Teach Your Kids the Basics of Financial Literacy with These Easy Activities

Financial literacy is a set of knowledge and skills that helps people manage money effectively throughout their lives. It’s not an easy concept to grasp, even for adults. Financial literacy isn’t just about learning the ins and outs of investing or how compound interest works – it’s about understanding money in its many forms from a young age.

Financial literacy is important because it has implications for how we manage money for the rest of our lives. Studies show that financially literate people are more likely to have good credit, save up for retirement, have insurance coverage, and invest in the stock market. The sooner we equip our kids with these essential financial skills, the sooner they can grow into independent adults who can confidently manage their own money.

Let’s take a look at some fun activities you can use to teach your child financial literacy!

Go on a field trip to a bank

One of the best ways to teach kids about money is to let them see it in action. A bank is the perfect place to do this: it’s full of ATMs, tellers, and financial products that kids can see and touch. While you’re at the bank, make sure to ask the teller any questions you have about your accounts and services. Kids love seeing their parents ask questions, so it’s a great way to share your own financial knowledge and make the concept feel real.

Afterwards, head to a grocery store or bank that has a coin-counting machine to let your child try counting coins for the first time. If you have the budget for it, you can also get your child their own bank account. This is a great way to let them start managing their own money from an early age.

Have an adult-led discussion about money

Kids learn best when they’re curious and interested. So instead of sitting your child down and trying to teach them the ins and outs of compound interest, have an adult-led discussion about money. Your child might not understand everything you say, but they’ll absorb the overall message. Plus, it’s a great way to start an open conversation about money. Your child might ask you about your own financial situation and future plans.

This is a great opportunity to share your own experiences and offer advice. Kids are naturally curious about the world around them, so they’ll likely want to ask you questions. Letting them know that money is a normal topic of conversation is a great way to build trust. It’s also a great way to open the door for more serious discussions about saving, investing, and other money-related topics.

Play games that teach basic financial skills

Kids love playing games, so why not incorporate basic financial skills into a fun game? There are many toys and board games designed to teach kids about money, like Money Madness and Monopoly. For younger kids, try playing a few rounds of Sesame Street’s Piggy Bankin’ game to let them experience the concept of compound interest firsthand.

There are plenty of online games that also teach kids about money and financial literacy. For example, you can browse the Money as a Second Language website to find fun online games, videos, and activities that teach kids the basics of money. There are also several smartphone apps that teach kids financial literacy. One app, called Grown Up, helps kids learn about credit scores and how to earn them.

Set up a pretend store and teach basic accounting skills

Kids love running their own businesses, but sometimes the basics of accounting can be a bit confusing. If you want to set up a simple, fun way for your child to learn about accounting, set up a pretend store. Kids can sell items that they’ve created or purchased.

When they’re done selling, they can keep track of the money they’ve earned, expenses they’ve spent, and profits they’ve made. This is a great way to help your child understand the difference between cash flow and profit. They’ll get a real-life experience with everything they need to know to run a business.

Help your child understand compound interest and investing

For many kids, the concept of compound interest is difficult to grasp. For younger kids, try explaining compound interest with simple examples. You can use LEGOs to create a visual representation, or try using a simulation program like COINs. For older kids, try explaining the concept of compound interest using something like an investment simulation game.

You can use a program like Investopedia to create a simulated stock market account for your child. Investopedia has a child-friendly interface that makes it easy for kids to explore the market and learn the basics of investing. Investopedia even lets you add your child as a co-signer on the account, so they can track their investments and account progress.

Conclusion

Financial literacy is a set of knowledge and skills that helps people manage money effectively throughout their lives. It’s not an easy concept to grasp, even for adults. Financial literacy isn’t just about learning the ins and outs of investing or how compound interest works – it’s about understanding money in its many forms from a young age.

Financial literacy is important because it has implications for how we manage money for the rest of our lives. Studies show that people who are financially literate are more likely to have good credit, save up for retirement, have insurance coverage, and invest in the stock market. The sooner we equip our kids with these essential financial skills, the sooner they can grow into independent adults who can confidently manage their own money.

If you are interested in teaching your children the importance of financial literacy, Kiddie Kredit can help you. Kiddie Kredit is a mobile app designed to educate children on a credit system by completing chores. Get your children to learn responsibility and learn the value of money in the process. Download the app now!