Why it is important to teach children about money

Have you ever wondered why some children will manage their pocket money in boarding schools better than others will? Or why some young people start investing part of their pocket money (even if it is little) as early as upper primary schools, while others squander the thousands of francs in pocket money at school? Well, the difference between the two sets of children is in their upbringing and the financial education they received during their formative age. While some parents endeavour to teach their children about money, others fear that that could turn them into cheats. On the contrary, the earlier a child learns about money, savings and investment, the better money managers they will become, financial experts advise. This is more important when students have to keep their own pocket money or bus fare during school time. Why should parents be bothered about teaching their children about money, one may ask. Financial literacy is better learnt from parents who can then start the kids on a savings scheme as a fun activity using piggy banks. Besides, it is not a secret that our school system does not teach financial lietarcy apart from subjects, like commerce or economics and entrepreneurship, which are quite different from the subject matter. Victor Nkindi, an ICT entrepreneur, says it is the responsibility of parents to educate their children about money and other issues like sex education and culture. “Financial literacy is crucial and should be provided alongside ICT programmmes like olpc at an early age. The savings culture should also be inculcated among kids by parents as soon as they learn how to count,” he says. Nkindi argues that these skills help children understand the difference between earning spending and saving, making them better money managers who are able to budget for each and every expenditure. According to Thomas Henske, a certified financial planner and partner in the at Lenox Advisors in the US, a good place to start is by teaching your children about coins and small bills. “Because it’s so important you start to get them familiar with not only financial literacy terms but the vehicles we use,” he says. However, the approaches you use with younger children won’t necessarily work with teenagers. With small children, you can use tools like piggy banks (preferably clear ones, so they can actually see money physically accumulate), but older children and teens should work with actual bank accounts. “Have them practice paying bills, even if that’s in an online fashion,” says Henske. Additional reporting from Internet sources.

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Why it is important to teach children about money