A financially savvy person is meant to be someone who has control and knowledge of all his finance and that does not necessarily mean money. It stands for someone who’s ambitious about achieving their financial goals.
While this might seem to be a big responsibility, know that technology has made the banking process very easy and convenient. At the same time who are the ones swift with technology? Kids. This is why it is significant for kids to know about financial savviness as the adults need to.
The significance of saving money
Of course, dealing with kids, we will start with minor measures such as teaching them how to secure a portion of the money they receive as a gift and allowances.
These kids should be aware of how to spend their money and deposit the savings into their bank accounts which of course is watched over by a parent. Through this, they learn a very important lesson of saving money, something even adults find hard to do.
Learning finance and responsibilities
While this might sound too complicated for a young kid, learn its significance. You can transition it into making them aware of how you spend money, for instance, insurance, grocery, bills that notify them of the responsibilities they have to take up later in the future and they can save for them beforehand.
Other than that, conversations regarding finance and technology should start from a very young age so they can understand them even more as they grow and are aware of handling them.
Money affecting relationships
It is very important to educate your child about money’s role in a relationship that at their stage would be the parent-child relationship. This may include money taking the form of allowance, tuition fees, etc.
This will also help them learn the difference between borrowing, lending and receiving money. This is a great initiative towards making them understand what role money plays in life and cannot take over self-worth.
Setting long-term goals
As an adult, we are aware of the fact that setting long term goals helps in financial planning. This is what kids should learn as well by setting their aims and passion in line.
It is true that a child’s dream may change over time but at least they have an insight of knowing they’ll be up to something for which they need to settle their finance and goals in place. Along with this, they learn the relationship between patience and achievement.
Money is a result of earning and hard work
Make sure your kid knows that ‘money does not grow on trees.’ It might be helpful if you take your child to work someday and allow them to have an insight into the earning world so they can realize earning money takes a lot of hard work.
This is a great way through which one learns how to not waste money and the correct way of spending it. Another way this can be done is by making them do chores and pay a little for it. This is a great way through which they are learning that they need to work hard for money.
The important distinction between need and want
A financially savvy person is well aware of their needs and what they actually want, whereas kids probably face trouble understanding this. Taking kids to grocery shopping allows them to understand that basic food items are needed and snacks and just want that they can surely live without. Similarly by saying no to some of their choices, again teaches them a lesson distinguishing both.