null Why You Should Teach Your Children about Financial Literacy
Since financial literacy education is not prevalent in schools, the
most effective way to ensure your children learn the fundamentals of
money management is by teaching them. Here are several areas you can
Wants vs. Needs
Teaching your children how to create a budget around necessities such
as food, rent or mortgage, car payments, clothing, healthcare, etc.
will help them learn how to prioritize and make wise choices when it
comes to spending their money.
Teaching your children that money is finite and “doesn’t grow on
trees” is another important lesson pertaining to financial literacy.
Helping them understand the concept of opportunity cost, or the
tradeoff for purchasing an item, is a good way to teach children that
money available to purchase one item isn’t available to purchase
others. Involving your children in practical decisions such as
choosing one type of cereal over the other is a good way to
demonstrate the concept of opportunity cost.
Practicing delayed gratification with your children rather than
purchasing every item at their request will help them develop the
self-discipline necessary for saving, budgeting, etc. Talking through
your children’s purchases with them by asking, “Do you have to have it
now or can you have it later” can help them think more logically when
Although there are many more areas of financial literacy to cover,
(i.e. establishing credit history, investing, etc.), teaching your
children some fundamental concepts of money may help put them ahead of
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