Financial literacy for young children.
Oct 08, 2020
Perhaps the only bigger surprise than discovering that Santa Claus doesn't exist is finding out that your parents' credit card doesn't have all the money in the world! And which of the two is harder to explain? Take advantage of this back-to-school period to address the topic at home. It's the ideal time to take the first steps in financial literacy for young children.
As a general rule, it's time to buy new school supplies, and therefore there's a budget to manage, and with that, basic financial management concepts to introduce. For older children who already have access to the school cafeteria or stationery store, it's also time to realize that you have to make choices and manage money on a daily basis. Whatever the reason, this is a good time of year to introduce the first concepts that will be crucial in your children's future.
Advice and tips to make financial education easier.
There are countless tips that make the concept of money management and saving more interesting (and even fun!) for children . Among them:
- Together, choose a goal that the child has expressed a desire for (e.g., a trip to Disney). You can choose a piggy bank that can be personalized with an image and customize it with a photo of your goal (trip destination, toy, or other). This way, each time they contribute to the savings, they will remember why they are doing it.
Make your own piggy bank and make the process fun right from the start;
- Explain more complex concepts by making comparisons with children's stories or everyday situations that are familiar to the child ;
- Encourage play related to this theme at home (playing shop or supermarket with pretend money and simulating commercial transactions);
- For older people , acquiring some books on the subject or even downloading mobile apps that help with basic management and provide easy-to-understand information is a good idea.
With the increasing use of cards or the adoption of smartphone payments, children have less and less of an understanding of exchange and the value of money . They don't see their parents paying with a bill and receiving small change or smaller bills as often.
The ease with which children perceive things conveys the idea that inside, in some magical place where a lot of money fits, lies an inexhaustible source that can buy anything and everything.
The need to visualize what happens in this process is extremely important for children, especially preschoolers. The cause-and-effect relationship, in whatever area, is what makes them begin to perceive the world and understand how things work.
Financial education in stages.
It's from a very young age, practically from 3 or 4 years old, that we begin to raise responsible adults! There are some tips that remain timeless, such as the importance of knowing how to say "no" and explaining that money is not unlimited. There are others that are only understood with some maturity.
· It is important to encourage children , around the age of 4 , to pay for things and receive change. At this stage, it is important to set practical examples and maintain regularity in any routine they undertake as a family (even if it's just giving €1 every 2 weeks).
· Around the age of 7, you can introduce slightly more complex concepts and instill financial responsibility in the child , showing them, for example, the expenses associated with school/extracurricular activities. The child should understand that, even if they receive an allowance or some extra money for their school card or small outings with friends (like going to the movies), there are many more expenses that parents incur. At this age, it is advisable to introduce a weekly allowance, giving only €3 or €4 to avoid unnecessary spending.
· Around the age of 10/12, a weekly/monthly allowance takes on a different importance and makes sense. You can start with an amount appropriate to the child's specific needs and increase it depending on their behavior or extra needs (you should never mix school grades with financial rewards).
· At 15/16 years old , it's generally expected that a monthly allowance will be given to manage when going out with friends. It's important to encourage saving around 10% of the agreed-upon allowance amount .
Complementary tools
There are numerous platforms that help with this topic . Cetelem has launched a new portal of stories that are familiar to young children, but adapted to the theme of financial education so that they can begin to understand early on the concepts of saving, management, responsibility, and many others. This story of the Three Little Pigs and the Money is delightful!
Dr. Finance has a book dedicated to the subject, called "Doctor Finance and the Magic Coat," which teaches about the method of spending, saving, and helping (adapted from the 3 S's financial method of Spend, Save, and Share ).
Most banks also have useful content about financial literacy for children on their websites or through specific initiatives, not to mention mobile apps that help with financial management from an early age.
Whether using digital tools and new technologies or the countless books available on the subject, you'll have plenty of support to get started. All you need is the courage to introduce what will be a lifelong topic in your children's lives!
