How To Teach Financial Literacy To Teenagers?

How To Teach Financial Literacy To Teenagers?

Written by Kimberly Linhares

From reading cheesy young adult novels to writing reviews about them. Books, have been an escape from reality. Writing, to capture a little bit of everything about my versatile lifestyle. Let’s talk but first grab some coffee!

October 17, 2022

Financial education for children is as important as other aspects of development. It helps you develop an appropriate attitude towards financial literacy and to ensure a pleasant lifestyle for your child’s future. Parents are responsible for the subject of economic education. It is recommended to begin learning at the young age of 3-7 years old. Experts suggest using games or an interactive form of class. The joy and excitement that is generated in the course will assist the baby to understand the concept of money as well as the ways to manage it. This way you can start the journey of creating an educated financial person.

WHY DO CHILDREN NEED FINANCIAL LITERACY

The aim of economic education is the development of a positive mental attitude towards money among children. As they grow older it will help them to be integrated more easily with society and have a better chance of success.

The development of financial literacy in children will aid them to:

  • Be aware that financial matters do not just appear from the blue;
  • Be aware that handling them improperly can lead to poverty
  • Learn to think critically and steer clear of scams;
  • Develop a clear understanding of money, and the capacity to accumulate it

You can feel the link between the capacity to manage money and the satisfaction of personal requirements.

WHAT IS MONEY: A DEFINITION FOR TEENS

It is a universal method designed to exchange anything. Their principal properties include:

  • Measurement of value. By using currencies, it is possible to assess the cost of various goods and services. For instance, one kind of ice cream can be more expensive than the other. This is due to higher-quality ingredients, better packaging, etc. being utilized in its manufacturing. Because of the money you have, you can estimate the final price that the final product will cost. The unique science of economics allows us to grasp the particulars.
  • The payment for goods and services. It is possible to exchange money for any kind of goods or services. We can purchase clothes and food using these funds. The money is paid out as a wage for the completion of specific tasks. They are used to pay utility bills and other expenses. When teaching kids about money literacy it’s essential to stress that if there is no money in this sector chaos could reign.
  • The function of the global financial system. They play a significant part in the creation of relationships between states and legal entities and individuals in various countries.
  • Circulation. Owners are able to dispose of the money at their decision: pay for goods or services, make donations or borrow money, or accumulate.
  • Accumulation. The more money you have, the more serious and premium products or services you will be able to purchase. You must build that up to grow. The financial literacy of children is a matter that can be started with their own piggy banks. Adults can earn money by investing, bank deposits, and other methods.

RULES FOR THE FORMATION OF CHILDREN’S FINANCIAL LITERACY

Here are some suggestions for parents:

  • Set a model. You must ensure the financial decision you take is prudent and balanced. Children on the subconscious level, repeat things followed by their parents. If you find yourself with a blank wallet until the next paycheck arrives, it’s in vain of trying to impart your child something.
  • Give them pocket money. The child should have enough money to cover pocket expenses starting at pre-school age. In addition, they must be able to manage these expenses on their own, even when they are with their parents. This is an essential stage in the development of financial literacy in children.
  • Learn about budgeting. To do this, it’s important to involve your child in making your family’s budget. By doing this they will be able to understand the financial position of the family. Lastly, add their pocket money to your list of expenditures, and consider how this money influences the financial status of the entire family. You can also create shopping lists, arranging them in order of importance.
  • Do not rush to discipline your child for unjustified costs. The most efficient way of fostering a child’s financial literacy is to use the trial and error approach. It is based on gaining experiences upon which the subsequent costs will be determined. It’s not even necessary to seek compensation for expenditure. This allows her to fully be aware of the negative effects of reckless spending, and to avoid losing huge amounts in the later years of their life.
  • Learn how to keep a record of your income and expenses. A simple notebook is perfect to do this. To get students more interested in what’s going on use colored markers. Record keeping will help students to develop a mental attitude toward resources and financial literacy.
  • Participate in financial concerns throughout your day. Let your child or son shop on their own or pay at a cafe or restaurant, etc. Get help when selecting appliances for the home, comparing prices, or reading reviews.

HOW TO TEACH A CHILD FINANCIAL LITERACY

It is essential that teenagers attain a more mature and responsible mindset towards financial matters. The teen years are characterized by the constant urge to purchase something. Thus, it is important to provide your child with pocket money, in order to help them understand the proper spending of money as well as keep records of the income and expenditure.

How to go about it:

  • Inform us about the typical expenses. Teenagers already know where the money originates. But, in the context of his own earnings, the salaries of his parents could seem astronomical to him. Discuss what the expense per month is for the family, such as the purchase of food, basic items, travel expenses, and electric bills, and the way it impacts the financial position of the entire family. It is also possible to discuss the subject of taxes as well as inflation.
  • It is important to trust a lot. The foundation of financial literacy for teens can be the capability to set a budget. We suggest spending money on pocket expenses, not daily or even every week, but all at once for the entire month. Also, explain that the amount is sufficient to last for the period specified. It is, therefore, the responsibility of the teenager to budget their expenses. If they run out before the deadline, issue additional bills and inform them of the obligation. If this happens again, you should try to strip your child of cash for a specific time.
  • Have fun playing board games that are appropriate for your age. The majority of the time “Monopoly” is not enough. To increase children’s financial literacy consider more complicated alternatives that make use of the notions of business, creating an empire, and establishing a tax system. This includes, for instance, “Antimonopoly” and “Millionaire”.
  • Install helpful apps on your phone. Adolescents are the best beneficiaries of specific programs that can help them manage spending. To avoid the scenarios mentioned above and to not keep track of your spending manually, download the software.

BEST FINANCE BOOKS FOR TEENAGERS

  1. Best Overall: How To Money: Your Ultimate Visual Guide to the Basics of Finance
  2. Best for Reluctant Readers: I Want More Pizza
  3. Best for Inspiration: Rich Dad Poor Dad for Teens
  4. Best for College-Bound Teens: Paying for College, 2023: Everything You Need to Maximize Financial Aid and Afford College
  5. Best for Understanding Credit and Debt: Broke Millennial: Stop Scraping by and Get Your Financial Life Together
  6. Best for Understanding Credit and Debt: Broke Millennial: Stop Scraping by and Get Your Financial Life Together

Author’s Bio

Over the past two decades of helping undergraduates complete theses and dissertations with attention to detail, Joe Eckel is now sharing his expertise via StudyCrumb. As a committed researcher and educator Joe Eckel assure students that they receive useful information when they write A-grade academic research papers.

Joe Eckel’s interests span the years, from classic English literature to the social sciences and psychology, along with cognitive linguistics and business practices. Joe Eckel sees his work as a way of demonstrating how writing can provide motivation.

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