Teaching your child financial literacy at a ripe young age will help them build a solid foundation for understanding the value of money and how it should be used. An early financial education will also ingrain good money management habits, which are sure to leave a positive impact on kids’ financial well-being throughout their lives.
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Some kids, however, may not initially be very interested in learning about personal finance. Perhaps they find the subject too boring and complicated, which makes it a challenge for parents to keep their children’s attention when imparting this knowledge.
Luckily, we’re living in the heyday of information and technology, and parents have several digital learning resources at their disposal to get their children interested in finance and basic financial management. Given that your children are considered “digital natives,” it may be easier to appeal to their tech-savviness or general interest in technology when it’s time to learn about money matters.
Whether you’re spending quality time at home or visiting a top travel destination like Singapore with your family, you’ll have the opportunity to use the latest tech to increase your child’s knowledge about the following basic financial literacy concepts— as long as you have access to the internet or are subscribed to the best SIM only plan Singapore has to offer:
1. Budgeting
Learning how to budget one’s money is an important step towards gaining financial freedom, as it allows one to have control over their finances and frees them from financial insecurity. Typically, it involves creating a financial plan that not only keeps spending in check, but also ensures that there’s enough money allocated to set up and maintain the saver’s emergency funds or achieve their financial goals.
You can use practical concepts like your household’s monthly expenses as a way to introduce your child to the concept of budgeting. If they have difficulty grasping ideas like budgeting categories, you can use interactive budgeting apps designed for kids to help them understand the value of money, the need for prioritisation, and the consequences of one’s financial decisions in the most child-friendly way.
Many of these apps can simulate budgeting scenarios that are engaging for kids, which will make it easier for them to understand the importance of a budget. Apps that have features such as virtual allowances, expense tracking, and customisable savings goals can take it further and give kids a more hands-on budgeting experience, which they can develop the more they use these apps.
2. Saving
If you’ve started to give your child an allowance, there’s no better time to teach them about the importance of saving money than now. Teaching them to save early helps them build a habit of delayed gratitude, which will strengthen their patience and enhance their goal-setting skills. Encouraging them to set a portion of their allowance aside also provides them with a sense of financial security and prepares them for future financial responsibilities.
To get your child more interested in saving, you can set up a kids’ virtual bank account and use it to send them their weekly or monthly allowance. Your child can gain access to their account via an app they can download to their smartphone, which will allow them to keep track of their spending and savings while on the go.
Some apps even allow you to check your child’s balance and transactions as well as give you parental control over the account, all towards properly monitoring your child’s spending behaviour. If you and your child work together to help them save, they’ll cultivate a habit of spending and managing their money wisely.
3. Investing
Early awareness of investing will instil in your children a deeper understanding of wealth-building and what they can achieve through the power of compounding their money. This will serve as a valuable lesson in long-term financial planning and encourage a proactive approach towards their future financial growth.
You may initially think that the concept of allocating money towards different investments is a difficult one to simplify. However, if you explore educational games or apps online that introduce basic investment concepts, it won’t be as hard as you think for your child to grasp the idea of growing their money through investments.
Online games or apps can explain the concepts of risk and return in an interactive manner, helping kids learn the fundamental principles of investing. There are also virtual investment experiences that can make the learning process engaging and relatable for children in the digital age.
4. How to Keep an Emergency Fund
An emergency fund is a savings reserve set aside for unexpected expenses or financial emergencies. Although you shouldn’t expect for your child to be in financial distress anytime soon, teaching them the importance of having a financial safety net will help prepare them for financial obstacles in their future. They’ll realise that unexpected events can happen at any time, and that having a financial cushion will provide them with a sense of security and stability.
If your child has an online bank account and is familiar with using it, set up a different account for them that’s dedicated to emergencies. This way, your child will be encouraged to allocate a portion of their allowance to their emergency fund account and start saving for their financial future.
5. How to Ascertain Their Own Financial Goals
It’s one thing to teach your child to manage their finances wisely. But if they continue saving money without having a goal in mind, it may become like a chore that they won’t be motivated to keep up. Knowing that, talk about your child’s financial goals and discuss what they want to do with their money once they reach a certain financial milestone.
They could be saving up for a new gaming console or concert tickets or topping up their wallets for something they want to buy while you’re travelling. Whatever the case, having something to aim for will inspire them to save more and to keep the habit up on their own. Again, you can leverage your child’s virtual bank account to help them set, track, and achieve their financial goals. This will make their financial journey more personal and their achievements more meaningful.
For your child to become financially secure and responsible during their adult years, it helps to teach them basic financial literacy concepts at a young age. Letting them understand the value of spending their money wisely early will enable them to make wiser financial decisions in the future. Look to the recommendations above, and use technology—a resource they can easily connect with—as a fun and engaging learning tool for their ongoing financial education.
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