Financial education: what do children do with the money in the piggy bank?

What is the history of money? How do we get them and, most importantly, how do we use them intelligently? Let's take a moment to think and ask ourselves: if from a young age, children receive pocket money, set aside and save in a piggy bank a certain amount for a new game, or receive money from grandparents and other relatives, wouldn't it be important for them to have some information in the field of financial education, to ensure that they understand the role of money in our daily lives? The answer comes naturally: of course yes, but ... how do we help the little ones to understand all this?

Financial literacy is a process by which we learn to use knowledge and skills to effectively manage financial resources. By teaching children about money, we help them balance needs and wants without taking uncalculated risks or feeling frustrated, be more calculated about how they use money, and achieve financial stability that allows them to achieve their goals. The learning process should start at an early age and happen in a fun, dynamic and engaging way. 

Photo source: Investopedia

Financial education is one of the most important lessons we can teach our children. Money is an important part of adult life and encouraging children to see the value of money, understand the importance of saving and being conservative in their spending habits will enable them to develop a healthy appreciation for money and its uses. 

Reasons why it is important to teach children financial literacy 

Financial education gives them future prospects

Today's children who manage to understand, even in broad terms, how money works, are tomorrow's adults who will make balanced decisions about the use of financial resources. 

It helps them understand the difference between needs and wants

Just because we want something badly doesn't mean we really need it. Each of us defines our list of things we want and the list of things we fit into need. It is valuable to help little ones understand how to prioritize their needs, how to select wants and how to save for them. 

The process of financial literacy sets the stage for making smart money decisions, which helps lead to a more balanced, higher-earning lifestyle. 

The future is approaching

Children and teenagers need to learn how to be self-sufficient. You would have them regularly do household chores in exchange for some pocket money, is a way we can teach them how to fend for themselves, control their own money, and it will empower them to make better decisions. 

According to a 2015 study by the Financial Industry Regulatory Authority (FINRA), building financial skills from an early age is critical to helping children grow into adults who are equipped to achieve financial security and success. Children who learn to manage their finances early become adults better prepared to live independently.

The term financial literacy refers to a variety of important financial skills and concepts.

Financial education:

• can prevent devastating mistakes;
• prepares people for emergencies;
• can help individuals achieve their goals;
• invoke confidence in one's own strength.

A strong foundation of financial literacy can help support various life goals, such as saving for education or retirement, using debt responsibly, and running a business. Key aspects of financial literacy include knowing how to create a budget, plan for the future and track personal spending.

*Article written by Veronica Dunga, KEN Academy trainer.