Financial literacy for kids

In a “tap and go” world where anything can be purchased simply with a tap or swipe of a card, it’s fair enough that people are worrying about the future generation and their relationship with money.

Will it get to a point where physical currency is no longer used?

And how will that impact the way that children perceive the value of money and will it impact their attitudes towards saving?

We’ve enlisted the help of Matific’s Education Expert and Ex-Primary Teacher, Brent Hughes, to help provide his insight on how we can help to teach children about money while we are in this semi-digital currency world.

Below are Brent’s top five tips for helping children become financially literate in a world where money is rapidly moving online.

Help them appreciate online dollar value

  • There’s no point denying that the digital evolution of money is happening and that it’s rapidly transforming the way we purchase things today. It is however still important that kids practice counting money and exchanging dollars. 

    This is an important part of them understanding how items are purchased and sold, and the value of money. Sometimes when online components of the financial world come into play, internet banking, debit cards, online shopping and so on, it can create an abstract view of money, but it’s important to teach our children early to treat their online financial activity with the same respect as they do with physical currency. 

    A great way to do this is to give kids opportunities to purchase small items from local shops so that they have examples of purchasing goods in real life as well as online.   

Work together to set savings goals 

  • The ‘Smashed Avocado Generation’ is constantly berated for their ‘buy now, think later’ mentality but while this may be true for some, the millennial first home buyers are proof that many are savvy with saving.

    Research coming out of Cambridge University[1] suggests that attitudes towards saving come from parents more so than schools. Their study found that when parents speak openly with their children about: why they are saving, how much they are saving and identify when the amount will be reached, it was found to be beneficial to the child’s understanding of money/and the importance of saving.

Rejecting the impulse buy!

  • There’s nothing wrong with purchasing something that you want, but it’s good to exercise a waiting period to avoid the ‘buy now but regret later’ scenario.

    I remember in primary school having to fill out a table where all the “Wants” were put on one side and the “Needs” on the other. As a boy I argued that despite the red Power Rangers outfit not being essential to my life, it was going to cause an amount of happiness greater than most of the “Needs”.

    An easy rule that I will also implement with my own child, is the ‘one week in the cart’ rule. It works like this – if I want something, I put it in my shopping cart (digitally of course) and leave it. One full week later if I still want in then I’ll buy it.

    What often happens though is I forget about what was in my cart proving that I never actually wanted in that badly. By doing this we instil a more thoughtful way of purchasing from a young age and hopefully 

Replicate reality …

  • One thing that is important to remember is to vary the medium in which your child/children pay for things. Sometimes they can use money, other times they can buy online, or with a card.

    They need to be exposed to more than just one method. It’s also important that children are given the opportunity to practice paying for things. An easy way to do this is incorporating online maths games such as Matific Galaxy.

Making the abstract concrete

  • I’m sure you’ve heard the tale of the child who when their parents explain they haven’t got any money quickly respond with total confidence – “Let’s go back to the hole in the wall and get some more!” Often if children can’t see the money, they struggle to understand the concept of it.

    Something that can help counteract this is if you take their experience with money and apply it to the digital space. For example, if pocket money is something that occurs in your house have you thought about taking it online?

    Why not set up an account under your own and dedicate it to your child. Sit with them and explain the direct debit you’re setting up. Explaining how x amount of dollars is coming from the money you earn at work and being paid into their account.

    Whether that money is earned by them for jobs around the house or not is personal choice but by taking that process online, rather than giving out handouts ad hoc, helps solidify the notion of digital money = real money.

[1] https://mascdn.azureedge.net/cms/the-money-advice-service-habit-formation-and-learning-in-young-children-may2013.pdf

Author: Sim K