Moonpreneur
Knowing how to manage one’s money effectively is a vital life skill that can profoundly affect one’s financial security. Research shows that just a fraction of the global population is financially literate.
According to a study by Forbes, only 30% of public school students in the United States have access to classes on money management. Experts agree that teaching children about money matters early on is crucial. Although people have differing views on the topic, teaching kids about money is a good thing.
Source: Financial Educators Council
Between March 21 and 22, 2016, 1,101 18-24 year-olds across the United States responded to a financial literacy survey conducted by the NFEC to assess young adults’ feelings regarding high school-level courses that would benefit their lives. This online survey produced statistically significant results with a 99% confidence interval and a less than 4% margin of error.
In this article, we will discuss the top five reasons kids need to learn about finances. From learning how to build good savings habits to mastering the art of budgeting, we can set kids up for a lifetime of financial security by equipping them with the knowledge and tools they need to become independent adults with sound financial habits.
Debating the Importance of Financial Education for Kids
There have been many discussions and conversations for a long time about whether teaching kids about money matters is a good idea. Unfortunately, many people think it’s okay because kids are already growing up in a complicated world, and there’s no reason to keep them from learning how much money affects our lives.
Some believe that financial literacy is a big deal that kids wouldn’t be able to understand at a young age. While others believe that financial literacy teaches them basic things like how to open a bank account, pay bills on time, make a budget for the house, etc. With the proper financial education, kids can learn about these basic ideas early on and know how to keep a healthy relationship with money.
How Can Financial Literacy Help?
Every part of a person’s life is affected by how well they understand money. It is essential for kids if they start learning about money when they are young; it can help them in the long run. But on the other hand, not knowing enough about money can lead to bad spending habits and too much debt.
Reversing bad financial habits is more complicated than making good ones, so teaching the younger generation about money is essential. When kids learn how to handle money at a young age, it can help them become financially stable as adults.
5 Reasons Why Financial Education Is Important For Kids
Money is needed everywhere, whether you like it or not, and your kids will have to learn how to use it to pay for things, even the most privileged ones, at some point. Money is essential for things like putting food on the table and keeping a roof over their heads.
They should learn this from a young age. Here are the top five reasons why kids need to learn about money:
1. Accurate Information:
Failing to educate your children about finances can have negative consequences later. Although schools provide some education on financial literacy to teenagers, they might also be influenced by misinformation from friends, acquaintances, or adults with poor money-management abilities. Many schools also do not have financial education courses.
2. Learning the Difference Between Wants and Needs:
As an adult, you might understand the difference between your wants and needs, but your children do not, especially when tweens and teens feel like they need everything they see in a store. Teaching children about money can aid in their ability to differentiate between necessities and desires, allowing them to avoid accumulating debt.
For example, as teens age, they may wish to splurge due to peer pressure on unnecessary things like expensive clothes or gadgets. However, with even basic financial knowledge, they will realize this is a “want” they must budget and save for.
3. Well-informed Decisions:
The ability to make smart financial decisions early can significantly impact one’s financial health in the long run. Financially literate individuals are better equipped to navigate the complexities of the financial world. They can also make informed decisions about which financial products to use, such as credit cards, loans, or investment accounts.
4. Understanding Bills and Purchase Receipts:
Money plays a prominent role in everyone’s daily lives, making financial literacy an essential skill to acquire. Opportunities to teach financial literacy to exist in everyday activities, such as shopping.
Parents can take advantage of the shopping experience to teach children about credit and debit cards, how cash is used, and the significance of purchase receipts, which include itemized costs and other pertinent details. By incorporating financial literacy lessons into everyday experiences, children can develop a strong foundation for financial management.
5. Saving Money:
Encouraging children to understand the relationship between expenses, income, and savings is crucial to their financial literacy. It is essential to teach children that saving is a critical aspect of managing expenses, and they should prioritize it.
One approach to instilling this habit in children is to encourage them to save some of their pocket money regularly. It will enable children to appreciate the value of saving and develop a sense of independence in managing their finances.
In short
Starting conversations about money with kids at a young age can help them deal with unexpected costs and keep them from worrying about money in the future. Knowledge and skills about money are also valuable assets that can help them throughout their lives and set them up for success as financially responsible adults.
Moonpreneur understands the needs and demands this rapidly changing technological world is bringing with it for our kids. Thus we are on a mission to educate and ignite the flames of entrepreneurship through our holistically created online STEM programs, which will help kids master the futuristic sciences such as Robotics, Game Development, App Development, Advanced Math, and much more!
Register for a free 60-minute Robotics class today!
