Money is a necessary component in life. West Ridge Academy says that you cannot just disregard it however by hiding behind worn-out cliches such as “money is the root of all evil”, or whatever adage that paints money as if it's something that you should stay away from. Actually, money can either work for you or work against you, depending on how you treat it; whether you treat as a friend that you want to keep for a life time, or as an enemy which you cannot wait to separate from.
If you are careful on where you invest your money, it can actually work for you or even multiply itself several times over like an obedient servant fulfilling your pecuniary dreams. On the other hand, if you do not understand how it works then it will definitely come back to haunt you, run you into the ground and bury you with all sorts of debts and financial trouble if you are not careful.
In this regard, it's very important that you must teach your children about financial literacy as early as possible if you want them to avoid financial ruins when they become adults. Provided below are some suggestions from West Ridge Academy on how to teach financial literacy for your children.
- Give your child a weekly allowance and hold him accountable for it. This is an effective way of teaching your child how to budget. To determine his weekly allowance, you must compute his basic needs for one week. Inform him that his allowance should last him for the whole week otherwise you won't be giving him any additional money if ever he will run short of funds, unless otherwise he can come up with a perfectly valid excuse why he came up short. Should he be able to save some money from his allowance, then he will have the option to do whatever he wishes to do with it.
Convince him to save some of his allowance so that he can buy his favorite toy or bike once he can save enough money in the future. In doing so, he will be able to learn many things about the nature of money, such as: the cost-effectiveness of choosing lower-cost foods (although not necessarily lower in nutritional value), in order to save some of his allowance; or the difficulty of accumulating money since you have to sacrfice a lot just to save a little amount; or he may learn to appreciate the true value of his toys since he will now have a better idea how hard his parents actually worked so that he can get his favorite toys.
- Try to play educational board games which will teach your child about financial basics. Monopoly, Life, and other board games which teach financial literacy, are fun ways of teaching your child about some financial basics. He will definitely ask you a lot of questions during the game, so you better be ready with your answers becuase this is your opportunity to explain the general financial concepts to him in an educational but fun learning environment. If it's possible, try to illustrate your points using simple real-life examples which he can relate to. According to West Ridge Academy, by the end of the game you will not only walk away from the game with a much more financially-savvy child, but more importantly, you will have a much stronger bond between parent and child.