8 Effective Ways to Boost Your Child’s Financial IQ

Abraham Hispraise
Sep 27 · 7 min read

Disciplined, financially-educated children will, in turn, produce self-controlled adults who can manage their finances properly.

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Photos from freepik created by brgfx

In a recent article on Forbes, here’s what Beth Kobliner, author of the New York Times bestseller Get a Financial Life, and a member of the President’s Advisory Council on Financial Capability, had to say.

“Look at the mortgage crisis and how many families lost their homes — 3.9 million foreclosures. Look at the amount of money — $1.1 trillion — we owe in student loan debt. The amount — $845 billion — we owe in credit card debt. It’s pretty clear that adults don’t know much about money. To help the next generation avoid the mistakes of their elders, and to live financially fit lives, they need to be taught the essentials about money.”

These days, it is easy to find young adults who are either uncertain or carefree about their financial future, with almost zero saving and investment habits, working 9-to-5 jobs, and hopping from one loan scheme or credit card debt to another.

On the other hand, there are other young adults, relatively rare, who could even be more youthful than our first category. This second group of adults also work 9-to-5 jobs, but have some money left in their salary accounts each month, are growing businesses or side hustles, and run savings accounts along with it.

The difference between these two groups in our illustration lies in how they manage their finances and what kind of financial background they are exposed to from an early age.

You see, although it’s possible to learn how to manage one’s finances at any age, it’s usually better to do so from an early age.

Learning to manage finances from a young age not only makes the process more fun and less stressful but also exciting due to the lack of financial pressure at that early stage of life.

Exposing a child to financial literacy from a young age is essential for a lot of different reasons.

One of these reasons is that it can increase the chances that they will begin to manage their finances properly earlier than later, and as a result, end up better positioned financially by the time they are adults.

One of these reasons is that it can increase the chances that they will begin to manage their finances properly earlier than later, and as a result, end up better positioned financially by the time they are adults.

There are several different ways to achieve this. We will only look at a few of the critical ones here.

Expose Them to Savings

It is easier to groom a child than an adult.

A little child who is consistently encouraged to save a cent or a percentage of his or her lunch money, a cash gift from a relative, or a monthly allowance from his or her parents, will have minor issues with finances by the time he or she is ready for college.

Many young adults are faced with financial constraints; one of the reasons for this is because they weren’t exposed to the culture of savings as kids.

Get a fancy saving box or piggy bank, open a kid savings account, encourage your children to sign up with apps on their phones that can teach them to, and help them save some of their own money.

Get a fancy saving box or piggy bank, open a kid savings account, encourage your children to sign up with apps on their phones that can teach them to, and help them save some of their own money.

Teach Them to Choose Homemade Food over Fast Food

A friend once said to me, “your cravings will bankrupt you.”

Like a lot of other young people, it feels a lot easier to crave burgers, fries, chips, pizza, and the lot, compared to homemade meals.

Now, this is not to say that wanting them is terrible. No. It is just essential to establish a balance and tilt towards homemade meals whenever possible.

As a bonus, homemade meals are a lot more economical, and healthier compared to some of the best fast food alternatives currently available.

Children should be taught to appreciate home-cooked meals and even make them by themselves.

Also, in terms of raising a child, choosing food over snacks can be seen as a form of self-discipline. It shows control of appetite.

In terms of raising a child, choosing food over snacks can be seen as a form of self-discipline. It shows control of appetite.

Rather than frequently buying snacks, encourage your children to save 20 to 30 per cent of their lunch money in a piggy bank.

At the end of a school year, help them open their piggy banks, and let them see what their discipline has earned them. And oh, one more thing, rewards; this way, they will be motivated to strive for more the next time.

Help Your Kids Understand What Priorities Mean

The questions should be:

Can I afford it now?

Do I need it?

Is it an emergency?

Else, I’ll pass.

Teach your child to know at an early age that not having what every other child has doesn’t make him or her inferior to the other child.

Teach your child to know at an early age that not having what every other child has doesn’t make him or her inferior to the other child.

Some of the different ways to curb excessive appetites in children include:

· Teaching them to say No to when necessary.

· Teaching them that people do not always get what they want immediately they want it.

You should try your best to explain to the child the reason why they are not given what they want instantly, without hurting their emotions.

Teach Them to Choose Quality over Quantity

Cheaper doesn’t always mean better.

When it comes to buying items, the long-term value should be considered over cost.

Instead of buying cheaper, inferior quality items, it is always better to purchase items of value even if their cost is slightly higher, given that they will last a longer time, and save you more money in the long run.

Teach them to always choose value despite the cost.

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Photo by Randy Fath on Unsplash

Introduce Them to Investing

Teaching a child the value of a book over a bunch of fancy toys and stickers is one thing millennial parents should do more. The kids need to learn to invest in their education by themselves.

When they ask you questions out of curiosity, encourage and guide them to search the internet for answers. Soon, they will learn how to educate themselves — an essential trait most successful people possess.

While it is okay to make a child comfortable and happy, you also need to prepare the child for adulthood by introducing them to investing money from the get-go.

One of the ways to expose your children to investing money is to play investment-related games with them.

One of the ways to expose your children to investing is to play investment-related games with them.

One such example is the age-long Monopoly board game which is engaging as well as educating.

Chess can also improve their ability to think ahead and make more resolute, well-calculated decisions as adults.

Teach Them How to Make Budgets and Stick to It

A lifestyle every parent should be conversant with is spending with budgets in mind. If you aren’t yet, it is essential that you learn it.

The first question you should teach your kids to answer when going on a trip, hanging out with friends, going shopping, or considering a purchase is, “What is my budget for this?

If your children demand something you don’t currently have a budget for, you need to explain why you won’t be able to get it, so that it becomes a part of them after a while.

It has to either be a pressing need, or a planned purchase with an already allocated budget for it to qualify to be a reasonable expense.

Soon, your kids will learn that purchases shouldn’t be impulsive, which will make them able to take better care of their financial future as they grow older.

Contentment

One of the primary reasons a lot of young adults become broke or cashless is due to a lack of contentment.

Contentment should stop you from trying to live above your means especially when the odds are screaming NO in your face!

While it is okay to admire and desire what others have that you don’t have, you need to be financially prepared before you jump into any purchases.

Teach your children that whatever they cannot afford at any particular time can wait until they are ready to make the financial commitment.

Also, teach them to be satisfied with what you give you them.

Teach Them to Be Grateful When Given Things

Gratitude is a must.

Children should be taught to appreciate the smallest things such as lunch taken to school, a new toy, new clothes and shoes, a vacation, a new hairdo, etc.

Teach children to always say “thank you”.

Being appreciative will make people feel better around you and a more willing to help you than if you lacked a sense of gratitude.

In summary, financial management is a lifelong commitment, and as such, it is a character that is best groomed with time. Since it is a lifelong commitment, it is essential to introduce children to it from a very early age.

Disciplined, financially-educated children will, in turn, produce self-controlled adults who can manage their finances properly.

Thank you so much for reading until this point. I hope you enjoyed the post and maybe learned a thing or two. Please feel free to share other ways that have worked for you in the comment section below.

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Abraham Hispraise

Written by

typing…

Data Driven Investor

from confusion to clarity not insanity

Abraham Hispraise

Written by

typing…

Data Driven Investor

from confusion to clarity not insanity

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