Financial literacy is a vital factor in molding your kids to become responsible and wise adults. Such is its importance that one day in April is set aside every year and designated as Teach Children to Save Day. Among other things, teaching your kids how to spend their money early on will help them develop healthy financial habits that they will carry through adulthood.
According to a 2020 survey, only less than 50% of adults consider themselves very good or excellent in personal finance literacy. Many of them have a difficult time saving money. Some even continue to struggle financially in their older years. More than anything else, this reality is proof of how important it is to start teaching kids to become financially responsible at an early age. Helping your kids learn how to handle money responsibly is not an option; it is a necessity, especially with all the uncertainties in the world.
A Consumer Financial Protection Bureau research reveals that kids are capable of learning how to save by the age of five. You do not have to teach them stuff like credit scores; focus only on the basic aspects of financial literacy such as saving and properly spending money. It can be challenging, but there are several creative ways to do this.
One good way of encouraging your kids to learn how to manage their money is by giving a kids debit card. Using the card, they will learn how to save, use their money sensibly, and add more money to their savings. It is also essential to focus on four practices that will help them become financially literate and responsible:
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The simplest way to do this process is to use an online chore system that allows your kids to save (earn) money, share or donate responsibly, spend wisely, and invest (to learn the value of money).
To help you start, below is an infographic that further explains the four-step process of teaching your kids how to spend their money.