Why Financial Literacy is Important for Kids
Financial literacy is incredibly important in the world we live in, and it’s something that doesn’t seem to get taught enough in schools. Kids will learn all about math, science and english but will fail to learn practical skills that they can carry with them in everyday adult life. It’s better for kids to learn about financial literacy at a young age than to have to learn through experience later on in life. Many people usually have to struggle in adapting to the financial burden that comes in adulthood and wish they had learned about managing finances earlier. Below are three reasons why becoming financially literate is incredibly important for kids.
Value of Money
Through financial literacy kids will understand how important it is to save money. This will teach them that in order to have money and buy the things that they need, they will need to work. It will also teach them not to spend their own money recklessly or ask their parents to buy them things that they don’t particularly need. If kids are able to start saving and making wise decisions with the little money that they have, they will be able to do so when they are trusted with larger sums.
Needs vs Wants
Understanding the value of money will ultimately teach kids to filter through needs and wants to determine what they actually need to spend their hard earned money on. Prior to purchasing something, it’s important for people to ask themselves whether that item is worth buying. They should ask themselves questions about whether this is something that they need or want. If it’s something they just want then will it be worth buying or is it just something that they want at the moment? Understanding as well as filtering through wants and needs is key for children in the present and in the future. This will not only teach them to be wise financially, but will also teach them self control and discipline.
Making Payments On Time
Becoming financially literate means understanding how debit and credit cards work. Kids need to understand that when owning a credit card they will need to pay back the money that the bank lends them at the end of each month. Financial literacy will help them understand that any loans that they have need to be paid back. With credit cards in particular, it’s important to pay them back on time in order to avoid generating interest or other penalties such as a low credit score. Understanding how loans and credit cards work will help ensure that kids understand that they should never take loans they can’t pay back.
Not only will financial literacy teach kids how to save the money that they earn, but it will teach them how they can grow it through smart investments. In adulthood, many realize how powerful of a tool investing can be. Making smart investments on the other hand is challenging for many, and understanding how to do so at a young age will help tremendously. The sooner kids start to invest when they become legal adults, the sooner their money will grow long term.
LSA’s “Future Millionaire – Financial Literacy” Course for Kids in Toronto
At LSA, we offer a financial literacy course that can teach kids all of the principles of financial literacy discussed in this article and more. In this course we teach kids financial terms and economic principles. We also teach them through fun/interactive games and entrepreneurship projects. To register for our “Future Millionaires” course click on the button below.Future Millionaires Course