy is that it emancipates kids to draw smart financial conclusions. It renders the knowledge and capabilities kids need to handle money effectively—budgeting, saving, borrowing& investing.
The specific advantages of financial literacy will vary depending on circumstances, but some common conditions in which financial literacy can help encompass:
- Savings - for retirement.
- Formulating and abiding by a balanced budget.
- Buying a home.
- Insurance selections.
- Reducing expenditures
- Purchasing a car.
- Savings for college.
- Organizing & Handling debt.
- Using credit cards effectively.
How financial literacy helps kids to lead a better life:
1. It provides kids with precise information:
Not teaching your kids about money now will attract repercussions down the line. While teens are taught angles of financial literacy at school, they may also grasp irrelevant information from friends, or other people in their lives with poor money-management abilities.
2. It supports them comprehend the difference between needs &desires:
For kids, it can be easy to bewilder a need with a desire. By educating kids about money, you’ll guide them to understand how to balance needs & desires without attracting debt.
3. It makes kids understand the value of money:
As a parent, you must have said - “Money doesn’t grow on trees” at least once. They will have to work for their money. Meantime, younger kids can make some money for doing chores, by the time they are tweens, most kids begin making their own money through babysitting, mowing lawns, etc.
Imparting financial literacy implants the roots for smart money decisions now, which aids in wiser conclusions with higher pay-outs.
4. It illustrates to kids how money can work for them:
Around the time they are in their early teens, kids may be prepared to learn the potential of investing &watch their money swell through compound interest. Advanced financial literacy discussions could encompass around what various investment selections look like, such as low-risk investments or high-risk stocks.
5. It permits teens to exercise financial independence - with a safety shield:
Authorizing your kids or teens to pay for their expensive demands & desires will effectively help empower them to take charge of their finances as they stand at the crossroads of the world
6. It supports teens comprehend how to dodge debt:
Discussing credit is crucial in helping kids & teens learn the value of money and the outcomes of making poor financial conclusions. If your kid demands a credit card, instead of answering a spontaneous “NO,” guide them to learn that it’s not a freebie. Emphasize that a credit card must be paid in full each month, else in addition they will have to pay interest, which can turn out to cost them much more than the actual buying price.
7. It educates kids on how to identify a scam:
Kids are consistently online, which reflects that they are susceptible to cybercrimes that pinpoint kids in the hope of hooking money. Guide your kids to avoid scams by instructing them on the significance of protecting their account info & password. Also, educate them about the danger of clicking unknown & suspicious links, even if they look like sent by a friend.
8. Because the future is arriving:
Kicking a head start on money management abilities will support setting your kid up for fast-nearing independence.
Financial Literacy should embrace the potential of credit scores, which will become a concern sooner than your kid registers. A credit score reflects- how much debt you have & whether you pay your bills timely. Poor credit scores in early adulthood could hinder teens from renting accommodation while they are in university or even getting a cell phone plan.
Kids also need to understand how to be autarkic. Involving them in regular chores is the one way parents can make kids learn how to fend for themselves.
Benefits of Teaching Financial Literacy to Kids:
Educating financial literacy to kids from an early age comes with an assortment of benefits, including:
- Your children will learn the importance of money and start to demand less.
- Once they begin to learn the importance of things, they’ll become much more grateful when they are gifted a present or given something suddenly.
- By Teaching about financial risks, kids will be better skilled to dodge financial debt and bankruptcy in the future.
- Their inclination to plan for occurrences in the future, such as saving for a holiday, investing in property, etc.
- They will lead more prosperous & stress-free lives, this advantage is mostly forgotten about, but should be strongly enforced when considering the long-term outcomes of teaching financial literacy.
The earlier you begin conversing with your kid about financial literacy, the more flexible& better guarded from financial anxiety they’re likely to be.
We all strive to secure our children inherit a bright financial future. To ensure our children truly admire this luxury, we have to educate them on the importance of money and start dressing our children today. As money is a vital commodity and it is mandatory to master personal money handling to acquire and sustain a dignified & respectful financial lifestyle.