5 Activities that Can Develop Financial Literacy in Children

Many parents have experienced the unpleasant effects of poor financial management at some point in their adult life, most notably when they were just starting out with being independent. For example, common causes include being behind on rent payments or incurring too much of a credit card debt. 

If you want your kids to avoid falling into the same traps as you did, you must begin teaching them financial literacy as soon as possible.

According to Cambridge research, many of our financial habits are formed by the age of seven. If positive habits are not instilled in your children at a young age, it will become increasingly difficult to steer them correctly.

How do parents instill a sense of financial responsibility in their children? Here are five daily activities for teaching children financial literacy:‍

1. Open a Savings Account for Your Children

It is vital to show your children the value of money early in life. One way you can do this is to open up a savings account for them and motivate them to deposit a portion of their allowance or birthday money into it. The bank might also offer incentives such as a small amount of interest.

Even though you can teach your children to save money, life is unpredictable. Your children might decide to spend their savings on new toys or video games, or they could lose the money on an unwise investment. By allowing your children to access their savings account, they will use the funds when they need them the most.‍

2. Pay Their Allowance in Cash

If you have decided to pay your children in cash, it will also teach them to spend wisely. Many people who are given their salary in a bank account with a direct debit option often spend recklessly because they have access to their salary without a need to budget.

You are better off paying your children in cash so that they will be forced to budget their money each week. Children paid in cash will still want to explore new places and purchase new toys, but they will also be more aware of setting a limit to their spending.‍

3. Set Limits on Screen Time

Another great way to teach your children financial responsibility is to set limits on their screen time. Excess screen time has been linked to various negative symptoms among children, such as lack of concentration and lethargy.

By encouraging your children to spend less time on their devices, they will have more time to spend on other activities. This can help develop their social skills and encourage them to spend more time exercising, reading, or attending extracurricular activities.‍

4. Encourage Them to Save Their Award Money

Your children may earn money through competitive activities such as sports, theatre, or music. These activities often require a substantial amount of time and effort. They may get rewarded with a trophy or a monetary prize in return.

Whenever your children win a prize, make sure they are encouraged to save their money. This will help set the habit that they should be cautious of spending their rewards aimlessly.‍

5. Teach Them How to Cook

Cooking is a great way to get both children and adults to cook. Even though it may be a fun activity for teenagers, it can also teach them about budgeting for groceries. It will also encourage them to practice restraint when making food choices.

Budgeting for food can be tricky, especially if you buy expensive ingredients. By getting your children to help you shop for food, you can give them a better understanding of the amount of money it costs to feed a family.

Conclusion

Teaching your children financial literacy is vital for their future. Depending on their age, you should be mindful of your teaching methods about money.

Reaching out to an expert who can provide financial advice for children can also help shape their financial future.

If you want to build a financially free future for your children, Kiddie Kredit is one of the best mobile apps for building credit. It is designed to educate children on the credit system by completing chores. This is a great approach to instill financial literacy among your kids at a young age. Download our app today!